OLD WESTBURY FUNDS INC (Form: 485BPOS, Received: 03/01/2007 16:45:42)

As filed with the Securities and Exchange Commission on March 1, 2007

Securities Act Registration Statement No. 033-66528

Investment Company Act File No. 811-07912

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933


		Pre-Effective Amendment		¨
		Post-Effective Amendment No. 28		x

and/or

REGISTRATION STATEMENT

UNDER

THE INVESTMENT COMPANY ACT OF 1940


		Amendment No. 29		x

(Check appropriate box or boxes)

OLD WESTBURY FUNDS, INC.

(Exact Name of Registrant as Specified in Charter)

760 Moore Road

King of Prussia, PA 19406

(Address of Principal Executive Offices, including Zip Code)

Steven L. Williamson, Esq.

Bessemer Trust Company, N.A.

630 Fifth Avenue

New York, New York 10111

(Name and Address of Agent for Service)

COPY TO:

Robert Kurucza, Esq.

Morrison & Foerster LLP

2000 Pennsylvania Avenue, NW Suite 5500

Washington, D.C. 20006

It is proposed that this filing will become effective (check appropriate box):

Immediately upon filing pursuant to paragraph (b) of Rule 485; or

On (date) pursuant to paragraph (b) of Rule 485; or

60 days after filing pursuant to paragraph (a)(1) of Rule 485; or

On (date) pursuant to paragraph (a)(1) of Rule 485; or

75 days after filing pursuant to paragraph (a)(2) of Rule 485; or

On (date) pursuant to paragraph (a)(2) of Rule 485.

If appropriate, check the following box:

This post-effective amendment designates a new effective date for a previously filed post-effective amendment.

Old Westbury Funds, Inc.

Prospectus

March 1, 2007

LOGO

Investment Adviser

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

The Notice of Privacy Policy and Practices of Old Westbury Funds, Inc. is included with this Prospectus, but is not considered to be a part of the Prospectus.

OLD WESTBURY FUNDS, INC.

Prospectus

March 1, 2007

Old Westbury Large Cap Equity Fund

Old Westbury Mid Cap Equity Fund

Old Westbury International Fund

Old Westbury Global Small Cap Fund

Old Westbury Real Return Fund

Old Westbury Fixed Income Fund

Old Westbury Municipal Bond Fund

(each a “Fund” and collectively, the “Funds”)

Bessemer Investment Management LLC—the Funds’ Investment Adviser (the “Adviser”)

CONTENTS


Fund Goals, Strategies, Risks and Performance		1
Summary of Fund Expenses		13
Principal Types of Securities in Which the Funds Invest		14
Other Information About the Funds		21
Specific Risks of Investing in the Funds		22
What Do Shares Cost?		24
How Do I Purchase Shares?		25
How Do I Redeem Shares?		27
How Do I Exchange Shares?		29
Market Timing Policies		29
Account and Other Information		30
Who Manages the Funds?		32
Distribution and Shareholder Servicing of Fund Shares		36
Financial Information		37

NOT FDIC INSURED

MAY LOSE VALUE

NO BANK GUARANTEE

FUND GOALS, STRATEGIES, RISKS AND PERFORMANCE

Old Westbury Funds, Inc. (“Old Westbury Funds”) offers seven portfolios or Funds. The following describes each Fund’s investment goal, strategy and principal risks. There can be no assurance that a Fund will achieve its goal. A description of the Funds’ policies and procedures with respect to the disclosure of the Funds’ portfolio securities is available in the Funds’ Statement of Additional Information (“SAI”).

The investment objective or goal of each Fund described in this section is fundamental and 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. Unless otherwise noted, the investment strategy and policies for each Fund are not fundamental and may be changed without shareholder approval.

Old Westbury Large Cap Equity 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 the Adviser believes have the potential for above-average total return. The Fund seeks to invest primarily in companies that are traded on a recognized national stock exchange and that, in the Adviser’s opinion, are relatively attractive based on factors that have in the past been associated with above-average return prospects. These factors include valuation, growth, risk profile and other criteria used to evaluate companies. The Fund will invest at least 80% of its net assets, including any borrowings for investment purposes, in equity securities of companies with market capitalizations, at the time of the initial investment, of at least $5 billion. The Fund will provide notice to shareholders at least 60 days prior to any change to this policy.

The Adviser uses a “core” style of investing, seeking stocks with above-average total return potential based on both growth and valuation, which, in the opinion of the Adviser, will lead to appreciation in stock price. Consistent with the Fund’s investment objective, policies and restrictions, the Adviser may from time-to-time allocate a substantial portion of the Fund’s assets to a small number of sectors (e.g., consumer staples, consumer cyclical, health care and/or finance), or to a single sector. The Fund may also purchase exchange traded funds and engage in futures and options transactions.

The Adviser may sell a portfolio security if it determines that the issuer’s prospects have deteriorated or if it finds an attractive security which it deems to have superior risk and return characteristics to a security held by the Fund.

Old Westbury Mid Cap Equity Fund

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

Strategy: The Fund seeks to achieve its goal by investing in a diversified portfolio of primarily medium size companies that are traded on a recognized U.S. or Canadian stock exchange. To this end, the Fund will invest at least 80% of its net assets, including any borrowings for investment purposes, in equity securities of companies whose market capitalizations at the time of the initial investment are between $200 million and $8 billion or whose market capitalizations at the time of any subsequent investment do not exceed $15 billion. The Fund will provide notice to shareholders at least 60 days prior to any change to this policy. The Fund may continue to hold investments in equity securities whose market capitalizations exceed the foregoing thresholds subsequent to the Fund’s investment in such securities.

The Fund seeks to invest in U.S. exchange listed and, to a lesser extent, Canadian exchange listed equity securities, including Depositary Receipts, of companies that, in the opinion of the Adviser, have the potential to grow profitably and generate sustainable returns above their cost of capital. The Fund’s investment criteria include sales growth, competitive positioning, strategy and execution, financially disciplined management, potential for margin expansion, free cash flow generation, productive capital deployment and attractive valuation based on issuer and industry specific criteria. The Fund’s portfolio will generally be diversified among various investment sectors.

The Adviser may sell a portfolio security if it determines that the issuer’s prospects have deteriorated or if it finds an attractive security that it deems to have superior risk and return characteristics to a security held by the Fund.

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 total 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 analysis of various factors by the Adviser or the Fund’s sub-adviser, Bessemer Group (UK) Limited (“BGUK”), including: (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. The Fund may also engage in futures, options and foreign currency transactions.

The Adviser or BGUK may sell a portfolio security if it determines that the issuer’s prospects have deteriorated or if it finds an attractive security which it deems to have superior risk and return characteristics to a security held by the Fund.

Old Westbury Global Small Cap Fund

Goal: The Fund’s goal is to seek long-term capital appreciation.

Strategy: The Fund invests in a broad, diversified portfolio of common stocks of small-capitalization companies that are traded on a principal U.S. exchange or U.S. over-the-counter market, and stocks of small non-U.S. companies in foreign countries, including emerging market countries. The Fund will invest at least 80% of its net assets, including borrowings for investment purposes, in securities of small-capitalization companies. The Fund will provide notice to shareholders at least 60 days prior to any change in this policy.

The Fund determines the universe of small-capitalization companies at the time of investment by first ranking companies listed on the major exchanges of each eligible country/region and then determining the maximum market capitalization of a company that should be eligible for purchase by the Fund from time to time in each country/region. Companies at or below this level (not otherwise excluded based on other characteristics) would then be eligible for investment. As of December 31, 2006, the market capitalization range of eligible companies was approximately $200 million to $4 billion. This range will change over time due to market conditions.

Under normal circumstances, the Fund intends to invest approximately 40-60% of its assets in U.S. companies, approximately 30-50% of its assets in non-U.S. companies in countries with developed markets, and approximately 0-20% of its assets in emerging market countries. The Fund intends to invest its assets primarily in equity securities listed on bona fide securities exchanges or actively traded in over-the-counter markets. These exchanges or over-the-counter markets may be either within or outside the issuer’s domicile country, and the securities may be listed or traded in the form of International Depositary Receipts or American Depositary Receipts. The Fund may engage in options, futures and foreign currency transactions.

Dimensional Fund Advisors LP (“Dimensional”) and Champlain Investment Partners, LLC (“Champlain”) serve as the investment sub-advisers to this Fund. The Adviser designates a portion of the Fund’s portfolio to be managed by each of Dimensional and Champlain, each of which is compensated by the Adviser on the basis of that portion of the Fund’s assets it manages. Under normal circumstances, the Adviser intends to manage directly approximately 10% of the Fund’s assets. The Adviser intends to invest this portion of the Fund’s assets for cash management purposes or to obtain exposure to small-capitalization companies in additional markets.

The Adviser, or a sub-adviser, may sell a portfolio security if, among other reasons, it determines that the issuer’s prospects have deteriorated or if it finds an attractive security that it deems to have superior risk and return characteristics to a security held by the Fund.

Old Westbury Real Return Fund

Goal: The Fund’s goal is to seek real return over inflation.

Strategy: The Fund intends to invest in a portfolio of instruments that the Adviser believes should benefit in environments of increasing inflation. Under normal circumstances, the Fund primarily invests its assets among the following instruments that, in the judgment of the Adviser, are affected directly or indirectly by the level of inflation: inflation-protected securities such as Treasury Inflation-Protected Securities (“TIPS”) and similar bonds issued by governments outside of the U.S., floating-rate bonds issued by various government and corporate entities, commodities, real estate investment trusts (“REITs”), securities and derivatives linked to the price of other assets (such as commodities, stock indexes and real estate), and equity securities of domestic and foreign companies within the natural-resources and agricultural sectors and related industries.

The Adviser attempts to manage the Fund’s “real return” (which equals total return less the estimated cost of inflation) by investing in instruments that the Adviser believes should perform better than other instruments during a period of time when inflation is rising. The Fund also attempts to hedge against inflationary pressures by investing in non-traditional instruments such as derivative instruments and commodities. The Fund is non-diversified, which means that it may concentrate its assets in a smaller number of issuers than a diversified fund. The Adviser may also engage in options and futures transactions.

The Adviser may sell a portfolio security if, among other reasons, it determines that the issuer’s prospects have deteriorated or if it finds an attractive security that it deems to have superior risk and return characteristics to a security held by the Fund.

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 80% of its net assets, plus borrowings for investment purposes, in fixed income securities including corporate, asset-backed, mortgage-backed, and U.S. government securities. The Fund will provide notice to shareholders at least 60 days prior to any change to this policy. 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. The Fund may also engage in futures and options transactions.

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 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 (“AMT”). This policy is fundamental and may not be changed without shareholder approval. The Fund will invest, as a non-fundamental policy, at least 80% of its net assets, plus borrowings for investment purposes, in municipal bonds. The Fund will provide notice to shareholders at least 60 days prior to any change to this non-fundamental policy.

Summary of Principal Risks of the Funds

Set forth below are principal risks specific to an investment in a particular Fund or Funds. For more information on these risks, see “Specific Risks of Investing in the Funds.”

In addition, all Funds are subject to the risk that a Fund’s share price may decline and an investor could lose money. Therefore, it is possible to lose money investing in any of the Funds. Also, there is no assurance that a Fund will achieve its investment objective.

The shares offered by this Prospectus are not deposits or obligations of any bank, are not endorsed or guaranteed by any bank and are not insured or guaranteed by the U.S. Government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency.

Large Cap
Equity
Fund

Mid Cap
Equity
Fund

International
Fund

Global
Small
Cap
Fund

Real
Return
Fund

Fixed
Income
Fund

Municipal
Bond Fund

Stock Market Risks ⁽¹⁾

Risks Related to Small Company Securities ⁽²⁾

Risks of Foreign Investing ⁽³⁾

Emerging Market Securities Risks ⁽⁴⁾

Interest Rate Risks ⁽⁵⁾

Municipal Securities Risks

Prepayment and Extension Risks ⁽⁶⁾

Futures and Options Risks ⁽⁷⁾

Commodities Risk ⁽⁸⁾

Currency Risks ⁽⁹⁾

⁽¹⁾

The value of equity securities rise and fall.

⁽²⁾

The smaller the capitalization of a company, generally, the less liquid its stock and the more volatile its price. Companies with smaller market capitalizations also tend to have unproven track records and are more likely to fail than companies with larger market capitalizations.

⁽³⁾

Foreign economic, political, tax or regulatory conditions may be less favorable than those of the United States.

⁽⁴⁾

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.

⁽⁵⁾

Prices of fixed income securities rise and fall in response to interest rate changes. Interest rate changes have a greater effect on the price of fixed income securities with longer durations.

⁽⁶⁾

When interest rates decline, unscheduled prepayments of principal could accelerate and require the Fund to reinvest the proceeds of the prepayments at lower interest rates. When interest rates rise, the likelihood of prepayments decreases, resulting in a longer effective maturity of a security.

⁽⁷⁾

The use of futures and options as hedging devices will not eliminate risk even if they work as intended. In addition, hedging strategies are not always successful, and could result in increased expenses to a Fund. Futures contracts not purchased for hedging purposes are also subject to the same market risks as the underlying securities markets.

⁽⁸⁾

Commodities are subject to certain risk factors including changes in overall market movements, interest rates and/or a specific industry related to the commodity.

⁽⁹⁾

Exchange rates for currencies fluctuate daily.

Performance Information

The following pages include performance bar charts and total return information for each Fund.

Performance Bar Chart and Total Return—Large Cap Equity Fund

The bar chart and table shown below provide some indication of the risks of investing in the Old Westbury Large Cap Equity Fund by showing changes in its performance from year to year and by comparing the Fund’s performance to a broad-based securities index. The Standard & Poor’s (“S&P”) 500 Index is an unmanaged index that measures the performance of domestic stocks in all major industries. While past performance (before and after taxes) 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 returns. Fund performance reflects fee waivers and/or expense reimbursements and reinvestment of distributions, if any. Without waivers/reimbursements, performance would be lower. Prior to February 20, 2004, the Fund was named the Core Equities Fund and operated under a different investment strategy.

During the periods shown in the bar chart, the highest return for a quarter was 24.54% (quarter ended 12/31/99) and the lowest return for a quarter was (14.45)% (quarter ended 09/30/01).


Average Annual Total Returns (for the periods ended 12/31/06)	One Year	Five Years	Since Inception*
Fund Return Before Taxes	13.01%	3.47%	4.18%
Fund Return After Taxes on Distributions ¹	12.94%	3.44%	4.15%
Fund Return After Taxes on Distributions and Sale of Shares ¹	8.55%	2.98%	3.62%
S&P 500 Index (reflects no deduction for expenses or taxes)	15.79%	6.19%	5.11%

*Inception date for the Fund is 3/2/98. S&P 500 Index since inception return from 3/1/98.

¹ After-tax returns are calculated using the historical highest individual federal marginal income tax rate, and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to tax-exempt investors or those who hold Fund shares through tax-deferred arrangements such as 401(k) plans or Individual Retirement Accounts.

Performance Bar Chart and Total Return—Mid Cap Equity Fund

The bar chart and table shown below provide some indication of the risks of investing in the Old Westbury Mid Cap Equity Fund by showing changes in its performance from year to year and by comparing the Fund’s performance to a broad-based securities index. The S&P MidCap 400 Index is an unmanaged index generally representative of the performance of U.S. mid-sized companies. While past performance (before and after taxes) 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 returns. Fund performance reflects fee waivers and/or expense reimbursements and reinvestment of distributions, if any. Without waivers/reimbursements, performance would be lower.

During the periods shown in the bar chart, the highest return for a quarter was 22.90% (quarter ended 12/31/99) and the lowest return for a quarter was (18.67)% (quarter ended 9/30/98).


Average Annual Total Returns (for the periods ended 12/31/06)	One Year	Five Years	Since Inception*
Fund Return Before Taxes	18.61%	7.33%	7.70%
Fund Return After Taxes on Distributions ¹	16.12%	6.65%	7.27%
Fund Return After Taxes on Distributions and Sale of Shares ¹	15.31%	6.31%	6.73%
S&P MidCap 400 Index (reflects no deduction for expenses or taxes)	10.31%	10.88%	13.38%

*Inception date of 2/28/97.

Performance Bar Chart and Total Return—International Fund

The bar chart and table shown below provide some indication of the risks of investing in the Old Westbury International Fund by showing changes in its performance from year to year and by comparing the Fund’s performance to a broad-based securities index. The Morgan Stanley Capital International: Europe, Australia, and Far East (“MSCI EAFE”) Index is an unmanaged index generally representative of the performance of international stock markets. While past performance (before and after taxes) 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 returns. Fund performance reflects fee waivers and/or expense reimbursements and reinvestment of distributions, if any. Without waivers/reimbursements, performance would be lower.

During the periods shown in the bar chart, the highest return for a quarter was 17.39% (quarter ended 6/30/03) and the lowest return for a quarter was (18.48)% (quarter ended 9/30/02).


Average Annual Total Returns (for the periods ended 12/31/06)	One Year	Five Years	Ten Years
Fund Return Before Taxes	19.18%	13.01%	4.47%
Fund Return After Taxes on Distributions ¹	18.37%	12.69%	3.82%
Fund Return After Taxes on Distributions and Sale of Shares ¹	13.83%	11.38%	3.58%
MSCI EAFE Index (net dividends) (reflects no deduction for expenses or taxes)	26.34%	14.98%	7.71%

Performance Bar Chart and Total Return—Global Small Cap Fund

The bar chart and table shown below provide some indication of the risks of investing in the Old Westbury Global Small Cap Fund by showing changes in its performance from year to year and by comparing the Fund’s performance to a broad-based securities index. The MSCI World Small Cap Index is an unmanaged index representing the small cap segment in 23 of the world’s developed equity markets. While past performance (before and after taxes) 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 returns. Fund performance reflects fee waivers and/or expense reimbursements and reinvestment of distributions, if any. Without waivers/reimbursements, performance would be lower.

During the periods shown in the bar chart, the highest return for a quarter was 11.40% (quarter ended 3/31/06) and the lowest return for a quarter was (3.86)% (quarter ended 6/30/06).


Average Annual Total Returns (for the periods ended 12/31/06)	One Year	Since Inception*
Fund Return Before Taxes	20.65%	20.30%
Fund Return After Taxes on Distributions ¹	19.76%	19.78%
Fund Return After Taxes on Distributions and Sale of Shares ¹	14.10%	17.31%
MSCI World Small Cap Index (reflects no deduction for expenses or taxes)	17.20%	19.61%

*Inception date for the Fund is 4/7/05. MSCI World Small Cap Index since inception return from 4/5/05.

Performance Bar Chart and Total Return—Real Return Fund

The bar chart and table shown below provide some indication of the risks of investing in the Old Westbury Real Return Fund by showing changes in its performance from year to year and by comparing the Fund’s performance to a broad-based securities index. The Lehman Brothers U.S. TIPS (Treasury Inflation - Protected Securities) Index tracks the performance of inflation - protected securities issued by the U.S. Treasury with at least one year to maturity and $200 million in par amount outstanding. While past performance (before and after taxes) 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 returns. Fund performance reflects fee waivers and/or expense reimbursements and reinvestment of distributions, if any. Without waivers/reimbursements, performance would be lower.

During the periods shown in the bar chart, the highest return for a quarter was 7.02% (quarter ended 12/31/06) and the lowest return for a quarter was (2.50)% (quarter ended 6/30/06).


Average Annual Total Returns (for the periods ended 12/31/06)	One Year	Since Inception*
Fund Return Before Taxes	11.46%	13.77%
Fund Return After Taxes on Distributions ¹	10.37%	12.85%
Fund Return After Taxes on Distributions and Sale of Shares ¹	8.27%	11.46%
Lehman Brothers U.S. TIPS Index (reflects no deduction for expenses or taxes)	0.41%	0.87%

*Inception date of 4/28/05.

Performance Bar Chart and Total Return—Fixed Income Fund

The bar chart and table shown below provide some indication of the risks of investing in the Old Westbury Fixed Income Fund by showing changes in its performance from year to year and by comparing the Fund’s performance to a broad-based securities index. The Lehman Brothers Government/Credit Total Index is an unmanaged index composed of all bonds that are investment grade. While past performance (before and after taxes) 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 returns. Fund performance reflects fee waivers and/or expense reimbursements and reinvestment of distributions, if any. Without waivers/reimbursements, performance would be lower.

During the periods shown in the bar chart, the highest return for a quarter was 6.12% (quarter ended 9/30/02) and the lowest return for a quarter was (1.95)% (quarter ended 6/30/04).


Average Annual Total Returns (for the periods ended 12/31/06)	One Year	Five Years	Since Inception*
Fund Return Before Taxes	3.40%	4.12%	4.98%
Fund Return After Taxes on Distributions ¹	1.97%	2.74%	3.36%
Fund Return After Taxes on Distributions and Sale of Shares ¹	2.20%	2.72%	3.28%
Lehman Brothers Government/Credit Total Index (reflects no deduction for expenses or taxes)	3.78%	5.17%	5.81%

*Inception date of 3/12/98.

Performance Bar Chart and Total Return—Municipal Bond Fund

The bar chart and table shown below provide some indication of the risks of investing in the Old Westbury Municipal Bond Fund by showing changes in its performance from year to year and by comparing the Fund to a broad-based securities index. The Lehman Brothers Municipal Bond Index is an unmanaged index generally representative of performance of the tax-exempt bond market. While past performance (before and after taxes) 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 returns. Fund performance shown below reflects fee waivers and/or expense reimbursements and reinvestment of distributions, if any. Without waivers/reimbursements, performance would have been lower.

During the periods shown in the bar chart, the highest return for a quarter was 5.35% (quarter ended 9/30/02) and the lowest return for a quarter was (2.65)% (quarter ended 6/30/04).


Average Annual Total Returns (for the periods ended 12/31/06)	One Year	Five Years	Since Inception*
Fund Return Before Taxes	3.74%	4.68%	4.88%
Fund Return After Taxes on Distributions ¹	3.73%	4.49%	4.70%
Fund Return After Taxes on Distributions and Sale of Shares ¹	3.47%	4.36%	4.56%
Lehman Brothers Municipal Bond Index (reflects no deduction for expenses or taxes)	4.84%	5.53%	5.36%

*Inception date of 3/6/98.

SUMMARY OF FUND EXPENSES

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


	Large Cap Equity Fund		Mid Cap Equity Fund		International Fund		Global Small Cap Fund		Real Return Fund		Fixed Income Fund		Municipal Bond Fund
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		None		None

Annual Fund Operating Expenses Expenses That are Deducted From Fund Assets
Management Fee ⁽¹⁾⁽²⁾	0.70	%	0.68	%	0.74	%	0.85	%	0.85	%	0.45	%	0.45	%
Other Expenses	0.36	%	0.35	%	0.40	%	0.30	%	0.25	%	0.42	%	0.41	%
Acquired Fund Fees and Expenses	0.01	%	0.01	%	0.00	%	0.04	%	0.00	%	0.00	%	0.01	%

Total Annual Fund Operating Expenses ⁽³⁾	1.07	%	1.04	%	1.14	%	1.19	%	1.10	%	0.87	%	0.87	%

Fee Waivers	-0.06	%	0.00	%	0.00	%	0.00	%	0.00	%	-0.17	%	-0.16	%

Net Expenses	1.01	%	1.04	%	1.14	%	1.19	%	1.10	%	0.70	%	0.71	%

(1)

The Adviser has contractually committed through October 31, 2008, to waive its advisory fees to the extent necessary to maintain the net operating expense ratios for certain Funds, excluding Acquired Fund Fees and Expenses (if any), as follows:


Large Cap Equity Fund	1.00	%
Fixed Income Fund	0.70	%
Municipal Bond Fund	0.70	%

Bessemer Trust Company, N.A. has also contractually committed through October 31, 2008, to waive its shareholder servicing fee for the Fixed Income Fund and Municipal Bond Fund to the extent necessary to maintain a maximum shareholder servicing fee for each of these Funds at 0.05%.

(2)

For those Funds that have a breakpoint schedule, the investment advisory fees charged to a Fund will decline as Fund assets grow and continue to be based on a percentage of the Fund’s average daily net assets. For Large Cap Equity Fund and Mid Cap Equity Fund, the investment advisory fee rate is 0.70% of the first $500 million in assets, 0.65% of the second $500 million up to $1 billion and 0.60% of assets over $1 billion. For International Fund, the investment advisory fee rate is 0.80% of the first $500 million in assets, 0.75% of the second $500 million up to $1 billion and 0.70% of assets over $1 billion. For Fixed Income Fund and Municipal Bond Fund, the investment advisory fee rate is 0.45% of the first $500 million in assets, 0.40% of the second $500 million up to $1 billion and 0.35% of assets over $1 billion. The Management Fee and Total Annual Fund Operating Expenses shown above reflect the current investment advisory fee, based on the breakpoints set forth above and the level of assets in each Fund as of October 31, 2006.

(3)

To the extent a Fund invests in another fund(s), the Total Annual Fund Operating Expenses will not correlate to the ratio of expenses to average net assets in the Fund’s Financial Highlights, as the Financial Highlights reflect actual operating expenses of the Fund and do not include Acquired Fund Fees and Expenses.

Example

This Example is intended to help you compare the cost of investing in each Fund with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in each Fund for the time periods indicated below and then redeem all of your shares at the end of these periods. The Example also assumes that your investment has a 5% return each year, that you reinvest all distributions and that the Fund’s operating expenses remain the same. The fee waivers shown in the Annual Fund Operating Expenses are only reflected for the length of the fee waiver commitment in each of the following time periods. Although your actual costs may be higher or lower, based on these assumptions your costs would be:


	Large Cap Equity Fund		Mid Cap Equity Fund		International Fund		Global Small Cap Fund		Real Return Fund		Fixed Income Fund		Municipal Bond Fund
1 Year	$	103	$	106	$	116	$	121	$	112	$	72	$	73
3 Years	$	331	$	331	$	362	$	378	$	350	$	252	$	253
5 Years	$	581	$	574	$	628	$	654	$	606	$	457	$	458
10 Years	$	1,297	$	1,271	$	1,386	$	1,443	$	1,340	$	1,049	$	1,050

PRINCIPAL TYPES OF 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.

The following describes the principal type of equity securities in which a Fund may invest, where that security has been referred to in the Fund’s strategy section.

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. Fixed income securities with higher risks generally have higher yields.

The following describes the principal types of fixed income securities in which a Fund may invest, where that security has been referred to in the Fund’s strategy section.

Treasury Securities

Treasury securities are direct obligations of the federal government of the United States. Treasury securities are generally regarded as having the lowest credit risks.

Agency Securities

Agency securities are issued or guaranteed by a federal agency or other government sponsored entity (“GSE”) acting under federal authority. The United States supports some GSEs with its full faith and credit. Other GSEs receive support through federal subsidies, loans or other benefits. A few GSEs have no explicit financial support, but are regarded as having implied support because the federal government sponsors their activities. Agency securities are generally regarded as having low credit risks, but not as low as treasury securities.

A Fund treats mortgage backed securities guaranteed by GSEs as agency securities. Although a GSE guarantee protects against credit risks, it does not reduce the interest rate and prepayment risks of these mortgage backed securities.

Corporate Debt Securities

Corporate debt securities are fixed income securities issued by businesses. Notes, bonds, debentures and commercial paper are the most prevalent types of corporate debt securities. A Fund may also purchase interests in bank loans to companies. The credit risks of corporate debt securities vary widely among issuers.

In addition, the credit risk of an issuer’s debt security may vary based on its priority for repayment. For example, higher ranking (senior) debt securities have a higher priority than lower ranking (subordinated) securities. This means that the issuer might not make payments on subordinated securities while continuing to make payments on senior securities. In addition, in the event of bankruptcy, holders of senior securities may receive amounts otherwise payable to the holders of subordinated securities. Some subordinated securities, such as trust preferred and capital securities notes, also permit the issuer to defer payments under certain circumstances. For example, insurance companies issue securities known as surplus notes that permit the insurance company to defer any payment that would reduce its capital below regulatory requirements.

Commercial Paper

Commercial paper is an issuer’s obligation with a maturity of less than nine months. Companies typically issue commercial paper to pay for current expenditures. Most issuers constantly reissue their commercial paper and use the proceeds (or bank loans) to repay maturing paper. If the issuer cannot continue to obtain liquidity in this fashion, its commercial paper may default. The short maturity of commercial paper reduces both the market and credit risks as compared to other debt securities of the same issuer.

Demand Instruments

Demand instruments are corporate debt securities that the issuer must repay upon demand. Other demand instruments require a third party, such as a dealer or bank, to repurchase the security for its face value upon demand. A Fund treats demand instruments as short-term securities, even though their stated maturity may extend beyond one year.

Mortgage-Backed Securities

Mortgage-backed securities represent interests in pools of mortgages. The mortgages that comprise a pool normally have similar interest rates, maturities and other terms. Mortgages may have fixed or adjustable interest rates. Interests in pools of adjustable rate mortgages are known as ARMs.

Mortgage-backed securities come in a variety of forms. Many have extremely complicated terms. The simplest form of mortgage-backed securities are pass-through certificates. An issuer of pass-through certificates gathers monthly payments from an underlying pool of mortgages. Then, the issuer deducts its fees and expenses and passes the balance of the payments onto the certificate holders once a month. Holders of pass-through certificates receive a pro rata share of all payments from the underlying mortgages. As a result, the holders assume all the risks of the underlying mortgages.

Collateralized Mortgage Obligations (“CMOs”)

CMOs, including interests in real estate mortgage investment conduits (“REMICs”), allocate payments and prepayments from an underlying pass-through certificate among holders of different classes of mortgage-backed securities. This creates different prepayment and interest rate risks for each CMO class.

Floaters and Inverse Floaters

Floaters and inverse floaters allocate interest payments between two classes of CMOs. One class (“Floaters”) receives a share of interest payments based upon a market index such as LIBOR. The other class (“Inverse Floaters”) receives any remaining interest payments from the underlying mortgages. Floater classes receive more interest (and Inverse Floater classes receive correspondingly less interest) as interest rates rise. This shifts prepayment and interest rate risks from the Floater to the Inverse Floater class, reducing the price volatility of the Floater class and increasing the price volatility of the Inverse Floater class.

Bank Instruments

Bank instruments are unsecured interest bearing deposits with banks. Bank instruments include bank accounts, time deposits, certificates of deposit and banker’s acceptances. Yankee instruments are denominated in U.S. dollars and issued by U.S. branches of foreign banks. Eurodollar instruments are denominated in U.S. dollars and issued by non-U.S. branches of U.S. or foreign banks.

Forward Foreign Currency Exchange Contracts

Forward Foreign Currency Exchange Contracts (“Forward Contracts”) may be 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. In addition, the Real Return Fund may use Forward Contracts to provide exposure to the foreign currency market. 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 because it is difficult to predict the values of foreign currencies and precisely match Forward Contract amounts. 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. The Real Return Fund may use Forward Contracts for hedging purposes as well as a broad based investment in the foreign currency markets.

In these transactions, a 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 the Fund than if it had not engaged in such contracts.

Tax Exempt Securities

Tax exempt securities are fixed income securities that pay interest that is not subject to regular federal income taxes, but may be subject to the federal AMT. 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.

The following describes the principal types of tax exempt securities in which a Fund may invest, where that security has been referred to in the Fund’s strategy section.

General Obligation Bonds

General obligation bonds are supported by the issuer’s power to exact property or other taxes. The issuer must impose and collect taxes sufficient to pay principal and interest on the bonds. However, the issuer’s authority to impose additional taxes may be limited by its charter or state law.

Special Revenue Bonds

Special revenue bonds are payable solely from specific revenues received by the issuer such as specific taxes, assessments, tolls, or fees. Bondholders may not collect from the municipality’s general taxes or revenues. For example, a municipality may issue bonds to build a toll road and pledge the tolls to repay the bonds. Therefore, a shortfall in the tolls normally would result in a default on the bonds.

Private Activity Bonds

Private activity bonds are special revenue bonds used to finance private entities. For example, a municipality may issue bonds to finance a new factory to improve its local economy. The municipality would lend the proceeds from its bonds to the company using the factory, and the company would agree to make loan payments sufficient to repay the bonds. The bonds would be payable solely from the company’s loan payments, not from any other revenues of the municipality. Therefore, any default on the loan normally would result in a default on the bonds.

Although Fund distributions attributable to interest on private activity bonds generally are not subject to regular federal income tax, such distributions generally are subject to the federal AMT.

Tax Increment Financing Bonds

Tax increment financing (“TIF”) bonds are payable from increases in taxes or other revenues attributable to projects financed by the bonds. For example, a municipality may issue TIF bonds to redevelop a commercial area. The TIF bonds would be payable solely from any increase in sales taxes collected from merchants in the area. The bonds could default if merchants’ sales, and related tax collections, failed to increase as anticipated.

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.

Variable Rate Demand Instruments

Variable rate demand instruments are tax exempt securities that require the issuer or a third party, such as a dealer or bank, to repurchase the security for its face value upon demand. The securities also pay interest at a variable rate intended to cause the securities to trade at their face value. A Fund treats demand instruments as short-term securities, because their variable interest rate adjusts in response to changes in market rates, even though their stated maturity may extend beyond thirteen months.

Municipal Leases

Municipalities may enter into leases for equipment or facilities. In order to comply with state public financing laws, these leases are typically subject to annual appropriation. In other words, a municipality may end a lease, without penalty, by not providing for the lease payments in its annual budget. After the lease ends, the lessor can resell the equipment or facility but may lose money on the sale.

A Fund may invest in securities supported by pools of municipal leases. The most common type of lease-backed securities are certificates of participation (“COPs”). However, the Fund may also invest directly in individual leases.

Foreign Securities

Foreign securities in which a Fund may invest, including the Mid Cap Equity Fund (which may invest more than 10% of its total assets in securities listed on Canadian stock exchanges) 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; or

•

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 to currency risks and risks of foreign investing.

Depositary Receipts

Depositary receipts represent interests in underlying securities issued by a foreign company. Depositary receipts are not traded in the same market as the underlying security. American Depositary Receipts (“ADRs”) are traded in the United States. ADRs provide a way for a Fund to gain exposure to foreign-based companies in the United States rather than purchasing shares in overseas markets. ADRs are also traded in U.S. dollars, eliminating the need for foreign exchange transactions. The foreign securities underlying European Depositary Receipts (“EDRs”), Global Depositary Receipts (“GDRs”), and International Depositary Receipts (“IDRs”) are traded globally or outside the United States. Depositary receipts involve many of the same risks of investing directly in foreign securities, including currency risks and risks of foreign investing.

Derivative Contracts

Derivative contracts are financial instruments that require payments based upon changes in the values of designated (or underlying) securities, currencies, commodities, financial indices or other assets. Some derivative contracts (such as futures, forwards and options) require payments relating to a future trade involving the underlying asset. Other derivative contracts (such as swaps) require payments relating to the income or returns from the underlying asset. The other party to a derivative contract is referred to as a counterparty.

Many derivative contracts are traded on securities or commodities exchanges. In this case, the exchange sets all the terms of the contract except for the price. Investors make payments due under their contracts through the exchange. Most exchanges require investors to maintain margin accounts through their brokers to cover their potential obligations to the exchange. Parties to the contract make (or collect) daily payments to the margin accounts to reflect losses (or gains) in the value of their contracts. This protects investors against potential defaults by the counterparty. Trading contracts on an exchange also allows investors to close out their contracts by entering into offsetting contracts.

For example, a Fund could close out an open contract to buy an asset at a future date by entering into an offsetting contract to sell the same asset on the same date. If the offsetting sale price is more than the original purchase price, the Fund realizes a gain; if it is less, the Fund realizes a loss. Exchanges may limit the amount of open contracts permitted at any one time. Such limits may prevent the Fund from closing out a position. If this happens, the Fund will be required to keep the contract open (even if it is losing money on the contract) and to make any payments required under the contract (even if it has to sell portfolio securities at unfavorable prices to do so). Inability to close out a contract could also harm the Fund by preventing it from disposing of or trading any assets it has been using to secure its obligations under the contract.

A Fund may also trade derivative contracts over-the-counter (“OTC”) in transactions negotiated directly between the Fund and a counterparty. OTC contracts do not necessarily have standard terms, so they cannot be directly offset with other OTC contracts. In addition, OTC contracts with more specialized terms may be more difficult to price than exchange traded contracts.

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 a Fund’s exposure to interest rate and currency risks and may also expose a Fund to liquidity and leverage risks. OTC contracts also expose a Fund to credit risks in the event that a counterparty defaults on the contract.

The Funds may trade in the following types of derivative contracts.

Futures Contracts

Futures contracts are obligations to provide for the future sale by one party and purchase by another party of a specified amount of an underlying asset at a specified price, date and time. Entering into a contract to buy an underlying asset is commonly referred to as buying a contract or holding a long position in the asset. Entering into a contract to sell an underlying asset is commonly referred to as selling a contract or holding a short position in the asset. Futures contracts are considered to be commodity contracts. Futures contracts traded OTC are frequently referred to as forward contracts.

The Funds may buy and sell the following types of futures contracts: financial futures, commodity or commodity index futures and stock index futures. The International Fund and Global Small Cap Fund may also buy and sell foreign currency futures contracts.

Linked or Hybrid Instruments

Linked or “hybrid” instruments, such as index-linked, equity-linked, credit-linked, commodity-linked and currency-linked securities, are types of derivative securities. Index-linked, equity-linked, credit-linked and commodity-linked securities can be either equity or debt securities that call for interest payments and/or payment at maturity in different terms than the typical note where the borrower agrees to make fixed interest payments and to pay a fixed sum at maturity. Principal and/or interest payments depend on the performance of an underlying stock, index, or a weighted index of commodity futures such as crude oil, gasoline and natural gas.

Like all derivatives, a Fund’s investments in “linked” securities can lead to large losses because of unexpected movements in the underlying financial asset, index, currency or other investment. The ability of the Fund to utilize linked-securities successfully will depend on its ability to correctly predict pertinent market movements, which cannot be assured.

Options

Options are rights to buy or sell an underlying asset for a specified price (the exercise price) during, or at the end of, a specified period. A call option gives the holder (buyer) the right to buy the underlying asset from the seller (writer) of the option. A put option gives the holder the right to sell the underlying asset to the writer of the option. The writer of the option receives a payment, or premium, from the buyer, which the writer keeps regardless of whether the buyer uses (or exercises) the option.

A Fund may:

•

Buy call options on individual securities and futures contracts in anticipation of an increase in the value of the underlying asset;

•

Buy put options on individual securities and futures contracts in anticipation of a decrease in the value of the underlying asset; and

•

Buy or write options to close out existing options positions.

A Fund may also write call options on individual securities and futures contracts to generate income from premiums and in anticipation of a decrease or only limited increase in the value of the underlying asset. If a call written by a Fund is exercised, a Fund foregoes any possible profit from an increase in the market price of the underlying asset over the exercise price plus the premium received.

A Fund may also write put options on individual securities and futures contracts to generate income from premiums and in anticipation of an increase or only limited decrease in the value of the underlying asset. In writing puts, there is a risk that the Fund may be required to take delivery of the underlying asset when its current market price is lower than the exercise price.

When a Fund writes options on futures contracts, it will be subject to margin requirements similar to those applied to futures contracts.

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 that 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.

Hedging

Hedging transactions are intended to reduce specific risks. For example, to protect the Fund against circumstances that would normally cause the Fund’s portfolio securities to decline in value, the Fund may buy or sell a derivative contract that would normally increase in value under the same circumstances. A Fund may also attempt to hedge by using combinations of different derivatives contracts, or derivatives contracts and securities. A Fund’s ability to hedge may be limited by the costs of the derivatives contracts. A Fund may attempt to lower the cost of hedging by entering into transactions that provide only limited protection, including transactions that (1) hedge only a portion of its portfolio, (2) use derivatives contracts that cover a narrow range of circumstances or (3) involve the sale of derivatives contracts with different terms. Consequently, hedging transactions may not eliminate risk even if they work as intended. In addition, hedging strategies are not always successful and could result in increased expenses and losses to a Fund.

Inflation-Protected Securities

Unlike traditional debt securities that make fixed or variable principal and interest payments, inflation-protected debt securities are structured to provide protection against the negative effects of inflation. The value of the debt securities’ principal is adjusted to track changes in an official inflation measure. For example, the U.S. Treasury currently uses the Consumer Price Index for Urban Consumers as a measure of inflation for Treasury Inflation-Protected Securities (“TIPS”). Other inflation-protected securities may not carry a similar guarantee by their issuer. A Fund may buy TIPS that are designed to provide an investment vehicle that is not vulnerable to inflation. The interest rate paid by TIPS is fixed. The principal value rises or falls semi-annually based on changes in the published Consumer Price Index. If inflation occurs, the principal and interest payments on TIPS are adjusted to protect investors from inflationary loss. If deflation occurs, the principal and interest payments will be adjusted downward, although the principal will not fall below its face amount at maturity.

Investments in Other Investment Companies

The Funds may invest their assets in securities of other investment companies (subject to certain limitations set forth in the Investment Company Act of 1940, as amended) 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. To the extent a Fund invests in the securities of other investment companies, the acquired investment companies’ fees and expenses are reflected in the “Summary of Fund Expenses” herein.

The Funds may also invest in various exchange traded funds (“ETFs”), subject to a Fund’s investment objective, policies and strategies. An ETF is an investment company which offers shares that are listed on a national securities exchange. Shares of ETFs, because they are listed on a stock exchange, can be traded throughout the day on that stock exchange at market-determined prices. ETFs typically invest predominantly in the securities comprising any

underlying index. As such, the ETF itself is an index fund. The Funds will only purchase shares of ETFs on the secondary market (through an exchange) and not directly from the ETF. Some types of ETFs are:

•

“ SPDRs ” (S&P’s Depositary Receipts), which are securities that represent ownership in a long-term unit investment trust that holds a portfolio of common stocks designed to track the performance of an S&P Index. Holders of SPDRs are entitled to receive proportionate quarterly cash distributions corresponding to the dividends that accrue to the stocks in the S&P Index’s underlying investment portfolio, less any trust expenses.

•

“QQQQ” (Qubes), are securities that represent ownership in the stocks of the Nasdaq 100 Index, a modified capitalization weighted index that includes the stocks of 100 of the largest and most actively traded non-financial companies listed on the Nasdaq Stock Market. Qubes use a unit investment trust structure that allows immediate reinvestment of dividends.

•

“ iShares ” which are a family of over seventy ETFs that are designed to track the performance of specific indexes.

•

“ HOLDRs ” (Holding Company Depositary Receipts), which are trust-issued receipts that represent beneficial ownership in a specified group of 20 or more stocks. Unlike other ETFs, a Fund can hold the group of stocks as one asset or unbundle the stocks and trade them separately, according to the Fund’s investment strategies.

REITs

A real estate investment trust (“REIT”) is a pool of investors’ funds for investment primarily in income producing real estate or real estate related loans or interests. A REIT is not subject to federal income tax on income distributed to shareholders if it complies with several requirements imposed by the Internal Revenue Code relating to its organization, ownership, assets, and income and a requirement that it distribute to its shareholders at least 90% of its taxable income (other than net capital gains) for each taxable year. REITs can generally be classified as Equity REITs, Mortgage REITs and Hybrid REITs. Equity REITs invest the majority of their assets directly in real property and derive their income primarily from rents. Equity REITs can also realize capital gains by selling properties that have appreciated in value. Mortgage REITs invest the majority of their assets in real estate mortgages and derive their income primarily from interest payments. Hybrid REITs combine the characteristics of both Equity REITs and Mortgage REITs.

OTHER INFORMATION ABOUT THE FUNDS

Temporary Defensive Investments

To minimize potential losses and maintain liquidity necessary to meet shareholder redemptions during adverse market conditions, each Fund 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 and a Fund may therefore not achieve its investment objective.

Portfolio Turnover

The Funds do 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 objective. In the case of the Real Return Fund, the portfolio turnover rate may exceed 100%. 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 short-term capital gain by a Fund which, when distributed to that Fund’s shareholders, are taxable to them at ordinary income tax rates.

Disclosure of Portfolio Holdings

A description of the Funds’ policies and procedures with respect to the disclosure of the Funds’ portfolio securities is available in the SAI.

SPECIFIC RISKS OF INVESTING IN THE FUNDS

The following is a description of the principal and other risks of investing in the Funds as specified in the chart under “Summary of Principal Risks of the Funds.” In addition to these principal risks, there can be no assurance that the Funds will achieve their investment objective (or goal).

Stock Market Risks

Certain 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.

Risks Relating to Small Company Securities

Stock market 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 investments in Funds that invest in small- and medium-capitalization companies to be more volatile than funds that invest exclusively in large-capitalization companies.

Risks of Foreign Investing

Foreign securities pose additional risks over U.S.-based securities for a number of reasons. Certain Funds invest in foreign securities either directly or through ADRs. Investments in foreign securities 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, currency exchange rates and regulations and accounting standards. Foreign companies may also be subject to significantly higher levels of taxation than U.S. companies, including potentially confiscatory levels of taxation, thereby reducing their earnings potential, and amounts realized on foreign securities may be subject to high levels of foreign taxation and withholding. In addition, these Funds 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 these Funds’ 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 these Funds 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.

Currency Risks

Exchange rates for currencies fluctuate 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.

The Adviser and sub-advisers attempt to manage currency risk by limiting the amount the Funds invest in securities denominated in a particular currency. However, diversification will not protect the Funds against a general increase in the value of the U.S. dollar relative to other currencies.

Emerging Market Securities Risks

Certain Funds may invest in developing or emerging market securities. The risks of foreign investments are typically increased in less developed countries, which are sometimes referred to as emerging markets; 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. To the extent a Fund is invested in emerging market securities it will be subject to higher risk than those investing in securities of developed market countries.

Interest Rate Risks

Certain Funds are affected by the risks of investing in fixed income securities.

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, the value of investments in a Fund may go down.

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 value 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, the Fixed Income Fund and Real Return Fund may invest in Floaters, a form of “derivative” debt security, whose yield may be subject to extreme fluctuation in the event of interest rate movements.

Municipal Securities Risks

An investment in the 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 the 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. Any failure of municipal securities invested in by the Fund to meet certain applicable legal requirements, or any proposed or actual changes in federal or state tax law, could cause Fund distributions attributable to interest on such securities to be taxable.

Prepayment and Extension Risks

Certain Funds may be subject to asset-backed and mortgage-backed securities risks which include 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. A 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. When interest rates rise, such securities are subject to the risk that an expected level of prepayments will not occur, resulting in a longer effective maturity of the security. As a result of this extension risk, the value of such securities may decline.

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.

Investment Ratings

Some securities in which the Municipal Bond Fund, Fixed Income Fund and Real Return Fund 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 Service, 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.

Futures and Options Risks

Certain Funds may use financial and stock index futures and options to protect against adverse changes to the value of portfolio securities due to anticipated changes in interest rates or market conditions. These Funds may also use such investments as a broad based investment in the stock market. Similarly, the International Fund and Global Small Cap Fund may also 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.

Commodities Risks

The Real Return Fund invests in commodities and commodity-linked derivatives (collectively, “Commodities”). Commodities may subject the Fund to greater volatility than investments in traditional securities. The value of commodities may be affected by, among other things, changes in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments.

Real Estate Risks

The Real Return Fund may invest in REITs. Investments in REITs are subject to varying degrees of risk generally incident to the ownership of real property as well as to additional risks, such as poor performance by the manager of the REIT, adverse changes to the tax laws or failure by the REIT to qualify for tax-free pass-through of income under the Internal Revenue Code. In addition, some REITs have limited diversification because they invest in a limited number of properties, a narrow geographic area, or a single type of property. Also, the organizational documents of a REIT may contain provisions that make changes in control of the REIT difficult and time-consuming.

Risks of ETFs

ETFs are subject to many of the same risks associated with individual stocks. ETFs are subject to market risk where the market as a whole, or that specific sector, may decline. ETFs that invest in volatile stock sectors, such as foreign issuers, smaller companies, or technology, are subject to the additional risks to which those sectors are subject. ETFs may trade at a discount to the aggregate value of the underlying securities. The underlying securities in an ETF may not follow the price movements of an entire industry or sector. Trading in an ETF may be halted if the trading in one or more of the ETF’s underlying securities is halted. Although expense ratios for ETFs are generally low, frequent trading of ETFs by a Fund can generate brokerage expenses.

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 4:00 p.m., Eastern time) each day the NYSE is open. Your purchase order must be received in proper form (as described below) 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. If events occur that materially affect the value of the security between the time trading ends on a particular security and the close of the normal trading session of the NYSE, the Funds may value the security at its fair value as determined in good faith by or under the supervision of the Board of Directors. A market quotation is considered not readily available if, among other circumstances, the most recent reported price is deemed unreliable. For example, securities that may be subject to fair valuation include, but are not limited to: (1) securities in which trading has been halted pending further news; (2) illiquid securities in which there is no trading market and no broker coverage; (3) stale priced securities; (4) securities that may have defaulted or de-listed from an exchange and are no longer trading; or (5) any other security which the Adviser, Sub-Advisers or Pricing Committee feels does not represent a reliable current price. In addition, a Fund may fair value securities that trade on a foreign exchange because a significant event has occurred after the foreign exchange closes but before the time as of which a Fund’s share price is calculated. Foreign exchanges typically close before the time as of which Fund share prices are calculated, and may be closed altogether on some days a Fund is open. Such significant events affecting a foreign security may include, but are not limited to: (1) those relating to a single issuer; (2) governmental actions that affect securities in one sector or country; (3) natural disasters or armed conflicts affecting a country or region; or (4) significant market fluctuations. There is no single factor for determining the fair value of a security, but rather several factors are used, including an evaluation of the forces that influence the market in which the security is purchased or sold, in determining whether a market price is readily available and, if not, the security’s fair value.

In light of the judgment involved in fair value decisions, there can be no assurances that a fair value assigned to a particular security reflects a price for which a security has traded or will trade. Accordingly, when a Fund uses fair value to price securities, it may value those securities higher or lower than another fund that uses market quotations to price the same securities.

The Board of Directors has adopted pricing and valuation procedures for determining the value of Fund shares. The Board of Directors receives and reviews quarterly reports regarding any valuation issues that arose during the preceding quarter.

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?

Each prospective investor in the Funds must first submit an account application in good order. An account application may be rejected at the discretion of the Funds and/or Adviser at any time and for any reason. Once an application is approved, shares of each Fund may be purchased by mail or by wire through PFPC Distributors, Inc. (the “Distributor”) or through broker/dealers or other financial institutions that have an agreement with the Distributor (a “Selling Agent”). Each of the Funds, Adviser and Distributor reserves the right to reject any purchase request at any time, for any reason. See “Market Timing Policies.”

If you purchase shares directly from the Distributor, your account will be maintained by the transfer agent of the Funds, PFPC Inc. (the “Transfer Agent”); you will not be considered a customer of the Distributor. For account balance information and shareholder services, you may call the Transfer Agent at (800) 607-2200. Shareholder information is subject to independent identity verification and may be shared, as permitted by law and the Funds’ Privacy Policy, for identifying and reporting suspected money laundering and terrorist activity. In compliance with the USA PATRIOT Act, all financial institutions (including mutual funds) are required, among other matters, to obtain, verify and record the following information for all registered owners or others who may be authorized to act on an

account: full name, date of birth, taxpayer identification number (usually your Social Security number), and permanent street address. Corporate, trust and other entity accounts require additional documentation . This information will be used to verify your true identity. If any of the above requested information is missing, we may reject your account and return your application or take such other action as we deem reasonable as permitted by law. All applications for purchase must be approved by the Adviser. Please review your account application for additional information.

By Mail

Through a Selling Agent

Contact your Selling Agent for instructions. Shares will be issued upon receipt of payment by the Funds in which you are investing (see “Additional Conditions—Transactions Through Intermediaries”).

Through the Distributor

•

Contact the Transfer Agent to request a Purchase Application;

•

Complete the Purchase Application; obtain written Adviser approval; and

•

Mail it together with a check payable to Old Westbury Funds, to the following address:

Old Westbury Funds, Inc.

c/o PFPC Inc.

P.O. Box 9767

Providence, RI 02940-9767

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

The Funds will not accept the following payments: third party checks; money orders; bank starter checks; traveler’s checks; credit card convenience checks; or checks drawn in a foreign currency. All checks should be made payable to Old Westbury Funds.

By Wire

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

Through a Selling Agent

Contact your Selling Agent for instructions.

Through the Distributor

If you do not have a relationship with a Selling Agent, you may purchase shares directly from the Distributor by federal funds wire to the Transfer Agent, after completing the Purchase Application, submitting the Purchase Application to the Adviser for approval, and forwarding a copy to the Transfer Agent. No Purchase Application is required for subsequent investments.

Complete applications should be directed to:

Old Westbury Funds, Inc.

c/o PFPC Inc.

P.O. Box 9767

Providence, RI 02940-9767

Please contact the Transfer Agent 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 a Selling Agent or through the 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 or sent electronically the following business day, but in no event more than seven days, after the request is made.

Generally, redemption requests are paid in cash, unless the redemption request is for more than the lesser of $250,000 or 1% of the net assets of a Fund by a single shareholder over any ninety-day period. If a request for a redemption is over these limits, it may be to the detriment of existing shareholders to pay such redemption in cash. Therefore, a redemption request may be paid in securities of equal value.

By Telephone

Through your Selling Agent

Contact your Selling Agent for complete instructions. Your Selling Agent may accept your redemption request if you have previously elected this service. See “Additional Conditions” for information regarding telephone transactions.

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 Selling Agent

Send a letter to your Selling Agent, 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.

c/o PFPC Inc.

P.O. Box 9767

Providence, RI 02940-9767

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

Additional Conditions

Transactions Through Intermediaries

Selling Agents are authorized to accept purchase orders on behalf of the Fund at the Fund’s net asset value next determined after your order is received by a Selling Agent in proper order before 4:00 p.m., Eastern time, or such earlier time as may be required by the Selling Agent. Selling Agents may be authorized to designate other intermediaries to act in this capacity. Selling Agents may charge you transaction fees on purchases of Fund shares and may impose other charges or restrictions or account options that differ from those applicable to shareholders who purchase shares directly through the Funds or the Distributor. Selling Agents may be the shareholders of record of your shares. Selling Agents are responsible for transmitting requests and delivering funds on a timely basis. Neither the Funds nor the Distributor is responsible for ensuring that the Selling Agents carry out their obligations to their customers.

Signature Guarantees

You must have a signature guarantee on the following written redemption requests:

•

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

•

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

•

when your account address has changed within the last 10 business days;

•

when the redemption proceeds are being transferred to another Fund account with a different registration; or

•

when the redemption proceeds are being wired to bank instructions currently not on your account.

A signature guarantee is designed to protect your account from fraud. We accept signature guarantees only from members of STAMP (Securities Transfer Agents Medallion Program), MSP (New York Stock Exchange Medallion Signature Program) or SEMP (Stock Exchanges Medallion Program). Members are subject to dollar limitations which must be considered when requesting their guarantee. The Transfer Agent may reject any signature guarantee if it believes the transaction would otherwise be improper.

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;

•

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

•

during periods when the NYSE is closed other than on customary weekend and holiday closings, when trading is restricted, if an emergency exists as determined by the Securities and Exchange Commission (“SEC”), or by other order of the SEC.

You will not accrue interest or dividends on uncashed checks from the Fund if those checks are undeliverable and returned to the Fund. The proceeds of your redemption of shares that were purchased by check may be held up to 10 business days until the Transfer Agent is satisfied that the check has cleared. You can avoid this delay by purchasing shares by wire. Redemptions made after an account has been opened, but before a customer’s identity has been verified, which may take up to five business days, must be made in writing, even if the redemption involves shares purchased by wire.

Telephone Transactions

The Funds make every effort to ensure that telephone redemptions and exchanges are only made by authorized shareholders. All telephone calls are recorded for your protection, and you will be asked for information to verify your identity. Given these precautions, unless you have specifically indicated on your application that you do not want the telephone redemption feature, you may be responsible for any fraudulent telephone orders. If appropriate precautions have not been taken, the Transfer Agent may be liable for losses due to unauthorized transactions. Telephone transaction privileges, including purchases, redemptions and exchanges placed by telephonic instructions or facsimile instructions, may be revoked at any time at the discretion of the Funds without advance notice to shareholders. In such cases, and at times of peak activity when it may be difficult to place requests by phone, transaction requests may be made by regular mail.

HOW DO I EXCHANGE SHARES?

You may exchange shares of a Fund for shares of any of the other Funds offered in this Prospectus 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. As stated above, the Funds reserve the right to reject any purchase order for any reason. Also see “Market Timing Policies” below. 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. See “Additional Conditions—Verifying Telephone Transactions” for information regarding exchanging shares by telephone.

Exchanges may be made by sending a written request to Old Westbury Funds, Inc., c/o PFPC Inc., P.O. Box 9767 Providence, RI 02940-9767 or by calling 1-800-607-2200. Please provide the following information:

•

your name and telephone number

•

the exact name on your account and account number

•

taxpayer identification number (usually your Social Security number)

•

dollar value or number of shares to be exchanged

•

the name of the Fund from which the exchange is to be made

•

the name of the Fund into which the exchange is being made.

MARKET TIMING POLICIES

The Funds are not designed for market timing strategies. If you intend to engage in market timing, do not invest in shares of the Funds . The Funds’ Board of Directors has adopted policies and procedures with respect to frequent purchases and/or exchanges of Fund shares that are intended to detect and deter market timing. Frequent purchases, and subsequent redemptions, or exchanges shortly thereafter may interfere with the most effective and efficient investment of assets of a Fund in accordance with its objectives and policies. Such trading practices may also cause dilution in value of a Fund’s shares held by long-term shareholders and may increase brokerage and administrative costs.

The Funds reserve the right to reject any purchase and/or exchange orders if, in the Adviser’s discretion, a shareholder (including all accounts under common ownership) engages in a trading practice which the Adviser believes may cause harm to the Fund or its shareholders. Moreover, the Funds reserve the right to reject any purchase request at any time, for any reason and may revoke telephone transaction privileges at any time. To minimize harm to the Funds and their shareholders, the Funds reserve the right to permanently refuse purchase and/or exchange requests.

The Funds do not knowingly accommodate excessive trading of shares and do not tolerate excessive trading when detected. In addition, the Funds have not created any arrangements, such as an automated exchange or redemption program, that would permit frequent trading. The Board of Directors receive periodic net asset inflow and outflow information reflecting purchase, exchange and redemption activities. The Board may determine to impose additional restrictions as they deem necessary, if any such transaction activities detrimental to long-term shareholders are discovered.

There can be no assurances that the Funds will be able to detect, anticipate or stop any such orders, exchanges or requests because of various factors. For example, the Funds may not able to identify trading by a particular beneficial owner through omnibus accounts held by financial intermediaries since trading activity in the omnibus account is generally aggregated. Neither the Funds nor their agents shall be held liable for any loss resulting from rejected purchase orders or exchanges.

ACCOUNT AND OTHER 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 distributions of any net investment income and realized net capital gains.

Fund Distributions

Distributions (if any) are paid to shareholders invested in the Funds on the record date. Distributions of any net investment income (dividends and interest less net expenses) are declared and paid semi-annually for the Fixed Income, Real Return and Municipal Bond Funds and annually for the Large Cap Equity, Mid Cap Equity, Global Small Cap and International Funds. Realized net capital gains, if any, are declared and distributed at least annually. Your distributions will be automatically reinvested in additional shares unless you elect cash payments.

If you purchase shares just before a Fund declares a taxable 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, which is generally subject to tax whether or not you reinvest the distribution in additional shares. Similarly, if you purchase shares of a Fund when it holds appreciated securities, you will receive a taxable return of part of your investment if and when the Fund sells the securities and realizes and distributes the gain. The Funds have built up, or have the potential to build up, high levels of unrealized appreciation. Therefore, you should consider the tax implications of purchasing shares shortly before the Fund declares a distribution. Contact your investment professional or the Fund for information concerning when distributions will be paid.

Householding

In order to reduce shareholder expenses, we may mail only one copy of a Fund’s prospectus and each annual and semi-annual report to those addresses shared by two or more accounts. If you wish to receive individual copies of these documents, please call 1-800-607-2200, or if your shares are held through a financial institution, please contact the financial institution directly. We will begin sending your individual copies with the next scheduled mailing.

Important Note Regarding “Lost Shareholders”

If you have elected to have your account dividends and/or distributions paid in cash, the Fund reserves the right to change the dividend and distribution payment option on your account to “reinvest” if mail sent to the address on your account is returned by the post office as “undeliverable”. In such event, the Fund would then purchase additional Fund shares with any dividend or distribution payments. In order to change the option back to “cash”, you would need to send the Transfer Agent written instructions as described above.

Taxes

The following discussion regarding federal income taxes is based upon laws that were in effect as of the date of this Prospectus and summarizes only some of the important federal income tax considerations affecting the Funds and you as a shareholder. It does not apply to foreign or tax-exempt shareholders or those holding Fund shares through a tax-advantaged account such as a 401(k) plan or Individual Retirement Account. This discussion is not intended as a substitute for careful tax planning. You should consult your tax advisor about your specific tax situation, including state, local and foreign tax consequences of investing in a Fund. Please see the SAI for additional federal income tax information.

We will pass on to a Fund’s shareholders substantially all of the Fund’s net investment income and realized net capital gains, if any. Distributions of the Municipal Bond Fund’s net investment income from tax-exempt securities, if any, generally will not be subject to federal income tax, although a portion of such distributions may be subject to the federal AMT. Distributions from the Municipal Bond Fund’s net investment income from other sources and net short-term capital gain, if any, and distributions from the other Funds’ ordinary income and net short-term capital gain, if any, generally will be taxable to you as ordinary income. Distributions from a Fund’s net long-term capital gain, if any, generally will be taxable to you as long-term capital gain.

An individual’s net long-term capital gain is subject to a reduced, maximum 15% rate of tax. Also, if you are an individual Fund shareholder, the portion of your distributions attributable to dividends received by your Fund from its investments in certain U.S. and foreign corporations generally will be taxed at a maximum 15% tax rate, as long as certain holding period requirements are met by you for your Fund shares and the Fund for its investment in stock producing such dividends. Under recently enacted legislation, these reduced rates of tax will expire after December 31, 2010. Corporate shareholders may be able to deduct a portion of their distributions when determining their taxable income.

Distributions from a Fund normally will be taxable to you when paid, whether you take distributions in cash or automatically reinvest them in additional Fund shares. Following the end of each year, we will notify you of the federal income tax status of your distributions for the year.

If more than 50% of a Fund’s total assets at the close of its taxable year consists of securities of non-U.S. companies, the Fund will be eligible to file an annual election with the Internal Revenue Service (“IRS”) that would require you to include a pro rata portion amount of the Fund’s foreign withholding taxes in your gross income and treat such amount as foreign taxes paid by you. In general, you can either deduct such amount in computing your taxable income or claim such amount as a foreign tax credit against your federal income tax liability, subject to certain limitations. We expect the International Fund and Global Small Cap Fund to be eligible for this election, but we cannot assure you that they will make the election for any year. It is not expected that any other Funds in this Prospectus will be eligible for this election.

As a regulated investment company for federal income tax purposes, each Fund must derive at least 90 percent of its gross income from certain qualifying sources. Rules governing the federal income tax aspects of derivatives are in a developing stage and are not entirely clear in certain respects, particularly in light of a recent IRS revenue ruling that held that income from a derivative contract on a commodity index is not qualifying income for a regulated investment company. The Real Return Fund intends to limit its investments in commodity-linked derivatives in a manner designed to ensure its continued qualification as a regulated investment company under the Internal Revenue Code. The IRS may not agree with determinations made by a Fund. These events could necessitate a future change to the Real Return Fund’s principal investment strategies.

Your redemptions (including redemptions-in-kind) and exchanges of Fund shares ordinarily will result in a taxable capital gain or loss, depending on the amount you receive for your shares (or are deemed to receive in the case of exchanges) and the amount you paid (or are deemed to have paid) for them. Such capital gain or loss generally will be long-term capital gain or loss if you have held your redeemed or exchanged Fund shares for more than one year at the time of redemption or exchange. In certain circumstances, losses realized on the redemption or exchange of Fund shares may be disallowed.

In certain circumstances, Fund shareholders may be subject to back-up withholding taxes.

WHO MANAGES THE FUNDS?

The Board of Directors governs the Funds. The Board oversees the Adviser, Bessemer Investment Management LLC, a wholly-owned subsidiary of Bessemer Trust Company, N.A. (“Bessemer”).

Adviser

The Adviser either manages the Funds’ assets, including buying and selling portfolio securities, or supervises the sub-advisers who are responsible for the day-to-day management of the Funds. The Adviser’s address is 630 Fifth Avenue, New York, New York 10111.

Bessemer is a subsidiary of The Bessemer Group, Incorporated (“BGI”). The Adviser, and other subsidiaries of BGI, advise or provide investment, fiduciary and personal banking services to approximately 1,800 client relationships with total assets under supervision of approximately $48.3 billion as of December 31, 2006.

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


	First $500 million of average net assets		Second $500 million of average net assets		Average net assets exceeding $1 billion
Large Cap Equity Fund	0.70	%	0.65	%	0.60	%
Mid Cap Equity Fund	0.70	%	0.65	%	0.60	%
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	%


	Average net assets
Global Small Cap Fund	0.85	%
Real Return Fund	0.85	%

For the fiscal year ended October 31, 2006, the Funds each paid advisory fees as a percentage of its average net assets as follows: 0.70% Large Cap Equity Fund; 0.68% Mid Cap Equity Fund; 0.74% International Fund; 0.85% Global Small Cap Fund; 0.85% Real Return Fund; 0.45% Fixed Income Fund; and 0.45% Municipal Bond Fund.

Information regarding the factors considered by the Board of Directors of the Funds in connection with the most recent approval of the Investment Advisory Agreement is provided in the Funds’ Annual Report for the fiscal year ended October 31, 2006.

Mr. Marc D. Stern is the Senior Managing Director and Chief Investment Officer of the Adviser. Mr. Stern is a member of Bessemer’s Senior Executive Group and is Chairman of the Adviser’s Investment Committee. Prior to joining Bessemer in 2004, Mr. Stern was Head of the Wealth Management Group at Bernstein Investment Research & Management, a unit of Alliance Capital Management LP, overseeing the investment strategy of clients with assets of $10 million or more. Mr. Stern has also served as Director of Acquisitions for a division of PepsiCo, Inc. and as a management consultant with McKinsey & Company. Mr. Stern earned a BS in Finance from the Wharton School of the University of Pennsylvania and an MBA from the University of Virginia.

Sub-Advisers

Bessemer Group (UK) Limited (“BGUK”), located at One Stanhope Gate, London, United Kingdom, a wholly-owned subsidiary of BGI, serves as sub-adviser to the International Fund. The fees BGUK receives, which are paid by the Adviser from the fees it receives, are included in the advisory fees set forth above.

Dimensional Fund Advisors LP, located at 1299 Ocean Avenue, 11th Floor, Santa Monica, CA 90401, serves as a Sub-Adviser to the Global Small Cap Fund. In this capacity, Dimensional is responsible for the day-to-day management for a portion of the Fund’s portfolio subject to the oversight of the Adviser. Dimensional, a registered investment adviser, was organized in May 1981 and is engaged in the business of providing investment management services to institutional investors and clients of independent financial advisers. Dimensional is currently organized as a Delaware limited partnership and is controlled and operated by its general partner, Dimensional Holdings Inc., a Delaware corporation. Prior to November 3, 2006, Dimensional was named Dimensional Fund Advisors Inc. and was organized as a Delaware corporation. As of December 31, 2006, assets under management totaled approximately $ 123 billion. The fees of Dimensional are based on the assets that Dimensional is responsible for managing. The fees Dimensional receives, which are paid by the Adviser from the fees it receives, are included in the advisory fees set forth above.

Champlain Investment Partners, LLC, located at 346 Shelburne Road, Burlington, Vermont 05401, serves as a Sub-Adviser to the Global Small Cap Fund. Champlain is responsible for the day-to-day management for a portion of the Fund’s portfolio subject to the oversight of the Adviser. Champlain is a registered investment adviser and had approximately $587 million in assets under management as of December 31, 2006. The fees Champlain receives, which are paid by the Adviser from the fees it receives, are included in the advisory fees set forth above.

As described above, the Adviser and the Global Small Cap and International Funds have engaged sub-advisers to make the day-to-day investment decisions for all or a portion of these Funds. With respect to the Global Small Cap Fund, the Adviser, under normal circumstances, intends to manage directly approximately 10% of the Fund’s assets. The Adviser, these Funds and other Funds may in the future engage one or more additional sub-advisers. While a sub-adviser may make the day-to-day investment decisions for a Fund, the Adviser retains ultimate responsibility (subject to Board oversight) for overseeing the sub-adviser and evaluating the Fund’s needs and the sub-adviser’s skills and abilities on an ongoing basis. Based on its evaluations, the Adviser may at times recommend to the Board that a Fund:

•

change, add or terminate one or more sub-advisers;

•

continue to retain a sub-adviser even though the sub-adviser’s ownership or corporate structure has changed; or

•

materially change a sub-advisory agreement with a sub-adviser.

Applicable law requires a Fund to obtain shareholder approval in order to act on most of these types of recommendations, even if the Board has approved the proposed action and believes that the action is in shareholders’ best interests. The Adviser and the Funds have sought exemptive relief from the SEC to permit the Adviser (subject to the Board’s oversight and approval) to make decisions about a Fund’s sub-advisory arrangements without obtaining approval from Fund shareholders. The Adviser or a Fund will inform the Fund’s shareholders of any actions taken in reliance on this relief. Until the Adviser and the Funds obtain the relief, each Fund will continue to submit these matters to shareholders for their approval to the extent required by applicable law.

The SAI has more information about the Adviser and the sub-advisers, as well as the Funds’ other service providers.

The Funds’ Portfolio Managers

Certain of the Funds are managed by individual portfolios managers, while others are managed by a team of co-managers. The individuals primarily responsible for the day-to-day investment management of the Funds are identified below. Information about the portfolio managers’ compensation arrangements, other accounts managed by the portfolio managers, as applicable, and the portfolio managers’ ownership of securities of the Funds they manage is available in the Funds’ SAI.

Large Cap Equity Fund and Mid Cap Equity Fund

Ms. Lois Roman, Managing Director—Head of U.S. Equities for the Adviser and Portfolio Manager of the Large Cap Equity Fund and Mid Cap Equity Fund, is primarily responsible for the day-to-day investment management of the Large Cap Equity Fund and Mid Cap Equity Fund. Ms. Roman joined Bessemer and the Adviser on July 6, 2005. Prior

to joining Bessemer, Ms. Roman served as Managing Director and Portfolio Manager at Oppenheimer Capital during the years of 2003 to 2005. Prior to Oppenheimer Capital, Ms. Roman served as Managing Director and Head of the Large Cap Value Portfolio Selection Team at Deutsche. Ms. Roman had spent 10 years with Scudder Stevens & Clark, and Zurich Scudder, predecessor of Deutsche. Prior to Deutsche, she was an analyst at Putnam Investments. Ms. Roman received her BA degree from Brandeis University in 1986 and her MBA from the Columbia Business School in 1991.

International Fund

Ms. Hermione Davies, Managing Director of the Adviser and BGUK and Portfolio Manager of the International Fund, is primarily responsible for Bessemer’s International Equity Investments and primarily responsible for the day-to-day investment management of the International Fund. Ms. Davies has managed the Fund since July, 1998 and is responsible for implementing and monitoring the overall portfolio management of the Fund. She is a member of the Adviser’s Investment 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 received her BA from Oxford University in 1981 and her postgraduate Diploma in Economics from Birkbeck College, University of London in 1984.

Sharon Dodgson, Principal of BGUK, shares responsibility for the day-to-day investment management of the International Fund, with particular emphasis on the Fund’s Japanese investments. She joined BGUK in 2000 and is responsible for BGUK’s Japanese equity investments. Prior to joining BGUK, Miss Dodgson was a Director responsible for Japanese Equity Investments at Clerical Medical Group, the financial services subsidiary of HBOS Plc, a major UK bank. Prior to this, she was a Japanese Fund Manager at HSBC Asset Management which had previously merged with Midland Montagu, a UK investment bank where she had begun her career in 1989. During her tenure as Head of Japanese Equity Investments at Clerical Medical, Miss Dodgson was also responsible for marketing the Japanese performance to consultants and corporate clients. Miss Dodgson received a Bachelor of Arts Degree from Sunderland University in Business Studies and a Masters in Finance and Investment from Exeter University.

Michael Crawford, Principal of BGUK, shares responsibility for the day-to-day investment management of the International Fund, with particular emphasis on the Fund’s UK and EU investments. He is responsible for BGUK’s UK investments. He has eleven years fund management experience. Prior to joining BGUK in 2005, he was a Director of Deutsche Asset Management where he was responsible for investing in the UK for eight years. His previous experience includes eight years with KPMG Peat Marwick where he qualified as a Chartered Accountant. Mr. Crawford is a graduate of Exeter University, B.Sc. (Chemistry and Law) 1985. He also has an MBA from Cranfield School of Management and is a member of the Institute of Chartered Accountants, and an Associate of the Securities Institute.

Global Small Cap Fund

Mr. Marc D. Stern, Senior Managing Director and Chief Investment Officer of the Adviser is primarily responsible for managing the Adviser’s portion of the Fund’s assets. Mr. Stern’s background and experience are described above in the “Adviser” sub-section above.

Dimensional manages its portion of the Global Small Cap Fund’s portfolio using a team approach. The investment team includes the Investment Committee of Dimensional, portfolio managers and all other trading personnel. The Investment Committee is composed primarily of certain officers and directors of Dimensional who are appointed annually. As of the date of this Prospectus, the Dimensional Investment Committee has 7 members. Investment strategies for the Global Small Cap Fund are set by the Dimensional Investment Committee, which meets on a regular basis and also as needed to consider investment issues. The Dimensional Investment Committee also sets and reviews all investment related policies and procedures and approves any changes in regards to approved countries, security types and brokers.

In accordance with the Dimensional team approach used to manage the Global Small Cap Fund, the portfolio managers and portfolio traders implement the policies and procedures established by the Dimensional Investment

Committee. The Dimensional portfolio managers and portfolio traders also make daily investment decisions regarding the portfolios including running buy and sell programs based on the parameters established by the Dimensional Investment Committee. The Dimensional portfolio managers named below coordinate the efforts of all other portfolio managers with respect to the day to day management of the category of portfolios indicated.


Domestic equities		Robert T. Deere
Non-U.S. equities		Karen E. Umland

Mr. Deere is a Senior Portfolio Manager and Vice President of Dimensional and a member of the Dimensional Investment Committee. Mr. Deere received his MBA from the University of California at Los Angeles in 1991. He also holds a BS and a BA from the University of California at San Diego. Mr. Deere joined Dimensional in 1991 and has been responsible for the domestic equity portfolios since 1994.

Ms. Umland is a Senior Portfolio Manager and Vice President of Dimensional and a member of the Dimensional Investment Committee. She received her BA from Yale University in 1988 and her MBA from the University of California at Los Angeles in 1993. Ms. Umland joined Dimensional in 1993 and has been responsible for the international equity portfolios since 1998.

Dimensional provides the Global Small Cap Fund with a trading department and selects brokers and dealers to effect securities transactions. Dimensional places securities transactions with a view to obtaining best price and execution. Dimensional has entered into a Consulting Services Agreement with Dimensional Fund Advisors Ltd. (“DFAL”) and DFA Australia Limited (“DFA Australia”), respectively. Pursuant to the terms of each Consulting Services Agreement, DFAL and DFA Australia provide certain trading and administrative services to Dimensional with respect to the Global Small Cap Fund. Dimensional controls DFAL and DFA Australia.

Champlain’s portion of Global Small Cap Fund (the “Segment”) is managed by Mr. Scott T. Brayman, CFA. Mr. Brayman has served as Chief Investment Officer and Managing Partner of Champlain since September 2004. In addition, Mr. Brayman has led Champlain’s investment team since September 2004. He has managed the Segment since January 1, 2006. He has also managed the Champlain Small Company Fund since its inception. Prior to joining Champlain, Mr. Brayman was a Senior Vice President at NL Capital Management, Inc. and served as a Portfolio Manager with Sentinel Advisors, Inc. where he was employed from June 1995 to September 2004. Mr. Brayman graduated cum laude from the University of Delaware with a Bachelor’s Degree in Business Administration. He earned his Chartered Financial Analyst (CFA) designation in 1995 and is a member of the CFA Institute and the Vermont Securities Analysts Society. He has more than 20 years of investment experience.

Real Return Fund

Mr. Preston Stahl, Principal of the Adviser and Portfolio Manager of the Real Return Fund, is primarily responsible for the day-to-day investment management of the Real Return Fund and is responsible for implementing and monitoring the overall portfolio management of the Fund. He has worked as an analyst since 1996, initially with Brundage, Story and Rose, LLC, which was acquired by Bessemer in 2000. Mr. Stahl graduated with a BS from Vanderbilt University, an MBA from Tulane University, and an MS from the London School of Economics and Political Science.

Mr. Andrew Parker, Managing Director of the Adviser, shares responsibility for the day-to-day investment management of the Real Return Fund, with particular emphasis on structured products. Mr. Parker has served as the Head of Equity Risk Management since 2001. Prior to joining Bessemer in 2001, Mr. Parker served as a portfolio manager for the structured products group at Credit Suisse Asset Management. Mr. Parker graduated with a BA in Economics from Gettysburg College.

Mr. Harold S. Woolley, Managing Director of the Adviser and Portfolio Manager of the Fixed Income Fund, shares responsibility for the day-to-day investment management of the Real Return Fund, with particular emphasis on investments in TIPS. Mr. Woolley’s background and experience are described below under “Fixed Income Fund”.

Fixed Income Fund

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

Municipal Bond Fund

Mr. Bruce A. Whiteford, Managing Director of the Adviser and Portfolio Manager of the Municipal Bond Fund, is primarily responsible for the day-to-day investment management of the 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 BS in Finance.

DISTRIBUTION AND SHAREHOLDER SERVICING OF FUND SHARES

The Funds have entered into an Underwriting Agreement with the Distributor. Pursuant to the Underwriting Agreement, the Distributor provides for the sale and distribution of Fund shares.

The Funds have adopted a shareholder servicing plan. Under this plan, the Funds have entered into a shareholder servicing agreement with Bessemer, pursuant to which Bessemer serves as a shareholder servicing agent and provides certain shareholder support services (“Shareholder Support Services”) to each Fund. Such Shareholder Support Services include, but are not limited to, providing necessary personnel and facilities to establish and maintain shareholder accounts and records, assisting in processing purchase and redemption requests, and transmitting various communications to shareholders. For these services, each Fund pays a maximum annual fee of up to 0.15% of its average daily net assets. Bessemer may engage other parties, including broker/dealers, banks, trust companies, investment advisers, and other financial institutions and intermediaries (each a “Shareholder Sub-Servicing Agent”) to provide Shareholder Support Services. Bessemer is solely responsible for compensating each such Shareholder Sub-Servicing Agent from the fees it receives from each Fund.

Because these fees are paid out of the Fund’s assets on an on-going basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.

Bessemer may make payments from time to time from its own resources for certain enumerated purposes.

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 distributions.

Information for the fiscal year ended October 31, 2006 has been audited by Ernst & Young LLP, whose report, along with the Funds’ audited financial statements, is included in the Annual Report which is available upon request free of charge. Information for each of the indicated periods through October 31, 2005 was audited by the Funds’ former independent registered public accounting firm.

OLD WESTBURY FUNDS, INC.

FINANCIAL HIGHLIGHTS

(For a share outstanding throughout each period)


	Large Cap Equity Fund
	For the Year Ended October 31,
	2006			2005			2004			2003			2002
Net asset value, beginning of period	$	12.20		$	11.51		$	10.98		$	9.85		$	10.88

Investment Operations:
Net investment income/(loss)		0.06			0.07			0.00	^(a)		(0.02	)		(0.01	)
Net realized and unrealized gains/(losses) on investments		1.62			0.67			0.53			1.15			(1.02	)

Total from investment operations		1.68			0.74			0.53			1.13			(1.03	)

Distributions:
Net investment income		(0.05	)		(0.05	)		—			—			—

Total distributions		(0.05	)		(0.05	)		—			—			—

Net asset value, end of period	$	13.83		$	12.20		$	11.51		$	10.98		$	9.85

Total return		13.8	%		6.4	%		4.9	%		11.5	%		(9.5	%)
Annualized Ratios/Supplementary Data:
Net assets at end of year (000)	$	396,493		$	306,520		$	290,045		$	228,994		$	150,729
Ratio of expenses to average net assets		1.06	%		1.14	%		1.21	%		1.25	%		1.25	%
Ratio of net investment income/(loss) to average net assets		0.47	%		0.61	%		(0.01	%)		(0.20	%)		(0.08	%)
Ratio of expenses to average net assets*		—	^(b)		—	^(b)		—	^(b)		1.27	%		1.26	%
Ratio of net investment loss to average net assets*		—	^(b)		—	^(b)		—	^(b)		(0.22	%)		(0.09	%)
Portfolio turnover rate		56	%		47	%		40	%		88	%		84	%

*	During the year, certain fees were voluntarily reduced. If such voluntary fee reductions and expense reimbursements had not occurred, the ratio would have been as indicated.

^(a)	Less than $0.01 per share.

^(b)	There were no voluntary fee reductions during the year.

OLD WESTBURY FUNDS, INC.

FINANCIAL HIGHLIGHTS

(For a share outstanding throughout each period)


	Mid Cap Equity Fund
	For the Year Ended October 31,
	2006			2005			2004			2003			2002
Net asset value, beginning of period	$	16.11		$	14.82		$	14.06		$	12.58		$	13.61

Investment Operations:
Net investment income/(loss)		—			(0.03	)		(0.03	)		0.00	^(a)		0.00	^(a)
Net realized and unrealized gains/(losses) on investments and written options		3.31			1.32			0.79			1.49			(0.91	)

Total from investment operations		3.31			1.29			0.76			1.49			(0.91	)

Distributions:
Net investment income		—			—			—			(0.01	)		(0.12	)
Net realized gains		(1.69	)		—			—			—			—

Total distributions		(1.69	)		—			—			(0.01	)		(0.12	)

Net asset value, end of period	$	17.73		$	16.11		$	14.82		$	14.06		$	12.58

Total return		21.9	%		8.6	%		5.5	%		11.8	%		(6.8	%)
Annualized Ratios/Supplementary Data:
Net assets at end of year (000)	$	914,525		$	774,551		$	810,668		$	673,753		$	501,467
Ratio of expenses to average net assets		1.03	%		1.11	%		1.16	%		1.19	%		1.18	%
Ratio of net investment income/(loss) to average net assets		(0.07	%)		(0.18	%)		(0.24	%)		(0.01	%)		0.07	%
Portfolio turnover rate		70	%		36	%		53	%		3	%		13	%

^(a)	Less than $0.01 per share.

OLD WESTBURY FUNDS, INC.

FINANCIAL HIGHLIGHTS

(For a share outstanding throughout each period)


	International Fund
	For the Year Ended October 31,
	2006			2005			2004			2003			2002
Net asset value, beginning of period	$	11.23		$	9.68		$	8.59		$	6.90		$	8.11

Investment Operations:
Net investment income		0.14			0.10			0.09			0.07			0.06
Net realized and unrealized gains/(losses) on investments and foreign currency translations		2.30			1.57			1.09			1.77			(1.27	)

Total from investment operations		2.44			1.67			1.18			1.84			(1.21	)

Distributions:
Net investment income		(0.08	)		(0.12	)		(0.09	)		(0.15	)		(0.00	) ^(a)
Net realized gains		—			—			—			—			—

Total distributions		(0.08	)		(0.12	)		(0.09	)		(0.15	)		(0.00	) ^(a)

Net asset value, end of period	$	13.59		$	11.23		$	9.68		$	8.59		$	6.90

Total return		21.9	%		17.3	%		13.8	%		27.2	%		(14.9	%)
Annualized Ratios/Supplementary Data:
Net assets at end of year (000)	$	1,915,043		$	1,518,585		$	794,107		$	518,690		$	299,917
Ratio of expenses to average net assets		1.14	%		1.25	%		1.31	%		1.36	%		1.36	%
Ratio of net investment income to average net assets		1.17	%		1.10	%		1.01	%		1.08	%		0.89	%
Portfolio turnover rate		50	%		49	%		51	%		143	%		160	%

^(a)	Less than $0.01 per share.

OLD WESTBURY FUNDS, INC.

FINANCIAL HIGHLIGHTS

(For a share outstanding throughout each period)


	Global Small Cap Fund
	For the Year Ended October 31, 2006			For the Period Ended October 31, 2005 ^(a)
Net asset value, beginning of period	$	10.69		$	10.00

Investment Operations:
Net investment income		0.07			0.03
Net realized and unrealized gains/(losses) on investments		2.21			0.66

Total from investment operations		2.28			0.69

Distributions:
Net investment income		(0.02	)		—
Net realized gains		(0.01	)		—

Total distributions		(0.03	)		—

Net asset value, end of period	$	12.94		$	10.69

Total return		21.4	%		6.9	% ^(b)
Annualized Ratios/Supplementary Data:
Net assets at end of period (000)	$	698,492		$	502,103
Ratio of expenses to average net assets		1.15	%		1.24	% ^(c)
Ratio of net investment income to average net assets		0.60	%		0.52	% ^(c)
Portfolio turnover rate		39	%		8	% ^(b)

^(a)	For the period from April 7, 2005 (commencement of operations) to October 31, 2005.

^(b)	Not Annualized.

^(c)	Annualized.

OLD WESTBURY FUNDS, INC.

FINANCIAL HIGHLIGHTS

(For a share outstanding throughout each period)


	Real Return Fund
	For the Year Ended October 31, 2006			For the Period Ended October 31, 2005 ^(a)
Net asset value, beginning of period	$	10.41		$	10.00

Investment Operations:
Net investment income		0.17			0.09
Net realized and unrealized gains/(losses) on investments		1.31			0.32

Total from investment operations		1.48			0.41

Distributions:
Net investment income		(0.15	)		—
Net realized gains		(0.06	)		—

Total distributions		(0.21	)		—

Net asset value, end of period	$	11.68		$	10.41

Total return		14.4	%		4.1	% ^(b)
Annualized Ratios/Supplementary Data:
Net assets at end of period (000)	$	1,264,707		$	839,573
Ratio of expenses to average net assets		1.10	%		1.16	% ^(c)
Ratio of net investment income to average net assets		1.81	%		1.97	% ^(c)
Portfolio turnover rate		56	%		5	% ^(b)

^(a)	For the period from April 29, 2005 (commencement of operations) to October 31, 2005.

^(b)	Not Annualized.

^(c)	Annualized.

OLD WESTBURY FUNDS, INC.

FINANCIAL HIGHLIGHTS

(For a share outstanding throughout each period)


	Fixed Income Fund
	For the Year Ended October 31,
	2006			2005			2004			2003			2002
Net asset value, beginning of period	$	10.78		$	10.98		$	11.12		$	11.14		$	10.94

Investment Operations:
Net investment income**		0.44			0.33			0.31			0.30			0.39
Net realized and unrealized gains/(losses) on investments**		(0.02	)		(0.17	)		(0.01	)		0.09			0.22

Total from investment operations		0.42			0.16			0.30			0.39			0.61

Distributions:
Net investment income		(0.38	)		(0.36	)		(0.37	)		(0.41	)		(0.41	)
Net realized gains		(0.03	)		(0.00	) ^(a)		(0.07	)		—			—

Total distributions		(0.41	)		(0.36	)		(0.44	)		(0.41	)		(0.41	)

Net asset value, end of period	$	10.79		$	10.78		$	10.98		$	11.12		$	11.14

Total return		4.0	%		1.6	%		2.8	%		3.5	%		5.9	%
Annualized Ratios/Supplementary Data:
Net assets at end of year (000)	$	98,267		$	78,440		$	78,281		$	87,054		$	54,212
Ratio of expenses to average net assets		0.87	%		0.99	%		1.05	%		1.05	%		1.05	%
Ratio of net investment income to average net assets**		4.07	%		3.05	%		2.68	%		3.04	%		4.09	%
Ratio of expenses to average net assets*		—	^(b)		1.00	%		1.10	%		1.11	%		1.13	%
Ratio of net investment income to average net assets*		—	^(b)		3.04	%		2.63	%		2.98	%		4.01	%
Portfolio turnover rate		72	%		17	%		8	%		54	%		25	%

*	During the year, certain fees were voluntarily reduced. If such voluntary fee reductions and expense reimbursements had not occurred, the ratio would have been as indicated.

As required, effective November 1, 2001, the Fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium on fixed income securities. The effect of this change for the year ended October 31, 2002 was to decrease net investment income per share by $0.03, increase net realized and unrealized gains and losses per share by $0.03 and decrease the ratio of net investment income to average net assets from 4.09% to 3.77%. Per share, ratios and supplemental data for periods prior to October 31, 2002 have not been restated to reflect this change in presentation.

^(a)	Less than $0.01 per share.

^(b)	There were no voluntary fee reductions during the year.

OLD WESTBURY FUNDS, INC.

FINANCIAL HIGHLIGHTS

(For a share outstanding throughout each period)


	Municipal Bond Fund
	For the Year Ended October 31,
	2006			2005			2004			2003			2002
Net asset value, beginning of period	$	11.20		$	11.47		$	11.42		$	11.37		$	11.16

Investment Operations:
Net investment income		0.33			0.29			0.29			0.32	^(a)		0.34
Net realized and unrealized gains/(losses) on investments		0.14			(0.21	)		0.22			0.19			0.32

Total from investment operations		0.47			0.08			0.51			0.51			0.66

Distributions:
Net investment income		(0.30	)		(0.28	)		(0.29	)		(0.33	)		(0.32	)
Net realized gains		(0.10	)		(0.07	)		(0.17	)		(0.13	)		(0.13	)

Total distributions		(0.40	)		(0.35	)		(0.46	)		(0.46	)		(0.45	)

Net asset value, end of period	$	11.27		$	11.20		$	11.47		$	11.42		$	11.37

Total return		4.3	%		0.7	%		4.6	%		4.6	%		6.2	%
Annualized Ratios/Supplementary Data:
Net assets at end of year (000)	$	116,442		$	98,652		$	88,523		$	81,675		$	62,258
Ratio of expenses to average net assets		0.86	%		0.98	%		1.05	%		1.05	%		1.05	%
Ratio of net investment income to average net assets		3.05	%		2.63	%		2.57	%		2.81	%		3.30	%
Ratio of expenses to average net assets*		—	^(b)		0.99	%		1.07	%		1.08	%		1.09	%
Ratio of net investment income to average net assets*		—	^(b)		2.62	%		2.55	%		2.78	%		3.26	%
Portfolio turnover rate		52	%		56	%		45	%		65	%		71	%

*	During the year, certain fees were voluntarily reduced. If such voluntary fee reductions and expense reimbursements had not occurred, the ratio would have been as indicated.

^(a)	Calculated using average shares outstanding.

^(b)	There were no voluntary fee reductions during the year.

OLD WESTBURY FUNDS, INC.

NOTICE OF PRIVACY POLICY & PRACTICES

Old Westbury Funds, Inc. recognizes and respects the privacy expectations of our customers. We provide this notice to you so that you will know what kinds of information we collect about our customers and the circumstances in which that information may be disclosed to third parties who are not affiliated with Old Westbury Funds, Inc.

Collection of Customer Information

We collect nonpublic personal information about our customers from the following sources:

•

Account Applications and other forms , which may include a customer’s name, address, social security number, and information about a customer’s investment goals and risk tolerance;

•

Account History , including information about the transactions and balances in a customer’s accounts; and

•

Correspondence , written, telephonic or electronic between a customer and Old Westbury Funds, Inc. or service providers to Old Westbury Funds, Inc.

Disclosure of Customer Information

We may disclose all of the information described above to certain third parties who are not affiliated with Old Westbury Funds, Inc. to process or service a transaction at your request, as permitted by law - for example, with companies who maintain or service customer accounts for Old Westbury Funds, Inc.

Security of Customer Information

We require service providers to the Old Westbury Funds, Inc.:

•

to maintain policies and procedures designed to assure only appropriate access to, and use of information about customers of the Old Westbury Funds, Inc.; and

•

to maintain physical, electronic and procedural safeguards that comply with federal standards to guard nonpublic personal information of customers of the Old Westbury Funds, Inc.

We will adhere to the policies and practices described in this notice regardless of whether you are a current or former customer of Old Westbury Funds, Inc.

A Statement of Additional Information (SAI) dated March 1, 2007 is incorporated by reference into this Prospectus. Additional information about each Fund’s investments is contained in the Funds’ SAI and Annual and Semi-Annual Reports to shareholders as they become available. The Annual Report discusses market conditions and investment strategies that significantly affected each Fund’s performance during its last fiscal year. To obtain the SAI, Annual Report, Semi-Annual Report and other information without charge, and make inquiries, call your investment professional or the Fund at 1-800-607-2200. The Funds do not make its SAI or Annual and Semi-Annual Reports available through the internet because the Funds do not have a web site.

Information from the SEC: You can obtain copies of Fund documents from the SEC as follows:

In person: Public Reference Room in Washington, D.C. (For information about their operation, call 1-202-551-5850.)

By mail: Securities and Exchange Commission

Public Reference Section

Washington, D.C. 20549-0102

(The SEC charges a fee to copy any documents.)

On the EDGAR database via the Internet: http://www.sec.gov

By electronic request: publicinfo@sec.gov (The SEC charges a fee to copy any documents.)

Cusip 680414307

Cusip 680414208

Cusip 680414109

Cusip 680414406

Cusip 680414505

Cusip 680414604

Cusip 680414703

Investment Company Act file no. 811-07912

A21-07PROS Old Westbury Funds, Inc. 5890 3/07

OLD WESTBURY FUNDS, INC.

Statement of Additional Information

March 1, 2007

Old Westbury Large Cap Equity Fund (“Large Cap Equity Fund”)

Old Westbury Mid Cap Equity Fund (“Mid Cap Equity Fund”)

Old Westbury International Fund (“International Fund”)

Old Westbury Global Small Cap Fund (“Global Small Cap Fund”)

Old Westbury Real Return Fund (“Real Return Fund”)

Old Westbury Fixed Income Fund (“Fixed Income Fund”)

Old Westbury Municipal Bond Fund (“Municipal Bond Fund”)

(each a “Fund” and collectively, the “Funds”)

This Statement of Additional Information (SAI) is not a Prospectus and should be read in conjunction with the Funds’ Prospectus dated March 1, 2007. This SAI incorporates by reference the Funds’ Annual Report dated October 31, 2006 and Semi-Annual Report dated April 30, 2006. You may obtain the Prospectus, Annual Report or Semi-Annual Report without charge by calling 1-800-607-2200.

Bessemer Investment Management LLC – the

Funds’ Investment Adviser (the “Adviser”)


CONTENTS
How Are The Funds Organized?		2
Securities In Which The Funds Invest		2
Securities Descriptions, Techniques And Risks		3
Investment Restrictions		20
Who Manages And Provides Services To The Funds?		22
How Do The Funds Measure Performance?		41
Account Information And Pricing Of Shares		43
How Are The Funds Taxed?		44
Financial Information		55
Appendix A - Ratings		56
Appendix B - Proxy Voting Policy		60

HOW ARE THE FUNDS ORGANIZED?

Old Westbury Funds, Inc. (the “Corporation”) is an open-end, management investment company that was established under the laws of the State of Maryland on August 26, 1993. Old Westbury Mid Cap Equity Fund changed its name from Old Westbury Capital Opportunity Fund on July 27, 2004. Old Westbury Large Cap Equity Fund changed its name from Old Westbury Core Equities Fund on February 20, 2004.

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

The Funds invest in a variety of securities and employ a number of investment techniques that involve certain risks. The Prospectus highlights the Funds’ principal investment strategies, investment techniques and risks. This SAI contains additional information regarding both the principal and non-principal investment strategies of the Funds. The following table sets forth additional information concerning permissible investments and techniques for each of the Funds. A “Y” in the table indicates that the Fund may purchase or engage in the corresponding instrument or technique. A “N” indicates the Fund (1) is prohibited by investment restriction or policy from purchasing the instrument or engaging in the technique or (2) does not intend to purchase or engage in the corresponding instrument or technique although the Fund is not prohibited from doing so. Following the table is further information describing the investments and techniques listed in the table, as well as others.

Securities

Large

Cap

Equity

Fund

Mid

Cap

Equity

Fund

Inter-

national

Fund

Global

Small

Cap

Fund

Real

Return

Fund

Fixed

Income

Fund

Municipal

Bond

Fund

American Depositary Receipts

Asset-Backed Securities

Bank Obligations

Borrowing

Collectibles

Commercial Paper

Common Stock of Domestic Companies

Common Stock of Foreign Companies

Convertible Securities

Corporate Reorganizations

Debt Obligations

Derivative Contracts and Securities

Emerging Growth Companies

Emerging Market Securities

European Depositary Receipts

Fixed Rate Debt Obligations

Floating Rate Debt Obligations

Foreign Currency Transactions

Foreign Securities

Futures and Options Transactions

Global Depositary Receipts

High Yield Securities

Securities

Large
Cap
Equity
Fund

Mid Cap
Equity
Fund

Inter-
national
Fund

Global
Small
Cap
Fund

Real
Return
Fund

Fixed
Income
Fund

Municipal
Bond
Fund

Hybrid or Linked Instruments

Illiquid and Restricted Securities

Inflation Protected Securities

Inverse Floaters

Lending of Portfolio Securities

Money Market Instruments

Mortgage-Backed Securities

Municipal Securities

Participation Interests

Precious Metals

Preferred Stocks

Real Estate Investment Trusts

Royalty Trusts

Repurchase Agreements

Small and Mid-Capitalization Stocks

Shares of Other Investment Companies

Short-Sales

Swap Agreements

TRAKRS

U.S. Government Securities

Temporary Investments

Variable Rate Demand Notes

Warrants

When-Issued and Delayed Delivery Transactions

Zero Coupon Bonds

SECURITIES DESCRIPTIONS, TECHNIQUES AND RISKS

The following describes the types of securities the Funds may purchase, as well as certain investment techniques the Funds may use that are in addition to those described in the Prospectus. The following also describes certain additional risks associated with such securities and investment techniques.

ASSET-BACKED SECURITIES. Certain Funds may invest in 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 at the time of investment 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.

COLLECTIBLES . The Real Return Fund may invest in Collectibles, which are rare objects collected by investors. They can include stamps, coins, books, oriental rugs, antiques, sports and other memorabilia, photographs, art and wine. Collectibles are generally expected to rise in value during inflationary periods when investors are trying to move to assets viewed as an inflation hedge. Generally, collectibles can be expected to drop in value during periods of low inflation. Collectible trading for profit is subject to certain risks and other considerations, including that collectibles: (i) have limited buying and selling markets; (ii) are often bought and sold at auction and subject to buyer and/or seller premiums; (iii) experience periods of high and low demand; (iv) must be insured, physically held and properly maintained; (v) may need to have their authenticity and provenance verified from time to time; and (vi) may not have accurate market valuations available. The Real Return Fund does not currently intend to invest more than 5% of its total assets in Collectibles.

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 investing 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 diversified 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 a Fund 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 federal income tax qualification tests of the Internal Revenue Code of 1986, as amended (the “Code”), imposed on the Funds. Each Fund does not intend to purchase these securities in excess of 5% of that Fund’s total assets.

CREDIT QUALITY. Generally, 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. Certain Funds may invest in securities rated below investment grade (commonly known as “junk bonds”). (See “High Yield Securities” herein for more information.)

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.

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 United States 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. Certain Funds may invest in 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, 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. Therefore, Funds that invest in emerging growth companies may be subject to greater fluctuation in value than funds investing entirely in proven growth stocks.

EMERGING MARKET SECURITIES. Certain of the Funds may invest in equity securities of companies in “emerging markets.” The Adviser may invest in those emerging markets that have a relatively low gross national product per capita, compared to the world’s major economies, and which exhibit potential for rapid economic growth. The Adviser believes that investment in equity securities of emerging market issuers offers significant potential for long-term capital appreciation.

Equity securities of emerging market issuers may include common stock, preferred stocks (including convertible preferred stocks) and warrants, bonds, notes and debentures convertible into common or preferred stock, equity interests in foreign investment funds or trusts and real estate investment trust securities. The Funds may invest in American Depositary Receipts (“ADRs”), Canadian Depositary Receipts (“CDRs”), European Depositary Receipts (“EDRs”), Global Depositary Receipts (“GDRs”) and International Depositary Receipts (“IDRs”) of such issuers.

Emerging market countries include, but are not limited to: Argentina, Brazil, Chile, China, the Czech Republic, Columbia, Indonesia, India, Malaysia, Mexico, the Philippines, Poland, Peru, Russia, Singapore, South Africa, Thailand, Taiwan and Turkey. A company is considered in a country, market or region if it conducts its principal business activities there, namely, if it derives a significant portion (at least 50%) of its revenues or profits from goods produced or sold, investments made, or services performed therein or has at least 50% of its assets situated in such country, market or region.

There are special risks involved in investing in emerging-market countries. Many investments in emerging markets can be considered speculative, and their prices can be much more volatile than in the more developed nations of the world. This difference reflects the greater uncertainties of investing in less established markets and economies. The financial markets of emerging markets countries are generally less well capitalized and thus securities of issuers based in such countries may be less liquid. Most are heavily dependent on international trade, and some are especially vulnerable to recessions in other countries. Many of these countries are also sensitive to world commodity prices. Some countries may still have obsolete financial systems, economic problems or archaic legal systems. The currencies of certain emerging market countries, and therefore the value of securities denominated in such currencies, may be more volatile than currencies of developed countries. In addition, many of these nations are experiencing political and social uncertainties.

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. A 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.

PUT AND CALL OPTIONS ON FOREIGN CURRENCIES. Purchasing and writing put and call options on foreign currencies are used to protect a 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. A 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 a Fund’s position, such 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. A 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. Certain Funds may invest in foreign securities. 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. Amounts realized on foreign securities may be subject to high levels of foreign withholding and other taxes which may decrease the net return on foreign investments as compared to amounts realized by the Funds by domestic securities.

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 of the International Fund are made primarily in those regions where, in the opinion of the Funds’ Adviser and sub-adviser, Bessemer Group U.K. (“BGUK”), 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 or BGUK 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 SECURITIES. Canadian securities are sensitive to conditions within Canada, but also tend to follow the U.S. market. Canada’s economy relies strongly on the production and processing of natural resources. In addition, the value in U.S. dollars of a Fund’s assets denominated in Canadian currency may be affected by changes in exchange rates and regulations.

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 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,” “Futures and Options Transactions” and “Linked or Hybrid Instruments” herein for more information.)

FOREIGN CURRENCY TRANSACTIONS. Certain Funds may engage in foreign currency transactions, which 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 a 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 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.

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, buy put and call options on portfolio securities and securities indices to hedge its portfolio or 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. A 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: (i) to hedge against anticipated changes in the value of its portfolio without necessarily buying or selling the securities; (ii) as a broad based investment in the stock market; or (iii) for any other reason deemed appropriate by the Adviser in achieving a Fund’s investment objective. A Fund’s use of futures contracts for non-hedging purposes is subject to certain limits described below. 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. Pursuant to regulations and/or published positions of the Securities Exchange Commission (the “SEC”), a Fund may be required to segregate cash or liquid assets in connection with its futures transactions in an amount generally equal to the entire value of the underlying security.

A Fund may purchase and sell stock index futures contracts: (i) to hedge against anticipated price changes with respect to any stock index traded on a recognized stock exchange or board of trade; (ii) as a broad based investment in the stock market; or (iii) for any other reason deemed appropriate by the Adviser in achieving the Fund’s investment objective. 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.

The Corporation has filed a notice of eligibility for exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act (the “CEA”) in accordance with Rule 4.5 of the CEA, and therefore, the Corporation is not subject to registration or regulation as a commodity pool operator under the CEA.

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, it will maintain, at a minimum, an amount of cash and/or cash equivalents, equal to the underlying commodity value of the futures contracts to “collateralize” the position and insure that the futures contracts are covered. The Fund is also required to deposit and maintain margin when it writes call options on futures contracts.

LIMITS ON NON-HEDGING USE OF FUTURES AND OPTIONS. A Fund will limit its use of futures contracts and options for non-hedging purposes. 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 gains 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%. In the alternative, a Fund will not enter into futures transactions for non-hedging purposes if the aggregate notional values exceed the liquidation value of its portfolio.

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 a 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.

HYBRID OR LINKED INSTRUMENTS. The Real Return Fund may invest in linked or hybrid instruments. They typically combine a traditional stock, bond, or commodity with an option or forward contract. Generally, the principal amount, amount payable upon maturity or redemption, or interest rate of a hybrid instrument is tied to the price of some commodity, currency or securities index or another interest rate or some other economic factor (a “benchmark”). The interest rate or the principal amount payable at maturity of a hybrid instrument may be increased or decreased, depending on changes in the value of the benchmark.

These instruments can be used as a means of pursuing a variety of investment goals, including currency hedging, duration management, and increased total return. Hybrid instruments may not bear interest or pay dividends. The value of a hybrid instrument or its interest rate may be a multiple of a benchmark and, as a result, may be leveraged and move more steeply and rapidly than the benchmark. These benchmarks may be sensitive to economic and political events, such as commodity shortages and currency devaluations, which cannot be readily foreseen by the purchaser of a linked hybrid instrument. Under certain conditions, the redemption value of a hybrid instrument could be zero. Thus, an investment in a linked or hybrid instrument may entail significant market risks that are not associated with a similar investment in a traditional, U.S. dollar-denomination bond that has a fixed principal amount and pays a fixed rate or floating rate of interest. The purchase of linked or hybrid instruments also exposes the Fund to the credit risk of the issuer of the linked or hybrid instrument. These risks may cause significant fluctuations in the net asset value of the Fund.

ROYALTY TRUSTS. The Real Return Fund may invest in royalty trusts. Royalty trusts are structured similarly to REITs. A royalty trust generally acquires an interest in natural resource companies or chemical companies and distributes the income it receives to the investors of the royalty trust. A part or all of the income distributed to investors may be tax deferred.

TRAKRS. The Real Return Fund may invest in Total Return Asset Contracts, also referred to as TRAKRS. TRAKRS are nontraditional futures contracts designed to enable investors to track a broad-based index of stocks, bonds, commodities, currencies or other asset classes. Unlike traditional investments, TRAKRS do not require the Real Return Fund to purchase and sell stocks, bonds or other assets which causes the Real Return Fund to incur costs and subject investors to potential adverse tax consequences. TRAKRS are futures contracts that are designed to track the performance of a particular index fund and do not make taxable distributions to investors. TRAKRS differ from future contracts in that an investor would pay 100% of the TRAKRS market value at the time of purchase and would not be subject to margin calls throughout the life of the specific investment.

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, it will maintain, at a minimum, an amount of cash and/or cash equivalents, equal to the underlying commodity value of the futures contracts to “collateralize” the position and insure that the futures contracts are covered. The Fund is also required to deposit and maintain margin when it writes call options on futures contracts.

HIGH YIELD SECURITIES. Certain Funds may invest in 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. The Funds that invest in high yield securities 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).

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 net assets.

INVERSE FLOATERS. Certain Funds may invest in 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.

Borrowers of loaned securities must increase collateral whenever the market value of the loaned securities rises above the level of such collateral. 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. In addition, if a Fund is unable to get the securities back on a timely basis, 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. The International Fund does not currently intend to lend portfolio securities in excess of 5% of its total assets. In addition, a Fund may pay only reasonable custodian fees approved by the Board of Directors of the Corporation in connection with the loan.

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. Certain Funds 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 pay downs. The interest portion of these payments is distributed by the Funds as income, and the capital portion is reinvested.

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

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

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

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. A 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. A Fund may purchase municipal securities covered by insurance which guarantees the timely payment of principal at maturity and interest (but not the value of the bonds before they mature) 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 noncancelable 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. Certain Funds 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.

PRECIOUS METALS . The Real Return Fund may invest in precious metals. Precious metals, such as gold, silver, platinum, and palladium, at times have been subject to substantial price fluctuations over short periods of time and may be affected by unpredictable monetary and political policies such as currency devaluations or revaluations, economic and social conditions within a country, trade imbalances, or trade or currency restrictions between countries. Investments in precious metals can present concerns such as delivery, storage and maintenance, possible illiquidity, and the unavailability of accurate market valuations. Although precious metals can be purchased in any form, including bullion and coins, the Real Return Fund intends to purchase only those forms of precious metals that are readily marketable and that can be stored in accordance with custody regulations applicable to mutual funds. The Real Return Fund may incur higher custody and transactions costs for precious metals than for securities. Also, precious metals investments do not pay income.

PREFERRED STOCKS. Certain Funds may invest in 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. A Fund may treat such redeemable preferred stock as a fixed income security.

REITs. Certain Funds may invest in REITs. Real estate investment trusts, or REITs, are pooled investment vehicles that own, and usually operate, income-producing real estate. Some REITs also finance real estate. If a REIT meets certain requirements under the Code, including distributing to shareholders substantially all of its taxable income (other than net capital gains), then it is not taxed on the income distributed to shareholders for federal income tax purposes. Therefore, REITs tend to pay higher dividends than other issuers.

REITs can be divided into three basic types: Equity REITs, Mortgage REITs and Hybrid REITs. Equity REITs invest the majority of their assets directly in real property. They derive their income primarily from rents received and any profits on the sale of their properties. Mortgage REITs invest the majority of their assets in real estate mortgages and derive most of their income from mortgage interest payments. As their name suggests, Hybrid REITs combine characteristics of both Equity REITs and Mortgage REITs.

An investment in a REIT is subject to the risks that impact the value of the underlying assets of the REIT. These risks include loss to casualty or condemnation, and changes in supply and demand, interest rates, zoning laws, regulatory limitations on rents, property taxes and operating expenses. Other factors that may adversely affect REITs include poor performance by management of the REIT, changes to the tax laws, or failure by the REIT to qualify for preferential treatment under the Code. REITs are also subject to default by borrowers and self-liquidation, and are heavily dependent on cash flow. Some REITs lack diversification because they invest in a limited number of properties, a narrow geographic area, or a single type of property. Mortgage REITs may be impacted by the quality of the credit extended, inflation, and changes in market interest rates.

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. A Fund will not enter into repurchase agreements of a duration of more than seven days if, taken together with other illiquid securities, more than 15% of the 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, subject to certain limitations set forth in the 1940 Act, as an efficient means of carrying out their investment policies. For instance, Rule 12d1-1 under the 1940 Act permits a Fund, subject to certain conditions, to invest an unlimited amount of its uninvested cash in a money market fund so long as said investment is consistent with the Fund’s investment objective and 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. Certain Funds may invest in small and mid capitalization markets. Small capitalization companies (“Small-Cap Companies”) generally are those with market capitalizations of less than $4 billion at the time of purchase. 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, markets or the economy generally.

The Mid Cap Equity Fund invests in companies whose market capitalizations at the time of the initial investment are between $200 million and $8 billion. The risks associated with investments in mid capitalization companies are similar to those associated with Small-Cap Companies as discussed above.

SHORT SALES. Certain Funds 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.

SWAP AGREEMENTS. The Real Return Fund may enter into swap agreements for the purpose of attempting to obtain a particular desired return at a lower cost to the Fund than if the Fund had invested directly in a security that yielded or produced that desired return. These instruments also may be used for tax and/or cash management purposes. Swap agreements are two-party contracts entered into primarily by institutional investors for periods ranging from a few weeks to more than one year. In a standard “swap” transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or “swapped” between the parties are calculated with respect to a “notional amount” (i.e., the return on or increase in value of a particular dollar amount invested in a particular

security, or at a particular interest rate, in a particular foreign currency), or in a “basket” of securities representing a particular index. The “notional amount” of the swap agreement is only a fictitious basis on which to calculate the obligations which the parties to a swap agreement have agreed to exchange. The Fund’s obligations (or rights) under a swap agreement will generally be equal only to the net amount to be paid or received under the agreement based on the relative values of the positions held by each party to the agreement. The Fund’s obligations under a swap agreement will be accrued daily (offset against any amounts owing to the Fund) and any accrued but unpaid net amounts owed to a swap counterparty will be covered by the maintenance of a segregated account consisting of cash, U.S government securities, or high grade debt obligations, to limit any potential leveraging of the Fund’s portfolio.

Whether the Fund’s use of swap agreements will be successful in furthering its investment objective will depend on the ability of the Adviser correctly to predict whether certain types of investments are likely to produce greater returns than other investments. Because they are two-party contracts and may have terms of greater than seven days, swap agreements may be considered to be illiquid. Moreover, the Fund bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty. The Adviser will cause the Fund to enter into swap agreements only with counterparties that would be eligible for consideration as repurchase agreement counterparties under the Fund’s repurchase agreement guidelines. Certain positions adopted by the Internal Revenue Service may limit the Fund’s ability to use swap agreements in a desired tax strategy. The swap market is a relatively new market and is largely unregulated. It is possible that developments in the swap market and the laws relating to swaps, including potential government regulation, could adversely effect the Fund’s ability to terminate existing swap agreements, to realize amounts to be received under such agreements, or to enter into swap agreements, or could have adverse tax consequences.

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

•

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

•

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

•

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

•

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:

•

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

•

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

•

the credit of the agency or instrumentality.

TEMPORARY INVESTMENTS. Each Fund may hold cash or money market instruments. It may invest in these securities without limit, when the Adviser: (i) believes that the market conditions are not favorable for profitable investing; (ii) is unable to locate favorable investment opportunities; or (iii) determines that a temporary defensive position is advisable or necessary in order to meet anticipated redemption requests, or for other reasons.

When a Fund engages in such strategies, it may not achieve its investment objective.

Money market instruments are high-quality, short-term debt obligations, which include, but are not limited to: (i) U.S. Government obligations (i.e., a wide range of debt securities that include U.S. Treasury obligations, securities issued or guaranteed by various agencies of the U.S. government or by various instrumentalities which have been established or sponsored by the U.S. government); (ii) certain corporate debt securities (e.g., commercial paper and master notes (which are generally understood to be unsecured obligations of a firm, often private and/or unrated,

privately negotiated by borrower and lender)); (iii) bank obligations (e.g., certificates of deposit, time deposits and bankers’ acceptances); (iv), pass-through certificates or participation interests; (v) short-term taxable municipal securities; (vi) repurchase agreements; and (vii) money market funds (i.e., funds that comply with Rule 2a-7 of the 1940 Act).

Money market instruments are generally regarded to be of high quality. However, except for certain U.S. Government obligations, they are not backed or insured by the U.S. Government, its agencies or instrumentalities. Accordingly, only the creditworthiness of an issuer, or guarantees of that issuer, support such instruments.

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. Certain Funds may invest in 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 Funds 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. Certain Funds 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 unless approved by a majority of the outstanding shares of the Corporation. The term “majority of outstanding shares” as defined by the 1940 Act means the vote of the lesser of (i) 67% or more of the shares of the Corporation present at a meeting, if the holders of more than 50% of the outstanding shares of the Corporation are present or represented by proxy, or (ii) more than 50% of the outstanding shares of the Corporation. 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 the Large Cap Equity Fund, Mid Cap Equity Fund, Fixed Income Fund, Global Small Cap Fund, Real Return 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 Securities Act of 1933, as amended, in disposing of a portfolio security.

5. With respect to the Large Cap Equity Fund, Mid Cap Equity Fund, Fixed Income Fund, International Fund and Municipal Bond Fund, 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. With respect to the Large Cap Equity Fund, Mid Cap Equity Fund, Fixed Income Fund, International Fund and Municipal Bond Fund, purchase or acquire commodities, commodity contracts or futures, except for the 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 the Large Cap Equity Fund, Mid Cap Equity 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 the Large Cap Equity Fund, Mid Cap Equity Fund, International Fund, Global Small Cap Fund, Real Return Fund and Fixed Income Fund, each Fund will not invest 25% or more of the value of its total assets in any particular industry; and with respect to the Municipal Bond Fund, the Fund will not invest 25% or more of the value of its total assets in any one industry or in industrial development bonds or other securities, the interest on which is paid from revenues of similar type projects.

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

10. With respect to 75% of the total assets of a Fund, except for the Real Return Fund, invest more than 5% of the value of the Fund’s total assets in any one issuer; and no Fund may own 10% or more of the outstanding voting securities of any one issuer. With respect to the Real Return Fund, invest more than 25% of the value of the Real Return Fund’s total assets in any one issuer, and with respect to 50% of the Real Return Fund’s total assets, invest more than 5% of the value of the Real Return Fund’s total assets in any one issuer.

11. With respect to the Municipal Bond Fund, invest less than 80% of net assets plus investment borrowings, under normal circumstances, in investments the income from which is exempt from federal income tax, but not necessarily the federal alternative minimum tax.

NON-FUNDAMENTAL LIMITATIONS

The following are additional investment restrictions. The Funds may not:

1. Invest more than 15% of the market value of each Fund’s net assets in illiquid investments including repurchase agreements maturing in more than seven days.

2. Invest in securities of other investment companies, except that (i) not more than 5% of the value of a Fund’s total assets may be invested in the securities of any one investment company, (ii) not more than 10% of the value of its total assets may 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 may 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 except as may be permitted by the SEC. Each Fund will limit its investments in 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?

DIRECTORS AND OFFICERS

The Board of Directors of the Corporation (the “Board” or the “Directors”) is responsible for managing the Corporation’s business affairs and for exercising all the Corporation’s powers except those reserved for the shareholders. In addition, the Board reviews contractual arrangements with companies that provide services to the Corporation and reviews the Funds’ performance.

Information about each Board member and each Officer of the Corporation is provided below and includes the following: name, address, age, present position(s) held with the Corporation, term of office and length of time served, principal occupations for the past five years, number of portfolios overseen by a Director in the Fund Complex, and total compensation received as a Director of the Corporation for its most recent fiscal year. The Corporation is comprised of seven funds.

Officers. The table below sets forth certain information about each of the Funds’ Officers.

OFFICERS OF THE CORPORATION


Name, Address, and Age	Position(s) Held with Funds	Term of Office; Term Served in Office	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex Overseen by Director	Other Directorships ¹ Held by Director
Don J. Andrews 630 Fifth Avenue New York, NY 10111 Age: 48	Vice President & Chief Compliance Officer	Indefinite; 3 Years	Managing Director and Chief Compliance Officer, Bessemer Trust Company, N.A. (Since October 2002); Chief Compliance Officer, Van Kampen Investments, Inc. (1999- 2002).	N/A	N/A

Peter C. Artemiou 630 Fifth Avenue New York, NY 10111 Age: 44	Vice President	Indefinite; 4 Years	Principal and Controller Alternative Assets, The Bessemer Group, Incorporated and Bessemer Trust Company, N.A. (Since 2000).	N/A	N/A

Diane J. Drake 301 Bellevue Parkway Wilmington, DE 19809 Age: 39	Secretary	Indefinite; Since April 2006	Vice President and Associate Counsel, PFPC Inc. (2003-present); Deputy Counsel, Turner Investment Partners (2001-2003).	N/A	N/A


Name, Address, and Age	Position(s) Held with Funds	Term of Office; Term Served in Office	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex Overseen by Director	Other Directorships ¹ Held by Director
Deborah J. Ferris 630 Fifth Avenue New York, NY 10111 Age: 61	AML Compliance Officer, Vice President and Assistant Secretary	Indefinite; 3 years	Principal and Director of Compliance, Bessemer Trust Company N.A. (Since May 2003); Vice President Morgan Stanley (2002-2003);Vice President and Compliance Officer, Van Kampen Investments, Inc. (2000- 2002).	N/A	N/A

Jack Jafolla 760 Moore Road King of Prussia, PA 19406 Age: 36	Assistant Treasurer	Indefinite; Since April 2006	Sr. Manager of Fund Accounting & Administration, PFPC Inc. (2005-present); Manager, Fund Accounting & Administration, PFPC Inc. (1998-2005).	N/A	N/A

Andrew J. McNally 760 Moore Road King of Prussia, PA 19406 Age: 36	Treasurer	Indefinite; Since April 2006	Vice President and Senior Director of Fund Accounting & Administration, PFPC Inc. (2000-present).	N/A	N/A

Linda R. Ridolfi 301 Bellevue Parkway Wilmington, DE 19809 Age: 36	Assistant Secretary	Indefinite; Since May 2006	Assistant Vice President, PFPC Inc. (since 2004); Senior Regulatory Administrator, PFPC Inc. (2002-2004).	N/A	N/A

Marc D. Stern 630 Fifth Avenue New York, NY 10111 Age: 44	President	Indefinite; 1 Year	Senior Managing Director, The Bessemer Group, Incorporated and all bank subsidiaries thereof (2004 to present); Chief Investment Officer, The Bessemer Group, Incorporated and all bank subsidiaries thereof (2004 to present); Head of Wealth Management Group, Bernstein Investment Research & Management (1995 to 2004).	N/A	N/A

Name, Address, and

Age

Position(s)
Held with
Funds

Term of
Office; Term
Served in
Office

Principal

Occupation(s)

During Past 5 Years

Number of
Portfolios in
Fund Complex
Overseen

Director

Other

Directorships ¹

Held by

Director

Steven L. Williamson
630 Fifth Avenue
New York, NY 10111
Age: 53

Chief Legal
Officer

Indefinite;

3 years

Managing Director and
General Counsel, The
Bessemer Group,
Incorporated and
principal bank
subsidiaries (since
2007); Managing
Director and Associate
General Counsel, The
Bessemer Group,
Incorporated and
principal bank
subsidiaries (2000-2006).

N/A

Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

Independent Directors. The following table sets forth certain information about the Funds’ Directors who are not “interested persons” of the Corporation as that term is defined by the 1940 Act (the “Independent Directors.”)


Name, Address, and Age	Position(s) Held with Funds	Term of Office; Term Served in Office	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex Overseen by Director	Other Directorships ¹ Held by Director
Eugene P. Beard 630 Fifth Avenue New York, NY 10111 Age: 71	Director	Indefinite; 8 Years	Chairman and Chief Executive Officer, Westport Asset Fund, Inc.	7	3 ²

Patricia L. Francy 630 Fifth Avenue New York, NY 10111 Age: 61	Director	Indefinite; 2 Years	Retired. Special Advisor for Alumni Relations (2004-2005), Treasurer (1989-2003), Controller (1984- 2003), Columbia University.	7	1 ³

Robert M. Kaufman, Esq. 630 Fifth Avenue New York, NY 10111 Age: 77	Chairman of the Board; Director	Indefinite; 13 Years	Partner, Proskauer Rose LLP, Attorneys at Law.	7	0

Name, Address, and Age

Position(s)
Held with
Funds

Term of Office;
Term Served in
Office

Principal
Occupation(s)

During Past 5 Years

Number
of
Portfolios
in Fund
Complex
Overseen

Director

Other

Directorships ¹

Held by

Director

John R. Whitmore
630 Fifth Avenue
New York, NY 10111
Age: 73

Director

Indefinite;

7 Years

Financial Advisor
(2003 to date);
Consultant to
Bessemer Trust
Company, N.A. (1999
-2002).

5 ⁴

¹	Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Exchange Act or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

²	Mr. Beard serves as Director of BBH Fund, Inc., Catalina Marketing Corporation and Mattel, Inc.

³	Ms. Francy serves as Director of Siebert Financial Corporation.

⁴	Mr. Whitmore serves as Chairman of the Board of Directors of ASB Capital Management, Inc. and Chevy Chase Trust Company. Mr. Whitmore also serves as Director of B.F. Saul Company, Chevy Chase Bank, and Saul Centers, Inc.

The Corporation has an Audit Committee, consisting of Messrs. Beard and Kaufman and Ms. Francy. As set forth in its charter, the primary duties of the Corporation’s Audit Committee are: (1) to recommend to the Board auditors to be retained for the next fiscal year; (2) to meet with the Corporation’s independent auditors as necessary; (3) to consider the effect upon each Fund of any changes in accounting principles or practices proposed by the Adviser or the auditors; (4) to review the fees charged by the auditors for audit and non-audit services; (5) to investigate improprieties or suspected improprieties in Fund operations; (6) to review the findings of SEC examinations and consult with BIM on appropriate responses; and (7) to report its activities to the full Board on a regular basis and to make such recommendations with respect to the above and other matters as the Audit Committee may deem necessary or appropriate. The Audit Committee met six times during the fiscal year ended October 31, 2006.

The Corporation has a Nominating Committee, consisting of Messrs. Beard and Kaufman and Ms. Francy. The Nominating Committee’s primary responsibility is to nominate Director candidates when there is a vacancy on the Board. The Nominating Committee does consider nominees from shareholders. The Corporation also has a Governance Committee consisting of Messrs. Beard and Kaufman and Ms. Francy. The Governance Committee’s primary responsibilities are to oversee the structure, compensation and operation of the Board. Prior to February 8, 2006, the Nominating Committee and Governance Committee were combined as a single Nominating and Governance Committee. There were no meetings of the Nominating Committee or the Governance Committee during the fiscal year ended October 31, 2006.

The table below shows the dollar range of equity securities owned beneficially by each Director in the Funds and in any registered investment company overseen by the Directors within the same family of investment companies for the calendar year ended December 31, 2006 stated as one of the following dollar ranges: None; $1-$10,000; $10,001-$50,000; $50,001-$100,000; or over $100,000.


	Name of Director
	Eugene Beard	Patricia L. Francy	Robert M. Kaufman	John R. Whitmore
Large Cap Equity Fund	None	None	$10,001-$50,000	None

Mid Cap Equity Fund	None	None	$50,001-$100,000	None

International Fund	None	None	Over $100,000	$50,001-$100,000

Global Small Cap Fund	None	None	$50,001-$100,000	$10,001-$50,000

Real Return Fund	None	None	$50,001-$100,000	None

Fixed Income Fund	None	None	$50,001-$100,000	None

Municipal Bond Fund	None	None	$50,001-$100,000	$10,001-$50,000

Aggregate Dollar Range of Securities in Fund Complex	None	None	Over $100,000	Over $100,000

None of the Independent Directors or their immediate family members own securities of the investment adviser, sub-adviser or the distributor of the Funds, or a person directly or indirectly controlling, controlled by, or under common control with the investment adviser, sub-adviser or the distributor of the Funds.

Effective August 21, 2006, Directors of the Corporation receive from the Corporation an annual retainer of $75,000 (plus $20,000 for serving as the Board’s Chairman and $10,000 for serving as the Audit Committee Chairman) and receive for attendance at Board and committee meetings the following:


	Noticed to be In-Person *(whether participating* *by phone or in-person)*		Noticed to be Telephonic
Regular Board Meeting	$	7,500	$	3,750

Special Board Meeting	$	4,000	$	2,000

Audit Committee Meeting	$	4,000	$	2,000

Nominating Committee Meeting	$	4,000	$	2,000

Governance Committee Meeting	$	4,000	$	2,000

The table below sets forth the compensation received by each Director from the Corporation for the fiscal year ended October 31, 2006. Prior to August 21, 2006, Directors of the Corporation received from the Corporation an annual retainer of $75,000 (plus $20,000 for serving as the Board’s Chairman and $10,000 for serving as the Audit Committee Chairman) and a fee of $7,500 for each regular Board meeting of the Corporation attended, a fee of $4,000 for each special Board meeting of the Corporation attended, $4,000 for each Audit Committee meeting attended and $4,000 for each Nominating and Governance Committee meeting attended. The Directors of the

corporation are reimbursed for all out-of-pocket expenses relating to attendance at meetings of the Board of Directors and any Board committee. Officers who are officers or employees of the Adviser and PFPC (as defined above) do not receive compensation from the Corporation.

FISCAL YEAR ENDED OCTOBER 31, 2006


Name of Director	Aggregate Compensation from the Funds	Pension or Retirement Benefits Accrued as a Part of Fund Expenses	Estimated Annual Benefits Upon Retirement	Total Compensation from Fund and Fund Complex (7 Funds) Paid to Directors
Independent Directors
Eugene P. Beard	$184,000	-0-	-0-	$184,000
Patricia L. Francy	$174,000	-0-	-0-	$174,000
Robert M. Kaufman	$194,000	-0-	-0-	$194,000
Interested Director
John R. Whitmore*	$145,000	-0-	-0-	$145,000

*	Subsequent to the fiscal year end, Mr. Whitmore’s status changed from Interested Director to Independent Director.

Control Persons and Principal Holders of Securities. As of January 31, 2007, NAIDOT & Co., acting in various capacities for numerous accounts, was the owner of record of 5% or more of the following Fund’s outstanding shares:


NAIDOT & Co. c/o Bessemer Trust Company	Large Cap Equity Fund	90.82%
100 Woodbridge Center Drive	Mid Cap Equity Fund	96.76%
Woodbridge, NJ 07095	International Fund	98.08%
	Global Small Cap Fund	98.07%
	Real Return Fund	98.85%
	Fixed Income Fund	91.54%
	Municipal Bond Fund	98.42%

As of January 31, 2007, Maril & Co. FBO 6K, acting in various capacities for numerous accounts, was the owner of record of 5% or more of the following Fund’s outstanding shares:


MARIL CO FBO	Large Cap Equity Fund	7.95%

1000 N Water Street

Milwaukee, WI 53202

As of January 31, 2007, the Directors and officers of the Corporation, as a group, own less than 1% of the outstanding shares of the Funds.

Code of Ethics. The Corporation, the Adviser, the sub-advisers and the Distributor have each adopted a Code of Ethics under Rule 17j-1 of the 1940 Act. The Codes of Ethics for these entities (the “Codes”) restrict the personal investing activities of certain Access Persons (as defined in Rule 17j-1) and others, as defined in the Codes. The

primary purpose of the Codes is to ensure that these investing activities do not disadvantage the Funds. Such Access Persons are generally required to pre-clear security transactions (which may include securities purchased by the Funds) with the entities’ Compliance Officer or his designee and to report all transactions on a regular basis. The Compliance Officer or designee has the responsibility for interpreting the provisions of the Codes, for adopting and implementing Procedures for the enforcement of the provisions of the Codes, and for determining whether a violation has occurred. In the event of a finding that a violation has occurred, the Compliance Officer or designee shall take appropriate action. The Corporation, the Adviser, the sub-advisers and the Distributor have developed procedures for administration of the Codes.

INVESTMENT ADVISER AND SUB-ADVISERS

The Adviser conducts investment research and makes investment decisions for the Funds. The Funds’ investment adviser is Bessemer Investment Management LLC (“BIM”), a wholly-owned subsidiary of Bessemer Trust Company, N.A. (“Bessemer”), which is a national banking association. The Adviser is a registered investment adviser, formed by Bessemer on May 2, 2001, to conduct all of its advisory and research activities. Prior to May 2, 2001, these activities were performed by Bessemer pursuant to an advisory contract for each Fund. Pursuant to an Assumption Agreement between the Corporation, Bessemer and BIM, BIM assumed all duties and obligations under each Fund’s advisory contract from Bessemer on May 2, 2001 (collectively, the “Advisory Contracts”).

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


	First $500* million of average net assets		Second $500 million of average net assets**		Average net assets exceeding $1 billion***
Large Cap Equity Fund	0.70	%	0.65	%	0.60	%
Mid Cap Equity Fund	0.70	%	0.65	%	0.60	%
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	%


	Average Net Assets
Global Small Cap Fund	0.85	%
Real Return Fund	0.85	%

*	Prior to September 1, 2005, the breakpoint was $100 million.

**	Prior to September 1, 2005, the breakpoint was the second $100 million.

***	Prior to September 1, 2005, the breakpoint was over $200 million.

The Adviser has committed through October 31, 2008 to waive its advisory fees to the extent necessary to maintain the net operating expense ratios of the Fixed Income Fund at 0.70%, the Large Cap Equity Fund at 1.00% and the Municipal Bond Fund at 0.70%. The Adviser may choose voluntarily to reimburse a portion of its advisory fee at any time. See “Fees Paid by the Funds for Services” for payments to the Adviser over the last three fiscal years.

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.

Since October 2001, the Adviser has retained its affiliate, BGUK, a wholly owned subsidiary of Bessemer, as sub-adviser to the International Fund pursuant to a sub-advisory agreement between BIM and BGUK, agreed to and

accepted by the Corporation (the “BGUK Sub-Advisory Contract”). Pursuant to the BGUK Sub-Advisory Contract, BGUK will, subject to BIM’s determination that proposed investments satisfy the investment objectives and policies of the International Fund, make recommendations with respect to all proposed purchases and sales of portfolio securities. Under the BGUK Sub-Advisory Contract, BIM will pay BGUK a fee as follows: 0.55% on the first $500 million of average net assets; 0.45% on the second $500 million of average net assets; and 0.35% for the average net assets in excess of $1 billion.

Under the investment advisory agreement between the Global Small Cap Fund and the Adviser, the Adviser is responsible for directly managing the assets of the Fund or allocating the Fund’s assets to and among any investment sub-advisers to the Fund. Currently, two sub-advisers each manage a portion of the Fund’s assets (each a “segment”). Since March 16, 2005, the Adviser retained Dimensional Fund Advisors LP (formerly, Dimensional Fund Advisors Inc.) (“Dimensional”) as sub-adviser to the Global Small Cap Fund pursuant to a sub-advisory agreement between BIM and Dimensional, agreed to and accepted by the Corporation (the “Dimensional Sub-Advisory Contract”). Pursuant to the Dimensional Sub-Advisory Contract, Dimensional will, subject to BIM’s determination that proposed investments satisfy the investment objectives and policies of the Global Small Cap Fund, make purchases and sales of portfolio securities for that portion of the Fund’s assets allocated to its management. Under the Dimensional Sub-Advisory Contract, BIM will pay Dimensional a fee as follows: 0.60% on the first $100 million of average net assets; 0.44% on the next $300 million of the average net assets; 0.33% on the next $100 million of average net assets; and 0.44% for the average net assets in excess of $500 million. The fees of Dimensional are paid for by the Adviser from the fees it receives from the Fund. David G. Booth and Rex A. Sinquefield may be deemed controlling persons of Dimensional.

Effective December 30, 2005, the Adviser retained Champlain Investment Partners, LLC (“Champlain”) to manage a segment of the Global Small Cap Fund pursuant to a sub-advisory agreement between the Adviser and Champlain (the “Champlain Sub-Advisory Contract”). Under the Champlain Sub-Advisory Contract, Champlain is entitled to receive from the Adviser an annual investment sub-advisory fee at the following rate, based on the average daily net assets of the Fund’s assets managed by it: 0.80% on all assets up to and including $50 million; 0.75% on all assets after the initial time assets exceed $50 million, up to and including $100 million; and 0.57% on all assets after the initial time assets exceed $100 million. The fees of Champlain are paid for by the Adviser from the fees it receives from the Fund. Rosemont Partners I, LP and CIP Management Company, LLC may be deemed controlling persons of Champlain.

Additional Portfolio Manager Information

Other Accounts Managed by Portfolio Managers

The following tables show the number and assets of other funds and investment accounts (or portions of investment accounts) that each Fund’s portfolio manager(s) managed as of each Fund’s fiscal year-end, and separately the same information but only for those funds and accounts whose investment advisory fee is based on performance.


Portfolio Manager	Other SEC-registered open-end and closed-end funds		Other pooled investment vehicles			Other accounts
	Number of accounts	Assets	Number of accounts	Assets		Number of accounts	Assets
BIM
Andrew Parker	0	0	0		0	0		0
Lois Roman	0	0	6	$	1,263,270,000	4,600	$	8,781,677,000
Preston Stahl	0	0	0		0	0		0
Marc D. Stern	0	0	0		0	0		0
Harold S. Woolley	0	0	2	$	85,097,000	400	$	1,433,597,000
Bruce A. Whiteford	0	0	5	$	501,809,000	1,800	$	4,635,074,000

BGUK
Hermione Davies	0	0	3	$	815,927,000	190	$	825,279,000
Sharon Dodgson	0	0	0		0	0		0
Michael Crawford	0	0	0		0	0		0


Portfolio Manager	Other SEC-registered open-end and closed-end funds			Other pooled investment vehicles			Other accounts
	Number of accounts	Assets		Number of accounts	Assets		Number of accounts	Assets
Dimensional
Robert T. Deere	23	$	44,002,000,000	8	$	10,283,000,000	40	$	3,226,000,000
Karen E. Umland	24	$	33,238,000,000	4	$	528,000,000	6	$	2,688,000,000

Champlain
Scott T. Brayman	1	$	74,379,420	None		None	20	$	379,204,212

Accounts and Assets for which an Investment Advisory Fee is Based on Performance

Portfolio Manager

Other SEC-registered open-

end and closed-end funds

Other pooled investment

vehicles

Other accounts

Number of
accounts

Assets

Number of
accounts

Assets

Number of
accounts

Assets

BIM

Andrew Parker

None

Lois Roman

None

Preston Stahl

None

Marc D. Stern

None

Harold S. Woolley

None

Bruce A. Whiteford

None

BGUK

Hermione Davies

None

Sharon Dodgson

None

Michael Crawford

None

Dimensional

Robert T. Deere

None

$307,000,000

None

Karen E. Umland

None

Champlain

Scott T. Brayman

None

$21,788,460

Ownership of Securities

The table below shows the dollar ranges of shares of each Fund beneficially owned (as determined pursuant to Rule 16a-1(a)(2) under the Securities Exchange Act of 1934, as amended) by the portfolio managers listed above at the end of each Fund’s most recent fiscal year:

Portfolio Manager

Mid Cap
Equity Fund

Large Cap
Equity Fund

International
Fund

Fixed Income
Fund

Municipal
Bond Fund

Global Small
Cap Fund

Real Return
Fund

BIM*

Andrew Parker

None

Lois Roman

None

Preston Stahl

None

$
$

100,001-
500,000

Marc D. Stern

$
$

50,000-
100,000

$
$

100,001-
500,000

$
$

100,001-
500,000

$
$

100,001-
500,000

None

$
$

50,000-
100,000

$
$

100,001-
500,000

Harold S. Woolley

None

Bruce A. Whiteford

None

BGUK*

Hermione Davies

None

Sharon Dodgson

Michael Crawford

Dimensional

Robert T. Deere

None

Karen E. Umland

None

Champlain

Scott T. Brayman

None

BIM and BGUK portfolio managers maintain exposure to the foregoing investment strategies through investment of their deferred compensation profit sharing account balances in bank portfolios with substantially the same investment objectives and strategies as the Funds. The portfolio managers provided investment advisory services for such portfolios.

Compensation of Portfolio Managers

BIM. The Adviser’s portfolio managers are generally responsible for providing investment advisory services for multiple types of accounts with similar investment objectives, strategies, risks and fees. Portfolio managers responsible for managing a Fund generally will also provide investment advisory services with respect to bank common and collective funds, separately managed accounts and model portfolios. The Adviser compensates portfolio managers with respect to their overall contribution and not with respect to the performance of any single account type.

The Adviser’s portfolio managers receive compensation comprised of an annual base salary, annual cash bonus, deferred cash bonus and, in some cases, restricted stock or stock appreciation rights awards granted by an affiliate of the Adviser. The Adviser’s portfolio managers also participate in a deferred compensation profit sharing plan and a defined benefit pension plan, as well as other medical and insurance coverage programs, of affiliates of the Adviser. The annual base salaries for portfolio managers are determined on the basis of relevant industry salary data and are intended to be competitive. Annual cash bonus awards are based upon a combination of qualitative and quantitative factors, including performance of the portfolios advised by the portfolio manager, generation and development of new investment ideas, willingness to develop and share ideas as part of a team and contributions to the development of the Adviser’s investment team. The deferred cash bonus is a fixed percentage of the annual cash bonus and is generally paid over a three-year period. Currently, all portfolio managers participate in a stock appreciation rights plan of an affiliate of the Adviser and one portfolio manager participates in a restricted stock plan of an affiliate of the Adviser.

Dimensional. Portfolio managers receive a base salary and bonus. Compensation of a portfolio manager is determined at the discretion of Dimensional and is based on a portfolio manager’s experience, responsibilities, the perception of the quality of his or her work efforts and other subjective factors. The compensation of portfolio managers is not directly based upon the performance of the Global Small Cap Fund or other accounts that they manage. Dimensional reviews the compensation of each portfolio manager annually and may make modifications in compensation as it deems necessary to reflect changes in the market. Each portfolio manager’s compensation consists of the following:

•

BASE SALARY. Each portfolio manager is paid a base salary. Dimensional considers the factors described above to determine each portfolio manager’s base salary.

•

SEMI-ANNUAL BONUS. Each portfolio manager receives a semi-annual bonus. The bonus paid to each portfolio manager is based on the factors described above.

•

RESTRICTED STOCK. Portfolio managers may be awarded the right to purchase restricted shares of Dimensional’s stock as determined from time to time by the Board of Directors of Dimensional or its delegees. Portfolio managers also participate in benefit and retirement plans and other programs available generally to all employees.

Champlain. Champlain compensates the Global Small Cap Fund’s portfolio manager for his management of the Fund. His compensation consists of a cash base salary and a discretionary performance bonus paid in cash that is based on overall profitability, and therefore in part based on the value of the Fund’s net assets and other client accounts he manages. The portfolio manager also receives benefits standard for all of Champlain’s employees, including health care and other insurance benefits. In addition, the portfolio manager may have an ownership stake in Champlain which would entitle him to a portion of the pre-tax profitability of the firm.

Potential Conflicts of Interests

BIM. Like other investment professionals with multiple clients, a portfolio manager for a Fund may face certain potential conflicts of interest in connection with managing both the Fund and other accounts at the same time. The paragraphs below describe some of these potential conflicts, which the Adviser believes are faced by investment professionals at most major financial firms but which the Adviser believes are adequately addressed by its current policies and procedures. The Adviser and the Board have adopted compliance policies and procedures that are designed to address certain of these potential conflicts.

A potential conflict of interest may arise when a Fund and other accounts purchase or sell the same securities. On occasions when a portfolio manager considers the purchase or sale of a security to be in the best interests of a Fund as well as other accounts, BIM’s trading desk may, to the extent permitted by applicable laws and regulations, aggregate the securities to be sold or purchased in order to obtain the best execution and lower brokerage commissions, if any. Aggregation of trades may create the potential for unfairness to a Fund or another account if one account is favored over another in allocating the securities purchased or sold – for example, by allocating a disproportionate amount of a security that is likely to increase in value to a favored account. The Adviser believes its policies and procedures relating to trade aggregation and allocation are reasonably designed to prevent such results.

“Cross trades,” in which one BIM account sells a particular security to another account (potentially saving transaction costs for both accounts), may also pose a potential conflict of interest. Cross trades may be seen to involve a potential conflict of interest if, for example, one account is permitted to sell a security to another account at a higher price than an independent third party would pay. The Adviser and the Board have adopted compliance procedures that provide that any transactions between the Funds and another BIM-advised account are to be made at an independent current market price, as required by law.

Another potential conflict of interest may arise based on the different investment objectives and strategies of a Fund and other accounts. For example, another account may have a shorter-term investment horizon or different

investment objective, policies or restrictions than a Fund. Depending on another account’s objectives or other factors, a portfolio manager may give advice and make decisions that may differ from advice given, or the timing or nature of decisions made, with respect to a Fund. In addition, investment decisions are the product of many factors in addition to basic suitability for the particular account involved. Thus, a particular security may be bought or sold for certain accounts even though it could have been bought or sold for other accounts at the same time. More rarely, a particular security may be bought for one or more accounts managed by a portfolio manager when one or more other accounts are selling the security (including short sales). There may be circumstances when purchases or sales of portfolio securities for one or more accounts may have an adverse effect on other accounts.

A Fund’s portfolio manager who is responsible for managing multiple funds and/or accounts may devote unequal time and attention to the management of those funds and/or accounts. As a result, the portfolio manager may not be able to formulate as complete a strategy or identify equally attractive investment opportunities for each of those accounts as might be the case if he or she were to devote substantially more attention to the management of a single fund. The effects of this potential conflict may be more pronounced where funds and/or accounts overseen by a particular portfolio manager have different investment strategies.

A Fund’s portfolio managers may be able to select or influence the selection of the brokers and dealers that are used to execute securities transactions for the Fund. In addition to executing trades, some brokers and dealers provide portfolio managers with brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934), which may result in the payment of higher brokerage fees than might have otherwise been available. These services may be more beneficial to certain funds or accounts than to others. Although the payment of brokerage commissions is subject to the requirement that the portfolio manager determine in good faith that the commissions are reasonable in relation to the value of the brokerage and research services provided to the fund, a portfolio manager’s decision as to the selection of brokers and dealers could yield disproportionate costs and benefits among the funds and/or accounts that he or she manages.

A Fund’s portfolio manager(s) may also face other potential conflicts of interest in managing the Funds, and the description above is not a complete description of every conflict that could be deemed to exist in managing both the Funds and other accounts. In addition, a Fund’s portfolio manager may also manage other accounts (including their personal assets or the assets of family members) in their personal capacity. The management of these accounts may also involve certain of the potential conflicts described above. Investment personnel at BIM, including each Fund’s portfolio manager, are subject to restrictions on engaging in personal securities transactions pursuant to Codes of Ethics adopted by BIM and the Funds, which contain provisions and requirements designed to identify and address certain conflicts of interest between personal investment activities and the interests of the Funds.

Dimensional. Actual or apparent conflicts of interest may arise when a portfolio manager has primary day-to-day responsibilities with respect to multiple accounts. In addition to the Global Small Cap Fund, other accounts may include registered mutual funds, unregistered pooled investment vehicles, and accounts managed for organizations and individuals (“Accounts”). An Account may have a similar investment objective to the Global Small Cap Fund, or may purchase, sell or hold securities that are eligible to be purchased, sold or held by the Global Small Cap Fund. Actual or apparent conflicts of interest include:

•

TIME MANAGEMENT. The management of multiple Accounts may result in a portfolio manager devoting unequal time and attention to the management of the Global Small Cap Fund and/or Accounts. Dimensional seeks to manage such competing interests for the time and attention of the portfolio manager by having him focus on a particular investment discipline. Most Accounts managed by a portfolio manager are managed using the same investment models that are used in connection with the management of the Global Small Cap Fund.

•

INVESTMENT OPPORTUNITIES. It is possible that at times identical securities will be held by both the Global Small Cap Fund and one or more Accounts. However, positions in the same security may vary and the length of time that the Global Small Cap Fund or an Account may choose to hold its investment in the same security may likewise vary. If a portfolio manager identifies a limited investment opportunity that may be suitable for the Global Small Cap Fund and one or more Accounts, the Global Small Cap Fund may not be able to take full advantage of that opportunity due to an allocation of filled purchase or sale orders. To deal with these situations, Dimensional has adopted procedures for allocating portfolio transactions across the Global Small Cap Fund and Accounts.

•

BROKER SELECTION. With respect to securities transactions for the Global Small Cap Fund, Dimensional determines which broker to use to execute each order, consistent with its duty to seek best execution of the transaction. However, with respect to certain Accounts (such as separate accounts), Dimensional may be limited by the client with respect to the selection of brokers or may be instructed to direct trades through a particular broker. In these cases, Dimensional or its affiliates may place separate, non-simultaneous, transactions for the Global Small Cap Fund and an Account that may temporarily affect the market price of the security or the execution of the transaction, or both, to the detriment of the Global Small Cap Fund or the Account.

•

PERFORMANCE-BASED FEES. For some Accounts, Dimensional may be compensated based on the profitability of the Account, such as by a performance-based management fee. These incentive compensation structures may create a conflict of interest for Dimensional with regard to Accounts where Dimensional is paid based on a percentage of assets because the portfolio manager may have an incentive to allocate securities preferentially to the Accounts where Dimensional might share in investment gains.

•

INVESTMENT IN A PORTFOLIO. A portfolio manager or his/her relatives may invest in a portfolio that he or she manages and a conflict may arise where he or she may therefore have an incentive to treat an Account in which the portfolio manager or his/her relatives invest preferentially as compared to the Global Small Cap Fund or other Accounts for which they have portfolio management responsibilities.

Dimensional has adopted certain compliance procedures that are reasonably designed to address these types of conflicts. However, there is no guarantee that such procedures will detect each and every situation in which a conflict arises.

Champlain. The portfolio manager’s management of “other accounts” may give rise to potential conflicts of interest in connection with his management of the Global Small Cap Fund’s investments, on the one hand, and the investments of the other accounts, on the other. The other accounts may have the same investment objective as the Global Small Cap Fund. Therefore, a potential conflict of interest may arise as a result of the identical investment objectives, whereby the portfolio manager could favor one account over another. Another potential conflict could include the portfolio manager’s knowledge about the size, timing and possible market impact of Global Small Cap Fund trades, whereby the portfolio manager could use this information to the advantage of other accounts and to the disadvantage of the Global Small Cap Fund. For some accounts, Champlain may be compensated based on the profitability of the account, such as by a performance-based management fee. These incentive compensation structures may create a conflict of interest for Champlain with regard to accounts where Champlain is paid based on a percentage of assets because the portfolio manager may have an incentive to allocate securities preferentially to the accounts where Champlain might share in investment gains. Champlain has adopted certain compliance procedures that are reasonably designed to address conflicts of interest. However, there is no guarantee that such procedures will detect each and every situation in which a conflict arises.

ADMINISTRATOR, FUND ACCOUNTANT AND TRANSFER AGENT

PFPC Inc. (“PFPC”), 760 Moore Road, King of Prussia, PA 19408, acts as administrator, fund accounting agent and transfer agent for the Funds pursuant to an Administration and Accounting Services Agreement and a Transfer Agency Services Agreement (the “PFPC Agreements”), respectively, effective April 8, 2006. Prior to April 8, 2006, BISYS Fund Services Ohio (“BISYS Ohio”) served in such capacities. Pursuant to the PFPC Agreements, PFPC provides the Funds with general office facilities and supervises the overall administration of the Funds, including among other responsibilities, assisting in the preparation and filing of all documents required for compliance by the Funds with applicable laws and regulations and arranging for the maintenance of books and records of the Funds. PFPC may also provide persons (including directors, officers and other employees of PFPC or its affiliates) satisfactory to the Board to serve as officers of the Funds. PFPC maintains all Fund books and records required under Rule 31a-1 under the 1940 Act, performs daily accounting services and satisfies additional Fund reporting and record keeping requirements. PFPC is an affiliate of the Funds’ Distributor.

For the services provided by PFPC, the following annual fee will be calculated based upon the aggregate average net assets of the Old Westbury Fund complex and payable to PFPC monthly:


Maximum Administrative Fee		Average Aggregate Daily Net Assets of the Funds
0.0350%		of the first $1.5 billion
0.0275%		of the next $1 billion
0.0175%		of the next $1 billion
0.0125%		of assets in excess of $3.5 billion

Additionally, the Funds pay PFPC an annual base fee of $25,000 per portfolio, excluding out-of-pocket expenses.

PFPC may choose voluntarily to reimburse a portion of its fee at any time. See “Fees Paid by the Funds for Services” for payments made over the last three fiscal years to BISYS Ohio, the Funds’ previous administrator, fund accounting agent and transfer agent, and to BISYS Fund Services LP, the Funds’ previous principal underwriter and distributor.

CUSTODIANS

Citibank, N.A. (“Citibank”), located at 111 Wall Street, New York, New York 10005, is the custodian for the Global Small Cap Fund and the co-custodian for the Real Return Fund. Pursuant to its agreement with the Funds, Citibank is responsible for maintaining the books and records of these Funds’ securities and cash, excluding coins or bullion or other forms of precious metals held by the Real Return Fund, and maintaining these Funds’ portfolio transaction records. Citibank receives a fee from these Funds calculated and paid monthly based on safekeeping and transaction fees that vary by country.

Bessemer Trust Company (New Jersey) (“BTCO”), an affiliate of the Adviser, located at 100 Woodbridge Center, Woodbridge, New Jersey 07095, is the custodian for the Large Cap Equity, Mid Cap Equity, International, Fixed Income and Municipal Bond Funds and the co-custodian for the Real Return Fund. Pursuant to its agreement with these Funds, BTCO is responsible for maintaining the books and records of these Funds’ securities and cash, except for the Real Return Fund for which BTCO is only responsible for the coins or bullions or other forms of precious metals held by the Real Return Fund, and maintaining these Funds’ portfolio transaction records. BTCO receives a fee from these Funds calculated and paid monthly at the annual rate of 0.10% (0.15% for the International Fund) of the average daily net assets of each Fund. In addition, BTCO receives from the Real Return Fund any transaction costs related to the Real Return Fund’s investments in coins or bullions or other forms of precious metals.

DISTRIBUTOR

PFPC Distributors, Inc. (“PFPC Distributors” or the “Distributor”), 760 Moore Road, King of Prussia, PA 19406, acts as principal underwriter and distributor of shares of the Funds pursuant to an Underwriting Agreement with the Funds, effective April 8, 2006 (the “Underwriting Agreement”). PFPC Distributors makes a continuous offering of the Funds’ shares. PFPC Distributors is an affiliate of PFPC.

In its capacity as Distributor, PFPC Distributors uses its best efforts to obtain subscriptions to shares of each Fund. Prior to April 8, 2006, BISYS Fund Services LP served as principal underwriter and distributor of the Funds’ shares. For the fiscal period of April 8, 2006 through October 31, 2006, payments by the Funds to PFPC Distributors were $37,503. For the fiscal period of November 1, 2005 through April 7, 2006 and for the fiscal years ended October 31, 2005 and October 31, 2004, BISYS Fund Services LP received no payments as the principal underwriter and distributor of the Funds’ shares.

FUND COUNSEL, INDEPENDENT DIRECTORS’ COUNSEL AND INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Morrison & Foerster LLP, 2000 Pennsylvania Avenue, NW, Suite 5500, Washington, D.C. 20006, serves as legal counsel to the Funds.

Paul, Hastings, Janofsky & Walker LLP, 75 East 55 ^th Street, New York, New York 10022 serves as independent counsel to the Independent Directors.

Ernst & Young LLP, 5 Times Square, New York, New York 10036, is the independent registered public accounting firm for the Funds, providing audit services and tax return preparation.

PROXY VOTING POLICIES

The Funds have adopted Proxy Voting Policies that delegate the responsibility of voting proxies to BIM. The Proxy Voting Policies of the Corporation, Dimensional and BIM are attached as Appendix B.

Information regarding how the Funds voted proxies relating to portfolio securities during the 12-month period ended June 30, 2006 is available, without charge, upon request, by calling 1-800-607-2200 and on the SEC’s website at http://www.sec.gov.

DISCLOSURE OF PORTFOLIO HOLDINGS INFORMATION

It is the policy of the Corporation, with respect to each of the Funds, to disclose to the general public the portfolio holdings of each of the Funds in regular public filings made with the SEC (“Portfolio Disclosure Policies”). In addition, the Corporation may disclose additional information, such as the top ten holdings within each Fund, on a monthly basis with a lag time of not less than seven days, on the website www.Bessemer.com. The Funds may also disclose portfolio holdings information in response to a request from a regulatory or other governmental entity.

Portfolio holdings information for the Funds may also be made available more frequently and prior to its public availability (“non-standard disclosure”) to:

(1)

the Funds’ service providers (which currently include the Funds’ adviser, sub-adviser, custodian, administrator, fund accountant, transfer agent, distributor, pricing service (FT Interactive Data Corporation) and printer (RR Donnelley)) (“Service Providers”); and

(2)

certain non-service providers (such as ratings agencies, which currently include Morningstar, Inc., Standard & Poor’s Securities, Inc. and Lipper Analytical Services for such purposes as analyzing and ranking the Funds or performing due diligence and asset allocation) (“Non-Service Providers”).

The disclosure of portfolio holdings information for the Funds may only be made pursuant to the Portfolio Disclosure Policies, which are designed to ensure compliance by the Funds and their service providers with the applicable federal securities laws and their respective fiduciary duties. The Disclosure Policies are also designed to ensure the interests of the Adviser are not put above those of the shareholders. Any waivers or exceptions to the Disclosure Policies will be considered by the Funds’ Chief Compliance Officer, who will make a determination based on several factors, including the best interest of shareholders.

Prior to the release of non-standard disclosure to Non-Service Providers, the recipient must adhere to the following conditions:

(1)

the recipient may not distribute the portfolio holdings or results of the analysis to third parties, other departments or persons who are likely to use the information for purposes of purchasing or selling the Funds before the portfolio holdings or results of the analysis become public information; and

(2)

the recipient signs a written Confidentiality Agreement . Persons and entities unwilling to execute an acceptable Confidentiality Agreement may only receive portfolio holdings information that has otherwise been publicly disclosed in accordance with the Funds’ Disclosure Policies.

Neither the Funds nor the Funds’ investment adviser or any sub-adviser may receive compensation or other consideration in connection with the disclosure of information about portfolio securities. These Disclosure Policies may not be waived or exceptions made, without the consent of the Funds’ Chief Compliance Officer. The Board of Directors will review this policy, including the list of approved recipients, as often as they deem appropriate, but not less often than annually, and recommend any changes that they deem appropriate. The Funds’ Board of Directors and Chief Compliance Officer may, on a case-by-case basis, impose additional restrictions on the dissemination of portfolio information beyond those found in the Funds’ Disclosure Policies.

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 Rule 12b-1(h), the Adviser will not 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 Exchange Act and is designed to augment the Adviser’s own internal research and investment strategy capabilities. These research services include such matters as general economic and securities market reviews, industry and company reviews, evaluations of securities and recommendations as to the purchase and sale of securities. 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.

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.

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.

As of October 31, 2006, the Large Cap Equity Fund and International Fund held investments in securities of their regular broker-dealers as follows:


Fund	Approximate Aggregate Value of Issuer’s Securities Owned by the Fund at 10/31/2006	Name of Broker or Dealer
Large Cap Equity Fund	$11,975,749 $11,958,160 $15,902,200	Goldman Sachs Group, Inc. Mellon Financial Corp. Prudential Financial, Inc.

International Fund	$17,378,902 $32,980,890 $17,183,241	ABN AMRO Mitsubishi UFJ Fin Group Mizhuno Financial Group

PORTFOLIO TURNOVER

Changes may be made in the portfolio consistent with the investment objectives and policies of the Funds whenever such changes are believed to be in the best interests of the Funds and their shareholders. The portfolio turnover rate is calculated by dividing the lesser of purchases or sales of portfolio securities by the average monthly value of the Fund’s portfolio securities. For purposes of this calculation, portfolio securities exclude all securities having a maturity when purchased of one year or less. For the fiscal year ended October 31, 2006, the turnover rates for the Funds can be found in the “Financial Highlights” section of Funds’ Prospectus. High portfolio turnover may result in increased brokerage costs to a Fund and also adverse tax consequences to a Fund’s shareholders. The following table compares selected Funds’ portfolio turnover rates for the past two fiscal years.


Fund Name	For Fiscal Year Ended October 31, 2006	For Fiscal Year Ended October 31, 2005
Mid Cap Equity Fund ¹	70%	36%
Global Small Cap Fund ²	39%	8%
Real Return Fund ³	56%	5%
Fixed Income Fund ⁴	72%	17%

¹	The Fund’s higher portfolio turnover rate for the fiscal year ended October 31, 2006 was due to the new portfolio manager repositioning the portfolio.

The Fund experienced a higher portfolio turnover rate for the fiscal year ended October 31, 2006 due to the transitioning of certain of the portfolio’s assets in March 2006, when the Fund hired Champlain to sub-advise a portion of the Fund’s assets. The portion of the portfolio sub-advised by Dimensional incurred a turnover rate of approximately 20% due to this transition.

The Fund’s portfolio turnover rate was uncharacteristically low for the fiscal year ended October 31, 2005, as the Fund commenced operations on April 29, 2005. Management anticipates that going forward the Fund’s portfolio turnover rate will be similar to the rate for the fiscal year ended October 31, 2006.

⁴	The Fund’s higher portfolio turnover rate for the fiscal year ended October 31, 2006 was due to a repositioning of the portfolio’s assets.

UNDERWRITING AGREEMENT

The Corporation has entered into an Underwriting Agreement with the Distributor. Pursuant to the Underwriting Agreement, the Distributor solicits orders for the sale of Fund shares and undertakes such advertising and promotion as requested by the Corporation and as it believes reasonable in connection with such solicitation. The Underwriting Agreement contemplates that the Distributor may, if authorized in each instance by the Corporation, on behalf of a Fund, or the Adviser, enter into sales agreements with securities dealers, financial institutions and other industry professionals, such as investment advisers, accountants and estate planning firms. The Distributor will require each dealer with whom the Distributor has a selling agreement to conform to all applicable provisions of the Fund’s Prospectus.

SHAREHOLDER SERVICING PLAN

FEES PAID BY THE FUNDS FOR SERVICES

FOR THE FISCAL YEAR ENDED OCTOBER 31, 2006 ¹


Fund Name	Advisory Fee/Fee Waived		Brokerage Commissions		Administrative Fee/Fee Waived ²		12b-1 Fees Distribution Plan Fee		12b-1 Shareholder Servicing Fee
Large Cap Equity Fund	$	2,422,574 / $0	$	441,852	$	154,586 / $0	$	0	$	519,124
Mid Cap Equity Fund	$	5,759,879 / $0	$	1,273,299	$	362,234 / $0	$	0	$	1,271,512
International Fund	$	13,241,678 ⁶ / $0	$	3,927,743	$	739,731 / $0	$	0	$	2,676,791
Global Small Cap Fund	$	5,339,930 ⁸ / $0	$	659,896	$	267,304 / $0	$	0	$	942,341
Real Return Fund	$	9,191,196 / $0	$	1,360,569	$	443,219 / $0	$	0	$	1,621,977
Fixed Income Fund	$	389,791 / $0	$	300	$	48,977 / $0	$	0	$	129,930
Municipal Bond Fund	$	493,155 / $0	$	0	$	58,740 / $0	$	0	$	164,385

FOR THE FISCAL YEAR ENDED OCTOBER 31, 2005 ¹


Fund Name	Advisory Fee/Fee Waived		Brokerage Commissions		Administrative Fee/Fee Waived		12b-1 Fees Distribution Plan Fee		12b-1 Shareholder Servicing Fee
Large Cap Equity Fund	$	1,978,591 / $0	$	321,422	$	231,864 / $0	$	0	$	701,021	⁵
Mid Cap Equity Fund	$	5,063,872 / $0	$	774,655	$	621,603 / $0	$	0	$	1,881,391	⁵
International Fund	$	8,657,523 ⁶ / $0	$	3,990,792	$	916,170 / $0	$	0	$	2,753,339	⁵
Global Small Cap Fund	$	2,006,944 ³ / $0	$	799,773	$	171,431 / $0	$	0	$	354,167	⁵
Real Return Fund	$	2,983,213 ⁴ / $0	$	1,015,702	$	252,160 / $0	$	0	$	526,450	⁵
Fixed Income Fund	$	349,591 / $6,442	$	0	$	59,948 / $0	$	0	$	181,333	⁵
Municipal Bond Fund	$	418,698 / $3,262	$	0	$	71,684 / $0	$	0	$	216,296	⁵

FOR THE FISCAL YEAR ENDED OCTOBER 31, 2004 ¹


Fund Name	Advisory Fee/Fee Waived		Brokerage Commissions		Administrative Fee/Fee Waived		12b-1 Fees Distribution Plan Fee		12b-1 Shareholder Servicing Fee
Large Cap Equity Fund	$	1,772,584 / $0	$	340,338	$	229,562 / $0	$	0	$	676,076	⁵
Mid Cap Equity Fund	$	4,675,405 ⁷ / $0	$	1,664,098	$	640,276 / $0	$	0	$	1,885,587	⁵
International Fund	$	5,006,948 ⁶ / $0	$	2,613,910	$	588,708 / $0	$	0	$	1,734,623	⁵
Fixed Income Fund	$	361,951 / $42,593	$	0	$	68,327 / $0	$	0	$	201,084	⁵
Municipal Bond Fund	$	380,222 / $20,778	$	0	$	71,747 / $0	$	0	$	211,234	⁵

¹	From time to time, the Adviser may voluntarily assume certain expenses of a Fund. This would have the effect of lowering the overall expense ratio of that Fund and of increasing yield to investors in that Fund.

Reflects amounts paid to PFPC and BISYS Ohio, the Funds’ previous administrator. BISYS Ohio was paid $95,200, $239,362, $493,050, $170,265, $282,424, $23,441 and $30,468 for the Large Cap Equity Fund, Mid Cap Equity Fund, International Fund, Global Small Cap Fund, Real Return Fund, Fixed Income Fund and Municipal Bond Fund, respectively. PFPC was paid $59,386, $122,872, $246,681, $97,039, $160,795, $25,536 and $28,272 for the Large Cap Equity Fund, Mid Cap Equity Fund, International Fund, Global Small Cap Fund, Real Return Fund, Fixed Income Fund and Municipal Bond Fund, respectively.

³	Period from April 7, 2005 (commencement of operations) to October 31, 2005 (includes fees of $963,271 paid to Dimensional). Champlain began serving as sub-adviser to the Global Small Cap Fund on December 30, 2005.

⁴	Period from April 29, 2005 (commencement of operations) to October 31, 2005.

⁵	Payments made as compensation to broker/dealers and other shareholder servicing agents (including BISYS Fund Services LP, the Funds’ previous distributor).

⁶	Includes fees paid to BGUK.

⁷	Includes sub-advisory fees paid to Glynn Capital Management, a former sub-adviser, in the amounts of $441,675 for the fiscal year ended October 31, 2004 and $34,799 for the fiscal year ended October 31, 2005.

⁸	Includes sub-advisory fees paid to Dimensional in the amount of $2,137,012 and Champlain in the amount of $533,702.

HOW DO THE FUNDS MEASURE PERFORMANCE?

Each Fund may advertise its share performance by using the SEC’s 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.

The performance of the Funds may be compared in various financial and news publications to the performance of various indices and investments for which reliable performance data is available. The performance of the Funds may be compared in publications to averages, performance rankings, or other information prepared by nationally recognized mutual fund ranking and statistical services. As with other performance data, performance comparisons should not be considered representative of a Fund’s relative performance for any future period.

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 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 AND TAX EQUIVALENT 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 the Municipal Bond 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.

The Municipal Bond Fund may use tax equivalent yield information in its sales literature and advertising. Such information sets forth the yield that is afforded by a tax free investment by showing such yields without the effect of Federal income taxes with respect to a given taxable income bracket. The interest earned by the municipal securities owned by the Fund generally remains exempt from regular federal income tax and is often exempt from state and local taxes as well. However, some of the Fund’s interest income may be subject to the federal AMT and state and/or local taxes.

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

After-tax returns are calculated using the historical highest individual federal marginal income tax rate, and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to tax-exempt investors or those who hold Fund shares through tax-deferred arrangements such as 401(k) plans or Individual Retirement Accounts.

PERFORMANCE COMPARISONS

Advertising and sales literature may include:

•

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

•

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;

•

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

•

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.

ACCOUNT INFORMATION AND PRICING OF SHARES

Information relating to the purchase and redemption of the Funds’ shares is located in the Prospectus.

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. Securities may be valued by independent pricing services, approved by the Corporation’s Board, which use prices provided by market makers or estimates of market value obtained yield data relating to instruments or securities with similar characteristics. 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 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 exchange representing the principal market for such securities. If significant events occur that materially affect the value of the security between the time trading ends on a particular security and the close of the regular trading session of the NYSE, the Funds may value the security at its fair value as determined in good faith by or under the supervision of the Board. The effect of using fair value pricing is that a Fund’s net asset value will be subject to the judgment of the Board or its designee instead of being determined by market prices. Examples of significant events may include, but will not necessarily include, an announcement by the issuer, a creditor, or a government body, political or economic events, natural disasters, or significant fluctuations in key markets that occurring after the close of the security’s principal market. Since some Funds may invest in securities that are primarily listed on foreign exchanges that trade on days when the Funds do not price their shares, the value of those Funds’ assets may change on days when you will not be able to purchase or redeem fund shares.

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 deems appropriate to reflect their fair value.

U.S. 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. 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 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, Jr. Day, Presidents’ Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. However, the NYSE may close on days not included in that announcement.

The Corporation intends to pay all redemptions in cash unless the redemption request is for more than the lesser of $250,000 or one percent of the net assets of the relevant Fund by a single shareholder over any ninety-day period. If a redemption request is over these limits, it may be to the detriment of existing shareholders to pay such redemption in cash; therefore, a redemption request may be paid in securities of equal value.

TRADING IN FOREIGN SECURITIES

Trading in foreign securities may be completed at times which vary from the closing of the 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 Board, although the actual calculation may be done by others.

CAPITAL STOCK AND VOTING RIGHTS

The authorized capital stock of the Corporation consists of twenty billion shares of stock having a par value of one tenth of one cent ($0.001) per share. The Board is authorized to divide the unissued shares into separate series of stock. Shares of all series will have identical voting rights, except where, by law, certain matters must be approved by a majority of the shares of the affected series. Each share of any series has equal distribution, liquidation and voting rights within the series in which it was issued. Each share of a Fund gives the shareholder one vote in Director elections and other matters submitted to shareholders for vote.

HOW ARE THE FUNDS TAXED?

The following information supplements and should be read in conjunction with the section in the Prospectus entitled “Taxes.” The Prospectus generally describes the federal income tax treatment of distributions by the Funds. This section of the SAI provides additional information concerning federal income taxes. It is based on the Code, applicable Treasury Regulations, judicial authority, and administrative rulings and practice, all as of the date of this SAI and all of which are subject to change, including changes with retroactive effect. The following discussion does not address any state, local or foreign tax matters. A shareholder’s tax treatment may vary depending upon his or her particular situation. This discussion applies only to shareholders holding Fund shares as capital assets within the meaning of the Code. Except as otherwise noted, it may not apply to certain types of shareholders who may be subject to special rules such as insurance companies; tax-exempt organizations, shareholders holding Fund shares through tax-advantaged accounts (such as a 401(k) Plan Accounts or Individual Retirement Accounts (“IRAs”)), financial institutions, broker-dealers, entities that are not organized under the laws of the United States or a political subdivision thereof, persons who are neither citizens nor residents of the United States, shareholders holding Fund shares as part of a hedge, straddle or conversion transaction, and shareholders who are not subject to the federal alternative minimum tax (“AMT”).

The Corporation has not requested and will not request an advance ruling from the Internal Revenue Service (the “IRS”) as to the federal income tax matters described below. The IRS could adopt positions contrary to those discussed below and such positions could be sustained. In addition, the following discussion and the discussions in the Prospectus applicable to each shareholder address only some of the federal income tax considerations generally affecting investments in the Funds. Prospective shareholders are urged to consult with their own tax advisors and financial planners regarding the federal tax consequences to them of an investment in a Fund, as well as the application of state, local or foreign laws, and the effect of possible changes in applicable tax laws to their investment in the Fund.

Qualification as a Regulated Investment Company

The Corporation intends to continue to qualify each Fund as a “regulated investment company” under Subchapter M of Subtitle A, Chapter 1 of the Code. Each Fund will be treated as a separate entity for federal income tax purposes. Thus, the provisions of the Code applicable to regulated investment companies generally will apply separately to each Fund, rather than to the Corporation as a whole. Furthermore, each Fund will separately determine its income, gains, losses and expenses for federal income tax purposes.

In order to qualify as a regulated investment company under the Code, each Fund must, among other things, derive at least 90% of its gross income each taxable year generally from dividends, interest, certain payments with respect to securities loans, gains from the sale or other disposition of stock, securities or foreign currencies, and other income attributable to its business of investing in such stock, securities or foreign currencies (including but not limited to gains from options, futures or forward contracts) and net income derived from an interest in a qualified publicly traded partnership, as defined in the Code. Future Treasury Regulations may (possibly retroactively) exclude from qualifying income foreign currency gains that are not directly related to a Fund’s principal business of investing in stock or securities or options and futures with respect to stock or securities. Each Fund must also diversify its holdings so that, at the end of each quarter of the taxable year, (i) at least 50% of the fair market value of its assets consists of (A) cash and cash items (including receivables), U.S. government securities and securities of other regulated investment companies, and (B) securities of any one issuer (other than those described in clause (A)) to the extent such securities do not exceed the greater of 5% of the value of the Fund’s total assets or 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of the value of the Fund’s total assets consists of the securities of any one issuer (other than those described in clause (i)(A)), or the securities of two or more issuers the Fund controls and which are engaged in the same, similar, or related trades or businesses, or the securities of one or more qualified publicly traded partnerships. The qualifying income and diversification requirements applicable to a Fund may limit the extent to which it can engage in transactions in options, futures contracts, forward contracts and swap agreements.

In addition, each Fund generally must distribute to its shareholders at least 90% of its investment company taxable income, which generally includes its ordinary income and the excess of any net short-term capital gain over net long-term capital loss and at least 90% of its net tax-exempt interest income earned in each taxable year. If a Fund meets all of the regulated investment company requirements, it generally will not be subject to federal income tax on any of the investment company taxable income and net capital gain (i.e., the excess of net long-term capital gain over net short-term capital loss) it distributes to its shareholders. For this purpose, a Fund generally must make the distributions in the same year that it realizes the income and gain. Although, in certain circumstances, a Fund may make the distributions in the following taxable year. Shareholders generally are taxed on any distributions from a Fund in the year they are actually distributed. If a Fund declares a distribution to shareholders of record in October, November or December of one year and pays the distribution by January 31 of the following year, the Fund and its shareholders will be treated as if the Fund paid the distribution by December 31 of the first taxable year. Each Fund intends to distribute its net income and gain in a timely manner to maintain its status as a regulated investment company and eliminate Fund-level federal income taxation of such income and gain. However, no assurance can be given that a Fund will not be subject to federal income taxation.

If, for any taxable year, a Fund fails to qualify as a regulated investment company under the Code or fails to meet the distribution requirements, it will be taxed in the same manner as an ordinary corporation without any deduction for its distributions to shareholders, and all distributions from the Fund’s current and accumulated earnings and profits (including any distributions of its net tax-exempt income and net long-term capital gains) to

its shareholders will be taxable as dividend income. To qualify again to be taxed as a regulated investment company in a subsequent year, the Fund may be required to distribute to its shareholders its earnings and profits attributable to non-regulated investment company years reduced by an interest charge on 50% of such earnings and profits payable by the Fund to the IRS. In addition, if the Fund failed to qualify as a regulated investment company for a period greater than two taxable years, the Fund may be required to recognize and pay tax on any net built-in gain (the excess of aggregate gain, including items of income, over aggregate loss that would have been realized if the Fund had been liquidated) or, alternatively, to be subject to taxation on such built-in gain recognized for a period of ten years, in order to qualify as a regulated investment company in a subsequent year.

Capital Loss Carry-Forwards

A Fund is permitted to carry forward a net capital loss from any year to offset its capital gains, if any, realized during the eight years following the year of the loss. A Fund’s capital loss carry-forward is treated as a short-term capital loss in the year to which it is carried. If future capital gains are offset by carried-forward capital losses, such future capital gains are not subject to Fund-level federal income taxation, regardless of whether they are distributed to shareholders. Accordingly, the Funds do not expect to distribute such capital gains. The Funds cannot carry back or carry forward any net operating losses.

Any losses incurred in the taxable year subsequent to October 31 will be deferred to the next taxable year and used to reduce subsequent year distributions. As of October 31, 2006, each of the following Funds had capital loss carry-forwards approximating the amount indicated for federal income tax purposes, expiring in the year indicated:


Fund Name	2010		2011		2014		Total
Large Cap Equity Fund	$	23,108,020	$	1,646,965	$	0	$	24,754,985
Fixed Income Fund	$	0	$	0	$	831,267	$	831,267
Municipal Bond Fund	$	0	$	0	$	22,373	$	22,373

If a Fund engages in a reorganization, either as an acquiring fund or acquired fund, its own capital loss carry-forwards and the use of its unrealized losses against future realized gains, or such losses of other funds participating in the reorganization, may be subject to severe limitations that could make such losses substantially unusable. The Funds may engage in reorganizations in the future.

Equalization Accounting

Each Fund may use the so-called “equalization method” of accounting to allocate a portion of its “earnings and profits,” which generally equals a Fund’s undistributed net investment income and realized capital gains, with certain adjustments, to redemption proceeds. This method permits a Fund to achieve more balanced distributions for both continuing and redeeming shareholders. Although using this method generally will not affect a Fund’s total returns, it may reduce the amount that the Fund would otherwise distribute to continuing shareholders by reducing the effect of purchases and redemptions of Fund shares on Fund distributions to shareholders. However, the IRS may not have expressly sanctioned the equalization accounting method used by the Funds, and thus the use of this method may be subject to IRS scrutiny.

Excise Tax

A 4% nondeductible excise tax will be imposed on each Fund’s net income and gains (other than to the extent of its tax-exempt interest income, if any) to the extent it fails to distribute by December 31 of each calendar year at least 98% of its ordinary income (excluding capital gains and losses), at least 98% of its net capital gains (adjusted for ordinary losses) for the 12-month period ending on October 31 of that year and all of its ordinary income and capital gains from previous years that were not distributed during such years. Each Fund intends to distribute substantially all of its net income and gain, if any, by the end of each calendar year and, thus, expects not to be subject to the excise tax. However, no assurance can be given that a Fund will not be subject to the excise tax. Moreover, each Fund reserves the right to pay an excise tax rather than make an additional distribution when circumstances warrant (for example, the amount of excise tax to be paid is deemed de minimis by a Fund).

Taxation of Fund Investments

In general, realized gains or losses on the sale of portfolio securities, will be treated as capital gains or losses, and long-term capital gains or losses if the Fund has held the disposed securities for more than one year at the time of disposition.

If a Fund purchases a debt obligation with original issue discount, generally at a price less than its principal amount (“OID”), such as a zero-coupon bond, the Fund may be required to annually include in its taxable income a portion of the OID as ordinary income, even though the Fund will not receive cash payments for such discount until maturity or disposition of the obligation. Inflation-protected bonds generally can be expected to produce OID income as their principal amounts are adjusted upward for inflation. A portion of the OID includible in income with respect to certain high-yield corporate debt securities may be treated as a dividend for federal income tax purposes. In general, gains recognized on the disposition of a debt obligation (including a municipal obligation) purchased by a Fund at a market discount, generally at a price less than its principal amount will be treated as ordinary income to the extent of the portion of market discount which accrued, but was not previously recognized pursuant to an available election, during the term that the Fund held the debt obligation. A Fund generally will be required to make distributions to shareholders representing the OID income on debt securities that is currently includible in income, even though the cash representing such income may not have been received by the Fund. Cash to pay such distributions may be obtained from borrowing or from sales proceeds of securities held by a Fund which the Fund otherwise might have continued to hold; obtaining such cash might be disadvantageous for the Fund.

If an option granted by a Fund is sold, lapses or is otherwise terminated through a closing transaction, such as a repurchase by the Fund of the option from its holder, the Fund will realize a short-term capital gain or loss, depending on whether the premium income is greater or less than the amount paid by the Fund in the closing transaction. Some capital losses may be deferred if they result from a position that is part of a “straddle,” discussed below. If securities are sold by a Fund pursuant to the exercise of a call option granted by it, the Fund will add the premium received to the sale price of the securities delivered in determining the amount of gain or loss on the sale. If securities are purchased by a Fund pursuant to the exercise of a put option written by it, the Fund will subtract the premium received from its cost basis in the securities purchased.

Some regulated futures contracts, certain foreign currency contracts, and non-equity, listed options used by a Fund will be deemed “Section 1256 contracts.” A Fund will be required to mark-to-market any such contracts held at the end of the taxable year by treating them as if they had been sold on the last day of that year at market value. Sixty percent of any net gain or loss realized on all dispositions of Section 1256 contracts, including deemed dispositions under the “mark-to-market” rule, generally will be treated as long-term capital gain or loss, and the remaining 40% will be treated as short-term capital gain or loss. These provisions may require a Fund to recognize income or gains without a concurrent receipt of cash. Transactions that qualify as designated hedges are exempt from the mark-to-market rule and the “60%/40%” rule and may require the Fund to defer the recognition of losses on certain futures contracts, foreign currency contracts and non-equity options.

Foreign exchange gains and losses realized by a Fund in connection with certain transactions involving foreign currency-denominated debt securities, certain options and futures contracts relating to foreign currency, foreign currency forward contracts, foreign currencies, or payables or receivables denominated in a foreign currency are subject to Section 988 of the Code, which generally causes such gains and losses to be treated as ordinary income or loss and may affect the amount and timing of recognition of the Fund’s income. Under future Treasury Regulations, any such transactions that are not directly related to a Fund’s investments in stock or securities (or its options contracts or futures contracts with respect to stock or securities) may have to be limited in order to enable the Fund to satisfy the 90% income test described above. If the net foreign exchange loss exceeds a Fund’s net investment company taxable income (computed without regard to such loss) for a taxable year, the resulting ordinary loss for such year will not be deductible by the Fund or its shareholders in future years.

Offsetting positions held by a Fund involving certain financial forward, futures or options contracts may be considered, for federal income tax purposes, to constitute “straddles.” “Straddles” are defined to include

“offsetting positions” in actively traded personal property. The tax treatment of “straddles” is governed by Section 1092 of the Code, which, in certain circumstances, overrides or modifies the provisions of Section 1256. If a Fund is treated as entering into “straddles” and at least one of the futures or option contracts, such straddles could be characterized as “mixed straddles” if the futures, forward, or option contracts comprising a part of such straddles is governed by Section 1256 of the Code, described above. A Fund may make one or more elections with respect to “mixed straddles.” Depending upon which election is made, if any, the results with respect to a Fund may differ. Generally, to the extent the straddle rules apply to positions established by a Fund, losses realized by the Fund may be deferred to the extent of unrealized gain in any offsetting positions. Moreover, as a result of the straddle rules, short-term capital loss on straddle positions may be recharacterized as long-term capital loss, and long-term capital gain may be characterized as short-term capital gain or ordinary income. Further, the Fund may be required to capitalize, rather than deduct currently, any interest expense on indebtedness incurred or continued to purchase or carry any positions that are part of a straddle. Because the application of the straddle rules may affect the character of gains and losses, defer losses and/or accelerate the recognition of gains or losses from affected straddle positions, the amount which must be distributed to shareholders, and which will be taxed to shareholders as ordinary income or long-term capital gain, may be increased or decreased substantially as compared to the situation where a Fund had not engaged in such transactions.

If a Fund enters into a “constructive sale” of any appreciated financial position in stock, a partnership interest, or certain debt instruments, the Fund will be treated as if it had sold and immediately repurchased the property and must recognize gain (but not loss) with respect to that position. A constructive sale occurs when a Fund enters into one of the following transactions with respect to the same or substantially identical property: (i) a short sale; (ii) an offsetting notional principal contract; (iii) a futures or forward contract; or (iv) other transactions identified in future Treasury Regulations. The character of the gain from constructive sales will depend upon a Fund’s holding period in the property. Losses from a constructive sale of property will be recognized when the property is subsequently disposed of. The character of such losses will depend upon a Fund’s holding period in the property and the application of various loss deferral provisions in the Code. Constructive sale treatment does not apply to transactions if such transaction is closed before the end of the 30th day after the close of the Fund’s taxable year and the Fund holds the appreciated financial position unhedged throughout the 60-day period beginning with the day such transaction was closed.

The amount of long-term capital gain a Fund may recognize from certain derivative transactions with respect to interests in certain pass-through entities is limited under the Code’s constructive ownership rules. The amount of long-term capital gain is limited to the amount of such gain a Fund would have had if the Fund directly invested in the pass-through entity during the term of the derivative contract. Any gain in excess of this amount is treated as ordinary income. An interest charge is imposed on the amount of gain that is treated as ordinary income.

“Passive foreign investment companies” (“PFICs”) are generally defined as certain foreign corporations that receive at least 75% of their annual gross income from passive sources (such as interest, dividends, certain rents and royalties, or capital gains) or that hold at least 50% of their assets in investments producing such passive income. If a Fund acquires any equity interest (which generally includes not only stock but also an option to acquire stock such as is inherent in a convertible bond under proposed Treasury Regulations) in a PFIC, the Fund could be subject to federal income tax and IRS interest charges on “excess distributions” received from the PFIC or on gain from the sale of such equity in the PFIC, even if all income or gain actually received by the Fund is timely distributed to its shareholders. Excess distributions will be characterized as ordinary income even though, absent the application of PFIC rules, some excess distributions would have been classified as capital gain.

A Fund will not be permitted to pass through to its shareholders any credit or deduction for taxes and interest charges incurred with respect to PFICs. Elections may be available that would ameliorate these adverse tax consequences, but such elections could require a Fund to recognize taxable income or gain without the concurrent receipt of cash. Investments in PFICs could also result in the treatment of associated capital gains as ordinary income. The Funds may attempt to limit and/or manage their holdings in PFICs to minimize their tax liability or maximize their returns from these investments, but there can be no assurance they will be able to do so. Moreover, because it is not always possible to identify a foreign corporation as a PFIC in advance of acquiring shares in the corporation, however, a Fund may incur the tax and interest charges described above in some instances.

Rules governing the federal income tax aspects of derivatives, including swap agreements, are in a developing stage and are not entirely clear in certain respects, particularly in light of a recent IRS revenue ruling that held that income from a derivative contract with respect to a commodity index is not qualifying income for a regulated investment company. Certain requirements that must be met under the Code in order for each Fund to qualify as a regulated investment company may limit the extent to which a Fund will be able to engage in derivative transactions. The Real Return Fund intends to limit its investments in commodity-linked derivatives in a manner designed to ensure its continued qualification as a regulated investment company under the Code. Each Fund also intends to account for derivative transactions in a manner it deems to be appropriate. However, the IRS might not agree with determinations made by a Fund. If it did not, the status of the Fund as a regulated investment company might be jeopardized. The Funds intend to monitor developments in this area.

In addition to the investments described above, prospective shareholders should be aware that other investments made by the Funds may involve complex tax rules that may result in income or gain recognition by the Funds without corresponding current cash receipts. Although the Funds seek to avoid significant noncash income, such noncash income could be recognized by the Funds, in which case the Funds may distribute cash derived from other sources in order to meet the minimum distribution requirements described above. In this regard, the Funds could be required at times to liquidate investments prematurely in order to satisfy their minimum distribution requirements.

Taxation of Distributions

Except for exempt-interest dividends paid out by the Municipal Bond Fund, defined below, all distributions paid out of a Fund’s current and accumulated earnings and profits (as determined at the end of the year), whether paid in cash or reinvested in the Fund, generally are deemed to be taxable distributions and must be reported by each shareholder who is required to file a U.S. federal income tax return. For federal income tax purposes, a Fund’s earnings and profits, described above, are determined at the end of the Fund’s taxable year and are allocated pro rata to distributions paid over the entire year. Distributions in excess of a Fund’s current and accumulated earnings and profits will first be treated as a return of capital up to the amount of a shareholder’s tax basis in his or her Fund shares and then as capital gain. A Fund may make distributions in excess of earnings and profits to a limited extent, from time to time.

Distributions designated by a Fund as capital gain distributions will be taxable to shareholders as long-term capital gain (to the extent such distributions do not exceed the Fund’s actual net long-term capital gain for the taxable year), regardless of how long a shareholder has held Fund shares and do not qualify as dividends for purposes of the dividends-received deduction or as qualified dividend income (defined below). Each Fund will designate capital gains distributions, if any, in a written notice mailed by the Fund to its shareholders not later than 60 days after the close of the Fund’s taxable year.

Some states will not tax distributions made to individual shareholders that are attributable to interest a Fund earned on direct obligations of the U.S. Government if the Fund meets the state’s minimum investment or reporting requirements, if any. Investments in Government National Mortgage Association or Federal National Mortgage Association securities, bankers’ acceptances, commercial paper and repurchase agreements collateralized by U.S. Government securities generally do not qualify for tax-free treatment. This exemption may not apply to corporate shareholders.

Sales and Exchanges of Fund Shares

If a shareholder sells, pursuant to a cash or in-kind redemption or exchanges his or her Fund shares, subject to the discussion below, he or she generally will realize a taxable capital gain or loss on the difference between the amount received for the shares (or deemed received in the case of an exchange) and his or her tax basis in the shares. This gain or loss will be long-term capital gain or loss if he or she has held such Fund shares for more than one year at the time of the sale or exchange, and short-term otherwise. Under certain circumstances, an individual shareholder receiving qualified dividend income (defined below) from a Fund, explained further below, may be required to treat a loss on the sale or exchange of Fund shares as a long-term capital loss.

If a shareholder sells or exchanges Fund shares within 90 days of having acquired such shares and if, as a result of having initially acquired those shares, he or she subsequently pays a reduced sales charge on a new purchase of

shares of the Fund or a different regulated investment company, the sales charge previously incurred in acquiring the Fund’s shares generally shall not be taken into account (to the extent the previous sales charges do not exceed the reduction in sales charges on the new purchase) for the purpose of determining the amount of gain or loss on the disposition, but generally will be treated as having been incurred in the new purchase. Also, if a shareholder realizes a loss on a disposition of Fund shares, the loss will be disallowed under “wash sale” rules to the extent he or she purchases substantially identical shares within the 61-day period beginning 30 days before and ending 30 days after the disposition. Any disallowed loss generally will be reflected in an adjustment to the tax basis of the purchased shares.

If a shareholder receives a capital gain distribution with respect to any Fund share and such Fund share is held for six months or less, then (unless otherwise disallowed) any loss on the sale or exchange of that Fund share will be treated as a long-term capital loss to the extent of the capital gains distribution. In addition, if a shareholder holds Municipal Bond Fund shares for six months or less, any loss on the sale or exchange of those shares will be disallowed to the extent of the amount of exempt-interest dividends received with respect to the shares. Additionally, where a Fund regularly distributes at least 90% of its net tax exempt interest, if any, the Treasury Department is authorized to issue regulations reducing the six months holding requirement to a period of not less than the greater of 31 days or the period between regular distributions where a Fund regularly distributes at least 90% of its net tax-exempt interest, if any. No such regulations have been issued as of the date of this SAI. If the losses described in this paragraph are incurred from the redemption of shares pursuant to a periodic redemption plan, then regulations may permit an exception to the six-month rule; however, no such regulations have been issued as of the date of this SAI.

Foreign Taxes

Amounts realized by a Fund from sources within foreign countries may be subject to withholding and other taxes imposed by such countries. Tax conventions between certain countries and the United States may reduce or eliminate such taxes. If more than 50% of the value of a Fund’s total assets at the close of its taxable year consists of securities of non-U.S. corporations, the Fund will be eligible to file an annual election with the IRS pursuant to which the Fund may pass-through to its shareholders on a pro rata basis foreign income and similar taxes paid by the Fund, which may be claimed, subject to certain limitations, either as a tax credit or deduction by the shareholders. Only the International Fund expects to qualify for the election. However, even if the International Fund qualifies for the election for a year, it may not make the election for such year. If the International Fund does not so elect then shareholders will not be entitled to claim a credit or deduction with respect to foreign taxes paid or withheld. The Fund will notify each shareholder within 60 days after the close of the Fund’s taxable year whether it has elected for the foreign taxes paid by the Fund to “pass-through” for that year.

Even if the International Fund qualifies for and makes the election, foreign income and similar taxes will only pass-through to the Fund’s shareholders if the Fund and its shareholders meet certain holding period requirements. Specifically, (i) the shareholders must have held the Fund shares for at least 16 days during the 31-day period beginning 15 days prior to the date upon which the shareholders became entitled to receive Fund distributions corresponding with the pass-through of such foreign taxes paid by the Fund, and (ii) with respect to dividends received by the Fund on foreign shares giving rise to such foreign taxes, the Fund must have held the shares for at least 16 days during the 31-day period beginning 15 days prior to the date upon which the Fund became entitled to the dividend. These holding periods increase for certain dividends on preferred stock. The International Fund may choose not to make the election if the Fund has not satisfied its holding requirement.

If the International Fund makes the election, the Fund will not be permitted to claim a credit or deduction for foreign taxes paid in that year, and the Fund’s dividends paid deduction will be increased by the amount of foreign taxes paid that year. Fund shareholders that have satisfied the holding period requirements shall include their proportionate share of the foreign taxes paid by the International Fund in their gross income and treat that amount as paid by them for the purpose of the foreign tax credit or deduction. If such shareholder claims a credit for foreign taxes paid, the credit will be limited to the extent it exceeds the shareholder’s federal income tax attributable to foreign source taxable income or the amount specified in the notice mailed to that shareholder within 60 days after the close of the year. If the credit is attributable, wholly or in part, to qualified dividend income (as defined below), special rules will be used to limit the credit in a manner that reflects any resulting dividend rate differential.

In general, an individual with $300 or less of creditable foreign taxes may elect to be exempt from the foreign source taxable income and qualified dividend income limitations if the individual has no foreign source income other than qualified passive income. This $300 threshold is increased to $600 for joint filers. A deduction for foreign taxes paid may only be claimed only by shareholders that itemize their deductions.

Federal Income Tax Rates

As of the printing of this SAI, the maximum stated federal income tax rate applicable to individuals generally is 35% for ordinary income and 15% for net capital gain.

Current federal income tax law also provides for a maximum individual federal income tax rate applicable to “qualified dividend income” (defined below) equal to the highest net long-term capital gains rate, which generally is 15%. In general, “qualified dividend income” is income attributable to dividends received by the Fund, in taxable years beginning on or before December 31, 2010, from certain domestic and foreign corporations, as long as certain holding period requirements are met and the dividends are attributable to qualified dividends received by the Fund itself. If 95% or more of a Fund’s gross income constitutes qualified dividend income, all of its distributions generally will be treated as qualified dividend income in the hands of individual shareholders, as long as they have owned their Fund shares for at least 61 days during the 121-day period beginning 60 days before the Fund’s ex-dividend date (or, in the case of certain preferred stock, 91 days during the 181-day period beginning 90 days before such date). If less than 95% of the Fund’s income is attributable to qualified dividend income, then only the portion of the Fund’s distributions that are attributable to and designated as such in a timely manner will be so treated in the hands of individual shareholders. Only dividends from direct investments will qualify. Payments received by the Fund derived from securities lending, repurchase and other derivative transactions ordinarily will not qualify. The rules attributable to the qualification of Fund distributions as qualified dividend income are complex, including the holding period requirements. Individual Fund shareholders therefore are urged to consult their own tax advisors and financial planners.

The maximum stated corporate federal income tax rate applicable to ordinary income and net capital gain is 35%. Actual marginal tax rates may be higher for some shareholders, for example through reductions in deductions. Naturally, the amount of tax payable by any taxpayer will be affected by a combination of tax laws covering, for example, deductions, credits, deferrals, exemptions, sources of income and other matters. Federal income tax rates are set to increase in future years under various “sunset” provisions of federal income tax laws.

Backup Withholding

The Corporation may be required to withhold, and remit to the U.S. Treasury, subject to certain exemptions, an amount equal to 28% of all distributions and redemption proceeds (including proceeds from exchanges and redemptions in-kind, and exempt-interest dividends) paid or credited to a Fund shareholder, if the shareholder fails to furnish the Fund with a correct “taxpayer identification number” (“TIN”), generally the shareholder’s social security or employer identification number; if (when required to do so) the shareholder fails to certify under penalty of perjury that the TIN provided is correct and that the shareholder is not subject to backup withholding; or if the IRS notifies the Corporation that the shareholder’s TIN is incorrect or that the shareholder is subject to backup withholding. This backup withholding is not an additional tax imposed on the shareholder. The shareholder may apply amounts required to be withheld as a credit against his or her future federal income tax liability, provided that the required information is furnished to the IRS. If a shareholder fails to furnish a valid TIN upon request, the shareholder can also be subject to IRS penalties. The rate of backup withholding is set to increase for amounts distributed or paid after December 31, 2010.

Tax-Deferred Plans

The shares of the Funds may be available for a variety of tax-deferred retirement and other tax-advantaged plans and accounts, including IRAs, Simplified Employee Pension Plans (“SEP-IRAs”), Savings Incentive Match Plans for Employees (“SIMPLE Plans”), Roth IRAs, and Coverdell Education Savings Accounts. Prospective investors should contact their tax advisors and financial planners regarding the tax consequences to them of holding Fund shares through such plans and/or accounts.

Corporate Shareholders

Subject to limitation and other rules, a corporate shareholder of a Fund may be eligible for the dividends-received deduction on Fund distributions attributable to dividends received by the Fund from domestic corporations, which, if received directly by the corporate shareholder, would qualify for such a deduction. The dividends-received deduction may be subject to certain reductions, and a distribution by a Fund attributable to dividends of a domestic corporation will be eligible for the deduction only if certain holding period requirements are met. These requirements are complex; therefore, corporate shareholders of the Funds are urged to consult their own tax advisors and financial planners.

Foreign Shareholders

With respect to taxable years beginning on or after January 1, 2005 and before January 1, 2008, distributions designated by a Fund as “interest-related distributions” (defined below) generally will be exempt from federal income tax withholding, provided the Fund obtains a properly completed and signed certificate of foreign status from such foreign shareholder (“exempt foreign shareholder”). Interest related distributions are generally attributable to the Fund’s net interest income earned on certain debt obligations and paid to a nonresident alien individual, a foreign trust (i.e., a trust other than a trust which a U.S. court is able to exercise primary supervision over administration of that trust and one or more U.S. persons have authority to control substantial decisions of that trust), a foreign estate (i.e., the income of which is not subject to U.S. tax regardless of source) or a foreign corporation (each, a “foreign shareholder”). In order to qualify as an interest-related distribution, the Fund must designate a distribution as such not later than 60 days after the close of the Fund’s taxable year. Distributions made to exempt foreign shareholders attributable to net investment income from other sources, such as dividends received by a Fund, generally will be subject to non-refundable federal income tax withholding at a 30% rate (or such lower rate provided under an applicable income tax treaty). However, this tax generally will not apply to exempt-interest dividends from a Fund. Notwithstanding the foregoing, if a distribution described above is “effectively connected” with a U.S. trade or business (or, if an income tax treaty applies, is attributable to a permanent establishment) of the recipient foreign shareholder, federal income tax withholding and exemptions attributable to foreign persons will not apply and the distribution will be subject to the tax, reporting and withholding requirements generally applicable to U.S. persons.

In general, a foreign shareholder’s capital gains realized on the disposition of Fund shares, capital gain distributions and, with respect to taxable years of a Fund beginning on or after January 1, 2005 and before January 1, 2008, “short-term capital gain distributions” (defined below) are not subject to federal income or withholding tax, provided that the Fund obtains a properly completed and signed certificate of foreign status, unless: (i) such gains or distributions are effectively connected with a U.S. trade or business (or, if an income tax treaty applies, are attributable to a permanent establishment) of the foreign shareholder; (ii) in the case of an individual foreign shareholder, the shareholder is present in the U.S. for a period or periods aggregating 183 days or more during the year of the sale and certain other conditions are met; or (iii) such gains or, in certain cases, distributions are attributable to gain from the sale or exchange of a U.S. real property interest, as discussed in the following paragraph. If such gains or distributions are effectively connected with a U.S. trade or business (or are attributable to a U.S. permanent establishment of the foreign shareholder pursuant to an applicable income tax treaty), the tax, reporting and withholding requirements applicable to U.S. persons generally will apply to the foreign shareholder. If such gains or distributions are not effectively connected for this purpose, but the foreign shareholder meets the requirements of clause (ii) described above, such gains and distributions will be subject to U.S. federal income tax withholding tax at a 30% rate (or such lower rate provided under an applicable income tax treaty). “Short-term capital gain distributions” are distributions attributable to its net short-term capital gain and designated as such from a Fund in a written notice mailed by the Fund to its shareholders not later than 60 days after the close of the Fund’s taxable year.

Under recently enacted legislation, any distribution by a Fund to a foreign shareholder that is attributable to gain from the Fund’s sale or exchange of a U.S. real property interest (which is defined in the Code to include, among other things, the stock of certain U.S. corporations that are substantially invested, directly or indirectly, in U.S. real property) may be subject to U.S. tax if more than half of a Fund’s assets are invested directly or indirectly in U.S. real property interests, taking into account the Fund’s investments in certain regulated investment companies and most REITs. Any such distributions that are taxable may be required to be reported by a foreign shareholder on a U.S. federal income tax return and will be subject to U.S. income tax at the rates applicable to U.S. persons and/or

may be subject to federal income tax withholding at a rate of 35% (or less to the extent provided in Treasury Regulations). The preceding distribution rules generally will not apply to tax years beginning on or after January 1, 2008, except in limited circumstances in which a Fund has invested in a REIT. In addition, in certain circumstances, if a foreign shareholder disposes of its Fund shares prior to a distribution and acquires, or enters into a contract or option to acquire, a substantially identical interest in the Fund during the 61-day period beginning 30 days before the ex-dividend date of the distribution (a “wash sale transaction”), the foreign shareholder may be treated as having gain from the sale of exchange of a U.S. real property interest, which may be subject to U.S. income tax and reporting requirements described above with respect to distributions. In addition to the distribution and wash sale transaction rules described above, in limited circumstances Fund shares could themselves be treated as U.S. real property interests, the disposition of which could be subject to similar U.S. income and withholding tax and reporting requirements. While the Funds do not expect Fund shares to constitute U.S. real property interests, a portion of a Fund’s distributions may be attributable to gain from the sale or exchange of U.S. real property interests and foreign shareholders may, therefore, be subject to U.S. tax and reporting requirements under the distribution rules described in this paragraph. Foreign shareholders should contact their tax advisors and financial planners regarding the tax consequences to them of such distributions.

Even if permitted to do so, the Funds provide no assurance that they will designate any distributions as interest-related distributions or short-term capital gain distributions. Even if a Fund makes such designations, if you hold Fund shares through an intermediary, no assurance can be made that your intermediary will respect such designations.

Special rules apply to foreign partnerships and those holding Fund shares through foreign partnerships. If the International Fund qualifies and makes an election to pass-through foreign taxes to its shareholders, foreign shareholders of the Fund generally will be subject to increased federal income taxation without a corresponding benefit for the pass-through of foreign taxes.

Additional Considerations for the Municipal Bond Fund

If at least 50% of the value of a regulated investment company’s total assets at the close of each quarter of its taxable years consists of obligations the interest on which is exempt from federal income tax, it will qualify under the Code to pay “exempt-interest dividends.” The Municipal Bond Fund intends to so qualify and is designed to provide shareholders with a high level of income exempt from federal income tax in the form of exempt-interest distributions.

Distributions of capital gains or income not attributable to interest on the Municipal Bond Fund’s tax-exempt obligations will not constitute exempt-interest dividends and will be taxable to its shareholders. The exemption of interest income derived from investments in tax-exempt obligations for federal income tax purposes may not result in a similar exemption under the laws of a particular state or local taxing authority.

Not later than 60 days after the close of its taxable year, the Municipal Bond Fund will notify its shareholders of the portion of the distributions for the taxable year which constitutes exempt-interest dividends. The designated portion cannot exceed the excess of the amount of interest excludable from gross income under Section 103 of the Code received by the Fund during the taxable year over any amounts disallowed as deductions under Sections 265 and 171(a)(2) of the Code. Interest on indebtedness incurred to purchase or carry shares of the Municipal Bond Fund will not be deductible to the extent that the Fund’s distributions are exempt from federal income tax.

In addition, certain deductions and exemptions have been designated “tax preference items” which must be added back to taxable income for purposes of calculating federal AMT. Tax preference items include tax-exempt interest on “private activity bonds.” To the extent that the Municipal Bond Fund invests in private activity bonds, its shareholders will be required to report that portion of the Fund’s distributions attributable to income from the bonds as a tax preference item in determining their federal AMT, if any. Shareholders will be notified of the tax status of distributions made by the Fund. Persons who may be “substantial users” (or “related persons” of substantial users) of facilities financed by private activity bonds should consult their tax advisors before purchasing shares in the Municipal Bond Fund. Furthermore, shareholders will not be permitted to deduct any of their share of the Municipal Bond Fund’s expenses in computing their federal AMT. In addition, exempt-interest dividends

paid by the Municipal Bond Fund to a corporate shareholder is included in the shareholder’s “adjusted current earnings” as part of its federal AMT calculation, and may also affect its federal “environmental tax” liability. As of the date of this SAI, individuals are subject to the federal AMT at a maximum rate of 28% and corporations are subject to the federal AMT at a maximum rate of 20%. Shareholders with questions or concerns about the federal AMT should consult their own tax advisors. A significant portion of exempt-interest dividends from the Municipal Bond Fund may be treated as a “tax preference item,” as discussed above.

The IRS is paying increased attention to whether obligations intended to produce interest exempt from federal income taxation in fact meet the requirements for such exemption. Ordinarily, the Municipal Bond Fund relies on an opinion from the issuer’s bond counsel that interest on the issuer’s obligation will be exempt from federal income taxation. However, no assurance can be given that the IRS will not successfully challenge such exemption, which could cause interest on the obligation to be taxable and could jeopardize the Municipal Bond Fund’s ability to pay exempt-interest dividends.

FINANCIAL INFORMATION

The Financial Statements incorporated herein by reference from the Funds’ 2006 Annual Report to Shareholders have been audited by Ernst & Young LLP, independent registered public accounting firm, as stated in their report, which is incorporated herein by reference, and has been so incorporated in reliance upon the report of such firm given upon their authority as experts in auditing and accounting. The Funds’ 2005 Annual Report to Shareholders which was audited by Deloitte & Touche LLP, the Funds’ former independent registered public accounting firm, is also incorporated by reference.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THE PROSPECTUS, INCORPORATED HEREIN BY REFERENCE IN THIS STATEMENT OF ADDITIONAL INFORMATION, IN CONNECTION WITH THE OFFERING MADE BY THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR PRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUNDS. THIS STATEMENT OF ADDITIONAL INFORMATION DOES NOT CONSTITUTE AN OFFERING BY THE FUNDS IN ANY JURISDICTION IN WHICH SUCH AN OFFERING MAY NOT LAWFULLY BE MADE.

APPENDIX A - RATINGS

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:

•

Leading market positions in well established industries.

•

High rates of return on funds employed.

•

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

•

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

•

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

F-1— (Highest Credit Quality) Commercial paper assigned this rating is regarded as having the strongest degree of assurance for timely payment.

F-2— (Very Good Credit Quality) Issues assigned this rating reflect an assurance of timely payment, but margin of safety is not as great as in the case of the higher ratings.

APPENDIX B

Old Westbury Funds, Inc.

Proxy Voting Policy

It is the policy of the Board of Directors of Old Westbury Funds, Inc. (the “Board”) to delegate the responsibility for voting proxies relating to portfolio securities to each investment adviser as a part of the adviser’s general management of the portfolio, subject to the Board’s continuing oversight. ¹ The following are the guidelines adopted by the Board for the administration of this policy:

Fiduciary Duty

Each adviser to whom authority to vote on behalf of the Old Westbury Funds, Inc. (the “Funds”) is delegated acts as a fiduciary of the Funds and must vote proxies in a manner consistent with the best interest of the Funds and its shareholders.

Review of Policies & Procedures

Each adviser must present to the Board its policies, procedures and other guidelines for voting proxies at least annually, and must notify the Board promptly of material changes to any of these documents. The Board shall review the policies, procedures and other guidelines presented by each adviser to determine that they meet the requirements of this policy.

Voting Record Reporting

Each adviser must include in its Board presentation materials once each year a record of each proxy voted with respect to portfolio securities of the Funds during the year. The report must include a separate report of proxies with respect to which the adviser or its affiliates have such a relationship that proxies presented with respect to those companies give rise to a conflict of interest between the adviser and the Funds indicating the nature of the conflict of interest and how that conflict was resolved with respect to the voting of the proxy.

Sub-advisers

The adviser may, but is not required to further delegate the responsibility for voting proxies relating to portfolio securities to a sub-adviser retained to provide investment advisory services to portfolios of the Funds. If such responsibility is delegated to a sub-adviser, the sub-adviser shall assume the reporting responsibilities of the adviser under these policy guidelines.

Record Retention

Each adviser will maintain such records with respect to the voting of proxies as may be required by the Investment Advisers Act of 1940 and the rules promulgated thereunder or by the Investment Company Act of 1940 and the rules promulgated thereunder.

The advisers of the Funds and PFPC Distributors, Inc., the Funds’ principal underwriter, are not affiliates. The delegation of authority to the advisers to vote proxies relating to portfolio securities eliminates the potential for conflicts of interest between PFPC Distributors, Inc. and the Funds’ shareholders from the proxy voting process.

Revocation

The delegation of authority by the Board to vote proxies relating to portfolio securities of the Funds is entirely voluntary and may be revoked by the Board, in whole or in part, at any time.

B ESSEMER I NVESTMENT M ANAGEMENT LLC

Proxy Voting Policy Guidelines

December 1, 2006

An important component of Bessemer’s investment discipline is making appropriate proxy voting decisions. In an effort to support proposals that maximize the value of our clients’ investments over the long term, Bessemer has developed a set of principles that guide our voting decisions. While Bessemer’s voting will generally follow these guidelines, specific voting decisions may differ in any instance where Bessemer believes it to be in the best interest of shareholders.

The Bessemer Proxy Committee (“Proxy Committee”) ² oversees the proxy voting process. The Proxy Committee reviews and approves amendments to the Bessemer Proxy Voting Policy Guidelines every six months or more frequently on a needed basis. The Proxy Committee will seek the input of Bessemer’s portfolio managers and research analysts in regards to controversial matters (i.e. contested board election, merger and acquisition activity, etc) prior to making a voting decision.

Bessemer has contracted with Institutional Shareholder Services (“ISS”), a professional proxy voting and corporate governance service, to provide research on proxy issues and to vote proxies in accordance with Bessemer’s guidelines.

Bessemer may refrain from voting in certain cases where it deems appropriate, if, for example, the cost of voting appears to exceed the expected benefits, or when voting could result in the imposition of trading or other restrictions that may restrict liquidity or otherwise impair investment returns. These conditions are most likely to exist with respect to non-U.S. securities.

1. Board of Directors

Voting on Director Nominees in Uncontested Elections

Votes on uncontested director nominees of U.S. companies will be cast as recommended by ISS based on their research and analysis, except that votes will be WITHHELD from director nominees who:

•

Have poor attendance history at board and committee meetings as determined by ISS;

•

Own no company stock and have served on the board for more than one year;

•

Are inside directors or affiliated outside directors and the full board is less than majority independent;

•

Are inside directors or affiliated outside directors and sit on the audit, compensation, or nominating committee;

•

Are compensation committee members and the company has poor compensation practices as determined by ISS;

•

Have ignored a proposal that was approved by either a majority of the shares outstanding in any year or by the majority of votes cast for two consecutive years;

•

Have adopted a poison pill without shareholder approval since the company’s last annual meeting where there is no requirement to put the pill to shareholder vote within 12 months of its adoption;

•

Have kept in place a dead-hand or modified dead-hand poison pill;

²	Comprised of Bessemer’s Chief Investment Officer, U.S. Equities Portfolio Manager, Compliance Officer, and Senior Portfolio Analyst.

B ESSEMER I NVESTMENT M ANAGEMENT LLC

•

Have taken egregious actions or failed to replace management as appropriate, as determined by ISS.

Vote FOR nominees for directors of non-U.S. companies in uncontested elections unless there are specific concerns adverse to shareholder interest.

Classification/Declassification of the Board

Vote AGAINST proposals to classify the board. Vote FOR proposals to repeal classified boards and to elect all directors annually.

Independent Chairman (Separate Chairman/CEO)

Vote FOR proposals requiring that the positions of chairman and CEO be held separately.

Majority of Independent Directors/Establishment of Committees

Vote FOR proposals asking that a majority or more of directors be independent unless the board composition already meets the proposed threshold under ISS’ definition of independence.

Vote FOR proposals asking that a majority or more of directors on the board, audit, compensation, and/or nominating committees be independent, unless the committee composition already meets this standard.

Majority Vote Proposals

Vote FOR reasonably crafted proposals calling for directors to be elected with an affirmative majority of votes cast and/or the elimination of the plurality standard for electing directors (including binding resolutions requesting that the board amend the company’s bylaws), provided the proposal includes a carve-out for a plurality voting standard when there are more director nominees than board seats (e.g. contested elections).

Stock Ownership Requirements

Vote FOR proposals that mandate a minimum amount of stock that directors must own in order to qualify as a director or to remain on the board. Stock ownership on the part of directors is desirable.

2. Shareholder Rights

Shareholder Ability to Act by Written Consent

Vote AGAINST proposals to restrict or prohibit shareholder ability to take action by written consent.

Vote FOR proposals to allow or make easier shareholder action by written consent.

Shareholder Ability to Call Special Meetings

Vote AGAINST proposals to restrict or prohibit shareholder ability to call special meetings.

B ESSEMER I NVESTMENT M ANAGEMENT LLC

Vote FOR proposals that remove restrictions on the right of shareholders to act independently of management.

Supermajority Vote Requirements

Vote AGAINST proposals to require a supermajority shareholder vote. Vote FOR proposals to lower supermajority vote.

Cumulative Voting

Vote FOR proposals to eliminate cumulative voting. Vote AGAINST proposals to restore or permit cumulative voting.

Confidential Voting

Vote FOR proposals requesting that corporations adopt confidential voting, use independent vote tabulators and use independent inspectors of election, as long as the proposal includes a provision for proxy contests as follows: In the case of a contested election, management should be permitted to request that the dissident group honor its confidential voting policy. If the dissidents agree, the policy remains in place. If the dissidents will not agree, the confidential voting policy is waived. Vote FOR management proposals to adopt confidential voting.

3. Auditors

Vote FOR proposals to ratify auditors, unless any of the following apply:

•

An auditor has a financial interest in or association with the company, and is therefore not independent

•

There is reason to believe that the independent auditor has rendered an opinion which is neither accurate nor indicative of the company’s financial position.

4. Proxy Contests

Voting for Director Nominees in Contested Elections

Votes in a contested election of directors will be evaluated on a CASE-BY-CASE basis, taking into consideration the company’s long-term financial performance, management’s track record, the qualifications of each slate of director nominees and the actions being recommended by each.

Reimbursing Proxy Solicitation Expenses

If the vote is in favor of the dissidents, vote FOR reimbursing proxy solicitation expenses. If the vote is against the dissidents, vote AGAINST reimbursing proxy solicitation expenses.

5. Capital Structure

Common Stock Authorization

Vote FOR proposals to increase the number of shares of common stock authorized for issuance unless ISS’s research and analysis indicate that the resulting authorized but unissued shares are

B ESSEMER I NVESTMENT M ANAGEMENT LLC

excessive. Vote AGAINST proposals at companies with dual-class capital structures to increase the number of authorized shares of the class of stock that has superior voting rights. Vote FOR proposals to approve increases beyond the allowable increase when a company’s shares are in danger of being delisted or if a company’s ability to continue to operate as a going concern is uncertain.

Dual-class Stock

Vote AGAINST proposals to create a new class of common stock with superior voting rights.

Vote AGAINST proposals to create a new class of nonvoting or subvoting common stock.

6. Executive/Director Compensation and Employee Stock Plans

Equity-Based Compensation Proposals

Vote FOR reasonably-crafted proposals requiring senior management to own a specified amount of company stock.

Votes with respect to compensation plans will be cast as recommended by ISS based on their research and analysis, which is summarized below. ISS will value every award type granted by U.S. companies, using the expanded compensation data disclosed under the SEC’s measure the total cost to shareholders of a company’s equity plans. If the cost is deemed to be reasonable, then ISS generally will vote FOR the proposal. However, ISS generally will vote AGAINST equity incentive plan proposals, even if the plans’ cost is deemed reasonable, if any of the following factors apply: a) the ability to reprice stock options without prior shareholder approval, b) excessive CEO compensation relative to company performance (pay-for-performance disconnect), c) excessive three-year average burn rate, or d) the plan is a vehicle for poor pay practices, such as egregious compensation practices.

ISS will evaluate plans proposed by non-U.S. companies using the data available to analyze dilution issues and other plan terms, including plan administration.

Management Proposals Seeking Approval to Reprice Options

Vote AGAINST management proposals seeking approval to reprice options.

Employee Stock Purchase Plans – Qualified Plans

Vote AGAINST qualified employee stock purchase plans where any of the following apply:

•

Purchase price is less than 85 percent of fair market value; or

•

Offering period is greater than 27 months; or

•

The number of shares allocated to the plan is more than ten percent of the outstanding shares.

Employee Stock Purchase Plans – Non-Qualified Plans

Vote FOR nonqualified employee stock purchase plans with all the following features:

•

Broad-based participation (i.e., all employees of the company with the exclusion of individuals with 5 percent or more of beneficial ownership of the company);

B ESSEMER I NVESTMENT M ANAGEMENT LLC

•

Limits on employee contribution, which may be a fixed dollar amount or expressed as a percent of base salary;

•

Company matching contribution up to 25 percent of employee’s contribution, which is effectively a discount of 20 percent from market value;

•

No discount on the stock price on the date of purchase if there is a company matching contribution.

Vote AGAINST nonqualified employee stock purchase plans when any of the plan features do not meet the above criteria. If the company matching contribution exceeds 25 percent of employee’s contribution, evaluate the cost of the plan against its allowable cap as calculated by ISS.

Employee Stock Ownership Plans (ESOPs)

Vote FOR proposals to implement an ESOP or increase authorized shares for existing ESOPs, unless the number of shares allocated to the ESOP is excessive (more than five percent of outstanding shares).

Incentive Bonus Plans and Tax Deductibility Proposals (OBRA-Related Compensation Proposals)

Vote FOR proposals that simply amend shareholder-approved compensation plans to include administrative features or place a cap on the annual grants any one participant may receive to comply with the provisions of Section 162(m).

Vote FOR proposals to add performance goals to existing compensation plans to comply with the provisions of Section 162(m) unless they are clearly inappropriate.

Amendments to existing plans to increase shares reserved and to qualify for favorable tax treatment under the provisions of Section 162(m) will be cast as recommended by ISS based on their research and analysis as long as the plan does not exceed the allowable cap and the plan does not violate any other supplemental policies.

Generally vote FOR cash or cash and stock bonus plans that are submitted to shareholders for the purpose of exempting compensation from taxes under the provisions of Section 162(m) if no increase in shares is requested.

Proposals on Compensation

Disclosure/Setting Levels or Types of Compensation for Executives and Directors: Generally, vote FOR proposals seeking additional disclosure of executive and director pay information, provided the information requested is relevant to shareholders’ needs, would not put the company at a competitive disadvantage relative to its industry, and is not unduly burdensome to the company. Vote AGAINST proposals seeking to set absolute levels on compensation or otherwise dictate the amount or form of compensation. Vote AGAINST proposals requiring director fees be paid in stock only. All other proposals regarding executive and director pay will be voted taking into account company performance, pay level versus peers, pay level versus industry, and long term corporate outlook.

Performance-Based Awards: Generally vote FOR proposals advocating the use of performance-based awards like indexed, premium-priced, and performance-vested options or performance-based shares, unless: 1) The proposal is overly restrictive (e.g., it mandates that awards to all

B ESSEMER I NVESTMENT M ANAGEMENT LLC

employees must be performance-based or all awards to top executives must be a particular type, such as indexed options); 2) The company demonstrates that it is using a substantial portion of performance-based awards for its top executives, where substantial portion would constitute 50 percent of the shares awarded to those executives for that fiscal year.

Severance Agreements for Executives/Golden Parachutes: Vote FOR proposals to require golden parachutes or executive severance agreements to be submitted for shareholder ratification, unless the proposal requires shareholder approval prior to entering into employment contracts. Proposals to ratify golden parachutes are voted FOR if they include the following: 1) The triggering mechanism should be beyond the control of management; 2) The amount should not exceed three times base amount (defined as the average annual taxable W-2 compensation during the five years prior to the year in which the change of control occurs; 3) Change-in-control payments should be double-triggered, i.e., (a) after a change in control has taken place, and (b) termination of the executive as a result of the change in control. Change in control is defined as a change in the company ownership structure.

Supplemental Executive Retirement Plans (SERPs): Generally vote FOR proposals requiring companies to draft reports detailing their SERP programs as well as proposals requesting to put extraordinary benefits contained in SERP agreements to a shareholder vote unless the company’s executive pension plans do not contain excessive benefits beyond what is offered under employee-wide plans.

Holding Periods: Vote in accordance with ISS’s recommendations on proposals asking companies to adopt holding periods or retention ratios for their executives. ISS’s recommendations generally take into account:

•

Whether the company has any holding period, retention ratio or officer ownership requirements in place. These should consist of:

•

Rigorous stock ownership guidelines, or

•

A short-term holding period requirement (six months to one year) coupled with a significant long-term ownership requirement, or

•

A meaningful retention ratio

•

officer stock ownership and the degree to which it meets or exceeds the proponent’s suggested holding period/retention ratio or the company’s own stock ownership or retention requirements.

7. Poison Pills

Vote FOR proposals that ask a company to submit its poison pill for shareholder ratification. Vote FOR proposals to redeem a company’s poison pill and vote AGAINST management proposals to ratify a poison pill.

8. Mergers and Corporate Restructurings

Vote CASE-BY-CASE on mergers and corporate restructuring based on such factors as pricing and strategic rationale.

B ESSEMER I NVESTMENT M ANAGEMENT LLC

9. Reincorporation Proposals

Proposals to change a company’s jurisdiction of incorporation will be evaluated by giving consideration to both financial and corporate governance concerns, including the reasons for reincorporating, a comparison of the governance provisions, and a comparison of the jurisdictional laws. Vote FOR reincorporation when recommended by company management.

10. Social and Environmental Issues

These issues cover a wide range of topics, including consumer and public safety, environment and energy, general corporate issues, labor standards and human rights, military business, and workplace diversity, and will be evaluated as to whether the proposal will enhance the economic value of the company.

The Proxy Committee will review ISS’s annual report on social policy shareholder resolutions as part of the Proxy Committee’s review of these guidelines.

In general, vote AGAINST proposals unless recommended by company management.

11. Issues in Countries with Share Blocking

Share blocking (the practice in some countries of prohibiting a shareholder from selling its shares for a specified period once it has cast its vote on an upcoming proxy) imposes a significant burden on shareholders in terms of reduced liquidity. Even in countries that permit unblocking, a lengthy delay is involved before a shareholder can execute a desired sale of securities. As a result of the potential inability of to sell shares when needed, Bessemer will NOT VOTE proxies in companies located in countries that practice share blocking.

12. Other Issues

All other issues are voted in accordance with the presumption that Bessemer will vote FOR proposals recommended by management and AGAINST proposals unless recommended by management.

13. Conflicts of Interest

In those situations where Bessemer determines that there is a potential conflict of interest, Bessemer will generally retain an independent fiduciary to vote the proxy. In certain cases, the proxy committee will refer the proxy to the governing board of the relevant investment company or the client institution.

Bessemer Trust Company, N.A. (“Bessemer”) and its affiliates provide services to the Old Westbury mutual funds, including investment advisory, custodian, shareholder servicing and administrative services, and receive fees for such services. Each mutual fund is described in a Prospectus that contains more complete information about the fund, including such fees, fund investment objectives and risks. Investors should read the Prospectus carefully before investing. The data provided here is for informational purposes only, is not intended as tax, legal or investment advice and is not a solicitation or recommendation to buy or sell the securities mentioned. Securities referred to herein are not deposits or other obligations of Bessemer or any other bank, are not guaranteed by Bessemer or any other bank, are not insured by the FDIC or any other governmental agency, and involve investment risks, including possible loss of principal invested.

B ESSEMER I NVESTMENT M ANAGEMENT LLC

Adopted as of May 19, 2003,

Restated as of November 18, 2003,

Restated as of May 6, 2004, and

Restated as of January 4, 2005

Restated as of April 27, 2006

Restated as of December 1, 2006

DIMENSIONAL FUND ADVISORS LP

PROXY VOTING POLICIES

Dimensional Fund Advisors LP (“Dimensional”) has adopted certain Proxy Voting Policies and Procedures (the “Voting Policies”) and Proxy Voting Guidelines (“Voting Guidelines”) for voting proxies on behalf of clients. The Investment Committee at Dimensional is generally responsible for overseeing Dimensional’s proxy voting process. The Investment Committee may designate one or more of its members to oversee specific, on-going compliance with respect to the Voting Policies and may designate other personnel of Dimensional to vote proxies on behalf of its clients, including all authorized traders of Dimensional.

Dimensional votes proxies in a manner it believes to be consistent with the best interests of its clients. Generally, Dimensional analyzes proxy statements on behalf of its clients in accordance with the Voting Policies and the Voting Guidelines. Most proxies that Dimensional receives will be voted in accordance with the predetermined Voting Guidelines. Since nearly all proxies are voted in accordance with the Voting Guidelines, it normally will not be necessary for Dimensional to make an actual determination of how to vote a particular proxy, thereby largely eliminating conflicts of interest for Dimensional during the proxy voting process. However, the Proxy Policies do address the procedures to be followed if a conflict of interest arises between the interests of Dimensional’s clients, and the interests of Dimensional or its affiliates. If an Investment Committee member has actual knowledge of a conflict of interest and recommends a vote contrary to the Voting Guidelines, Dimensional, prior to voting, will fully disclose the conflict to the client and vote the proxy in accordance with such client’s direction.

The Voting Guidelines summarize Dimensional’s positions on various issues and give a general indication as to how Dimensional will vote proxies on each issue. Dimensional will usually vote proxies in accordance with the Voting Guidelines. However, Dimensional reserves the right to vote certain issues counter to the Voting Guidelines if, after a review of the matter (which analysis will be documented in writing), Dimensional believes that a client’s best interests would be served by such vote. To the extent that the Voting Guidelines do not address a potential voting issue, Dimensional will vote on such issue in a manner that is consistent with the spirit of the Voting Guidelines and that Dimensional believes would be in the best interest of the client. Pursuant to the Voting Guidelines, Dimensional generally votes for matters such as: (i) routine business decisions (such as stock splits, name changes and setting the number of directors); (ii) reverse anti-takeover amendments; (iii) auditors; (iv) directors; (v) proposals establishing or increasing indemnification of directors; (vi) proposals eliminating or reducing director’s liability; (vii) equal access to the proxy; (viii) the right to act by written consent of shareholders and to hold special meetings of shareholders; (ix) the separation of audit and consulting responsibilities; and (x) confidential voting. As provided in the Voting Guidelines, Dimensional generally votes against matters such as: (i) anti-takeover measures (such as reincorporation to facilitate a takeover defense, adoption of fair price amendments, institution of classified boards of directors, elimination of cumulative voting and creation of super majority provisions); (ii) the issuance of a new class of stock with unequal voting rights; and (iii) blank check preferred stock proposals. The Voting Guidelines also provide that Dimensional will generally consider on an individual basis such proposals as: (i) increasing authorized common stock; (ii) establishing or increasing a stock option plan or other employee compensation plan; (iii) approving a reorganization or merger; (iv) approving a proposal by a dissident shareholder in a proxy battle; and (v) issues related to independent directors.

Under certain circumstances, Dimensional may not be able to vote proxies or Dimensional may find that the expected economic costs from voting outweigh the benefits associated with voting. Generally, Dimensional does not vote proxies on foreign securities due to local restrictions, customs or anticipated expenses. Dimensional determines whether to vote proxies of non-U.S. companies on a portfolio-by-portfolio basis, and to the extent it is appropriate, Dimensional generally implements uniform voting procedures for all proxies of a country. Dimensional periodically reviews voting logistics, including costs and other voting difficulties, on a portfolio-by-portfolio and country-by-country basis, in order to determine if there have been any material changes that would affect Dimensional’s decision of whether or not to vote.

ADDRESSES

OLD WESTBURY FUNDS, INC.

760 Moore Road

King of Prussia, Pennsylvania 19406

Distributor

PFPC DISTRIBUTORS, INC.

760 Moore Road

King of Prussia, Pennsylvania 19406

Investment Adviser

BESSEMER INVESTMENT MANAGEMENT LLC

630 Fifth Avenue

New York, New York 10111

Investment Sub-Advisers

BESSEMER GROUP (U.K.) LIMITED

(SUB-ADVISER TO THE INTERNATIONAL FUND)

One Stanhope Gate, London, England, W1K 1AF

DIMENSIONAL FUND ADVISORS LP

(SUB-ADVISER TO THE GLOBAL SMALL CAP FUND)

1299 Ocean Avenue, 11 ^th Floor

Santa Monica, California 90401

CHAMPLAIN INVESTMENT PARTNERS, LLC

(SUB-ADVISER TO THE GLOBAL SMALL CAP FUND)

346 Shelburne Road

Burlington, Vermont 05401

Custodians

BESSEMER TRUST COMPANY (NEW JERSEY)

100 Woodbridge Center Drive

Woodbridge, New Jersey 07095

CITIBANK, N.A.

111 Wall Street

New York, New York 10005

Administrator, Fund Accountant and Transfer Agent

PFPC INC.

760 Moore Road

King of Prussia, Pennsylvania 19406

Independent Registered Public Accounting Firm

ERNST & YOUNG LLP

5 Times Square

New York, New York 10036

Fund Counsel

MORRISON & FOERSTER LLP

2000 Pennsylvania Avenue NW, Suite 5500

Washington, District of Columbia 20006

Counsel to the Independent Directors

PAUL HASTINGS JANOFSKY & WALKER LLP

75 East 55 ^th Street

New York, New York 10022

PART C

OTHER INFORMATION

OLD WESTBURY FUNDS, INC.


ITEM 23.		EXHIBITS
(a)(i)		Articles of Incorporation of the Registrant are incorporated by reference to Pre-Effective Amendment No. 1 to Registrant’s Registration Statement filed on October 5, 1993 (File No. 33-66528).

(a)(ii)		Articles Supplementary of the Registrant, Amendment No. 1 are incorporated by reference to Post-Effective Amendment No. 14 to Registrant’s Registration Statement filed on February 29, 2000 (File No. 33-66528).

(a)(iii)		Articles Supplementary of the Registrant, Amendment No. 2 are incorporated by reference to Post-Effective Amendment No. 14 to Registrant’s Registration Statement filed on February 29, 2000 (File No. 33-66528).

(a)(iv)		Articles Supplementary of the Registrant, Amendment No. 3 are incorporated by reference to Post-Effective Amendment No. 14 to Registrant’s Registration Statement filed on February 29, 2000 (File No. 33-66528).

(a)(v)		Articles Supplementary of the Registrant, Amendment No. 4 are incorporated by reference to Post-Effective Amendment No. 20 to Registrant’s Registration Statement filed on February 20, 2004 (File No. 33-66528).

(a)(vi)		Articles Supplementary of the Registrant, Amendment No. 5 are incorporated by reference to Post-Effective Amendment No. 21 to Registrant’s Registration Statement filed on May 28, 2004 (File No. 33-66528).

(a)(vii)		Articles Supplementary of the Registrant, Amendment No. 6 are incorporated by reference to Post-Effective Amendment No. 25 to Registrant’s Registration Statement filed on March 16, 2005 (File No. 33-66528).

(b)		Copy of By-Laws of the Registrant are incorporated by reference to Post-Effective Amendment No. 3 to Registrant’s Registration Statement filed on February 28, 1996 (File No. 33-66528).

(c)		Not Applicable.

(d)(i)		Investment Advisory Agreement between the Registrant, on behalf of the Real Return Fund and Global Small Cap Fund, and Bessemer Investment Management LLC (“BIM”) dated March 16, 2005 is incorporated by reference to Post-Effective Amendment No. 25 to Registrant’s Registration Statement filed on March 16, 2005 (File No. 33-66528).



(d)(ii)		Amendment No. 1 to the Investment Advisory Agreement dated September 1, 2005 between the Registrant, on behalf of the Real Return Fund and Global Small Cap Fund, and BIM to add the Large Cap Equity Fund, Mid Cap Equity Fund, Fixed Income Fund, Municipal Bond Fund and International Fund, is incorporated by reference to Post-Effective Amendment No. 26 to Registrant’s Registration Statement filed on February 28, 2006 (File No. 33-66528).

(d)(iii)		Sub-Advisory Agreement dated April 6, 2005 among the Registrant, BIM and Dimensional Fund Advisors LP (formerly, Dimensional Fund Advisors Inc.) (“Dimensional”) with respect to the Global Small Cap Fund is filed herewith.

(d)(iv)		Sub-Advisory Agreement dated May 14, 2002 among the Registrant, BIM and Bessemer Group U.K. with respect to the International Fund is filed herewith.

(d)(v)		Sub-Advisory Agreement dated January 1, 2006 among the Registrant, BIM and Champlain Investment Partners, LLC (“Champlain”) with respect to the Global Small Cap Fund is filed herewith.

(d)(vi)		Form of Fee Waiver Commitment Letter of BIM and Bessemer Trust Company, N.A. is filed herewith.

(e)(i)		Underwriting Agreement between Registrant and PFPC Distributors, Inc. dated April 3, 2006 is incorporated by reference to Post-Effective Amendment No. 27 to Registrant’s Registration Statement filed on December 14, 2006 (File No. 33-66528).

(e)(ii)		Form of Selling Agreement is incorporated by reference to Post-Effective Amendment No. 27 to Registrant’s Registration Statement filed on December 14, 2006 (File No. 33-66528).

(f)		Not Applicable.

(g)(i)		Custody Agreement between the Registrant and Bessemer Trust Company is incorporated by reference to Post-Effective Amendment No. 1 to Registrant’s Registration Statement filed on October 5, 1993 (File No. 33-66528).

(g)(ii)		Amendment to Custodian Agreement dated May 2, 2001 between the Registrant and Bessemer Trust Company is incorporated by reference to Post-Effective Amendment No. 27 to Registrant’s Registration Statement filed on December 14, 2006 (File No. 33-66528).

(g)(iii)		Second Amendment to Custodian Agreement dated September 1, 2004 between Registrant and Bessemer Trust Company is incorporated by reference to Post-Effective Amendment No. 24 to Registrant’s Registration Statement filed on January 31, 2005 (File No. 33-66528).

(g)(iv)		Third Amendment to Custodian Agreement dated September 1, 2005 between Registrant and Bessemer Trust Company is incorporated by reference to Post-Effective Amendment No. 26 to Registrant’s Registration Statement filed on February 28, 2006 (File No. 33-66528).



(g)(v)		Fourth Amendment to Custodian Agreement dated December 6, 2006 between the Registrant and Bessemer Trust Company, N.A. is filed herewith.

(g)(vi)		Global Custodial Services Agreement dated March 16, 2005 between Registrant and Citibank, N.A. is filed herewith.

(g)(vii)		First Amendment to Custodian Agreement dated December 1, 2006 between the Registrant and Citibank, N.A. is filed herewith.

(h)(i)		Administration and Accounting Services Agreement dated April 3, 2006 between the Registrant and PFPC Inc. is incorporated by reference to Post-Effective Amendment No. 27 to Registrant’s Registration Statement filed on December 14, 2006 (File No. 33-66528).

(h)(ii)		Transfer Agency Services Agreement dated April 3, 2006 between the Registrant and PFPC Inc. is incorporated by reference to Post-Effective Amendment No. 27 to Registrant’s Registration Statement filed on December 14, 2006 (File No. 33-66528).

(i)		Legal Opinion of Morrison & Foerster LLP is filed herewith.

(j)(i)		Consent of Ernst & Young LLP is filed herewith.

(j)(ii)		Consent of Deloitte & Touche LLP is filed herewith.

(k)		Not Applicable.

(m)		Shareholder Servicing Plan on behalf of the Funds (including Form of Shareholder Servicing Agreement between the Registrant and Bessemer Trust Company, N.A. and Form of Shareholder Sub-Servicing Agreement) is filed herewith.

(n)		Not Applicable.

(o)		Reserved.

(p)(i)		Code of Ethics of the Registrant as amended December 2004 is incorporated by reference to Post-Effective Amendment No. 25 to Registrant’s Registration Statement filed on March 16, 2005 (File No. 33-66528).

(p)(ii)		Code of Ethics of BIM and its affiliates is incorporated by reference to Post-Effective Amendment No. 25 to Registrant’s Registration Statement filed on March 16, 2005 (File No. 33-66528).



(p)(iii)		Code of Ethics of PFPC Distributors, Inc. is incorporated by reference to Post-Effective Amendment No. 27 to Registrant’s Registration Statement filed on December 14, 2006 (File No. 33-66528).

(p)(iv)		Code of Ethics of Dimensional is incorporated by reference to Post-Effective Amendment No. 27 to Registrant’s Registration Statement filed on December 14, 2006 (File No. 33-66528).

(p)(v)		Code of Ethics of Champlain is incorporated by reference to Post-Effective Amendment No. 26 to Registrant’s Registration Statement filed on February 28, 2006 (File No. 33-66528).

(q)(i)		Power of Attorney of Patricia L. Francy is incorporated by reference to Post-Effective Amendment No. 27 to Registrant’s Registration Statement filed on December 14, 2006 (File No. 33-66528).

(q)(ii)		Power of Attorney of Marc D. Stern is incorporated by reference to Post-Effective Amendment No. 27 to Registrant’s Registration Statement filed on December 14, 2006 (File No. 33-66528).

(q)(iii)		Power of Attorney of Eugene P. Beard is incorporated by reference to Post-Effective Amendment No. 27 to Registrant’s Registration Statement filed on December 14, 2006 (File No. 33-66528).

(q)(iv)		Power of Attorney of Robert M. Kaufman is incorporated by reference to Post-Effective Amendment No. 27 to Registrant’s Registration Statement filed on December 14, 2006 (File No. 33-66528).

(q)(v)		Power of Attorney of John R. Whitmore is incorporated by reference to Post-Effective Amendment No. 27 to Registrant’s Registration Statement filed on December 14, 2006 (File No. 33-66528).

(q)(vi)		Power of Attorney of Andrew J. McNally is incorporated by reference to Post-Effective Amendment No. 27 to Registrant’s Registration Statement filed on December 14, 2006 (File No. 33-66528).

ITEM 24.

PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE REGISTRANT

None.

ITEM 25.

INDEMNIFICATION

Response is incorporated by reference to Registrant’s Post-Effective Amendment No. 7 to Registrant’s Registration Statement filed on February 26, 1997.

ITEM 26.

BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

BIM (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 Bessemer Trust Company, which is a subsidiary of The Bessemer Group, Incorporated.

Information regarding the directors and officers of the Adviser is included in the Adviser’s Form ADV (SEC Number 801-60185) on file with the Securities and Exchange Commission (“SEC”) and is incorporated by reference.

Dimensional is a sub-adviser to the Global Small Cap Fund. Information regarding the directors and officers of Dimensional is included in Dimensional’s Form ADV on file with the SEC and is incorporated by reference.

Champlain is a sub-adviser to the Global Small Cap Fund. Information regarding the directors and officers of Champlain is included in Champlain’s Form ADV on file with the SEC and is incorporated by reference.

ITEM 27.

PRINCIPAL UNDERWRITER

(a)

PFPC Distributors, Inc. (“the Distributor”) is registered with the SEC as a broker-dealer and is a member of the National Association of Securities Dealers. As of January 2, 2007, the Distributor acted as principal underwriter for the following investment companies:


		AFBA 5 Star Funds, Inc.
		Aston Funds
		Atlantic Whitehall Funds Trust
		CRM Mutual Fund Trust
		E.I.I. International Property Fund
		E.I.I. Realty Securities
		GuideStone Funds
		Highland Floating Rate Fund
		Highland Floating Rate Advantage Fund


		Kalmar Pooled Investment Trust
		Matthews Asian Funds
		Metropolitan West Funds
		New Alternatives Fund
		The RBB Fund, Inc.
		Stratton Growth Fund, Inc.
		Stratton Monthly Dividend REIT Shares, Inc.
		The Stratton Funds, Inc.
		The Torray Fund
		Van Wagoner Funds
		Wilshire Mutual Funds, Inc.
		Wilshire Variable Insurance Trust

Distributed by ABN AMRO Distribution Services (USA), Inc., a wholly-owned subsidiary of PFPC Distributors, Inc.:

Distributed by BlackRock Distributors, Inc., a wholly-owned subsidiary of PFPC Distributors, Inc.:


		BlackRock Funds
		BlackRock Bond Allocation Target Shares
		BlackRock Liquidity Funds
		International Dollar Reserve Fund I, Ltd.

Distributed by MGI Funds Distributors, Inc., a wholly-owned subsidiary of PFPC Distributors, Inc.:


		MGI Funds

Distributed by Northern Funds Distributors, LLC, a wholly-owned subsidiary of PFPC Distributors, Inc.:


		Northern Funds
		Northern Institutional Funds

(b)

The Distributor is a Massachusetts corporation located at 760 Moore Road, Valley Forge, Pennsylvania 19406. The Distributor is a wholly-owned subsidiary of PFPC, Inc. and an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc., a publicly traded company.

The following is a list of the directors and executive officers of the Distributor:


Name		Position(s) with Distributor
Brian Burns		Chairman; Director;
		President; Chief Executive Officer
Michael Denofrio		Director
Nicholas Marsini		Director
Rita G. Adler		Chief Compliance Officer
John Munera		Anti-Money Laundering Officer
Jodi Jamison		Chief Legal Officer
Bradley A. Stearns		Secretary; Clerk
Julie Bartos		Assistant Secretary; Assistant Clerk
Amy Brennan		Assistant Secretary; Assistant Clerk
Craig Stokarski		Treasurer; Chief Financial Officer;
		Financial & Operations Principal
Maria Schaffer		Assistant Treasurer; Controller
Bruno Di Stefano		Vice President
Susan K. Moscaritolo		Vice President

(c)

Not Applicable.

ITEM 28.

LOCATION OF ACCOUNTS AND RECORDS

All accounts and records required to be maintained by Section 31(a) of the Investment Company Act of 1940 and Rules 31a-1 through 31a-3 promulgated thereunder are maintained at the following locations:

(1)	PFPC Inc., Bellevue Corporate Center, 301 Bellevue Parkway, Wilmington, Delaware 19809 (records relating to its functions as administrative agent).

(2)	PFPC Inc., 760 Moore Road, Valley Forge, Pennsylvania 19406 (records relating to its functions as accounting, administrative, transfer agent and dividend disbursing agent).

(3)	PFPC Distributors, Inc., 760 Moore Road, Valley Forge, Pennsylvania 19406. (records relating to its functions as distributor).

(4)	Bessemer Investment Management LLC, 630 Fifth Avenue, New York, New York 10111 (records relating to its functions as investment adviser).

(5)	Bessemer Trust Company, 100 Woodbridge Center, Woodbridge, NJ 07095 (records relating to its functions as custodian).

(6)	Bessemer Group (UK) Limited, One Stanhope Gate, London, United Kingdom (records relating to its function as sub-adviser to the International Fund).

(7)	Dimensional Fund Advisors LP, 1299 Ocean Avenue, 11 ^th Floor, Santa Monica, CA 90401 (records relating to its function as sub-adviser to the Global Small Cap Fund).

(8)	Champlain Investment Partners, LLC, 346 Shelburne Road, Burlington, Vermont 05401 (records relating to its function as sub-adviser to the Global Small Cap Fund).

(9)	Citibank, N.A., 388 Greenwich Street, 14 ^th Floor, New York, NY 10013 (records relating to its function as custodian).

ITEM 29.

MANAGEMENT SERVICES

Not Applicable.

ITEM 30.

UNDERTAKINGS

Registrant hereby undertakes to furnish each person to whom a prospectus is delivered a copy of Registrant’s latest annual report to shareholders upon request and without charge.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended (the “1933 Act”), and the Investment Company Act of 1940, as amended, the Registrant certifies that it meets all of the requirements for effectiveness of this Amendment to the Registration Statement on Form N-1A, pursuant to Rule 485(b) under the 1933 Act, and has duly caused this Amendment to its Registration Statement to be signed on its behalf by the undersigned, duly authorized, in the City of New York, State of New York, on the 1 ^st day of March, 2007.


OLD WESTBURY FUNDS, INC.

By:
		Marc D. Stern, President*

Pursuant to the requirements of the 1933 Act, this Amendment to its Registration Statement on Form N-1A has been signed below by the following persons in the capacities indicated on the 1 ^st day of March, 2007.


Name	Title	Date

	President*	March 1, 2007
Marc D. Stern

	Director*	March 1, 2007
Patricia Francy

	Director*	March 1, 2007
Robert M. Kaufman

	Director*	March 1, 2007
Eugene P. Beard

	Director*	March 1, 2007
John R. Whitmore

	Treasurer, Principal Financial Officer*	March 1, 2007
Andrew McNally



*By:		/s/ Steven Williamson
		Steven Williamson
		As Attorney-in-Fact
		March 1, 2007

EXHIBIT INDEX


Exhibit No.		Description
99.23(d)(iii)		Sub-Advisory Agreement among the Registrant, BIM and Dimensional.

99.23(d)(iv)		Sub-Advisory Agreement among the Registrant, BIM and Bessemer Group U.K.

99.23(d)(v)		Sub-Advisory Agreement among the Registrant, BIM and Champlain.

99.23(d)(vi)		Form of Fee Waiver Commitment Letter of BIM and Bessemer Trust Company, N.A.

99.23(g)(v)		Fourth Amendment to Custodian Agreement between the Registrant and Bessemer Trust Company, N.A.

99.23(g)(vi)		Global Custodial Services Agreement between Registrant and Citibank, N.A.

99.23(g)(vii)		First Amendment to Custodian Agreement between the Registrant and Citibank, N.A.

99.23(i)		Legal Opinion of Morrison & Foerster LLP

99.23(j)(i)		Consent of Ernst & Young LLP

99.23(j)(ii)		Consent of Deloitte & Touche LLP

99.23(m)		Shareholder Servicing Plan

Exhibit 99.23(d)(iii)

OLD WESTBURY FUNDS, INC.

BESSEMER INVESTMENT MANAGEMENT LLC

SUB-ADVISORY AGREEMENT

Global Small Cap Fund

This SUB-ADVISORY AGREEMENT executed as of April 6, 2005, by and among OLD WESTBURY FUNDS, INC. (hereinafter called “the Fund”), BESSEMER INVESTMENT MANAGEMENT LLC (hereinafter called “the Adviser”), and DIMENSIONAL FUND ADVISORS INC. (hereinafter called “the Sub-Adviser”),

W I T N E S S E T H:

WHEREAS, the Adviser is the investment adviser to the Global Small Cap Fund (hereinafter called “the Portfolio” of the Fund, an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”);

WHEREAS, the Adviser and the Sub-Adviser are registered under the Investment Advisers Act of 1940 (the “Investment Advisers Act”) as investment advisers; and

WHEREAS, the Fund and the Adviser desire to retain the Sub-Adviser to provide portfolio selection and related research and statistical services in connection with the investment advisory services for the Portfolio or a designated portion of the assets of the Portfolio (a “Segment”), which the Adviser has agreed to provide to the Portfolio, and the Sub-Adviser desires to furnish such services; and

WHEREAS, the Adviser has furnished the Sub-Adviser with copies properly certified or authenticated of each of the following and will promptly provide the Sub-Adviser with copies properly certified or authenticated of any amendment or supplement thereto:

(a)

Investment Advisory Agreement (the “Advisory Agreement”) with the Fund;

(b)

The Fund’s registration statement as filed with the Securities and Exchange Commission;

(c)

The Fund’s Articles of Incorporation and By-laws;

(d)

The resolutions of the Board of Directors of the Fund approving the engagement of the Sub-Adviser as sub-adviser for the Portfolio and approving the form of this Agreement;

(e)

A list of affiliated brokers and underwriters of the Fund for compliance with applicable provisions of the 1940 Act;

(f)

A list of securities, including CUSIP or other identifying security information, that may not be bought or sold for the Portfolio (“Restricted Securities List”); and

(g)

Policies, procedures or instructions adopted or approved by the Board of Directors of the Fund relating to obligations and services to be provided by the Sub-Adviser.

NOW, THEREFORE, in consideration of the premises and the terms and conditions hereinafter set forth, the parties agree as follows:

1. Appointment of Sub-Adviser

Subject to the direction and control of the Board of Directors of the Fund and the Adviser, the Sub-Adviser shall provide the services described in Section 2 below for investment and reinvestment of the securities and other assets of the Portfolio or Segment for the period and on the terms hereinafter set forth. The Sub-Adviser agrees to furnish the services hereinafter set forth for the compensation herein provided. The Sub-Adviser shall for all purposes herein be deemed to be an independent contractor and shall, except as expressly provided or authorized, have no authority to act for or represent the Fund or the Adviser in any way or otherwise be deemed an agent of the Fund or the Adviser.

2. Obligations of and Services to be Provided by the Sub-Adviser

The Sub-Adviser will:

(a)

Provide investment advisory services, including but not limited to research, advice and supervision for the Portfolio or Segment.

(b)

Implement the approved investment program by placing orders for the purchase and sale of securities without prior consultation with the Adviser and without regard to the length of time the securities have been held, the resulting rate of portfolio turnover or any tax considerations, subject always to the provisions of the Fund’s registration statement, Restricted Securities List, Articles of Incorporation and Bylaws and the requirements of the 1940 Act, as each of the same shall be from time to time in effect; provided however, that copies of all such documents shall have been provided to Sub-Adviser prior to their effectiveness marked to show the proposed changes.

(c)

Maintain, in connection with the Sub-Adviser’s investment advisory services obligations, compliance with the 1940 Act and the regulations adopted by the Securities and Exchange Commission thereunder and the Portfolio or Segment investment strategies and restrictions as stated in the Fund’s prospectus and statement of additional information subject to receipt of such additional information as may be required from the Adviser and provided in accordance with Section 15(d) of this Agreement.

(d)

Report to the Board of Directors of the Fund at such times and in such detail as the Board of Directors may reasonably request in order to enable it to determine that the investment policies, procedures and approved investment program of the Portfolio or Segment are being observed. The Sub-Adviser will also keep the Board of Directors informed of important developments affecting the Portfolio or Segment, and on its own initiative will furnish the Adviser and the Board of Directors from time-to-time with such information as the Sub-Adviser may believe appropriate.

(e)

Furnish, at its own expense, (i) all necessary investment and management facilities, including salaries of clerical and other personnel required for it to execute its duties faithfully, and (ii) administrative facilities, including bookkeeping, clerical personnel and equipment necessary for the efficient conduct of the investment advisory affairs of the Portfolio or Segment.

(f)

Open accounts with broker-dealers and futures commission merchants (“broker-dealers”), select broker-dealers to effect all transactions for the Portfolio or Segment, place all necessary orders with broker-dealers or issuers (including affiliated broker-dealers), and negotiate commissions, if applicable. To the extent consistent with applicable law and the investment objectives of the Portfolio, purchase or sell orders for the Portfolio or Segment may be aggregated with contemporaneous purchase or sell orders of other clients of the Sub-Adviser. In such event allocation of securities so sold or purchased, as well as the expenses incurred in the transaction, will be made by the Sub-Adviser in the manner the Sub-Adviser considers to be the most equitable and consistent with its fiduciary obligations to the Portfolio and to other clients. The Sub-Adviser will seek to obtain best execution of transactions for the Portfolio or Segment at prices which are advantageous to the Portfolio or Segment and at commission rates that are reasonable in relation to the benefits received. However, the Sub-Adviser may select brokers or dealers on the basis that they provide brokerage, research or other services or products to the Sub-Adviser. To the extent consistent with applicable law, the Sub-Adviser may pay a broker or dealer an amount of commission for effecting a securities transaction in excess of the amount of commission or dealer spread another broker or dealer would have charged for effecting that transaction if the Sub-Adviser determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage and research products and/or services provided by such broker or dealer. This determination, with respect to brokerage and research products and/or services, may be viewed in terms of either that particular transaction or the overall responsibilities which the Sub-Adviser and its affiliates have with respect to the Portfolio or Segment as well as to accounts over which they exercise investment discretion. Not all such services or products need be used by the Sub-Adviser in managing the Portfolio or Segment. In the event that the Adviser or the Fund shall direct the selection of broker-dealers for the execution of security transactions for all or a portion of the Portfolio or any Segment managed by the Sub-Adviser, the Adviser and/or the Fund shall instruct the Sub-Adviser in writing with the name(s) of such designated broker(s) (a “directed broker”), which instruction shall not be deemed

effective until countersigned by the Sub-Adviser, and the Adviser and/or the Fund specifically agree that the Sub-Adviser shall not be responsible to seek best execution for portfolio transactions placed with such directed broker.

(g)

Upon reasonable request, provide assistance and recommendations for the determination of the fair value of certain individual securities when reliable market quotations are not readily available for purposes of calculating net asset value in accordance with procedures and methods established by the Fund’s Board of Directors.

(h)

Maintain all accounts, books and records with respect to the Portfolio or Segment as are required pursuant to the 1940 Act and Investment Advisers Act, and the rules thereunder, and furnish the Fund and the Adviser with such periodic and special reports as the Fund or Adviser may reasonably request. In compliance with the requirements of Rule 31a-3 under the 1940 Act, the Sub-Adviser hereby agrees that all records that it maintains for the Portfolio or Segment are the property of the Fund, agrees to preserve for the periods described by Rule 31a-2 under the 1940 Act any records that it maintains for the Portfolio or Segment and that are required to be maintained by Rule 31a-1 under the 1940 Act, and further agrees to surrender promptly to the Fund any records that it maintains for the Portfolio or Segment upon request by the Fund or the Adviser. The Sub-Adviser has no responsibility for the maintenance of Fund records except insofar as is directly related to the services the Sub-Adviser provides to the Portfolio or Segment.

(i)

Observe and comply with Rule 17j-1 under the 1940 Act and the Sub-Adviser’s Code of Ethics adopted pursuant to such Rule 17j-1 and Rule 204A-1 under the Investment Advisers Act as the same may be amended from time to time. The Adviser acknowledges receipt of a copy of Sub-Adviser’s current Code of Ethics. Sub-Adviser shall promptly forward to the Adviser a copy of any material amendment to the Sub-Adviser’s Code of Ethics along with certification that the Sub-Adviser has implemented procedures for administering the Sub-Adviser’s Code of Ethics.

(j)

From time to time as the Adviser or the Fund may reasonably request, furnish the requesting party reports on portfolio transactions and reports on investments held by the Portfolio or Segment, all in such detail as the Adviser or the Fund may reasonably request. The Sub-Adviser will make available its officers and employees to meet with the Adviser’s Board of Directors at the Adviser’s principal place of business on due notice to review the investments of the Portfolio or Segment.

(k)

Upon request by the Adviser, provide such information as may be required for the Portfolio or the Adviser to comply with their respective obligations under applicable laws, including, without limitation, the Internal Revenue Code of 1986, as amended (the “Code”), the 1940 Act, the Investment Advisers Act, the Securities Act of 1933,

as amended (the “Securities Act”), and any state securities laws, and any rule or regulation thereunder.

(l)

Provide a copy of the Sub-Adviser’s Form ADV and any material amendments thereto contemporaneously with the filing of such documents with the Securities and Exchange Commission or other regulatory agency.

(m)

The Adviser and the Fund agree and understand that the Sub-Adviser is not responsible to advise or act for the Portfolio in any legal proceedings, including bankruptcies or class actions, involving securities held or previously held by the Portfolio or Segment or the issuers of such securities.

(n) In carrying out its obligations under this Agreement, without limiting the generality of the foregoing, the Sub-Adviser shall at all times comply with the following as they have been provided to Sub-Adviser:

(i) all applicable provisions of the 1940 Act, and any rules and regulations adopted thereunder;

(ii) the provisions of the registration statement of the Fund, as it may be amended from time-to-time, under the 1940 Act;

(iii) subject to Section 4(b) below, the provisions of the Code applicable to the Portfolio relating to its qualification as a regulated investment company under Subchapter M of the Code; and

(iv) any other applicable provisions of state or federal law.

(o)

As in the case with respect to the Adviser under the Investment Advisory Agreement, any investment activities undertaken by the Sub-Adviser relating to the Portfolio, shall at times be subject to the direction and control of the Fund’s Board of Directors, as well as the Adviser.

(p)

In the manner in which the Sub-Advisor believes to be in the best interests of the Portfolio or Segment, (i) exercise conversion or subscription rights, and respond to tender offers and other consent solicitations relating to the investment securities held by the Portfolio or Segment and (ii) vote proxies with respect only to those securities of U.S. companies held by the Portfolio or Segment; provided that such materials and information have been forwarded to the Sub-Advisor or its designee in a timely fashion by the Portfolio’s custodian. The Sub-Advisor shall review its proxy voting activities on a periodic basis with the Manager and provide reports as are reasonably requested by the Manager to assist the Portfolio in meeting its regulatory reporting requirements. For the avoidance of doubt, the Adviser and the Fund agree and understand that the Sub-Adviser is not responsible to vote or give any advice about how to vote proxies for securities of non-U.S. companies held by the Portfolio or Segment.

3. Compensation

As full compensation for all services rendered and obligations assumed by the Sub-Adviser hereunder with respect to the Portfolio or Segment, the Adviser shall pay the compensation specified in Appendix A to this Agreement. The Sub-Adviser acknowledges and agrees that the Adviser shall be solely responsible for the fees of the Sub-Adviser for its services hereunder, and the Sub-Adviser shall have no claim against the Fund or the Portfolio with respect to its compensation under this Agreement.

4. Liability of Sub-Adviser

(a)

Neither the Sub-Adviser nor any of its directors, officers, employees, agents or affiliates shall be liable to the Adviser, the Portfolio or its shareholders for any loss suffered by the Adviser or the Portfolio resulting from any error of judgment or mistake of law made in the good faith exercise of the Sub-Adviser’s investment discretion in connection with selecting investments for the Portfolio or Segment or as a result of the failure by the Adviser or any of its affiliates to comply with the terms of this Agreement except for losses resulting from willful misfeasance, bad faith or gross negligence of, or from reckless disregard of, the duties of the Sub-Adviser or any of its directors, officers, employees, agents, or affiliates. Notwithstanding the foregoing, Sub-Adviser shall not be liable for actions taken or non-actions with respect to the performance of services under this Agreement based upon information, instructions or requests given or made to Sub-Adviser by the Adviser or information provided by any of the Portfolio’s custodian, administrator or fund accountant. The Adviser shall be responsible at all times for supervising Sub-Adviser, and this Agreement does not in any way limit the duties and responsibilities that the Adviser has agreed to under the Advisory Agreement and applicable laws.

(b)

In no event will the Sub-Adviser have any responsibility for any other portfolio of the Fund, for any portion of the Portfolio not managed by the Sub-Adviser or for the acts or omissions of the Adviser or any other sub-adviser to the Fund or Portfolio. In particular, in the event the Sub-Adviser shall manage only a Segment of the Portfolio, the Sub-Adviser shall have no responsibility for the Portfolio’s being in violation of any applicable law or regulation or investment policy or restriction applicable to the Portfolio as a whole or for the Portfolio’s failing to qualify as a regulated investment company under the Code, if the securities and other holdings of the Segment of the Portfolio managed by the Sub-Adviser are such that such Segment would not be in such violation or fail to so qualify if such Segment were deemed a separate series of the Fund or a separate “regulated investment company” under the Code. Nothing in this Section shall be deemed a limitation or waiver of any obligation or duty that may not by law be limited or waived.

5. Indemnification by the Sub - Adviser .

The Adviser shall not be responsible for, and the Sub-Adviser shall indemnify and hold the Fund, the Adviser and the Portfolio harmless from and against, any and all losses, damages, costs, charges, counsel fees, payments, expenses and liability arising out of or attributable to the willful misfeasance, bad faith, gross negligence or reckless disregard of obligations or duties of the Sub-Adviser hereunder or any of its officers, directors, employees or agents; provided , however , that in no case is the Sub-Adviser’s indemnity in favor of the Adviser, the Fund or the Portfolio deemed to protect such person against any liability to which any such person would otherwise be subject by reason of willful misconduct, bad faith or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties under this Agreement.

6. Indemnification by the Fund and the Adviser.

In the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of duties hereunder on the part of the Sub-Adviser or its affiliates or any of their respective officers, directors, employees or agents (“Sub-Adviser Indemnitees”), the Fund and the Adviser, severally and not jointly, hereby agree to indemnify and hold harmless the Sub-Adviser Indemnitees against all claims, actions, suits or proceedings at law or in equity whether brought by a private party or a governmental department, commission, board, bureau, agency or instrumentality of any kind, arising from the advertising, solicitation, sale, purchase or pledge of securities, whether of the Portfolio or other securities, undertaken by the Portfolio, its officers, directors, employees or affiliates, resulting from any violations of the securities laws, rules, regulations, statutes and codes, whether federal or of any state, by the Portfolio, its officers, directors, employees or affiliates. Federal and state securities laws impose liabilities under certain circumstances on persons who act in good faith, and nothing herein shall constitute a waiver or limitation of any rights which the Fund or the Adviser may have and which may not be waived under any applicable federal and state securities laws; provided , however , that in no case is the Fund’s or the Adviser’s indemnity in favor of the Sub-Adviser Indemnitees deemed to protect such person against any liability to which any such person would otherwise be subject by reason of willful misconduct, bad faith or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties under this Agreement.

7. Supplemental Arrangements

The Sub-Adviser may enter into arrangements with other persons affiliated with the Sub-Adviser or with unaffiliated third parties to better enable the Sub-Adviser to fulfill its obligations under this Agreement for the provision of certain personnel and facilities to the Sub-Adviser, the cost of such arrangements to be borne solely by the Sub-Advisor, subject where required by applicable law, to approval of the Board of Directors of the Fund.

8. Regulation

The Sub-Adviser shall submit to all regulatory and administrative bodies having jurisdiction over the services provided pursuant to this Agreement any information, reports or other material which any such body may request or require pursuant to applicable laws and regulations.

9. Duration and Termination of This Agreement

(a)

This Agreement shall become effective on the latest of (i) the date of its execution, (ii) the date of its approval by a majority of the Board of Directors of the Fund, including approval by the vote of a majority of the Board of Directors of the Fund who are not interested persons of the Adviser, the Sub-Adviser, or the Fund, cast in person at a meeting called for the purpose of voting on such approval or (iii) if required by the 1940 Act, the date of its approval by a majority of the outstanding voting securities of the Portfolio. It shall continue in effect for an initial term of two years and thereafter from year to year provided that the continuance is specifically approved at least annually either by the Board of Directors of the Fund or by a vote of a majority of the outstanding voting securities of the Portfolio and in either event by a vote of a majority of the Board of Directors of the Fund who are not interested persons of the Adviser, the Sub-Adviser or the Fund, cast in person at a meeting called for the purpose of voting on such approval.

(b)

If the shareholders of the Portfolio fail to approve the Agreement or any continuance of the Agreement in accordance with the requirements of the 1940 Act, the Sub-Adviser will continue to act as Sub-Adviser with respect to the Portfolio or Segment pending the required approval of the Agreement or its continuance or of any contract with the Sub-Adviser or a different manager or sub-adviser or other definitive action; provided, that the compensation received by the Sub-Adviser in respect to the Portfolio or Segment during such period is in compliance with Rule 15a-4 under the 1940 Act.

(c)

This Agreement may be terminated at any time without the payment of any penalty by the Board of Directors of the Fund or by the Sub-Adviser, or the Adviser or by vote of a majority of the outstanding voting securities of the Portfolio on sixty days written notice. This Agreement shall automatically terminate in the event of its assignment. In interpreting the provisions of this Section 9, the definitions contained in Section 2(a) of the 1940 Act (particularly the definitions of “interested person,” “assignment” and “voting security”) shall be applied.

10. Trade Settlement At Termination

Termination will be without prejudice to the completion of any transaction already initiated. On, or after, the effective date of termination, the Sub-Adviser shall be entitled, without prior notice to the Adviser or the Portfolio, to direct the Custodian to retain and/or realize any assets of the Portfolio as may be required to settle transactions already initiated, and to pay any outstanding liabilities of the Sub-Adviser. Following the date of effective

termination, any new transactions will only be executed by mutual agreement between the Adviser and the Sub-Adviser.

11. Amendment of this Agreement

No provision of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. No material amendment of this Agreement shall be effective until approved, if required by the 1940 Act or the rules, regulations, interpretations or orders issued thereunder, by vote of the holders of a majority of the outstanding voting securities of the Portfolio and by vote of a majority of the Board of Directors of the Fund who are not interested persons of the Adviser, the Sub-Adviser, or the Fund cast in person at a meeting called for the purpose of voting on such approval. Prior to the execution of any amendment, Adviser shall notify Sub-Adviser if any such approval is required.

12. Services to Other Clients

The services furnished by the Sub-Adviser hereunder are deemed not to be exclusive, and the Sub-Adviser shall be free to furnish similar services to others. The Adviser understands, and has advised the Fund’s Board of Directors, that the Sub-Adviser now acts, and may in the future act, as an investment adviser to fiduciary and other managed accounts, and as investment adviser, sub-investment adviser, and/or administrator to other investment companies. The Adviser has no objection to the Sub-Adviser’s acting in such capacities, provided that whenever the purchase or sale of securities or other investments of the same issuer may be deemed by the Sub-Adviser to be suitable for two or more investment companies or accounts managed by the Sub-Adviser, the available securities or investments will be allocated in a manner believed by the Sub-Adviser to be equitable to each of them. It is recognized and acknowledged by the Adviser that in some cases this procedure may adversely affect the price paid or received by the Portfolio or the size of the position obtained for or disposed of by the Portfolio. In addition, the Adviser understands, and has advised the Fund’s Board of Directors, that the persons employed by the Sub-Adviser to assist in the Sub-Adviser’s duties under this Agreement will not devote their full time to such service and nothing contained in this Agreement will be deemed to limit or restrict the right of the Sub-Adviser or any of its affiliates to engage in and devote time and attention to other businesses or to render services of whatever kind or nature.

13. Distribution

The Sub-Adviser understands that the Portfolio shall be marketed or otherwise sold primarily to clients and prospective clients of the Adviser and its affiliates and may also be made available to clients of certain financial institutions who have an investment advisory or consulting relationship with the Adviser or one of its affiliates. The Adviser understands and acknowledges that the manner in which the Portfolio will be marketed and sold is important to the Sub-Adviser and agrees to provide the Sub-Adviser with at least 60 days’

prior written notice in the event that the Portfolio will be marketed, sold or otherwise made available to individuals or institutions otherwise than as described above.

14. Disclosure

(a)

None of the Adviser, the Portfolio or the Sub-Adviser shall disclose information of a confidential nature acquired in consequence of this Agreement, except for information that they may be entitled or bound to disclose by law or regulation or which is disclosed to their advisers where reasonably necessary for the performance of their professional services or, in the case of the Sub-Adviser, to persons retained as permitted in accordance with Section 7 above to the extent reasonably necessary for the performance of the Sub-Advisor’s services hereunder and provided such persons are bound by confidentiality obligations at least as stringent as the foregoing. The Sub-Adviser shall also comply with the Fund’s policies with respect to disclosure of portfolio holdings.

(b)

Notwithstanding the provisions of 14(a) above, to the extent that any market counterparty with whom the Sub-Adviser deals requires information relating to the Portfolio or Segment (including, but not limited to, the identity of the Adviser or the Portfolio and market value of the Portfolio or Segment), the Sub-Adviser shall be permitted to disclose such information to the extent necessary to effect transactions on behalf of the Portfolio or Segment in accordance with the terms of this Agreement.

15. General Provisions

(a)

Each party agrees to perform such further acts and execute such further documents as are necessary to effectuate the purposes hereof. This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of California. The captions in this Agreement are included for convenience only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect.

(b)

Any notice under this Agreement shall be in writing, addressed and delivered or mailed postage pre-paid to the other party at such address as such other party may designate for the receipt of such notices. Until further notice to the other party, it is agreed that the address of the Adviser for this purpose shall be Bessemer Investment Management LLC, 630 Fifth Avenue, New York, New York 10111, Attention: General Counsel, and the address of the Sub-Adviser shall be, Dimensional Fund Advisors Inc., 1299 Ocean Ave., 11th Floor, Santa Monica, CA 90401, Attention: Legal Department.

(c)

The Sub-Adviser will promptly notify the Adviser in writing of the occurrence of any of the following events:

(i) the Sub-Adviser fails to be registered as an investment adviser under the Investment Advisers Act or under the laws of any jurisdiction in which the Sub-Adviser is required to be registered as an investment adviser in order to perform its obligations under this Agreement.

(ii) the Sub-Adviser is served or otherwise receives notice of any action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, involving the affairs of the Portfolio.

(d)

The Adviser shall provide (or cause the Portfolio’s custodian to provide) timely information to the Sub-Adviser regarding such matters as the composition of the assets of the Portfolio or Segment, cash requirements and cash available for investment in the Portfolio Segment, and all other reasonable information as may be necessary for the Sub-Adviser to perform its duties and responsibilities hereunder.

(e)

This Agreement contains the entire understanding and agreement of the parties.

(f)

The Sub-Adviser acknowledges that nonpublic customer information (as defined in Regulation S-P, including any amendments thereto) of customers of the Portfolio received from the Adviser is subject to the limitations on redisclosure and reuse set forth in Section 248.11 of Regulation S-P, and agrees that such information: (i) shall not be disclosed to any third party for any purpose without the written consent of the Adviser and/or the Fund unless permitted by exceptions set forth in Sections 248.14 or 248.15 of Regulation S-P; and (ii) shall be safeguarded pursuant to procedures adopted under Section 248.30 of Regulation S-P.

(g)

The Adviser understands and agrees that the Sub-Adviser, as part of its duties hereunder, is not responsible for determining whether or not the Portfolio is suitable and an appropriate investment for the clients who invest in such.

(h)

During the term of this Agreement, the Adviser agrees to furnish to the Sub-Adviser at its principal office all prospectuses, proxy statements, reports to stockholders, sales literature or other material prepared for distribution to sales personnel, shareholders of the Portfolio or the public (collectively, “Marketing Materials”) containing descriptions of or references to the Sub-Adviser or its clients or affiliates. The Adviser shall not use any Marketing Materials that refer to the Sub-Adviser or its clients or affiliates in any way without the prior approval of the Sub-Adviser with respect to the description of the Sub-Adviser or its clients or affiliates. The Sub-Adviser shall use its best efforts to approve or respond with comments on such Marketing Materials created by the Adviser within 10 business days of receipt of such Marketing Materials. Marketing Materials may be furnished to the Sub-

Adviser for its review hereunder by first-class or overnight mail, facsimile transmission equipment or hand delivery, Attention: Legal Department.

16. Release

The names “Old Westbury Funds, Inc.” and “Directors of Old Westbury Funds, Inc.” refer respectively to the Fund created by the Articles of Incorporation and the Directors, as directors but not individually or personally. The obligations of “Old Westbury Funds, Inc.” entered into in the name or on behalf thereof by any of the Directors, representatives or agents are made not individually, but in such capacities, and are not binding upon any of the Directors, shareholders, or representatives of the Fund personally, but bind only assets of the Portfolio, and all persons dealing with the Portfolio of the Fund must look solely to the assets of such Portfolio for the enforcement of any claims.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.


OLD WESTBURY FUNDS, INC.

By:		/S/ Peter C. Artemiou
Name:		Peter C. Artemiou
Title:		Vice President

BESSEMER INVESTMENT MANAGEMENT LLC

By:		/S/Marc D. Stern
Name:		Marc D. Stern
Title:		President

DIMENSIONAL FUND ADVISORS INC.

By:		/S/ Catherine L. Newell
Name:		Catherine L. Newell
Title:		Vice President & Secretary

APPENDIX A

SUB-ADVISORY FEES

The Sub-Adviser shall serve as investment sub-adviser for the Portfolio or Segment. The Adviser will pay the Sub-Adviser, as full compensation for all services provided under this Agreement, an annual fee computed at the following annual rates of the Portfolio’s or Segment’s average daily net assets:

The Sub-Adviser’s fee shall be accrued for each calendar day and the sum of the daily fee accruals shall be paid monthly in arrears to the Sub-Adviser no later than fifteen (15) business days following each month end. The daily fee accruals will be computed by multiplying the fraction of one over the number of calendar days in the year by the applicable annual rate set forth in the schedule above and multiplying this product by the net assets of the Portfolio or Segment, as determined in accordance with the Portfolios’ Prospectus and Statement of Additional Information as of the close of business on the previous business day on which the Portfolio was open for business.

If this Agreement becomes effective or terminates before the end of any month, the fee (if any) for the period from the effective date to the end of such month or from the beginning of such month to the date of termination, as the case may be, shall be prorated according to the proportion which such period bears to the full month in which such effectiveness or termination occurs.

Exhibit 99.23(d)(iv)

Bessemer Investment Management LLC

630 Fifth Avenue

New York

New York 10111

USA

Attention: Timothy J. Morris

Date:- May 14, 2002

Dear Mr. Morris

We write further to our letter of 1 August 2001 when we detailed the basis on which we accepted the delegation by Bessemer Investment Management LLC (“BIM LLC”) to Bessemer Group (U.K.) Limited of certain responsibilities in respect of the Old Westbury International Fund (the "Fund"), a series of the Old Westbury Funds, Inc. (the “Company”).

As you may be aware, with effect from 1 December 2001, the regulatory environment in the United Kingdom has been subject to a step change with bringing into force of the majority of the provisions of the new Financial Services and Markets Act 2000 (“FSMA”) under which the Financial Services Authority (“FSA”) has become responsible for the regulation of all “regulated activity” (which includes the provision of investment services) in the United Kingdom. It is necessary to make certain changes to the terms on which we provide investment services to you, and this letter sets out the revised terms.

1.	The Advisor

Bessemer Group (U.K.) Limited (the “Advisor”) is authorized by the FSA. The investment services which the Advisor will provide to the Company through the agency of BIM LLC under these terms are:

(a)

investment advice of the kind described in article 53 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 as amended;

(b)

effecting transactions relating to investments where the Advisor does not and will not hold client money or assets and where arrangements exist under which a clearing firm accepts primary responsibility for the execution of those transactions; and

(c)

the exercise of limited discretion in respect of arranging and effecting transactions which the Advisor recommends to the Company in accordance with these terms, such transactions to be ratified by BIM LLC as the investment manager of the Fund, provided that the Advisor does not and will not hold client money or assets and where the assets of the Company are held by a bank or custodian appointed by the Company; and that bank or custodian will only release money or assets of the Company:

(i)

to the Company or as the Company may direct, upon authority of written instructions given by the Company ; or

(ii)

to the counterparty of any transaction authorized by the investment manager, upon the authority of a confirmation issued by the clearing firm which effects the transaction on the instructions of the investment manager.

The Advisor is bound by the Rules of the FSA (the “Rules”). The Advisor does not have authorization to handle client money and therefore does not maintain separate client accounts. The Advisor will not act as custodian and therefore has made no arrangements for registration, identification of ownership or safe custody of documents of title. The Advisor will not procure or recommend the appointment of any person to act as custodian of money or assets.

2.	The Customer

The Advisor has classified BIM LLC and the Company as intermediate customers (as that term is defined in the Rules) and BIM LLC and the Company agree to this classification. BIM LLC is registered with the Securities and Exchange Commission as an Investment Advisor. The Company is registered under the U.S. Investment Company Act of 1940, as amended.

The Advisor will treat both BIM LLC and the Company as its clients. BIM LLC is the investment manager of the Fund and is acting as agent for the Company in its appointment of the Advisor as advisor to the Company.

3.	The Fund

The Company has entered into an advisory contract in respect of the Fund with Bessemer Trust Company, N.A. (“BTNA”) dated October 12, 1993 (the “BTNA Contract”). On May 2, 2001, the Company and BIM LLC entered into an Assumption Agreement (together with the BTNA Contract, the “Advisory Contract”), pursuant to which BIM LLC has been employed to manage the investment and reinvestment of the Fund’s assets, subject to the general control of the Company’s Board of Directors.

Pursuant to the Advisory Contract, BIM LLC is permitted from time to time to employ, subcontract with or otherwise associate with, entirely at its expense, such persons as it believes to be particularly fitted to assist it in the execution of the duties set forth under the Advisory Contract. The appointment of the Advisor as advisor to the Company in respect of the Fund is made in accordance with the Advisory Contract. BIM LLC will supply the Advisor with such evidence of such authority as may be reasonably requested.

- 2 -

The Fund, as provided in the Advisory Contract, proposes to engage in the business of investing and reinvesting its assets in securities of the type, and in accordance with the limitations, specified in the Company’s Articles of Incorporation, By-Laws and Registration Statement filed with the U.S. Securities and Exchange Commission under the U.S. Investment Company Act of 1940 (the “1940 Act”) and the U.S. Securities Act of 1933, including the prospectus of the Fund (“Prospectus”) forming a part thereof (the “Registration Statement”), all as from time to time in effect, and in such manner and to such extent as may from time to time be authorized by the Company’s Board of Directors. Copies of the documents listed above have been furnished to the Advisor, and the Advisor will be furnished with copies of such amendments thereto as may be made from time to time.

4.	Services

The investment objectives of the Fund are contained in the Prospectus and Registration Statement (as the same may be amended by agreement in writing from time to time) which the Advisor acknowledges it has received.

Subject to the general control of the Board of Directors of the Company, and the determination by BIM LLC that proposed investments satisfy the investment objectives and policies of the Fund (as described in the Prospectus) (“Acceptable Investments”), BIM LLC hereby subcontracts with the Advisor and the Advisor agrees to make recommendations and to effect transactions (including the exercise of its limited discretion in effecting transactions as described in section 1 of these terms) with respect to all proposed purchases and sales of the portfolio securities. In recommending purchases and sales of the Fund’s portfolio securities, the Advisor will observe the policies set from time to time by the Company’s Board of Directors as well as the limitations imposed by the Company’s Articles of Incorporation and by the provisions of the Internal Revenue Code and the 1940 Act relating to regulated investment companies and the limitations contained in the Registration Statement and Prospectus.

Subject to the immediately preceding paragraph, the Advisor may recommend transactions in units in unregulated collective investment schemes. Such investments are frequently high risk and can carry with them a significant risk of the loss of the entire investment.

The Advisor shall recommend the brokers to be used for all transactions, to assist in ensuring best execution. Subject to applicable law and procedures adopted by the Fund’s Board of Directors, the Advisor may (i) recommend brokers other than itself who charge commissions that are higher than such that might be charged by another qualified broker to obtain brokerage and/or research services considered by the Advisor to be useful or desirable for its investment management of the Fund and/or other advisory accounts of the Advisor and any investment advisor affiliated with the Advisor; and (ii) consider the sales of shares of the Fund by brokers including the Advisor’s affiliates as a factor in the Advisor’s recommendation of brokers for Fund transactions. It is intended that commissions paid to any broker generally will not exceed 25% of the total commissions paid in any year, subject to such deviations from this guideline as may from time to time be agreed. BIM LLC will be notified with an explanation if this level is exceeded. BIM LLC may, of course, direct the Advisor to use specific brokers.

The Advisor will receive no commissions or discounts from any other party to a transaction. The Advisor will not act as principal and therefore will not apply any mark-up or mark-down to any transaction.

- 3 -

The Advisor will keep BIM LLC and the Company in touch with important developments affecting the Fund’s portfolio and, on the Advisor’s initiative, will furnish BIM LLC and the Company from time to time with such information as the Advisor may believe appropriate for this purpose, whether concerning the individual entities whose securities are included in the Fund’s portfolio, the activities in which such entities engage or the conditions prevailing in the equity market or the economy generally. The Advisor will also furnish BIM LLC and the Company with such statistical and analytical information with respect to the Fund’s portfolio securities as the Advisor may believe appropriate or as BIM LLC may reasonably request.

The Advisor or its affiliates will also furnish BIM LLC and the Company, at the Advisor’s own expense, with such investment advisory supervision and assistance with respect to the Fund’s portfolio as the Advisor may believe appropriate or as BIM LLC or the Company may reasonably request subject to the requirements of any regulatory authority to which the Advisor may be subject.

If requested by BIM LLC, brokers shall be instructed to send directly to BIM LLC statements of all transactions for the Fund effected on the instructions of the Advisor. The Advisor will maintain its records in relation to each transaction for seven years from the date of the transaction and will supply copies of such records to BIM LLC as the Company’s investment manager on demand.

BIM LLC shall make available to the Advisor at least weekly and monthly statements of holdings in the Fund. The Advisor will discuss with BIM LLC at agreed intervals investment holdings and performance. Verbal instructions from BIM LLC will be accepted by the Advisor and acknowledged verbally. The Advisor may request that these instructions be followed up in writing. Written instructions will be acknowledged in writing. The Company confirms that BIM LLC is authorized by it to provide information and to give instructions as contemplated by this paragraph.

The Advisor is hereby authorised and requested to communicate unsolicited real time financial promotions to BIM LLC and the Company in circumstances in which it considers it appropriate with a view to its performing its services under these terms.

The Advisor’s advice, and the basis on which the Advisor has made the judgement leading to such advice, will be communicated to BIM LLC verbally unless specifically requested in writing.

The Advisor undertakes not to transact for the Company any business in which the Advisor or any Approved Person has a material interest or a conflict of interest unless that interest has been previously disclosed in writing.

The Company and BIM LLC on its behalf request the Advisor not to provide initial and periodic statements of the value and composition of the managed fund. BIM LLC has arranged for such statements to be provided by Bessemer Trust Company.

5.	Remuneration

The Advisor’s fee for this service will be at the rates as per the First Schedule attached to this agreement. The fee will be charged monthly in arrears as of the end of each month. Fee advices will be rendered to BIM LLC which will be responsible for payment of the amounts due.

- 4 -

If this agreement is terminated, BIM LLC will pay a due proportion of any periodic payments for services.

6.	Accounting

The Advisor will hold and provide to BIM LLC upon request information on all transactions executed by it or on its instructions on behalf of the Company in respect of the Fund’s portfolio.

7.	Soft Commission Agreements

The Advisor may undertake transactions for the Company with or through a broker with whom it has a soft commission agreement. It is the policy of the Advisor to only enter into such agreements where it considers that the goods or services to be supplied to it under such an agreement will be directly relevant to and used to assist in the provision by the Advisor to its clients of services of the type to be supplied to the Company under this agreement. The Company and BIM LLC request the Advisor not to make a periodic disclosure of information regarding its soft commission arrangements. The Advisor will supply such information to BIM LLC or the Company upon written request.

8.	Standard of Care

The Advisor does not owe a duty of best execution (as that phrase is described in the Rules) to BIM LLC, save that the Advisor will require any broker with whom it has a soft commission agreement to provide best execution and it will at all times act in what it reasonably believes to be the best interests of the Company including complying with any reasonable requirements which it or BIM LLC may impose from time to time in relation to best execution.

The Company and BIM LLC will expect of the Advisor, and the Advisor will give them the benefit of, its best judgment and efforts in rendering these services to BIM LLC and the Company, and BIM LLC and the Company agree as an inducement to the Advisor undertaking these services that the Advisor will not be liable hereunder for any mistake of judgment or for any other cause, provided that nothing herein shall protect the Advisor against any liability to BIM LLC or the Company or to their security holders by reason of wilful misfeasance, bad faith or gross negligence in the performance of the Advisor’s duties hereunder, or by reason of the Advisor’s reckless disregard of its obligations and duties hereunder or in respect of any liability which cannot be excluded under the Rules.

The Advisor does not accept liability for default by any third party who is the nominal holder of the Fund’s registered investments or who has in his possession or custody on behalf of the Fund documents of title or certificates evidencing title to any of the Fund’s investments.

The Advisor may aggregate transactions for the Company with those of other customers and of its employees and of its associates (as defined in the Rules) and their employees and will allocate such transactions on a fair and reasonable basis in accordance with the requirements of the Rules. The effect of aggregation may work on some occasions to the disadvantage of the Company.

9.	Compensation

A statement is available from the Advisor upon request describing BIM LLC’s or the Company’s rights to compensation, if any, in the event that the Advisor is unable to meet its liabilities.

10.

Complaints

All formal complaints should, in the first instance, be made in writing to the compliance officer of the Advisor. The Advisor operates complaints handling procedures for such complaints.

11.

Effectiveness and Termination

This agreement will become effective on the date of signature by all parties and shall continue in effect until September 30, 2003 and thereafter for successive twelve-month periods (computed from each October 1); provided that such continuation is specifically approved at least annually by the Company’s Board of Directors or by a majority vote of the holders of the Fund’s outstanding voting securities, as defined in the 1940 Act and the rules thereunder, and, in either case, by a majority of those of the Company’s directors who are neither party to this agreement nor, other than by their service as directors of the Company, interested persons, as defined in the 1940 Act and the rules thereunder, of any such person who is party to this agreement. Upon the effectiveness of this agreement, it shall supersede all previous agreements between BIM LLC, the Company and the Advisor covering the subject matter hereof. This agreement may be terminated at any time, without the payment of any penalty, (i) by vote of a majority of the Fund’s outstanding voting securities, as defined in the 1940 Act and the rules thereunder, (ii) by a vote of a majority of the Company’s entire Board of Directors, on sixty days’ written notice to the Advisor, (iii) by BIM LLC on sixty days’ written notice to the Advisor, (iv) by the Advisor on sixty days’ written notice to BIM LLC and the Company, or (v) upon the termination of the Advisory Contract.

Termination will be without prejudice to the completion of transactions already initiated. Such transactions shall be dealt with, and remuneration shall be payable, in accordance with the terms of this agreement.

12.

Assignment

This agreement may not be transferred, assigned, sold or in any manner hypothecated or pledged by the Advisor and this agreement shall terminate automatically in the event of any such transfer, assignment, sale, hypothecation or pledge by the Advisor. The terms “transfer”, “assignment” and “sale” as used in this paragraph shall have the meanings ascribed thereto by governing law and in applicable rules or regulations of the U.S. Securities and Exchange Commission.

13.

Confidentiality

The Advisor, BIM LLC and the Company will at all times respect and protect the confidentiality of information in consequence of this agreement (except under compulsion of law).

- 6 -

14.

No Third Party Rights

The parties do not intend that any of the terms of this agreement shall be enforceable under the Contracts (Rights of Third Parties) Act 1999 and accordingly this agreement shall not confer any such rights.

The terms and conditions of this agreement will be governed by English law.

If BIM LLC and the Company are in agreement with these terms, please each sign the enclosed copy of this letter and return it to the undersigned.

Yours sincerely,

/s/ Hermione Davies

Hermione Davies

Managing Director

ACCEPTED AND AGREED:


Bessemer Investment Management LLC

By:		/s/ Timothy J. Morris
		Timothy J. Morris Senior Managing Director


Old Westbury Funds, Inc.

By:		/s/ Walter Grimm
		Walter Grimm President

- 7 -

First Schedule

The Advisor’s total remuneration from BIM LLC is calculated at the following rates applied to the aggregate market value ("X") of all of the assets, including the assets in the Fund’s portfolio, for which the Advisor has accepted responsibility to provide investments services as delegated to it by BIM LLC, as set forth in various agreements:

The Advisor’s remuneration under this agreement shall calculated by multiplying the resultant amount by the market value of the assets in the Fund’s portfolio which is the subject of this agreement (including capital cash un-invested) and dividing the product by X.

- 8 -

Exhibit 99.23 (d)(v)

OLD WESTBURY FUNDS, INC.

BESSEMER INVESTMENT MANAGEMENT LLC

SUB-ADVISORY AGREEMENT

Global Small Cap Fund

This SUB-ADVISORY AGREEMENT executed as of January 1, 2006 by and among OLD WESTBURY FUNDS, INC. (hereinafter called “the Fund”), BESSEMER INVESTMENT MANAGEMENT LLC (hereinafter called “the Adviser”), and CHAMPLAIN INVESTMENT PARTNERS, LLC (hereinafter called “the Sub-Adviser”),

W I T N E S S E T H:

WHEREAS, the Adviser is the investment adviser to the Old Westbury Global Small Cap Fund (hereinafter called “the Portfolio” of the Fund, an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”);

WHEREAS, the Adviser and the Sub-Adviser are each registered under the Investment Advisers Act of 1940 (the “Investment Advisers Act”) as investment advisers; and

WHEREAS, the Fund and the Adviser desire to retain the Sub-Adviser to provide portfolio selection and related research and statistical services in connection with the investment advisory services, which the Adviser provides to the Portfolio, for the Portfolio or a designated portion of the assets of the Portfolio (a “Segment”), and the Sub-Adviser desires to furnish such services; and

(a)

Investment Advisory Agreement (the “Advisory Agreement”) with the Fund;

(b)

The Fund’s registration statement as filed with the Securities and Exchange Commission;

(c)

The Fund’s Articles of Incorporation and By-laws;

(d)

The resolutions of the Board of Directors of the Fund approving the engagement of the Sub-Adviser as sub-adviser for the Portfolio and approving the form of this Agreement;

(e)

The Fund’s Prospectus and Statement of Additional Information;

(f)

A list of affiliated persons and affiliated brokers and underwriters of the Fund for compliance with applicable provisions of the 1940 Act; and

(g)

Policies, procedures or instructions adopted or approved by the Board of Directors of the Fund relating to obligations and services to be provided by the Sub-Adviser.

NOW, THEREFORE, in consideration of the premises and the terms and conditions hereinafter set forth, the parties agree as follows:

1. Appointment of Sub-Adviser .

Subject to the direction and control of the Board of Directors of the Fund and the Adviser, the Sub-Adviser shall provide the services described in Section 2 below for investment and reinvestment of the securities and other assets of the Portfolio or Segment for the period and on the terms hereinafter set forth. The Sub-Adviser agrees to furnish the services hereinafter set forth for the compensation herein provided. The Sub-Adviser shall for all purposes herein be deemed to be an independent contractor and shall, except as expressly provided or authorized herein, have no authority to act for or represent the Fund or the Adviser in any way or otherwise be deemed an agent of the Fund or the Adviser.

2. Obligations of and Services to be Provided by the Sub-Adviser .

The Sub-Adviser will:

(a)

Provide investment advisory services for the Portfolio or Segment, including but not limited to research, advice and supervision for the Portfolio or Segment.

(b)

Implement the investment program by placing orders for the purchase and sale of securities and other assets without prior consultation with the Adviser and without regard to the length of time the securities have been held, the resulting rate of portfolio turnover or any tax considerations, subject always to the provisions of the Fund’s registration statement, Articles of Incorporation and Bylaws and the requirements of the 1940 Act, as each of the same shall be from time to time in effect; provided however, that copies of all such documents shall have been provided to Sub-Adviser prior to their effectiveness marked to show the proposed changes.

(c)

Maintain, as applicable to the Sub-Adviser’s investment advisory services obligations, compliance with the 1940 Act and the regulations adopted by the Securities and Exchange Commission thereunder and the Portfolio or Segment investment strategies and restrictions as stated in the Fund’s prospectus and statement of additional information subject to receipt of such

additional information as may be required from the Adviser and provided in accordance with Section 14(d) of this Agreement.

(d)

Report to the Board of Directors of the Fund at such times and in such detail as the Board of Directors may reasonably request in order to enable it to determine that the investment policies, procedures and approved investment program of the Portfolio or Segment are being observed. The Sub-Adviser will also keep the Adviser, and, as appropriate, the Board of Directors, informed of important developments affecting the Fund, the Portfolio and the Sub-Adviser, and on its own initiative will furnish the Adviser and the Board of Directors from time-to-time with such information as the Sub-Adviser may believe appropriate, whether concerning the individual companies whose securities are held by the Portfolio or the industries in which they engage.

(e)

(f)

dealer. This determination, with respect to brokerage and research products and/or services, may be viewed in terms of either that particular transaction or the overall responsibilities which the Sub-Adviser and its affiliates have with respect to the Portfolio or Segment as well as to accounts over which they exercise investment discretion. Not all such services or products need be used by the Sub-Adviser in managing the Portfolio or Segment. In the event that the Adviser or the Fund shall direct the selection of broker-dealers for the execution of security transactions for all or a portion of the Portfolio or any Segment managed by the Sub-Adviser, the Adviser and/or the Fund shall instruct the Sub-Adviser in writing with the name(s) of such designated broker(s) (a “directed broker”), which instruction shall not be deemed effective until countersigned by the Sub-Adviser, and the Adviser and/or the Fund specifically agree that the Sub-Adviser shall not be responsible to seek best execution for portfolio transactions placed with such directed broker.

(g)

Upon reasonable request, provide assistance and recommendations for the determination of the fair value of certain securities when reliable market quotations are not readily available for purposes of calculating net asset value in accordance with procedures and methods established by the Fund’s Board of Directors.

(h)

Maintain all accounts, books and records with respect to the Portfolio or Segment as are required pursuant to the 1940 Act and Investment Advisers Act, and the rules thereunder, and furnish the Fund and the Adviser with such periodic and special reports as the Fund or Adviser may reasonably request. In compliance with the requirements of Rule 31a-3 under the 1940 Act, the Sub-Adviser hereby agrees that all records that it maintains for the Portfolio or Segment are the property of the Fund, agrees to preserve for the periods set forth in Rule 31a-2 under the 1940 Act any records that it maintains for the Portfolio or Segment and that are required to be maintained by Rule 31a-1 under the 1940 Act, and further agrees to surrender promptly to the Fund any records that it maintains for the Portfolio or Segment upon request by the Fund or the Adviser. The Sub-Adviser has no responsibility for the maintenance of Fund records except insofar as is directly related to the services the Sub-Adviser provides to the Portfolio or Segment.

(i)

(j)

From time to time as the Adviser or the Fund may reasonably request, furnish the requesting party reports on portfolio transactions and reports on investments held by the Portfolio or Segment, all in such detail as the Adviser or the Fund may reasonably request. The Sub-Adviser will make available its officers and employees to meet with the Adviser’s Board of Directors at the Adviser’s principal place of business on reasonable notice to review the investments of the Portfolio or Segment.

(k)

Upon request by the Adviser, provide such information as may be required for the Fund or the Adviser to comply with their respective obligations under applicable laws, including, without limitation, the Internal Revenue Code of 1986, as amended (the “Code”), the 1940 Act, the Investment Advisers Act, the Securities Act of 1933, as amended (the “Securities Act”), and any state securities laws, and any rule or regulation thereunder.

(l)

(m)

The Adviser and the Fund agree and understand that the Sub-Adviser is not responsible to act for the Portfolio in any legal proceedings, including bankruptcies or class actions, involving securities held or previously held by the Portfolio or Segment or the issuers of such securities; provided that the Sub-Adviser shall advise and consult with the Adviser with respect to any such proceedings of which the Sub-Adviser becomes aware. The Adviser and the Fund agree and understand that the Sub-Adviser is not responsible to vote or give any advice about how to vote proxies for securities held by the Portfolio or Segment.

(n)

In carrying out its obligations under this Agreement, the Sub-Adviser shall at all times comply with:

(i) all applicable provisions of the 1940 Act and the Investment Advisers Act, and all rules and regulations adopted thereunder;

(ii) the provisions of the registration statement of the Fund, as it may be amended from time-to-time, under the 1940 Act;

(iii) the provisions of the Articles of Incorporation of the Fund, as they may be amended from time-to-time;

(iv) the provisions of the By-laws of the Fund, as they may be amended from time-to-time, or resolutions of the Board of Directors as may be adopted from time-to-time;

(v) the provisions of the Internal Revenue Code of 1986, as amended, applicable to the Fund or the Portfolio; and

(vi) any other applicable provisions of federal or state law.

(o)

3. Compensation .

4. Liability of Sub-Adviser .

(a)

(b)

for the Portfolio’s being in violation of any applicable law or regulation or investment policy or restriction applicable to the Portfolio as a whole or for the Portfolio’s failing to qualify as a regulated investment company under the Code, if the securities and other holdings of the Segment managed by the Sub-Adviser are such that the Segment would not be in such violation or fail to so qualify if the Segment were deemed a separate series of the Fund or a separate “regulated investment company” under the Code. Nothing in this Section shall be deemed a limitation or waiver of any obligation or duty that may not by law be limited or waived.

5. Indemnification by the Sub-Adviser .

The Adviser shall not be responsible for, and the Sub-Adviser shall indemnify and hold the Fund, the Adviser and the Portfolio harmless from and against, any and all losses, damages, costs, charges, reasonable counsel fees, payments, reasonable expenses and liability arising out of or attributable to the willful misfeasance, bad faith, gross negligence or reckless disregard of obligations or duties of the Sub-Adviser hereunder or any of its officers, directors, employees or agents; provided , however , that in no case is the Sub-Adviser’s indemnity in favor of the Adviser, the Fund or the Portfolio deemed to protect such person against any liability to which any such person would otherwise be subject by reason of willful misconduct, bad faith or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties under this Agreement.

6. Indemnification by the Fund and the Adviser .

In the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of duties hereunder on the part of the Sub-Adviser or its affiliates or any of their respective officers, directors, employees or agents (“Sub-Adviser Indemnitees”), the Fund and the Adviser, severally and not jointly, hereby agree to indemnify and hold harmless the Sub-Adviser Indemnitees against all losses, damages, costs, charges, reasonable counsel fees, payments, reasonable expenses and liability arising out of the services provided by the Sub-Adviser hereunder. Federal and state securities laws impose liabilities under certain circumstances on persons who act in good faith, and nothing herein shall constitute a waiver or limitation of any rights which the Fund or the Adviser may have and which may not be waived under any applicable federal and state securities laws; provided , however , that in no case is the Fund’s or the Adviser’s indemnity in favor of the Sub-Adviser Indemnitees deemed to protect such person against any liability to which any such person would otherwise be subject by reason of willful misconduct, bad faith or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties under this Agreement.

7. Supplemental Arrangements .

The Sub-Adviser may enter into arrangements with other persons affiliated with the Sub-Adviser or with unaffiliated third parties to better enable the Sub-Adviser to fulfill its

obligations under this Agreement for the provision of certain personnel and facilities to the Sub-Adviser, the cost of such arrangements to be borne solely by the Sub-Advisor, subject where required by applicable law, to approval of the Board of Directors of the Fund.

8.	Regulation .

The Sub-Adviser shall submit to all regulatory and administrative bodies having jurisdiction over the services provided pursuant to this Agreement any information, reports or other material that any such body may request or require pursuant to applicable laws and regulations, subject to attorney-client and other similar privileges.

9. Duration and Termination of This Agreement .

(a)

(b)

(c)

(particularly the definitions of “interested person,” “assignment” and “voting security”) shall be applied.

10. Trade Settlement At Termination .

11. Amendment of this Agreement .

12. Services to Other Clients .

The services furnished by the Sub-Adviser hereunder are deemed not to be exclusive, and the Sub-Adviser shall be free to furnish similar services to others. The Adviser understands, and has advised the Fund’s Board of Directors, that the Sub-Adviser now acts, and may in the future act, as an investment adviser to fiduciary and other managed accounts, and as investment adviser, sub-investment adviser, and/or administrator to other investment companies. The Adviser has no objection to the Sub-Adviser’s acting in such capacities, provided that whenever the purchase or sale of securities or other investments of the same issuer may be deemed by the Sub-Adviser to be suitable for two or more investment companies or accounts managed by the Sub-Adviser, the available securities or investments will be allocated in a manner believed by the Sub-Adviser to be equitable to each of them, although not necessarily with respect to any particular transaction. It is recognized and acknowledged by the Adviser that in some cases this procedure may adversely affect the price paid or received by the Portfolio or the size of the position obtained for or disposed of by the Portfolio. In addition, the Adviser understands, and has advised the Fund’s Board of Directors, that the persons employed by the Sub-Adviser to assist in the Sub-Adviser’s duties under this Agreement will not devote their full time to such service and nothing contained in this Agreement will be deemed to limit or restrict the

right of the Sub-Adviser or any of its affiliates to engage in and devote time and attention to other businesses or to render services of whatever kind or nature.

13. Distribution

14. Disclosure .

(a)

None of the Adviser, the Portfolio or the Sub-Adviser shall disclose information of a confidential nature acquired in connection with this Agreement, except for information that they may be entitled or bound to disclose by law or regulation or that is requested by a court or regulatory body or which is disclosed to their advisers where reasonably necessary for the performance of their professional services or, in the case of the Sub-Adviser, to persons retained as permitted in accordance with Section 7 above to the extent reasonably necessary for the performance of the Sub-Advisor’s services hereunder and provided such persons are bound by confidentiality obligations at least as stringent as the foregoing. The Sub-Adviser shall also comply with the Fund’s policies with respect to disclosure of portfolio holdings, provided such policies are provided to the Sub-Adviser in writing.

(b)

Notwithstanding the provisions of 13(a) above, to the extent that any market counterparty with whom the Sub-Adviser deals requires information relating to the Portfolio or Segment (including, but not limited to, the identity of the Adviser or the Portfolio and market value of the Portfolio or Segment), the Sub-Adviser shall be permitted to disclose such information to the extent necessary to effect transactions on behalf of the Portfolio or Segment in accordance with the terms of this Agreement.

15. General Provisions .

(a)

Each party agrees to perform such further acts and execute such further documents as are necessary to effectuate the purposes hereof. This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of New York. The captions in this Agreement are included for convenience only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect.

(b)

Any notice under this Agreement shall be in writing, addressed and delivered or mailed postage pre-paid to the other party at such address as such other party may designate for the receipt of such notices. Until further notice to the other party, it is agreed that the address of the Adviser for this purpose shall be Bessemer Investment Management LLC, 630 Fifth Avenue, New York, New York 10111, Attention: General Counsel, and the address of the Sub-Adviser shall be, Champlain Investment Partners, LLC, 346 Shelburne Road, Burlington, Vermont 05401, Attention: Chief Operating Officer.

(c)

The Sub-Adviser will promptly notify the Adviser in writing of the occurrence of any of the following events:

(d)

(e)

This Agreement contains the entire understanding and agreement of the parties.

(f)

The Sub-Adviser acknowledges that nonpublic customer information (as defined in Regulation S-P, including any amendments thereto) of customers of the Fund or the Portfolio received from the Adviser is subject to the limitations on redisclosure and reuse set forth in Section 248.11 of Regulation S-P, and agrees that such information: (i) shall not be disclosed to any third party for any purpose without the written consent of the Adviser and/or the Fund unless permitted by exceptions set forth in Sections 248.14 or 248.15 of Regulation S-P; and (ii) shall be safeguarded pursuant to procedures adopted under Section 248.30 of Regulation S-P, provided such policies are provided to the Sub-Adviser in writing.

(g)

The Fund and the Adviser understand and agree that the Sub-Adviser, as part of its duties hereunder, is not responsible for determining whether or not the

Portfolio is suitable and an appropriate investment for the clients who invest in such.

(h)

During the term of this Agreement, the Fund and the Adviser agree to furnish to the Sub-Adviser at its principal office all prospectuses, proxy statements, reports to stockholders, sales literature or other material prepared for distribution to sales personnel, shareholders of the Portfolio or the public, which refer to the Sub-Adviser or its clients in any way and to consult with the Sub-Adviser regarding such materials to the extent of any references to the Sub-Adviser. Sales literature may be furnished to the Sub-Adviser hereunder by first-class or overnight mail, facsimile transmission equipment or hand delivery, Attention: Chief Operating Officer.

(i)

During the term of this Agreement, the Sub-Adviser agrees that all marketing, advertising or promotional material or other client information that makes reference to the Fund, the Portfolio, the Adviser or the services being provided pursuant to this Agreement shall be expressly subject to the prior review and approval by the Adviser. Without limiting the generality of the foregoing, no reference to Old W estbury Funds or the Adviser shall be included in any such marketing, advertising or promotional material or other client information or communication without the Adviser’s express prior written consent.

16. Release .

of the Directors, shareholders, or representatives of the Fund personally, but bind only assets of the Portfolio, and all persons dealing with the Portfolio of the Fund must look solely to the assets of such Portfolio for the enforcement of any claims.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.


OLD WESTBURY FUNDS, INC.

By:		/s/Peter Artemiou
Name:		Peter Artemiou
Title:		Vice President

BESSEMER INVESTMENT MANAGEMENT LLC

By:		/s/Marc D. Stern
Name:		Marc D. Stern
Title:		President

CHAMPLAIN INVESTMENT PARTNERS, LLC

By:		/s/ Judith W. O’Connell
Name:		Judith W. O’Connell
Title:		Managing Partner

APPENDIX A

SUB-ADVISORY FEES

The Adviser will pay the Sub-Adviser, as full compensation for all services provided under this Agreement, an annual fee computed at the following annual rates of the Portfolio’s or Segment’s average daily net assets:

The Sub-Adviser’s fee shall be accrued for each calendar day and the sum of the daily fee accruals shall be paid monthly in arrears to the Sub-Adviser. The daily fee accruals will be computed by multiplying the fraction of one over the number of calendar days in the year by the applicable annual rate set forth in the schedule above and multiplying this product by the net assets of the Portfolio or Segment, as determined in accordance with the Portfolios’ Prospectus and Statement of Additional Information as of the close of business on the previous business day on which the Portfolio was open for business.

Exhibit 99.23(d)(vi)

[March 1, 2007]

Mr. Peter C. Artemiou

Old Westbury Funds, Inc.

760 Moore Road

King of Prussia, PA 19406

Re: Waiver of Certain Investment Advisory Fees and Shareholder Servicing Fees

Dear Mr. Artemiou:

This letter sets forth the commitments of Bessemer Investment Management LLC (“BIM”) and Bessemer Trust Company, N.A. (“BTNA”) to waive certain investment advisory fees and shareholder servicing fees for various series of Old Westbury Funds, Inc. (the “Corporation”). Specifically, BIM commits to waive certain investment advisory fees for the Fixed Income Fund, Large Cap Equity Fund and Municipal Bond Fund and BTNA commits to waive certain shareholder servicing fees for the Fixed Income Fund and Municipal Bond Fund, on the basis described below.

Investment Advisory Fee Waivers

As you are aware, BIM serves as the investment adviser for the Fixed Income Fund, Large Cap Equity Fund and Municipal Bond Fund pursuant to an investment advisory agreement (the “Investment Advisory Agreement”). Under the Investment Advisory Agreement, the Fixed Income Fund, Large Cap Equity Fund and Municipal Bond Fund each have agreed to pay BIM the following fees for providing investment advisory services to such funds (the “Investment Advisory Fees”):


Fund	Advisory Fees
	First $500 million of average net assets		Second $500 million of average net assets		Average net assets exceeding $1 billion
Fixed Income Fund	0.45	%	0.40	%	0.35	%
Large Cap Equity Fund	0.70	%	0.65	%	0.60	%
Municipal Bond Fund	0.45	%	0.40	%	0.35	%

BIM hereby commits to waive a portion of the Investment Advisory Fees it is entitled to receive from each such fund to the extent necessary to maintain the net operating expense ratio, excluding acquired fund fees and expenses, of the Fixed Income Fund at 0.70%, Large Cap Equity Fund at 1.00% and Municipal Bond Fund at 0.70% (each an “Investment Advisory Fee Waiver”).

Shareholder Servicing Fee Waivers

As you are also aware, BTNA serves as the shareholder servicing agent for the Fixed Income Fund and Municipal Bond Fund pursuant to a shareholder servicing agreement (the “Shareholder Servicing Agreement”). Under the Shareholder Servicing Agreement, the Fixed Income Fund and Municipal Bond Fund each have agreed to pay BTNA 0.15% of its average daily net assets as compensation for BTNA providing shareholder support services to such fund (the “Shareholder Servicing Fee”). BTNA hereby commits to waive a portion of the Shareholder Servicing Fee that it receives from each of the Fixed Income Fund and the Municipal Bond Fund to the extent necessary to maintain a maximum Shareholder Servicing Fee for each such fund at 0.05% (each a “Shareholder Servicing Fee Waiver”).

Terms of Investment Advisory Fee Waivers and Shareholder Servicing Fee Waivers

Each Investment Advisory Fee Waiver and Shareholder Servicing Fee Waiver described above (each a “Committed Fee Waiver”) will be maintained for an initial waiver period that begins as of the date of this letter and extends through October 31, 2008. BIM and BTNA both acknowledge and understand that each Committed Fee Waiver is a binding legal obligation on which the funds will rely. Each Committed Fee Waiver shall renew automatically, on the same terms, for a period of one year from the expiration of the Committed Fee Waiver, unless prior to such expiration, BIM or BTNA provides notice to the Board of Directors of the Corporation of its intention not to renew the Committed Fee Waiver.


Very Truly Yours,

BESSEMER INVESTMENT MANAGEMENT LLC

By:
Name:		Marc D. Stern
Title:		President

and

BESSEMER TRUST COMPANY, N.A.

By:
Name:		John G. MacDonald
Title:		Managing Director and Chief Financial Officer


Accepted:

OLD WESTBURY FUNDS, INC.

By:
Name:		Peter C. Artemiou
Title:		Vice President

Exhibit 99.23(g)(v)

FOURTH AMENDMENT TO CUSTODIAN AGREEMENT

THIS FOURTH AMENDMENT TO CUSTODIAN AGREEMENT dates as of December 6, 2006 by and between OLD WESTBURY FUNDS, INC., a Maryland corporation (the “Fund”), and BESEMER TRUST COMPANY, a New Jersey state chartered bank (“Bessemer”)

WITNESSETH:

WHEREAS , the Fund and Bessemer are parties to that certain Custodian Agreement dates as of October 12, 1993, as amended as of May 2 2001, September 1,2004 and September 1, 2005 (as so amended, in the “Custodian Agreement”), pursuant to which Bessemer serves as Custodian for the Fund; and

WHEREAS , the Fund and Bessemer desire to amend the custodian Agreement to provide for the provision of certain custodial services to the Real Return Fund, a series of the Fund, but only with respect to coins or bullion or other forms of precious metals held by the Real Return Fund and to provide payable to Bessemer for providing such custodial services;

NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein, the parties hereby agree as follows:

1. Paragraph 1 of the custodian Agreement is hereby amended by replacing its first sentence with the following:

“The Fund hereby appoints Bessemer to acct as custodian of the portfolio securities, cash and other property for each series of the Fund set forth on Appendix A attached hereto, as such Appendix may be amended from time to time, for the period and on the terms set forth in this Agreement, except that for the Real Return Fund, Bessemer will act as custodian only for the coins or bullion or other forms of precious metals held by the Real Return Fund.”

2. Paragraph 21 of the Custodian Agreement is hereby amended and restated in its entirety to read as follows:

“During the term of this Agreement, the Fund will pay to Bessemer 0.15% of the average daily net assets of the Old Westbury International Fund; 0.10% of the average daily net assets of the Old Westbury Large Cap Equity Fund, the Old Westbury Mid Cap Equity Fund, the Old Westbury Fixed Income Fund, and the Old Westbury Municipal Bond Fund; and 0.10% of the average daily net assets of the Old Westbury Real Return Fund’s investments in coins or bullion or other forms of precious metals.”

3. The Custodian Agreement, as expressly amended hereby, shall continue in full force and effect.

4. This Amendment may be executed in counterparts, each of which shall be an original but all of which, taken together, shall constitute one and the same agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Fourth Amendment to the Custodian Agreement to be executed by their respective officers as of the day and year first written above.


OLD WESTBURY FUNDS, INC.

By:		/s/ Peter C. Artemiou
		Peter C. Artemiou
		Vice President


BESSEMER TRUST COMPANY

By:		/s/ John G. MacDonald
		John G. MacDonald
		Managing Director and Chief Financial Officer

APPENDIX A

Old Westbury Fund Income Fund

Old Westbury International Fund

Old Westbury Large Cap Equity Fund

Old Westbury Mid Cap Equity Fund

Old Westbury Municipal Bond Fund

Old Westbury Real Return Fund

Exhibit 99.23(g)(vi)

LOGO

GLOBAL

CUSTODIAL SERVICES AGREEMENT

OLD WESTBURY FUNDS INC.


GCSA 2000 - V.11.9.2002 (Std/Neg )

LOGO

TABLE OF CONTENTS


1.	DEFINITIONS AND INTERPRETATION	1

2.	ESTABLISHMENT OF ACCOUNTS	2

3.	CUSTODY ACCOUNT PROCEDURES	2

4.	CASH ACCOUNT PROCEDURES	2

5.	INSTRUCTIONS	3

6.	PERFORMANCE BY THE CUSTODIAN	3

7.	TAX STATUS/WITHHOLDING TAXES	4

8.	USE OF THIRD PARTIES	5

9.	REPRESENTATIONS	5

10.	SCOPE OF RESPONSIBILITY	6

11	SUBROGATION	7

12.	INDEMNITY	7

13.	LIEN AND SET OFF	7

14.	FEES AND EXPENSES	8

15.	CITIGROUP ORGANISATION INVOLVEMENT	8

16.	RECORDS AND ACCESS	8

17.	INFORMATION	8

18.	ADVERTISING	9

19.	TERMINATION	9

20.	FOREIGN SUBCUSOTODIANS	10

21.	GOVERNING LAW AND JURISDICTION	11

22.	MISCELLANEOUS	11

	SIGNATURES	12

Schedules:

Schedule A – Portfolios

Schedule B – Reports

Fee Schedule


GCSA 2000 - V.11.9.2002 (Std/Neg )

LOGO

THIS GLOBAL CUSTODIAL SERVICES AGREEMENT is made as of March 16, 2005 by and between Old Westbury Funds, Inc., a Maryland corporation and an open-end management investment company registered with the Securities and Exchange Commission under the Investment Company Act of 1940, as amended (the “ Client “), and Citibank, N.A. acting through its offices located in New York, New York (the “ Custodian ”).

1.	DEFINITIONS AND INTERPRETATION

(A)	*Definitions.*

“ Authorized Person ” means the Client or any person (including any individual or entity) authorized by the Client to act on its behalf in the performance of any act, discretion or duty under this Agreement (including, for the avoidance of doubt, any officer or employee of such person) in a notice reasonably acceptable to the Custodian.

“ Cash ” means all cash or cash equivalents in any currency received and held on the terms of this Agreement.

“ Citigroup Organization ” means Citigroup, Inc. and any company or other entity of which Citigroup, Inc. is directly or indirectly a shareholder or owner. For purposes of this Agreement, each branch of Citibank, N.A. shall be a separate member of the Citigroup Organization.

“ Clearance System ” means any clearing agency, settlement system or depository (including any entity that acts as a system for the central handling of Securities in the country where it is incorporated or organized or that acts as a transnational system for the central handling of Securities) used in connection with transactions relating to Securities and any nominee of the foregoing.

“ Fee Schedule ” means the schedule referred to in Section 14, as annexed hereto.

“ Instructions ” means any and all written instructions (including approvals, consents and notices) received by the Custodian from, or reasonably believed by the Custodian to be from, any Authorized Person, including any instructions communicated through any manual or electronic medium or system agreed between the Client and the Custodian.

“ Portfolio ” means each series of the Client set forth on Schedule A annexed hereto, as such Schedule A may be amended from time to time.

“Securities ” means any financial asset (other than Cash) from time to time held for the Client on the terms of this Agreement.

“ Subcustodian ” means any subcustodian appointed by the Custodian in accordance with the terms of this Agreement, including Section 20 below.

“Taxes” means all taxes, levies, imposts, charges, assessments, deductions, withholdings and related liabilities, including additions to tax, penalties and interest imposed on or in respect of (i) Securities or Cash, (ii) the transactions effected under this Agreement or (iii) the Client; provided that “Taxes” does not include income or franchise taxes imposed on or measured by the net income of the Custodian or its agents.

(B)	*Interpretation.*

References in this Agreement to schedules shall be deemed to be references to schedules, the terms of which shall be incorporated into and form part of this Agreement.


GCSA 2000 - V.11.9.2002 (Std/Neg)
Page 1

LOGO

2.	ESTABLISHMENT OF ACCOUNTS

(A)

Accounts . The Client authorizes the Custodian to establish on its books, pursuant to the terms of this Agreement, (i) a custody account or accounts (the “Custody Account”) and (ii) a cash account or accounts (the “Cash Account”) for each Portfolio. The Custody Account will be a custody account for the receipt, safekeeping and maintenance of Securities, and the Cash Account will be a current account for Cash, in each case solely for the assets of the Portfolio for which such Custody Account or Cash Account is established.

(B)	*Acceptance of Securities and Cash.* The Custodian will accept (i) for custody in each Custody Account, Securities of any kind and (ii) for deposit in each Cash Account, Cash in any currency.

(C)	*Designation of Accounts* .

(i)	Each Custody Account will be in the name of the Client or such other name as the Client may reasonably designate and will indicate that Securities do not belong to the Custodian and are segregated from the Custodian’s assets.

(ii)	Each Cash Account will be in the name of the Client or such other name as the Client may reasonably designate and will be held by the Custodian as banker.

(D)	*Segregation.*

(i)

The Custodian will hold Securities with a Subcustodian only in an account which holds exclusively assets held by the Custodian for its customers. The Custodian will direct each Subcustodian to identify on its books that Securities are held for the account of the Custodian as custodian for its customers. The Custodian will direct each Subcustodian to hold Securities in a Clearance System only in an account of the Subcustodian which holds exclusively assets held by the Subcustodian for its customers.

(ii)	Any Securities deposited by the Custodian with a Subcustodian will be subject only to the instructions of the Custodian, and any Securities held in a Clearance System for the account of a Subcustodian will be subject only to the instructions of the Subcustodian.

(iii)

The Custodian shall require each Subcustodian to agree that Securities will not be subject to any right, charge, security interest, lien or claim of any kind in favor of the Subcustodian.

3.	CUSTODY ACCOUNT PROCEDURES

(A)	*Credits to the Custody Account* . The Custodian is not obligated to credit Securities to a Custody Account before receipt of such Securities by final settlement.

(B)

Debits to the Custody Account. If the Custodian has received Instructions that would result in the delivery of Securities exceeding credits to a Custody Account for that Security, the Custodian may reject the Instructions or may decide which deliveries it will make (in whole or in part and in the order it selects).

(C)	*Denomination of Securities* . The Client shall bear the risk and expense associated with investing in Securities denominated in any currency.

4.	CASH ACCOUNT PROCEDURES

(A)

Credits and Debits to the Cash Account . The Custodian is not obliged to make a credit or debit to a Cash Account before receipt by the Custodian of a corresponding and final payment in cleared funds. If the Custodian makes a credit or debit before such receipt, the Custodian may at any time reverse all or part of the credit or debit (including any interest thereon), make an appropriate entry to such Cash Account, and if it reasonably so decides, require repayment of any amount corresponding to any debit.


GCSA 2000 - V.11.9.2002 (Std/Neg)
Page 2

LOGO

(B)

Debit Balances in the Cash Account . The Custodian is not obliged to make any debit to a Cash Account which might result in or increase a debit balance. The Custodian may make any debit to a Cash Account even if this results in (or increases) a debit balance. If the total amount of debits to the Cash Account at any time would otherwise result in a debit balance or exceed the immediately available funds credited to such Cash Account, the Custodian may decide which debits it will make (in whole or in part and in the order it selects).

(C)

Payments. The Custodian may at any time cancel any extension of credit. The Client will transfer to the Custodian on closure of a Cash Account and otherwise on demand from the Custodian sufficient immediately available funds to cover any debit balance on such Cash Account or any other extension of credit and any interest, fees and other amounts owed.

(D)	*Foreign Currency Risks.* The Client shall bear the risk and expense associated with Cash denominated in any currency.

5.	INSTRUCTIONS

The Custodian is entitled to rely and act upon Instructions of any Authorized Person until the Custodian has received notice of any change from the Client and has had a reasonable time to note and implement such change. The Custodian is authorized to rely upon any Instructions received by any means, provided that the Custodian and the Client have agreed upon the means of transmission and the method of identification for the Instructions. In particular:

(i)	The Client and the Custodian will comply with security procedures designed to verify the origination of Instructions.

(ii)

The Custodian is not responsible for errors or omissions made by the Client or resulting from fraudulent actions by the Client or the duplication of any Instruction by the Client, and the Custodian may act on any Instruction by reference to an account number only, even if any account name is provided.

(iii)

The Custodian may act on an Instruction if it reasonably believes it contains sufficient information.

(iv)	The Custodian may decide not to act on an Instruction where it reasonably doubts its contents, authorization, origination or compliance with any security procedures and will promptly notify the Client of its decision.

(v)

If the Custodian acts on any Instruction sent manually (including facsimile or telephone), then, if the Custodian complies with the security procedures, the Client will be responsible for any loss the Custodian may incur in connection with that Instruction. The Client expressly acknowledges that the Client is aware that the use of [manual] forms of communication to convey Instructions increases the risk of error, security and privacy issues and fraudulent activities.

(vi)	Instructions are to be given in the English language.

(vii)

The Custodian is obligated to act on Instructions only within applicable cut-off times on banking days when the Custodian and the applicable financial markets are open for business.

(viii)

In some securities markets, securities deliveries and payments therefore may not be or are not customarily made simultaneously. Accordingly, notwithstanding the Client’s Instruction to deliver Securities against payment or to pay for Securities against delivery, the Custodian may make or accept payment for or delivery of Securities at such time and in such form and manner as is in accordance with relevant local law and practice or with the customs prevailing in the relevant market.


GCSA 2000 - V.11.9.2002 (Std/Neg)
Page 3

LOGO

6. PERFORMANCE BY THE CUSTODIAN

(A)	*Custodial Duties Requiring Instructions* . The Custodian shall carry out the following actions only upon receipt of and in accordance with specific Instructions:

(i)	make payment for and/or receive any Securities or deliver or dispose of any Securities except as otherwise specifically provided for in this Agreement;

(ii)	deal with rights, conversions, options, warrants and other similar interests or any other discretionary right in connection with Securities; and

(iii)

carry out any action affecting Securities or a Custody Account or Cash or a Cash Account other than those specified in Section 6(B) below, but in each instance subject to the agreement of the Custodian.

(B)	*Non-Discretionary Custodial Duties* . Absent a contrary Instruction, the Custodian shall carry out the following without further Instructions:

(i)	in the Client’s name or on its behalf, sign any affidavits, certificates of ownership and other certificates and documents relating to Securities which may be required (i) to obtain any Securities or Cash or (ii) by any tax or regulatory authority;

(ii)

collect, receive, and/or credit the appropriate Custody Account or Cash Account, as appropriate, with all income, payments and distributions in respect of Securities and any capital arising out of or in connection with Securities (including all Securities received by the Custodian as a result of a stock dividend, bonus issue, share sub-division or reorganization, capitalization of reserves or otherwise) and take any action necessary and proper in connection therewith;

(iii)

exchange interim or temporary receipts for definitive certificates, and old or overstamped certificates for new certificates;

(iv)	notify the Client of notices, circulars, reports and announcements which the Custodian has received, in the course of acting in the capacity of custodian, concerning Securities held on the Client’s behalf that require discretionary action;

(v)	make any payment by debiting the appropriate Cash Account or any other designated account of the Client with the Custodian as required to effect any Instruction; and

(vi)	attend to all non-discretionary matters in connection with anything provided in this Section 6(B) or any Instruction.

7.	TAX STATUS/WITHHOLDING TAXES

(A)

Information. The Client will provide the Custodian, from time to time and in a timely manner, with information and proof (copies or originals) as the Custodian reasonably requests, as to the Client’s and/or the underlying beneficial owner’s tax status or residence. Information and proof may include, as appropriate, executing certificates, making representations and warranties, or providing other information or documents in respect of Securities, as the Custodian deems necessary or proper to fulfill obligations under applicable law.

(B)

Payment. If any Taxes become payable with respect to any payment to be made to the Client, such Taxes will be payable by the Client and the Custodian may withhold the Taxes from such payment. The Client shall remain liable for any deficiency. Upon receipt of proper Instructions, the Custodian may pay any such Taxes and reimburse itself by debiting the appropriate Cash Account held hereunder.

(C)

Tax Relief . In the event the Client requests that the Custodian provide tax relief services and the Custodian agrees to provide such services, the Custodian shall apply for appropriate tax relief (either by way of reduced tax rates at the time of an income payment or retrospective tax reclaims in certain markets as agreed from time to time); provided the Client provides to the Custodian such documentation and information as to it or its underlying beneficial owner clients as is necessary to secure such tax relief.


GCSA 2000 - V.11.9.2002 (Std/Neg)
Page 4

LOGO

However, in no event shall the Custodian be responsible, or liable, for any Taxes resulting from the inability to secure tax relief, or for the failure of any Client or beneficial owner to obtain the benefit of credits, on the basis of foreign taxes withheld, against any income tax liability.

8.	USE OF THIRD PARTIES

(A)	*General Authority* .

(i)	The Custodian is hereby authorized to appoint Subcustodians and administrative support providers as its delegates and to use or participate in market infrastructures and Clearance Systems to perform any of the duties of the Custodian under this Agreement.

(ii)	Subcustodians are those persons utilized by the Custodian for the safe-keeping, clearance and settlement of Securities.

(iii)

Administrative support providers are those persons utilized by the Custodian to perform ancillary services of a purely administrative nature such as couriers, messengers or other commercial transport systems.

(iv)	Market infrastructures are public utilities, external telecommunications facilities and other common carriers of electronic and other messages, and external postal services. Market infrastructures are not delegates of the Custodian.

(v)	Securities deposited with Clearance Systems hereunder will be subject to the laws, rules, statements of principle and practices of such Clearance Systems. Clearance Systems are not delegates of the Custodian.

(B)	*Responsibility.*

(i)	The Custodian shall act in good faith and use reasonable care in the selection and continued appointment of Subcustodians and administrative support providers

(ii)	The Custodian may deposit or procure the deposit of Securities with any Clearance System as required by law, regulation or best market practice. The Custodian has no responsibility for for performance by any Clearance System or market infrastructure.

(C)	*Shareholders Voting* . The Custodian’s only obligation in regard to any matter where the Client may exercise shareholder voting rights will be to provide shareholder voting services as specified in a separate proxy services letter between the Custodian and the Client.

9.	REPRESENTATIONS

(A)	*General.* The Client and the Custodian each represents at the date this Agreement is entered into and any custodial service is used or provided that:

(i)	It is duly organized and in good standing in every jurisdiction where it is required so to be;

(ii)	It has the power and authority to sign and to perform its obligations under this Agreement;

(iii)

This Agreement is duly authorized and signed and is its legal, valid and binding obligation;

(iv)	Any consent, authorization or instruction required in connection with its execution and performance of this Agreement has been provided by any relevant third party;


GCSA 2000 - V.11.9.2002 (Std/Neg)
Page 5

LOGO

(v)	Any act required by any relevant governmental or other authority to be done in connection with its execution and performance of this Agreement has been or will be done prior to the commencement of performance under this Agreement (and will be renewed if necessary); and

(vi)	Its performance of this Agreement will not violate or breach any applicable law, regulation, contract or other requirement.

(B)	*Client* . The Client also represents at the date this Agreement is entered into and any custodial service is used or provided that:

(i)	It has authority to deposit the Securities received in the respective Custody Accounts and the Cash in the respective Cash Accounts and there is no claim or encumbrance that adversely affects any delivery of Securities or payment of Cash made in accordance with this Agreement;

(ii)	Where it acts as an agent on behalf of any of its own customers, whether or not expressly identified to the Custodian from time to time, any such customers shall not be customers or indirect customers of the Custodian; and

10.

SCOPE OF RESPONSIBILITY

(A)	*Standard of Care.* The Custodian shall exercise the due care of a professional custodian for hire.

(B)

Limitations on Losses. The Custodian will not be responsible for any loss or damage suffered by the Client unless the loss or damage results from the Custodian’s negligence, willful misconduct or fraud or the negligence, willful misconduct or fraud of its nominees or any Subcustodian or administrative support provider; in the event of such negligence, willful misconduct or fraud the liability of the Custodian in connection with the loss or damage will not exceed (i) the lesser of replacement of any Securities or the market value of the Securities to which such loss or damage relates at the time the Client reasonably should have been aware of such negligence, willful misconduct or fraud and (ii) replacement of Cash, plus (iii) compensatory interest up to that time at the rate applicable to the currency relating to such loss. Under no circumstances will the Custodian be liable to the Client for consequential loss or damage, even if advised of the possibility of such loss or damage.

(C)	*Limitations on the Custodian’s Responsibility.*

(i)	*General.* The Custodian is responsible for the performance of only those duties as are expressly set forth herein, including the performance of any Instruction given in accordance with this Agreement. The Custodian shall have no implied duties or obligations.

(ii)

Sole Obligations of the Custodian . The Client understands and agrees that (i) the obligations and duties of the Custodian will be performed only by the Custodian and are not obligations or duties of any other member of the Citigroup Organization (including any branch or office of the Custodian) and (ii) the rights of the Client with respect to the Custodian extend only to such Custodian and, except as provided by law, do not extend to any other member of the Citigroup Organization.

(iii)

Liability for Third Parties. The Custodian shall be responsible for the acts, omissions, or defaults of any Subcustodians or administrative support providers, if such acts, omissions, or defaults result in a loss to the Client, to the same extent the Custodian would be liable to the Client if the Custodian were providing the relevant services directly to the Client. Except as provided in Sections 8 and 10(B) hereof, the Custodian is not responsible for the acts, omissions, defaults or insolvency of any broker, counterparty or issuer of Securities.

(iv)

Performance Subject to Laws . The Client understands and agrees that the Custodian’s performance of this Agreement is subject to the relevant local laws, regulations, decrees, orders and government acts, and the rules, operating procedures and practices of any relevant stock exchange, Clearance System or market where or through which Instructions are to be carried out and to which the Custodian is subject and as exist in the country in which any Securities or Cash are held.


GCSA 2000 - V.11.9.2002 (Std/Neg)
Page 6

LOGO

(v)

Prevention of Performance. The Custodian will not be responsible for any failure to perform any of its obligations (nor will it be responsible for any unavailability of funds credited to the Cash Account) if such performance is prevented, hindered or delayed by a Force Major Event, in such case its obligations will be suspended for so long as the Force Major Event continues. “Force Major Event” means any event due to any cause beyond the reasonable control of the Custodian, such as restrictions on convertibility or transferability, requisitions, involuntary transfers, unavailability of communications system, sabotage, fire, flood, explosion, acts of God, civil commotion, strikes or industrial action of any kind, riots, insurrection, war or acts of government.

(vi)

Client’s Reporting Obligations. The Client shall be solely responsible for all filings, tax returns and reports on any transactions in respect of Securities or Cash or relating to Securities or Cash as may be required by any relevant authority, whether governmental or otherwise; provided that at the Client’s reasonable request, the Custodian shall take all reasonable actions to assist the Client in obtaining from year to year favorable opinions from the Client’s independent auditors with respect to the Custodian’s activities hereunder.

(vii)

Validity of Securities. The Custodian shall exercise reasonable care in receiving Securities but does not warrant or guarantee the form, authenticity, value or validity of any Security received by the Custodian. If the Custodian becomes aware of any defect in title or forgery of any Security, the Custodian shall promptly notify the Client.

(viii)

Capacity of Custodian . The Custodian is not acting under this Agreement as an investment manager, nor as an investment, legal or tax adviser to the Client, and the Custodian’s duty is solely to act as a Custodian in accordance with the terms of this Agreement.

(ix)

Forwarded Information. The Custodian is not responsible for the form, accuracy or content of any notice, circular, report, announcement or other material provided under Section 6(B)(iv) of this Agreement not prepared by the Custodian including the accuracy or completeness of any translation provided by the Custodian in regard to such forwarded communication.

11 .	SUBROGATION

To the extent permissible by law or regulation and upon the Client’s request, the Client shall be subrogated to the rights of the Custodian with respect to any claim for any loss, damage or claim suffered by the Client, in each case to the extent that the Custodian fails to pursue any such claim or the Client is not made whole in respect of such loss, damage or claim. Notwithstanding any other provision hereof, in no event is the Custodian obliged to bring suit in its own name or to allow suit to be brought in its name, unless required as a matter of law to permit the Client to pursue any claim in its own right.

12.

INDEMNITY

(A)

Indemnity to the Custodian. The Client agrees to indemnify the Custodian and to defend and hold the Custodian harmless from all losses, costs, damages and expenses (including reasonable legal fees) and liabilities for any claims, demands or actions (each referred to as a “Loss”), incurred by the Custodian in connection with this Agreement, except any Loss resulting from the Custodian’s negligence, willful misconduct or fraud. Under no circumstances will the Client be liable to the Custodian for consequential loss or damage, even if advised of the possibility of such loss or damage.

(B)	*Client’s Direct Liability.* The disclosure by the Client to the Custodian that the Client has entered into this Agreement as the agent or representative of another person shall not relieve the Client of any of its obligations under this Agreement.


GCSA 2000 - V.11.9.2002 (Std/Neg)
Page 7

LOGO

13.

LIEN AND SET OFF

(A)

Lien. In addition to any other remedies available to the Custodian under applicable law, the Custodian shall have, and the Client hereby grants, a continuing general lien on all Securities to the extent the Custodian has made payment for any Securities at anytime a Cash Account has insufficient funds to cover that payment.

(B)

Set Off. To the extent permitted by applicable law and in addition to any other remedies available to the Custodian under applicable law, the Custodian may, upon receipt of Instructions and with prior notice to the Client, set off any payment obligation owed to it by the Client in connection with all liabilities arising under this Agreement against any payment obligation owed by it to the Client under this Agreement regardless of the place of payment or currency of either obligation (and for such purpose may make any currency conversion necessary).

14.

FEES AND EXPENSES

The Client agrees to pay all fees, charges and obligations incurred from time to time for any services pursuant to this Agreement as determined in accordance with the terms of the Fee Schedule, which may be changed from time to time by the Custodian upon prior written notice to the Client, together with any other amounts payable to the Custodian under this Agreement. The Custodian shall invoice the Client on a monthly basis for all fees and charges incurred during the preceding month. Upon receipt of Instructions, the Custodian may debit the appropriate Cash Account to pay such fees and charges as are authorized by the Client.

15.

CITIGROUP ORGANISATION INVOLVEMENT

The Client agrees and understands that any member of the Citigroup Organization can engage as principal or otherwise in any transaction effected by the Client or by any person for its account and benefit, or by or on behalf of any counterparty or issuer. When instructed to effect any transactions (particularly foreign exchange transactions), the Custodian is entitled to effect any transaction by or with itself or any member of the Citigroup Organization and to pay or keep any fee, commissions or compensation as specified in the Client’s Instruction or, if no specification is provided, any charges, fees, commissions or similar payments generally in effect from time to time with regard to such or similar transactions.

16.

RECORDS AND ACCESS

(A)	*Reports* . The Custodian shall provide to the Client the reports set forth on Schedule B in the Custodian’s standard format. In addition, the Custodian shall provide such additional or other reports in such formats as the Custodian and the Client may from time to time agree.

(B)

Examination of Statements. The Client shall examine each statement sent by the Custodian and notify the Custodian in writing within sixty (60) days of the date of such statement of any discrepancy between Instructions given by the Client and the position shown on the statement and of any other errors known to the Client. Absent such notification, the Custodian’s liability for any loss or damage in regard to such discrepancy or errors shall not accrue beyond such sixty (60) days.

(C)

Access to Records. The Custodian shall allow the Client and its independent public accountants, agents or regulators reasonable access to the records of the Custodian relating to Securities or Cash as is required by the Client in connection with an examination of the books and records pertaining to the affairs of the Client and will seek to obtain such access from each Subcustodian and Clearance System. The Custodian shall provide to the Client, at the Client’s expense, copies of such books and records to the extent available to the Custodian as the Client may reasonably request from time to time.


GCSA 2000 - V.11.9.2002 (Std/Neg)
Page 8

LOGO

(D)	*Books and Records* . Books and records pertaining to the Client shall be prepared and maintained as required by the Investment Company Act of 1940, as amended (the “1940 Act”), and other applicable securities laws, rules and regulations as they relate to custodial services..

17.

INFORMATION

The Custodian will treat information related to the Client as confidential but, unless prohibited by law, the Client authorizes the transfer or disclosure of any information relating to the Client to and between the branches, subsidiaries, representative offices, affiliates and agents of the Custodian and third parties selected by any of them, wherever situated, who require such information in order to provide the services being provided under this Agreement, for confidential use in connection with the provision of services to the Client (including for data processing, statistical and risk analysis purposes), and further acknowledges that any such branch, subsidiary, representative office, affiliate, agent or third party may transfer or disclose any such information as required by any law, court, regulator or legal process; provided that any such party will furnish only that portion of the information that it is advised by its legal counsel is required and will exercise all commercially reasonable efforts to obtain confidential treatment of the information disclosed.

Each party shall treat the terms of this Agreement, including any Fee Schedule, as confidential in accordance with the foregoing paragraph.

18.

ADVERTISING

Neither the Client nor the Custodian shall display the name, trade mark or service mark of the other without the prior written approval of the other, nor will the Client display that of Citigroup, Inc. or any subsidiary of Citigroup, Inc. without prior written approval from Citigroup, Inc. or the subsidiary concerned; provided the Client may disclose the Custodian’s name in the Client’s prospectus and any other regulatory filings. The Client shall not advertise or promote any service provided by the Custodian without the Custodian’s prior written consent.

19.

TERMINATION

(A)	*Date of Termination.* Any party may terminate this Agreement in whole or as between itself and the other parties hereto by giving not less than sixty (60) days’ prior written notice to such other parties.

(B)

Effect on Property. The Custodian shall deliver the Securities and Cash as instructed by the Client. If by the termination date the Client has not given instructions to deliver any Securities or Cash, the Custodian will continue to safekeep such Securities and/or Cash until the Client provides such instructions to effect a free delivery of such. However, the Custodian will provide no other services with respect to any such Securities except to collect and hold any cash distributions. Notwithstanding termination of this Agreement or any Instruction, the Custodian may retain sufficient Securities or Cash to close out or complete any transaction that the Custodian will be required to settle on the Client’s behalf.

(C)	*Surviving Terms.* The rights and obligations contained in Sections 7, 10, 12, 13, 17, 18 and 20 of this Agreement shall survive the termination of this Agreement.

20.

FOREIGN SUBCUSTODIANS

(A)	Foreign Custody Manager:

In addition to the duties and obligations of the Custodian under this Agreement, with respect to Securities and Cash in such jurisdictions as the Custodian provides custody services under this


GCSA 2000 - V.11.9.2002 (Std/Neg)
Page 9

LOGO

Agreement for the Client, the Client desires to have the Custodian assume and discharge the responsibility of the Client’s board of directors (hereinafter the “Board”) to select, contract with and monitor certain custodians of non-U.S. assets of the Client held by the Custodian pursuant to this Agreement. The Custodian agrees to accept the delegation and to perform the responsibility as provided herein.

Accordingly, the Client on behalf of the Board hereby delegates to the Custodian, and the Custodian hereby accepts the delegation to it, of the obligation to serve as the Client’s “Foreign Custody Manager” (as defined in Rule 17f-5(a)(3) under the 1940 Act) in respect to the Client’s foreign investments held from time to time by the Custodian with any Subcustodian that is an Eligible Foreign Custodian (as defined in Rule 17f-5(a)(1)). Foreign investments are any Securities for which the primary market is outside the United States of America.

As Foreign Custody Manager, the Custodian shall:

(i)

select Eligible Foreign Custodians to serve as foreign custodians and place and maintain the Client’s foreign investments with such foreign custodians;

(ii)

in selecting an Eligible Foreign Custodian, first determine that foreign investments placed and maintained in the safekeeping of each Eligible Foreign Custodian shall be subject to reasonable care, based on the standards applicable to custodians in the relevant market, after having considered all factors relevant to the safekeeping of such investments including, without limitation, those factors set forth in Rule 17f-5(c)(1)(i)- (iv);

(iii)

enter into written agreements with each Eligible Foreign Custodian selected by the Custodian hereunder;

(iv)

determine that the written contract with each Eligible Foreign Custodian requires that the Eligible Foreign Custodian will provide reasonable care for the foreign investments, based on the standards applicable to custodians in the relevant market, and that all such contracts, rules, practices and procedures satisfy the requirements of Rule 17f-5(c)(2);

(v)

provide written reports (x) notifying the Board of the placement of foreign investments with each Eligible Foreign Custodian, such reports to be provided at such time as the Board deems reasonable and appropriate, but not less than quarterly, and (y) promptly notifying the Board of the occurrence of any material change in the arrangements with an Eligible Foreign Custodian;

(vi)

monitor the continued appropriateness of (x) maintaining the foreign investments with Eligible Foreign Custodians selected hereunder and (y) the governing contractual arrangements; it being understood, however, that in the event the Custodian shall determine that any Eligible Foreign Custodian would no longer afford the foreign investments reasonable care or would no longer meet the requirements of Rule 17f-5, the Custodian shall promptly so advise the Client and shall then act in accordance with Instructions with respect to the disposition of the foreign investments; and

(vii)

exercise such reasonable care, prudence and diligence in serving as the Foreign Custody Manager as the Custodian exercises in performing its responsibility under this Agreement for the safekeeping of the Client’s Securities and Cash.

Nothing in this paragraph shall relieve the Custodian of any responsibility otherwise provided in this Agreement for loss or damage suffered by the Client from an act of negligence, willful misconduct or fraud on the part of the Custodian. Nothing in Section 20 shall require the Custodian to make any selection on behalf of the Client that would entail consideration of any factor reasonably related to the systemic risk of holding assets in a particular country, including, but not limited to, such country’s financial infrastructure and prevailing settlement practices. The Custodian agrees to provide to the Client such information relating to such risk as the Client shall reasonably request from time to time and such other information as the Custodian generally makes available to customers with regard to such countries and risk.


GCSA 2000 - V.11.9.2002 (Std/Neg)
Page 10

LOGO

(B)	*Eligible Securities Depositories:*

(i)

The Custodian may deposit and/or maintain assets of the Client that consist of Foreign Assets (as defined in Rule 17f-5 under the Investment Company Act of 1940) only in a Clearance System located outside of the United States of America that the Custodian has determined satisfies the requirements of Rule 17f-7(b)(1) as an Eligible Securities Depository. In such manner as the Custodian deems reasonable, the Custodian shall give the Client prompt notice of any material change known to the Custodian that would adversely effect the Custodian’s determination that a Clearance System is an Eligible Securities Depository.

(ii)

The Custodian shall provide the Client (or Bessemer Investment Management LLC, its investment adviser) with an analysis (in form and substance as reasonably determined by the Custodian) of the custody risks associated with maintaining securities with each Eligible Securities Depository in accordance with Rule 17f-7(a)(1)(i)(A). The Custodian shall monitor such custody risks on a continuing basis and in such manner as the Custodian deems reasonable, shall promptly notify the Client (or is duly-authorized investment manager or investment adviser) of any adverse material changes in such risks in accordance with Rule 17f-7(a)(1)(i)(B).

(iii)

The Custodian agrees to exercise the same care, prudence and diligence in performing the duties set forth in this Section 20 as the Custodian exercises in performing its other responsibilities under this Agreement.

(iv)

In performing its obligations under this Agreement, the Custodian may obtain information from sources the Custodian believes to be reliable, but the Custodian does not warrant its completeness or accuracy and has no duty to verify or confirm any such information. Except as provided in this Section 20, the Custodian is not obligated to make any determination regarding whether any Eligible Securities Depository provides reasonable care for Foreign Assets or to provide any information or evaluation comparing any Eligible Securities Depository to any other Clearance System or any existing or proposed standards for securities depositories.

(v)

Upon the receipt of Instructions, the Custodian shall withdraw securities from any Eligible Securities Depository to the extent and as soon as reasonably practicable; provided, however, the Custodian shall have no obligation to obtain, safekeep or provide any services in respect of any certificated or physical security in any jurisdiction where the Custodian does not offer or provide such services generally to customers within that jurisdiction.

(C)	*Termination:*

(i)

The Client may terminate this delegation upon written notice to the Custodian.

(ii)

The Custodian may terminate its acceptance of this delegation in regard to acting as Foreign Custody Manager or its obligation to make the determination or provide the analysis and monitoring in regard to Eligible Securities Depositories upon ninety (90) days written notice to the Client.

21.

GOVERNING LAW AND JURISDICTION

(A)	*Governing Law.* This Agreement shall be governed by and construed in accordance with the internal laws (and not the laws of conflicts) of the State of New York.


GCSA 2000 - V.11.9.2002 (Std/Neg)
Page 11

LOGO

(B)	*Jurisdiction.* The courts of the State of New York shall have non-exclusive jurisdiction to hear any disputes arising out of or in connection with this Agreement, and the parties irrevocably submit to the jurisdiction of such courts.

(C)

Venue. Each party hereto waives any objection it may have at any time, to the laying of venue of any actions or proceedings brought in any court specified in Section 21(B) hereof, waives any claim that such actions or proceedings have been brought in an inconvenient forum and further waives the right to object that such court does not have jurisdiction over such party.

(D)	*Sovereign Immunity.* The Client and the Custodian each irrevocably waives, with respect to itself and its revenues and assets, all immunity on the grounds of sovereignty or similar grounds in respect of its obligations under this Agreement.

22.

MISCELLANEOUS

(A)

Entire Agreement; Amendments. This Agreement consists exclusively of this document together with the schedules. The Custodian may notify the Client of terms which are applicable to the provision of services in the location of a particular office and such terms shall be contained in a schedule and shall supplement this Agreement in relation to that office. In case of inconsistency with the rest of this Agreement, such terms shall prevail in relation to that office.

Except as specified in this Agreement, this Agreement may only be modified by written agreement of the Client and the Custodian.

(B)	*Severability.* If any provision of this Agreement is or becomes illegal, invalid or unenforceable under any applicable law, the remaining provisions shall remain in full force and effect (as shall that provision under any other law).

(C)

Waiver of Rights. No failure or delay of the Client or the Custodian in exercising any right or remedy under this Agreement shall constitute a waiver of that right. Any waiver of any right will be limited to the specific instance. The exclusion or omission of any provision or term from this Agreement shall not be deemed to be a waiver of any right or remedy the Client or the Custodian may have under applicable law.

(D)

Recordings. The Client and the Custodian consent to telephonic or electronic recordings for security and quality of service purposes and agree that either may produce telephonic or electronic recordings or computer records as evidence in any proceedings brought in connection with this Agreement.

(E)	*Further Information.* The Client agrees to execute further documents and provide materials and information as may be reasonably requested by the Custodian to enable it to perform its duties and obligations under this Agreement.

(F)

Assignment. No party may assign or transfer any of its rights or obligations under this Agreement without the other’s prior written consent, which consent will not be unreasonably withheld or delayed; provided that the Custodian may make such assignment or transfer to a branch, subsidiary or affiliate if it does not materially affect the provision of services to the Client.

(G)	*Headings* . Titles to Sections of this Agreement are included for convenience of reference only and shall be disregarded in construing the language contained in this Agreement.

(H)	*Counterparts* . This Agreement may be executed in several counterparts, each of which shall be an original, but all of which together shall constitute one and the same agreement.

IN WITNESS WHEREOF , the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized.


GCSA 2000 - V.11.9.2002 (Std/Neg)
Page 12

LOGO


CITIBANK, N.A.		Old Westbury Funds, Inc

By:	/S/ Michael Hayes	By:	/S/ Peter Artemiou
Name:	Michael Hayes	Name:	Peter Artemiou
Title:	Vice President	Title:	Vice President


GCSA 2000 - V.11.9.2002 (Std/Neg)
Page 13

LOGO

SCHEDULE A

Old Westbury Global Small Cap Fund

Old Westbury Real Return Fund


GCSA 2000 - V.11.9.2002 (Std/Neg)
Page 14

LOGO

SCHEDULE B

CITIDIRECT FOR SECURITIES - REPORTS

CitiDirect for Securities

Position Statements

• Settled Position by:

- Location

- Description

- Maturity

• Statement Deposits by:

- Account

- CUSIP

• Statutory Deposits by Account

Position Valuations

• Position Valuation

- Security

- Value

Pending and Failed Transactions

• Trade Details by ‘Trade Date’ and ‘Settlement Date’

- Actual Fails

- Pending Trades

- All Fails

- Contractual Postings

- Pre-Matched Trades

- Open Pending Trades

- 3 ^rd Party Loans

Settled Transactions

• Settled Transaction Listing by:

- Actual Settlement Date

- Trade Date

- Transaction Type

- 3 ^rd Party Loans


GCSA 2000 - V.11.9.2002 (Std/Neg)
Page 15

LOGO

SCHEDULE B

CORPORATE ACTIONS

CitiDirect for Securities

Corporate Actions Information

• Corporate Actions Notices

- By Event Type

- By Event Stage

- By Ex Date

- By ‘Reply-By’ Date

• New and Amended

- By Event Type

- By Event Stage

- By Ex Date

- By ‘Reply-By’ Date

• Responses

- By Event Type

- By Event Stage

- By Ex Date

- By ‘Reply-By’ Date

CASH REPORTS

CitiDirect for Securities

Standard Reports

• Balances:

- Branch

- Currency

- Accrued Interest

• Ledger Statement (by Value Date and Posted Date)

• Principal & Income (by Value Date and Posted Date)

• Cash Transactions (by Value Date and Posted Date)

• Cash Projections (by Currency and Transaction Type)

• Income Projections

- Assured Income

- By Branch / Agent

- By Event Pay Date

- By Ex Date

• Paid Income

- Assured Income

- By Branch / Agent

- By Event Pay Date

- By Ex Date

- By Posted Date

- US Income Listing


GCSA 2000 - V.11.9.2002 (Std/Neg)
Page 16

Exhibit99_23(g)(vii)

FIRST AMENDMENT TO CUSTODIAN AGREEMENT

THIS FIRST AMENDMENT TO CUSTODIAN AGREEMENT dated as of December 6, 2006 by and between OLD WESTBURY FUNDS, INC., a Maryland corporation and an open-end management investment company registered with the Securities and Exchange commission under the Investment Company Act of 1940, as amended (the “Client”), and CITIBANK, N.A., acting through its offices located in New York, New York (the “Custodian”).

W I T N E S S E T H:

WHEREAS , the Client and the Custodian are parties to that certain Custodian Agreement dated as of March 16, 2005 (the “Custodian Agreement”), pursuant to which the Custodian serves as the custodian for certain series of the Client, including the Old Westbury Real Return Fund; and

WHEREAS , the Client and the Custodian desire to amend the Custodian Agreement to exclude the provision of custodial services to the Real Return Fund with respect to coins or bullion or other forms of precious metals held by the Real Return Fund;

NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein, the parties hereby agree as follows:

1. Paragraph 1(A) of the Custodian Agreement is hereby amended by replacing the definition of “Securities” with the following:

““ Securities ” means any financial asset (other than Cash) from time to time held for the Client on the terms of this Agreement, excluding coins or bullion or other forms of precious metals held by the Real Return Fund.”

2. The Custodian Agreement, as expressly amended hereby, shall continue in full force and effect.

3. This Amendment may be executed in counterparts, each of which shall be an original but all of which, taken together, shall constitute one and the same agreement.

IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to the Custodian Agreement to be executed by their respective officers as of the day and year first written above.


OLD WESTBURY FUNDS, INC.

By:		/s/ Peter C. Artemiou
		Peter C. Artemiou
		Vice President

CITIBANK, N.A.

By:		/s/ Peter Verduin
		Peter Verduin Managing Director

Exhibit 99.23(i)


		2000 PENNSYLVANIA AVE., NW WASHINGTON, D.C. 20006-1888		MORRISON & FOERSTER LLP NEW YORK, SAN FRANCISCO, LOS ANGELES, PALO ALTO, SAN DIEGO, WASHINGTON, D.C.

		TELEPHONE: 202.887.1500 FACSIMILE: 202.887.0763		DENVER, NORTHERN VIRGINIA, ORANGE COUNTY, SACRAMENTO, WALNUT CREEK, CENTURY CITY

		WWW.MOFO.COM		TOKYO, LONDON, BEIJING, SHANGHAI, HONG KONG, SINGAPORE, BRUSSELS

March 1, 2007


Old Westbury Funds, Inc.
760 Moore Road

King of Prussia, PA 19406


Re:		Shares of Common Stock of
		Old Westbury Funds, Inc.

Ladies and Gentlemen:

We refer to Post-Effective Amendment No. 28 and Amendment No. 29 to the Registration Statement on Form N-1A (SEC File Nos. 033-66528; 811-07912) (the “Registration Statement”) of Old Westbury Funds, Inc. (the “Company”) relating to the registration of an indefinite number of shares of common stock of all the Company’s series (the “Shares”).

We have been requested by the Company to furnish this opinion as Exhibit 23(i) to the Registration Statement.

We have examined documents relating to the organization of the Company and its series and the authorization and issuance of shares of its series.

Based upon and subject to the foregoing, we are of the opinion that:

The issuance and sale of the Shares by the Company have been duly and validly authorized by all appropriate action and, assuming delivery by sale or in accord with the Company’s dividend reinvestment plan in accordance with the description set forth in the Registration Statement, as amended, the Shares will be validly issued, fully paid and nonassessable.

We consent to the inclusion of this opinion as an exhibit to the Registration Statement.

Very truly yours,

/s/ Morrison & Foerster LLP

MORRISON & FOERSTER LLP

Exhibit 99.23(j)(i)

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the reference to our firm under the captions “Financial Highlights” “Fund Counsel, Independent Directors’ Counsel and Independent Registered Public Accounting Firm”, “Financial Information” and “Independent Registered Public Accounting Firm,” and to the incorporation by reference of our report, dated December 20, 2006, with respect to the financial statements of Old Westbury Funds, Inc. (comprising, respectively, Large Cap Equity Fund, Mid Cap Equity Fund, Global Small Cap Fund, International Fund, Fixed Income Fund, Municipal Bond Fund, and Real Return Fund) (collectively the “Funds”) for the year ended October 31, 2006 in this Registration Statement on Form N-1A under the Securities Act of 1933 (File No. 033-66528) and under the Investment Company Act of 1940 (File No. 811-07912) of Old Westbury Funds, Inc.

/s/ Ernst & Young LLP

New York, New York

February 26, 2007

Exhibit 99.23(j)(ii)

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in this Post-Effective Amendment No. 28 to Registration Statement No. 333-66528 on Form N-1A of our report dated December 29, 2005, relating to the financial statements and financial highlights of Old Westbury Funds, Inc., including Old Westbury Large Cap Equity Fund, Old Westbury Mid Cap Equity Fund, Old Westbury Global Small Cap Fund, Old Westbury International Fund, Old Westbury Fixed Income Fund, Old Westbury Municipal Bond Fund and Old Westbury Real Return Fund appearing in the Annual Report on Form N-CSR for the year ended October 31, 2005, which is incorporated by reference in the Statement of Additional Information which is part of this Registration Statement. We also consent to the reference to us under the heading “Financial Information” in the Statement of Additional Information, which is part of such Registration Statement.

/s/ DELOITTE & TOUCHE LLP

Chicago, Illinois

February 26, 2007

Exhibit 99.23(m)

OLD WESTBURY FUNDS, INC.

SHAREHOLDER SERVICING PLAN

WHEREAS , Old Westbury Funds, Inc. (the “Corporation”) is registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”); and

WHEREAS , the Corporation desires to adopt a Shareholder Servicing Plan (the “Plan”) on behalf of each series of the Corporation listed in Appendix A, as it may be amended from time to time (each, a “Portfolio”, and collectively, the “Portfolios”), and the Board of Directors (the “Directors”), including a majority of the Independent Directors (as defined below), has determined that there is a reasonable likelihood that adoption of the Plan will benefit each Portfolio listed in Appendix A and its shareholders;

NOW, THEREFORE , the Corporation, on behalf of each Portfolio listed in Appendix A, adopts the Plan on the following terms and conditions:

Section 1. The Corporation, on behalf of each Portfolio listed in Appendix A, will execute and deliver a written agreement substantially in the form attached hereto as Appendix B (the “Shareholder Servicing Agreement”) with Bessemer Trust Company, N.A. (“BTNA”). Pursuant to the Shareholder Servicing Agreement, BTNA shall provide shareholder support services (“Shareholder Support Services”) to persons who beneficially own shares of a Portfolio in consideration of the fees payable by each Portfolio listed in Appendix A, computed monthly in the manner set forth in such Portfolio’s then current prospectus. Shareholder Support Services may include, but are not limited to, answering customer inquiries regarding account status and history, the manner in which purchases and redemptions of shares of the Corporation may be effected and other matters pertaining to the Corporation; assisting shareholders in designating and changing dividend options, account designations and addresses; providing necessary personnel and facilities to establish and maintain shareholder accounts and records; assisting in processing purchase and redemption transactions; assisting in the wiring of funds; assisting in the transmission and receipt of funds in connection with customer orders to purchase or redeem shares; verifying and guarantying shareholder signatures in connection with redemption orders and transfers and changes in shareholder designated accounts; furnishing (either separately or on an integrated basis with other reports sent to a shareholder by the Corporation) monthly and year-end statements and confirmation of purchases and redemptions; transmitting, on behalf of the Corporation or the relevant Portfolios, proxy statements, annual reports, updated prospectuses and other communications from the Corporation or the affected Portfolio to shareholders of Portfolios; receiving, tabulating and transmitting to the Corporation proxies executed by

shareholders with respect to meetings of shareholders of the Corporation or a Portfolio; and providing such other related services as the Corporation or a shareholder may reasonably request. BTNA is expressly permitted to engage shareholder sub-servicing agents to provide Shareholder Support Services (“Shareholder Sub-Servicing Agents”) to the clients of Shareholder Sub-Servicing Agents who are Portfolio shareholders pursuant to written agreements substantially in the form attached hereto as Appendix B (the “Shareholder Sub-Servicing Agreements”). BTNA shall be solely responsible for making payments, from its fees, to any Shareholder Sub-Servicing Agent that it engages to provide Shareholder Support Services and for determining the amount of such payments. The Corporation’s distributor, administrator and adviser, and their respective affiliates, are eligible to become Shareholder Sub-Servicing Agents. All expenses incurred by a Portfolio in connection with the Shareholder Servicing Agreement and the implementation of the Plan shall be borne entirely by the holders of that Portfolio.

Section 2. The Corporation’s officers shall monitor, or shall cause the Corporation’s administrator to monitor, the arrangements pertaining to the Shareholder Servicing Agreement and Shareholder Sub-Servicing Agreements.

Section 3. The Plan shall be effective with respect to each Portfolio listed on Appendix A (or each Portfolio added to Appendix A from time to time): (a) on the date upon which it is approved for such Portfolio by vote of a majority of the Directors of the Corporation, including a majority of the Independent Directors, cast in person at a meeting called for the purpose of voting on the approval of the Plan for such Portfolio, or such later date as may be designated by the Directors in connection with the foregoing approval; or (b) on the date the Portfolio commences operations, if such date is later.

Section 4. Unless earlier terminated, the Plan shall continue in effect for a period of one year from its effective date and shall continue thereafter for successive annual periods, provided that such Plan is reapproved at least annually, with respect to a Portfolio by vote of a majority of the Directors, including a majority of the Independent Directors, cast in person at a meeting called for the purpose of voting on such reapproval.

Section 5. So long as the Plan is in effect, the Corporation shall provide, or shall cause the Corporation’s administrator to provide, to the Directors, and the Directors shall review, at least quarterly, a written report of the amounts expended pursuant to the Plan and the purposes for which such expenditures were made.

Section 6. The Plan may be amended at any time with respect to a Portfolio by the Directors, provided that any material amendment of the terms of the Plan (including a material increase of the fee payable hereunder) shall become effective with respect to a Portfolio only upon the vote of a majority of the Directors, including a majority of the Independent Directors, cast in person at a meeting called for the purpose of voting on such amendment.

Section 7. The Plan may be terminated with respect to any Portfolio at any time by vote of a majority of the Directors, including a majority of the Independent Directors, cast in person at a meeting called for the purpose of voting on such termination.

Section 8. While the Plan is in effect, the selection and nomination of the Directors who are not interested persons of the Corporation shall be committed to the discretion of such Directors who are not interested persons of the Corporation.

Section 9. Notwithstanding anything herein to the contrary, no Portfolio shall be obligated to make any payments under the Plan that exceed the maximum amounts payable under Rule 2830 of the Conduct Rules of the National Association of Securities Dealers, Inc.

Section 10. The Corporation shall preserve copies of the Plan, the Shareholder Servicing Agreement, any Shareholder Sub-Servicing Agreements and each written report presented to the Corporation’s Board of Directors pursuant to Section 5 hereof, for a period of not less than six years from the date of the Plan, Agreement or report, as the case may be, the first two years in an easily accessible place.

Section 11. The provisions of the Plan are severable for each Portfolio listed in Appendix A, and whenever any action is to be taken with respect to the Plan, such action shall be taken separately for each such Portfolio affected.

Section 12. As used in the Plan, (a) the term “interested person” shall have the meaning given it in the 1940 Act and the rules and regulations thereunder, subject to such exemption or interpretation as may be provided by the Securities and Exchange Commission or the staff thereof, and (b) the term “Independent Directors” shall mean the Directors who (i) are not “interested persons” of the Corporation and (ii) have no direct or indirect financial interest in the operation of the Plan or in the Shareholder Servicing Agreement or any Shareholder Sub-Servicing Agreement.

APPENDIX A

SHAREHOLDER SERVICING FEES


Portfolios	Maximum Annual Shareholder Servicing Fee*
Fixed Income Fund	0.15	%
Global Small Cap Fund	0.15	%
International Fund	0.15	%
Large Cap Equity Fund	0.15	%
Mid Cap Equity Fund	0.15	%
Municipal Bond Fund	0.15	%
Real Return Fund	0.15	%

*	Annual fees payable to BTNA are expressed as a percentage of the average daily net asset value of the shares of the particular Portfolio beneficially owned by or attributable to clients of BTNA and any Shareholder Sub-Servicing Agents.

A-1

APPENDIX B

OLD WESTBURY FUNDS, INC.

SHAREHOLDER SERVICING AGREEMENT

THIS SHAREHOLDER SERVICING AGREEMENT is made as of [March 1, 2007] by and between Old Westbury Funds, Inc. (the “Corporation”), a Maryland corporation having its principal place of business at 760 Moore Road, King of Prussia, Pennsylvania 19406, and Bessemer Trust Company, N.A. (“BTNA”), a national association having its principal place of business at 630 Fifth Avenue, New York, NY 10111.

WHEREAS, the Corporation is registered under the Investment Company Act of 1940, as amended (the “l940 Act”), as an open-end management investment company and is authorized to issue shares in one or more series;

WHEREAS, the Corporation desires that BTNA provide certain shareholder support services (“Shareholder Support Services”) for each series of the Corporation listed on Schedule A hereto, as such Schedule A may be amended or supplemented from time to time by mutual agreement (each, a “Portfolio”, and collectively, the “Portfolios”), and BTNA is willing to provide those services on the terms and conditions set forth in this Agreement:

NOW, THEREFORE, the Corporation and BTNA hereby agree as follows:

1. The Corporation hereby retains BTNA, pursuant to the Shareholder Servicing Plan adopted by the Corporation (the “Plan”), to provide Shareholder Support Services of the type described herein:

(a) BTNA will provide, or arrange for other parties, including broker/dealers, banks, trust companies, investment advisers, and other financial institutions and intermediaries with which BTNA has written shareholder sub-servicing agreements and whose clients/customers are Corporation shareholders (each such party a “Shareholder Sub-Servicing Agent”) to provide Shareholder Support Services.

(b) In consideration of the foregoing, the Corporation will pay BTNA a fee at the annual rate of fifteen one-hundredths of one percent (0.15%) of each of the Portfolio’s average daily net assets attributable to its clients/customers and clients/customers of any Shareholder Sub-Servicing Agents as compensation for providing Shareholder Support Services to such clients/customers (“Shareholder Servicing Fees”). BTNA’s payment will be accrued by the Corporation daily, and will be payable on the last day of each calendar month for services performed hereunder during that month or on such other schedule as BTNA shall request of the Corporation in writing.

(c) To the extent that BTNA engages a Shareholder Sub-Servicing Agent to assist it in providing Shareholder Support Services, BTNA shall be solely responsible for

B-1

compensating any such Shareholder Sub-Servicing Agent for the Shareholder Servicing Fees that the Shareholder Sub-Servicing Agent is entitled to receive, which compensation shall be payable from BTNA’s Shareholder Servicing Fees.

(d) BTNA shall in its sole discretion determine the amount of any payments made by BTNA to a Shareholder Sub-Servicing Agent pursuant to this Agreement; provided, however, that in no event shall any payment to a Shareholder Sub-Servicing Agent increase the amount which the Corporation is required to pay to BTNA under this Agreement.

2. BTNA will be solely responsible for the payment of all expenses incurred by BTNA in providing Shareholder Support Services; except that the Corporation will pay the cost of typesetting, printing and delivering the Corporation’s prospectus to existing shareholders of the Portfolios and of preparing and printing subscription application forms for shareholder accounts.

3. The types of Shareholder Support Services that BTNA may provide include, but are not limited to, the following: answering customer inquiries regarding account status and history, the manner in which purchases and redemptions of shares of the Corporation may be effected and other matters pertaining to the Corporation; assisting shareholders in designating and changing dividend options, account designations and addresses; providing necessary personnel and facilities to establish and maintain shareholder accounts and records; assisting in processing purchase and redemption transactions; assisting in the wiring of funds; assisting in the transmission and receipt of funds in connection with customer orders to purchase or redeem shares; verifying and guarantying shareholder signatures in connection with redemption orders and transfers and changes in shareholder designated accounts; furnishing (either separately or on an integrated basis with other reports sent to a shareholder by the Corporation) monthly and year-end statements and confirmation of purchases and redemptions; transmitting, on behalf of the Corporation or the relevant Portfolios, proxy statements, annual reports, updated prospectuses and other communications from the Corporation or the affected Portfolio to shareholders of Portfolios; receiving, tabulating and transmitting to the Corporation proxies executed by shareholders with respect to meetings of shareholders of the Corporation or a Portfolio; and providing such other related services as the Corporation or a shareholder may request.

4. BTNA will give the Corporation the benefit of its best judgment and efforts in rendering these services to the Corporation, and the Corporation agrees as an inducement to BTNA’s undertaking these services that BTNA will not be liable hereunder for any mistake of judgment or for any other cause, provided that nothing herein shall protect BTNA against any liability to the Corporation or to its shareholders by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties hereunder, or by reason of its reckless disregard of its obligations and duties hereunder.

5. This Agreement will become effective on the date hereof and will remain in effect until [February 28, 2008] , and thereafter for successive twelve-month periods, provided that such continuation is specifically approved at least annually by vote of a majority of the

B-2

Corporation’s Board of Directors, including a majority of directors of the Corporation who are not interested persons (as defined in the 1940 Act) and have no direct or indirect financial interest in the operation of the Plan or in any agreements related to the Plan, cast in person at a meeting called for the purpose of voting on this Agreement. This Agreement may be terminated at any time, without the payment of any penalty, by vote of a majority of the Corporation’s entire Board of Directors, and by a vote of a majority of the Corporation’s Directors who are not interested persons (as defined in the 1940 Act) and who have no direct or indirect financial interest in the operation of the Plan or in any agreement related to the Plan, or by vote of a majority of the outstanding voting securities (as defined in the 1940 Act) of the affected Portfolio, on sixty (60) days’ written notice to BTNA, or by BTNA on (60) sixty days’ written notice to the Corporation.

6. This Agreement may not be transferred, assigned, hypothecated or pledged, in any manner, by BTNA, and this Agreement shall terminate automatically in the event of any such transfer, assignment, sale, hypothecation or pledge by BTNA. The terms “transfer” and “assignment” as used in this paragraph shall have the meanings ascribed thereto by the 1940 Act and in applicable rules or regulations of the Securities and Exchange Commission thereunder.

7. Except to the extent necessary for BTNA to perform its obligations hereunder, nothing herein shall be deemed to limit or restrict BTNA’s right, or the right of any officers, directors or employees who may also be a director, officer or employee of the Corporation, or of a person affiliated with the Corporation, as defined in the 1940 Act, to engage in any other business or to devote time and attention to the management or other aspects of any other business, whether of a similar or dissimilar nature, or to render services of any kind to another corporation, firm, individual or association.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers designated below as of the day and year first above written.


OLD WESTBURY FUNDS, INC.

By:
		Marc D. Stern
		President

BESSEMER TRUST COMPANY, N.A.

By:
		John G. MacDonald
		Managing Director and Chief Financial Officer

B-3

SCHEDULE A

Old Westbury Funds, Inc. Portfolios

Fixed Income Fund

Global Small Cap Fund

International Fund

Large Cap Equity Fund

Mid Cap Equity Fund

Municipal Bond Fund

Real Return Fund

B-4

SHAREHOLDER SUB-SERVICING AGREEMENT

THIS SHAREHOLDER SUB-SERVICING AGREEMENT is made as of , 2007 by and between Bessemer Trust Company, N.A. (“BTNA”), having its principal place of business at 630 Fifth Avenue, New York, NY 10111 and (“Shareholder Sub-Servicing Agent”), having its principal place of business at .

WHEREAS, Old Westbury Funds, Inc. (the “Corporation”), an open-end management investment company organized as a Maryland corporation and registered with the Securities and Exchange Commission (the “SEC”) under the Investment Company Act of 1940 (the “1940 Act”), is authorized to issue shares in one or more series; and

WHEREAS, the Corporation has adopted a Shareholder Servicing Plan (the “Plan”) on behalf of each series of the Corporation listed on Schedule A hereto (each, a “Portfolio”, and collectively, the “Portfolios”); and

WHEREAS, BTNA has entered into a shareholder servicing agreement with the Corporation (the “Shareholder Servicing Agreement”) that permits BTNA to perform, or arrange for other parties, including broker/dealers, banks, trust companies, investment advisers, and other financial institutions and intermediaries with which BTNA has written shareholder sub-servicing agreements and whose clients are Corporation shareholders, to provide shareholder support services under the Plan; and

WHEREAS, BTNA desires to retain that Shareholder Sub-Servicing Agent to provide Shareholder Support Services for its clients who are shareholders of each Portfolio listed on Schedule A hereto, as such Schedule A may be amended or supplemented from time to time by mutual agreement, and Shareholder Sub-Servicing Agent is willing to perform such Shareholder Support Services on the terms and conditions set forth in this Agreement and desires to enter into this Agreement to provide such Shareholder Support Services upon the terms and conditions hereinafter set forth;

NOW, THEREFORE, BTNA and Shareholder Sub-Servicing Agent agree as follows:

Section 1. The types of Shareholder Support Services that the Shareholder Sub-Servicing Agent may provide for its clients include, but are not limited to the following: answering customer inquiries regarding account status and history, the manner in which purchases and redemptions of shares of the Corporation may be effected and other matters pertaining to the Corporation; assisting shareholders in designating and changing dividend options, account designations and addresses; providing necessary personnel and facilities to establish and maintain shareholder accounts and records; assisting in processing purchase and redemption transactions; assisting in the wiring of funds; assisting in the transmission and receipt of funds in connection with customer orders to purchase or redeem shares; verifying and guarantying shareholder signatures in connection with redemption orders and transfers and changes in shareholder designated accounts; furnishing (either separately or on an integrated basis with other reports sent to a shareholder by the Corporation) monthly and year-end statements and confirmation of

C-1

purchases and redemptions; transmitting, on behalf of the Corporation or the relevant Portfolios, proxy statements, annual reports, updated prospectuses and other communications from the Corporation or a Portfolio to shareholders of the Portfolios; receiving, tabulating and transmitting to the Corporation proxies executed by shareholders with respect to meetings of shareholders of the Corporation or any affected Portfolio; and providing such other related services as BTNA may reasonably request.

Section 2. In consideration of the foregoing, BTNA will pay the Shareholder Sub-Servicing Agent a maximum fee at the annual rate of [fifteen] basis points [0.15%] of each of the Portfolio’s average daily net assets attributable to its clients to compensate Shareholder Sub-Servicing Agent for providing Shareholder Support Services to such clients. Such payment to Shareholder Sub-Servicing Agent will be payable on the last day of each calendar month for services provided hereunder during that month or on such other schedule as BTNA and the Shareholder Sub-Servicing Agent determine. BTNA may arrange for payments to Shareholder Sub-Servicing Agent to be made directly by a Portfolio.

Section 3. Except as otherwise provided herein, Shareholder Sub-Servicing Agent will be responsible for the payment of all expenses incurred by Shareholder Sub-Servicing Agent in rendering the foregoing services.

Section 4. Notwithstanding anything in this Agreement to the contrary, Shareholder Sub-Servicing Agent agrees that any Nonpublic Personal Information, as defined under Section 248.3(t) of Regulation S-P (“Regulation S-P”), promulgated under the Gramm-Leach-Bliley Act (the “Act”), disclosed hereunder is for the specific purpose of permitting Shareholder Sub-Servicing Agent to perform Shareholder Support Services set forth in this Agreement. Shareholder Sub-Servicing Agent agrees that, with respect to such information, it will comply with Regulation S-P and the Act and that it will not disclose any Nonpublic Personal Information received in connection with this Agreement, to any other party, except to the extent as necessary to carry out the Shareholder Support Services set forth in this Agreement or as otherwise permitted by Regulation S-P or the Act.

Shareholder Sub-Servicing Agent shall be in compliance with all regulations to which it is subject issued under the USA PATRIOT Act, and NASD Rules and/or NYSE Rules (as applicable) relating thereto, including without limitation rules requiring such party to implement an Anti-Money Laundering Program and a Customer Identification Program (“CIP”). Shareholder Sub-Servicing Agent will, upon BTNA’s reasonable request, not more than once each year, certify to BTNA that Shareholder Sub-Servicing Agent remains in compliance with such rules; specifically, that it (i) provides notices of its CIP to all new clients, (ii) obtains required identifying data elements for each client, (iii) reasonably verifies the identity of each new client (using the data elements), (iv) takes appropriate action with respect to persons the identities of whom it cannot verify, and (v) retains all records for required time periods, each at least to an extent required by relevant USA PATRIOT Act regulation and NASD Rules and/or NYSE Rules, as applicable.

Section 5. Shareholder Sub-Servicing Agent shall act solely for, upon the order of, and for the account of, its clients. For all purposes of this Agreement, the Shareholder Sub-Servicing Agent will be deemed to be an independent contractor, and will have no authority to act as agent for BTNA in any matter or in any respect. No person is authorized to make any representations

C-2

concerning the Corporation or any Corporation Shares except those representations contained in the Corporation’s then current Prospectus and Statement of Additional Information and in such printed information as the Corporation or the Corporation’s distributor may subsequently prepare. The Shareholder Sub-Servicing Agent further agrees to deliver to its clients/customers invested in Corporate Shares, upon the request of BTNA, the Corporation or the Corporation’s distributor, copies of any amended Prospectus and Statement of Additional Information.

Section 6. Shareholder Sub-Servicing Agent and its employees will, upon request, be available during normal business hours to consult with BTNA or its designees concerning the performance of the Shareholder Sub-Servicing Agent’s responsibilities under this Agreement. In addition, Shareholder Sub-Servicing Agent will furnish to BTNA, the Corporation or their designees such information as BTNA, the Corporation or their designees may reasonably request (including, without limitation, periodic certifications confirming the provision to clients of the services described herein), and will otherwise cooperate with BTNA, the Corporation and their designees (including, without limitation, any auditors designated by the Corporation), in the preparation of reports to the Corporation’s Board of Directors concerning this Agreement, as well as any other reports or filings that may be required by law.

Section 7. Except to the extent necessary to perform Shareholder Sub-Servicing Agent’s obligations hereunder, nothing herein shall be deemed to limit or restrict Shareholder Sub-Servicing Agent’s right to engage in any other business or to devote time and attention to the management or other aspects of any other business, whether of a similar or dissimilar nature, or to render services of any kind to another corporation, firm, individual or association.

Section 8. This Agreement will become effective with respect to each Portfolio on the date a fully executed copy of this Agreement is received by BTNA or its designee. Unless sooner terminated with respect to any Portfolio, this Agreement will continue with respect to a Portfolio until [ ] , and thereafter will continue automatically for successive annual periods ending on [ ] of each year, provided such continuance is specifically approved at least annually by the vote of a majority of the members of the Board of Directors of the Corporation, including a majority of the directors who are not “interested persons” (as such term is defined in the 1940 Act) and who have no direct or indirect financial interest in the Plan relating to such Corporation or any agreement relating to such Plan, including this Agreement, cast in person at a meeting called for the purpose of voting on such approval.

This Agreement will automatically terminate with respect to a Portfolio in the event of its assignment (as such term is defined in the 1940 Act), unless otherwise continued by BTNA. This Agreement may be terminated with respect to any Portfolio by BTNA or by Shareholder Sub-Servicing Agent, without penalty, upon ten days’ prior written notice to the other party.

Section 9. All notices and other communications to either the Shareholder Sub-Servicing Agent or BTNA will be duly given if mailed, emailed or faxed to the appropriate address set forth on page 1 hereof, or at such other address as either party may provide in writing to the other party.

Section 10. This Agreement supersedes any other agreement between the parties or Shareholder Sub-Servicing Agent and any other party relating to the provision of Shareholder Support Services to Shareholder Sub-Servicing Agent’s clients/customers who beneficially own

C-3

shares of the Corporation and relating to any other matters discussed herein. All covenants, agreements, representations, and warranties made herein shall be deemed to have been material and relied on by each party, notwithstanding any investigation made by either party or on behalf of either party, and shall survive the execution and delivery of this Agreement.

The invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of any other term or provision hereof. This Agreement shall be governed by and construed in accordance with the laws (other than conflict of laws rules) of the State of New York.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers designated below as of the day and year first above written.

BESSEMER TRUST COMPANY, N.A

Shareholder Sub-Servicing Agent

By:

Print Name:

Title:

C-4