<PAGE>
As filed with the Securities and Exchange Commission on April 29, 1996
REGISTRATION NO. 33-47703
811-6654
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
================================================================================
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
PRE-EFFECTIVE AMENDMENT NO. [ ]
POST-EFFECTIVE AMENDMENT NO. 8 [X]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 11
(CHECK APPROPRIATE BOX OR BOXES)
BNY HAMILTON FUNDS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
3435 STELZER ROAD 43219-3035
COLUMBUS, OHIO (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (614) 470-8000
COPY TO:
GEORGE MARTINEZ JOHN E. BAUMGARDNER, JR.
3435 STELZER ROAD SULLIVAN & CROMWELL
COLUMBUS, OHIO 43219-3035 125 BROAD STREET
(NAME AND ADDRESS OF AGENT FOR SERVICE) NEW YORK, NEW YORK 10004
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after the
effective date of this Registration Statement. It is proposed that this filing
will become effective (check appropriate box):
[X] immediately upon filing pursuant to paragraph (b)
[_] on (date) pursuant to paragraph (b)
[_] 60 days after filing pursuant to paragraph (a)(1)
[_] on (date) pursuant to paragraph (a)(1)
[_] 75 days after filing pursuant to paragraph (a)(2)
[_] 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.
The Registrant has registered an indefinite number of shares under the
Securities Act of 1933, pursuant to Rule 24f-2 of the Investment Company Act of
1940. Registrant's Rule 24f-2 Notice for the fiscal year ended December 31,
1995, was filed with the Commission on February 26, 1996.
Total Number of Pages __________
Exhibit Number on Page __________
<PAGE>
CROSS-REFERENCE SHEET
(AS REQUIRED BY RULE 495)
N-1A
- ----
ITEM NO. LOCATION
- -------- --------
PART A PROSPECTUS
- ------ ----------
Item 1. Cover Page Cover Page
Item 2. Synopsis Fee Table; Summary of
Classes and Services
Available for BNY Hamilton
Money Fund
Item 3. Condensed Financial Financial Highlights;
Information Additional Information
Item 4. General Description Cover Page; Summary of
of Registrant Classes and Services
Available for BNY Hamilton
Money Fund; Investment
Objectives and Policies;
Description of Securities;
Additional Investment
Information and Risk
Considerations; Investment
Restrictions; Organization
Item 5. Management of the Management of the Funds;
Fund Fund and Other Shareholder
Services -
General; Additional
Information; Fee Table
Item 6. Capital Stock and Summary of Shareholder
Other Securities Services; Fund and Other
Shareholder Services;
Purchase of Shares;
Dividends and
Distributions; Net Asset
Value; Organization; Taxes;
Additional Information
Item 7. Purchase of Shareholder Services - BNY
Securities Being Hamilton Money Fund -
Offered Hamilton Shares;
Shareholder Services - BNY
Hamilton Money Fund -
Hamilton Premier Shares;
Shareholder Services - BNY
Hamilton Money Fund -
Hamilton Classic Shares;
Fund and Other Shareholder
Services - General;
Purchase of Shares;
Exchange of Shares;
Dividends and
Distributions; Net Asset
Value
Item 8. Redemption or Shareholder Services - BNY
Repurchase Hamilton Money Fund -
Hamilton Shares;
Shareholder Services - BNY
Hamilton Money Fund -
Hamilton Premier Shares;
Shareholder Services - BNY
Hamilton Money Fund -
Hamilton Classic Shares;
Fund and Other Shareholder
Services - General;
Redemption of Shares;
Exchange of Shares;
Dividends and
Distributions; Net Asset
Value
Item 9. Pending Legal Not Applicable
Proceedings
N-1A
- ----
ITEM NO. LOCATION
- -------- --------
PART B STATEMENT OF ADDITIONAL INFORMATION
- ------ -----------------------------------
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information Additional Information
and History
Item 13. Investment Objective Investment Objectives and
and Policies Policies; Investment
Restrictions
Item 14. Management of the Directors and Officers
Fund
Item 15. Control Persons and Description of Shares
Principal Holders of
Securities
<PAGE>
N-1A
ITEM NO. LOCATION
- -------- --------
Item 16. Investment Advisory and Directors and Officers;
Other Services Investment Adviser;
Administrator;
Distributor; Fund,
Shareholder and Other
Services; Expenses;
Financial Statements
Item 17. Brokerage Allocation Portfolio Transactions
and Brokerage
Item 18. Capital Stock and Other Description of Shares
Securities
Item 19 Purchase, Redemption Net Asset Value;
and Pricing of Purchase of Shares;
Securities Being Offered Redemption of Shares;
Dividends and
Distributions; Exchange
of Shares
Item 20. Tax Status Dividends and
Distributions; Taxes
Item 21. Underwriters Administrator;
Distributor
Item 22. Calculation of Performance Data
Performance Data
Item 23. Financial Statements Financial Statements
PART C
- ------
Information required to be included in Part C is set forth under the appropriate
item, so numbered in Part C of this registration statement.
<PAGE>
[ART]
BNY HAMILTON MONEY FUND
BNY 125 WEST 55TH STREET
HAMILTON NEW YORK, NEW YORK 10019
FUNDS FOR INFORMATION CALL 1-800-426-9363 (1-800-4BNY-FND)
BNY Hamilton Funds, Inc. is a family of mutual funds for
which there are no exchange fees or redemption fees. BNY
Hamilton Funds, Inc. is comprised of BNY Hamilton Money Fund, BNY
Hamilton Intermediate Government Fund, BNY Hamilton Intermediate New
York Tax-Exempt Fund and BNY Hamilton Equity Income Fund, providing
clients with a range of attractive alternatives for meeting their
investment needs. This Prospectus describes the shares offered by BNY
Hamilton Money Fund. FOR A SUMMARY OF THE CLASSES AND SERVICES
AVAILABLE, SEE THE TABLE ON THE NEXT PAGE.
(ART)
BNY Hamilton Money Fund seeks to earn as high a level of current income
as is consistent with preservation of capital and maintenance of
liquidity by investing principally in high quality money market
instruments. BNY Hamilton Money Fund is advised by The Bank of New
York.
INVESTMENTS IN BNY HAMILTON MONEY FUND ARE NOT BANK DEPOSITS OR
OBLIGATIONS OF OR GUARANTEED OR INSURED BY THE BANK OF NEW YORK AND
SHARES IN BNY HAMILTON MONEY FUND ARE NEITHER INSURED NOR GUARANTEED BY
THE UNITED STATES GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENTAL
AGENCY. ALTHOUGH BNY HAMILTON MONEY FUND SEEKS TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE, THERE CAN BE NO ASSURANCE THAT IT WILL
BE ABLE TO DO SO.
This Prospectus sets forth concisely the information that a prospective
investor should know about BNY Hamilton Money Fund before investing and
should be retained for future reference.
Additional information about BNY Hamilton Money Fund and other funds
within the BNY Hamilton Family of Funds has been filed with the
Securities and Exchange Commission in the Statement of Additional
Information for BNY Hamilton Funds, Inc., dated April 29, 1996. This
information is incorporated by reference and is available without
charge upon request from BNY Hamilton Money Fund's distributor, BNY
Hamilton Distributors, Inc., 125 West 55th Street, New York, New York
10019, Attention: BNY Hamilton Funds, Inc., 1-800-426-9363.
------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURI-
TIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMIS-
SION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REP-
RESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------------------------------------------------------
THE DATE OF THIS PROSPECTUS IS APRIL 29, 1996.
<PAGE>
SUMMARY OF CLASSES AND SERVICES AVAILABLE
FOR BNY HAMILTON MONEY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT FOR INVESTORS SEEKING(1) SERVICES PROVIDED
---------- ------------------------ -----------------
<S> <C> <C>
HAMILTON SHARES Daily dividends and liquidity * Wire order processing
(INSTITUTIONAL INVESTORS
ONLY)
* Detailed statements sent to you
directly each month
* Confirmation statements mailed to
you after each transaction
- --------------------------------------------------------------------------------------------
HAMILTON PREMIER SHARES Daily dividends and liquidity * Wire order processing
(INSTITUTIONAL INVESTORS through a sweep facility
ONLY)
* Detailed statements sent to you
directly each month
* Confirmation statements mailed to
you after each transaction
* Automatic investment of assets via
a "sweep" facility, pursuant to
specific preauthorized
instructions
- --------------------------------------------------------------------------------------------
HAMILTON CLASSIC SHARES Daily dividends and liquidity * Wire order processing
(INDIVIDUAL AND as an alternative investment
INSTITUTIONAL
INVESTORS)
* Detailed statements sent to you
directly each month
* Confirmation statements mailed to
you after each transaction
* Automatic Investment Program
* Direct Deposit Program (for
individuals receiving income from
the federal government, and for
employees and retirees of The Bank
of New York and its affiliates)
* Automatic Withdrawal Program
* Check Redemption
* Individual Retirement Account
("IRAs")
- --------------------------------------------------------------------------------------------
</TABLE>
(1) Investors are cautioned that investments in BNY Hamilton Money Fund are not
FDIC insured.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Fee Table.................................... 1
Financial Highlights......................... 2
Investment Objectives and Policies........... 3
Additional Investment Information
and Risk Considerations...................... 5
Investment Restrictions...................... 7
Management of the Fund....................... 8
Fund and Other Shareholder Services--General. 9
Shareholder Services--Hamilton Shares........ 12
Shareholder Services--Hamilton Premier
Shares...................................... 13
Shareholder Services--Hamilton Classic
Shares...................................... 13
Purchase of Shares........................... 18
Redemption of Shares......................... 19
Exchange of Shares........................... 20
Dividends and Distributions.................. 21
Net Asset Value.............................. 22
Organization................................. 22
Taxes........................................ 23
Additional Information....................... 24
</TABLE>
<PAGE>
BNY Hamilton Money Fund (the "Fund") consists of three
classes of shares: Hamilton Shares, Hamilton Premier
Shares and Hamilton Classic Shares.
FEE TABLE
The following table illustrates that investors in the
Fund will incur no shareholder transaction expenses;
their investments will be subject only to the annual
operating expenses set forth below.
<TABLE>
HAMILTON HAMILTON
HAMILTON PREMIER CLASSIC
SHAREHOLDER TRANSACTION EXPENSES: SHARES SHARES SHARES
-------- -------- --------
<S> <C> <C> <C>
Sales Load Imposed on Purchases.......... None None None
Sales Load Imposed on Reinvested
Dividends............................... None None None
Deferred Sales Load...................... None None None
Redemption Fees.......................... None None None
Exchange Fees*........................... None None None
ANNUAL FUND OPERATING EXPENSES:
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
Management Fees.......................... .20% .20% .20%
12b-1 Fees............................... .00% .00% .25%
Other Expenses**......................... .06% .34%** .31%**
-------- -------- --------
Total Fund Operating Expenses............ .26% .54% .76%
</TABLE>
---------------------
* Although there are no exchange fees, shareholders in any
class of the BNY Hamilton Money Fund who wish to exchange
their shares for shares of any other fund in the BNY Ham-
ilton Family of Funds will be required to pay the sales
load applicable to the specific fund. See the Combined
Prospectus of BNY Hamilton Equity Income Fund, BNY Hamil-
ton Intermediate Government Fund and BNY Hamilton Interme-
diate New York Tax-Exempt Fund for details.
** Other Expenses consist primarily of a .25% shareholder
servicing fee charged to holders of Hamilton Premier
Shares and Hamilton Classic Shares.
EXAMPLE
An investor would pay the following
expenses on a $1,000 investment,
assuming (1) 5% annual return and (2)
redemption at the end of each time
period:
<TABLE>
<CAPTION>
HAMILTON HAMILTON
HAMILTON PREMIER CLASSIC
SHARES SHARES SHARES
-------- -------- --------
<S> <C> <C> <C>
1 year.............................. $ 3 $ 6 $ 8
3 years............................. $ 8 $17 $24
5 years............................. $15 $30 $42
10 years............................. $33 $68 $94
</TABLE>
This table is designed to assist investors in understanding the
various direct and indirect costs that an investor would bear. For
a description of contractual fee arrangements or the fees and
expenses included in Other Expenses, see "Management of the Fund"
and "Fund and Other Shareholder Services-General". In connection
with the example, please note that $1,000 is less than the minimum
initial investment requirement and that there are no redemption or
exchange fees of any kind. See "Shareholder Services", "Purchase
of Shares" and "Redemption of Shares".
1
<PAGE>
THE EXAMPLE IS HYPOTHETICAL; IT IS INCLUDED SOLELY FOR
ILLUSTRATIVE PURPOSES. IT SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE PERFORMANCE; ACTUAL EXPENSES MAY
BE MORE OR LESS THAN THOSE SHOWN.
The following selected data for an outstanding share
has been audited by Deloitte & Touche LLP, independent
accountants, whose report thereon was unqualified.
This information should be read in conjunction with
the financial statements and related notes that appear
in the Statement of Additional Information.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
HAMILTON
HAMILTON HAMILTON CLASSIC
SHARES PREMIER SHARES SHARES
--------------------------------------- ------------------ --------
FOR THE
FOR THE PERIOD FOR THE
PERIOD AUGUST PERIOD
AUGUST 7, 15, DECEMBER
YEAR ENDED 1992* YEAR 1994* 4, 1995*
DECEMBER 31, THROUGH ENDED THROUGH THROUGH
---------------------------- DECEMBER DECEMBER DECEMBER DECEMBER
1995 1994 1993 31, 1992 31, 1995 31, 1994 31, 1995
-------- -------- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net value at beginning of
period.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income.... 0.057 0.040 0.030 0.012 0.054 0.017 0.004
-------- -------- -------- -------- -------- -------- ------
DIVIDENDS
Dividends from net
investment income...... (0.057) (0.040) (0.030) (0.012) (0.054) (0.017) (0.040)
-------- -------- -------- -------- -------- -------- ------
Net asset value at end of
period.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- ------
TOTAL RETURN:............ 5.84% 4.02% 3.03% 1.26%** 5.54% 1.69%** 0.40%**
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of
period (000's omitted).. $604,053 $235,220 $307,395 $135,852 $340,163 $107,799 $3,098
Ratio to average net
assets of:
Expenses, net of waiver
from The Bank of New
York................... 0.26% 0.30% 0.27% 0.20%*** 0.54% 0.61%*** 0.76%***
Expenses, prior to
waiver from The Bank of
New York............... 0.26% 0.32% 0.32% 0.49%*** 0.54% 0.61%*** 0.76%***
Net investment income,
net of waiver from The
Bank of New York....... 5.67% 3.92% 2.97% 3.11%*** 5.40% 4.40%*** 5.18%***
</TABLE>
---------------------
* Commencement of investment operations for the respective class
of shares.
** Not annualized.
*** Annualized.
Further information about the performance of the classes of the
Fund is contained in the Fund's annual report to shareholders,
which may be obtained from the distributor, BNY Hamilton
Distributors, Inc., upon request and without charge.
2
<PAGE>
The Fund's investment objective is to earn as high a
level of current income as is consistent with
INVESTMENT preservation of capital and maintenance of liquidity
OBJECTIVES by investing principally in high quality money market
AND POLICIES instruments. The Fund will attempt to accomplish this
objective by maintaining a dollar-weighted average
portfolio maturity of not more than 90 days and by
investing in United States dollar-denominated
securities that have effective remaining maturities of
397 days or less. There can be no assurance that the
Fund will attain its investment objective.
Because the Fund only invests in United States Government and high
quality money market securities, the Fund may not be able to
achieve as high a level of current income under all market
conditions as would be possible if it were permitted to invest in
lower quality and longer term securities, which generally are less
liquid, have greater market risk and are subject to more
fluctuation of market value.
UNITED STATES GOVERNMENT OBLIGATIONS
The Fund may invest in obligations issued or guaranteed by the
United States Government or by its agencies or instrumentalities.
Obligations issued or guaranteed by federal agencies or
instrumentalities may or may not be backed by the "full faith and
credit" of the United States and in either case the Fund must look
principally to the agency issuing or guaranteeing the obligations
for legitimate repayment. Securities that are backed by the full
faith and credit of the United States include Treasury Bills,
Treasury Bonds and obligations of the Government National Mortgage
Association, the Farmers Home Administration and the Export-Import
Bank. Securities in which the Fund may invest that are not backed
by the full faith and credit of the United States include, but are
not limited to, obligations of the Federal National Mortgage
Association, the Tennessee Valley Authority, the Federal Farm
Credit System and Federal Home Loan Banks. The Fund may also
invest in component parts of United States Treasury notes or
bonds, namely either the corpus (principal) of such Treasury
obligations or one of the interest payments scheduled to be paid
on such obligations. Certain arrangements by which such components
are offered have been created by private sponsors, such as
investment banks and securities dealers, and are not United States
Government securities.
BANK OBLIGATIONS
As is consistent with its credit quality parameters, the Fund may
invest in high quality negotiable certificates of deposit, time
deposits and bankers' acceptances of domestic and foreign issuers.
Investments in such obligations will be limited, at the time of
investment, to the obligations of domestic banks that are subject
to regulatory supervision by the United States Government or state
governments, and the obligations of foreign banks with branches or
agencies in the United States.
Investments in foreign banks and foreign branches of United States
banks involve certain risks not generally associated with
investments in domestic banks. While domestic banks are required
to maintain certain reserves and are subject to other regulations,
such requirements and regulations may not apply to foreign
branches. Investments in foreign banks and branches
3
<PAGE>
may also be subject to other risks, including future political and
economic developments, the seizure or nationalization of foreign
deposits and the establishment of exchange controls or other
restrictions. For more information about foreign investments, see
"Additional Investment Information and Risk Considerations--
Foreign Investment Risk."
The Fund may also invest in obligations of international banking
institutions designated or supported by national governments to
promote economic reconstruction, development or trade between
nations (e.g., the World Bank, the Inter-American Development Bank
and the European Investment Bank). These obligations may be
supported by appropriated but unpaid commitments of their member
countries, and there is no assurance that these commitments will
be undertaken or met in the future.
COMMERCIAL PAPER
The Fund may invest in high quality commercial paper issued by
domestic and foreign issuers.
The Fund may invest in the commercial paper of foreign issuers
provided the commercial paper is United States dollar-denominated.
For more information about foreign investments, see "Additional
Investment Information and Risk Considerations--Foreign Investment
Risk."
REPURCHASE AGREEMENTS
The Fund may invest in securities generally referred to as
repurchase agreements, provided the agreements are entered into
with dealers meeting credit criteria established by the Board of
Directors of BNY Hamilton Funds, Inc. (the "Directors"), monitored
by the Fund's adviser and fully collateralized by (i) United
States Government or Agency obligations or (ii) other securities
rated in the highest rating category by a nationally recognized
statistical rating organization at the time of purchase. See
Additional Investment Information and Risk Considerations--
Repurchase Agreements.
CORPORATE BONDS AND NOTES
The Fund may invest in high quality corporate bonds and notes
issued by United States corporations. The Fund may also invest in
the bonds of foreign issuers provided the bonds are United States
dollar-denominated and are not subject to foreign withholding tax.
4
<PAGE>
FOREIGN GOVERNMENT OBLIGATIONS
The Fund may invest in short-term obligations of foreign sovereign
governments or of their agencies, instrumentalities, authorities
or political subdivisions, provided the short-term obligations are
United States dollar-denominated. For the purpose of applying the
Fund's fundamental concentration policy, the Fund will consider
each sovereign government, together with all of its agencies,
instrumentalities, authorities and political subdivisions, as
being engaged in the same industry. See Investment Restrictions.
QUALITY INFORMATION
The Fund will limit its investments to those securities that, in
accordance with guidelines adopted by the Directors, present
minimal credit risks and are "First Tier Securities" (as defined
in Rule 2a-7 promulgated under the Investment Company Act of 1940)
at the time of acquisition by the Fund. The term "First Tier
Securities" generally includes securities rated by the requisite
Nationally Recognized Statistical Rating Organizations ("NRSROs")
in the highest short-term rating categories, securities of issuers
that have received such ratings with respect to other comparable
short-term debt securities and comparable unrated securities.
Requisite NRSROs means (a) any two NRSROs that have issued a
rating with respect to a security or class of debt obligations of
an issuer, or (b) one NRSRO, if only one NRSRO has issued such a
rating at the time that the Fund acquires the security. Currently,
there are six NRSROs: Standard & Poor's Corporation, Moody's
Investors Service, Fitch Investors Services, L.P., Duff and
Phelps/MCM, IBCA Limited and its affiliate, IBCA, Inc. and Thomson
Bankwatch. The ratings categories of Standard & Poor's Corporation
and Moody's Investors Service are described in detail in the
Appendix to the Statement of Additional Information. The Fund
generally may not invest more than 5% of its total assets in the
securities of any one issuer, except for United States government
securities.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES
ADDITIONAL INVESTMENT INFORMATION AND RISK CONSIDERATIONS
The Fund may purchase securities on a when-issued or
delayed delivery basis. Delivery of and payment for
these securities may take as long as a month or more
after the date of the purchase commitment. The value
of these securities is subject to market fluctuation
during this period and no interest or income accrues
to the Fund until settlement. The Fund will maintain
with its custodian a separate account with a
segregated portfolio of liquid assets consisting of
cash, United States Government securities or other
liquid, high-grade debt securities
in an amount at least equal to these commitments. When entering
into a when-issued or delayed delivery transaction, the Fund will
rely on the other party to consummate the transaction; if the
other party fails to do so, the Fund may be disadvantaged. It is
the current policy of the Fund not to enter into when-issued
commitments exceeding in the aggregate 15% of the market value of
the Fund's total assets less liabilities other than the
obligations created by these commitments.
5
<PAGE>
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements with brokers,
dealers or banks that meet the credit guidelines established by
the Directors. In a repurchase agreement, the Fund buys a security
from a seller that has agreed to repurchase it on a mutually
agreed upon date and at a price reflecting the interest rate
effective for the term of the agreement. The term of these
agreements is usually from overnight to one week. A repurchase
agreement may be viewed as a fully collateralized loan of money by
the Fund to the seller. The Fund always receives, as collateral,
securities with a market value at least equal to the purchase
price plus accrued interest and this value is maintained during
the term of the agreement. If the seller defaults and the
collateral value declines, the Fund might incur a loss. If
bankruptcy proceedings are commenced with respect to the seller,
the Fund's realization upon the collateral may be delayed or
limited. Investments in certain repurchase agreements and certain
other investments that may be considered illiquid are limited as
set forth under Investment Restrictions below.
REVERSE REPURCHASE AGREEMENTS
The Fund is permitted to enter into reverse repurchase agreements.
In a reverse repurchase agreement, the Fund sells a security and
agrees to repurchase it on a mutually agreed upon date and at a
price reflecting the interest rate effective for the term of the
agreement. A reverse repurchase agreement may also be viewed as
the borrowing of money by the Fund. The Fund will not invest the
proceeds of a reverse repurchase agreement for a period which
exceeds the duration of the reverse repurchase agreement. The Fund
may not enter into reverse repurchase agreements exceeding in the
aggregate one-third of the market value of its total assets, less
liabilities other than the obligations created by reverse
repurchase agreements. The Fund will establish and maintain with
its custodian a separate account with a segregated portfolio of
liquid assets consisting of cash, United States Government
securities or other liquid, high-grade debt securities in an
amount at least equal to its purchase obligations under its
reverse repurchase agreements.
If interest rates rise during the term of a reverse repurchase
agreement, entering into the reverse repurchase agreement may have
a negative impact on the Fund's ability to maintain a net asset
value of $1.00 per share for each class of shares. Reverse
repurchase agreements also involve the risk that the market value
of the securities retained by the Fund may decline below the price
of the securities the Fund has sold but is obligated to repurchase
under the agreement. In the event the buyer of securities under a
reverse repurchase agreement files for bankruptcy or becomes
insolvent, the Fund's use of proceeds from the agreement may be
restricted pending a determination by the other party or its
trustee or receiver whether to enforce the Fund's obligation to
repurchase the securities.
FOREIGN INVESTMENT RISK
The Fund may invest in certain foreign securities, as described in
"Investment Objectives and Policies". Investments in obligations
of foreign issuers, foreign sovereign governments and in foreign
branches of domestic banks involve somewhat different investment
risks from those affecting obligations of United States domestic
issuers. For example, there may be limited publicly available
information with respect to foreign issuers, and foreign issuers
are not
6
<PAGE>
generally subject to uniform accounting, auditing and financial
standards and requirements comparable to those applicable to
domestic institutions. There may also be less government
supervision than in the United States. Foreign markets have
substantially less trading volume than domestic markets and
securities of some foreign issuers are less liquid and more
volatile than securities of comparable domestic issuers. Brokerage
commissions and other transaction costs in foreign markets are
generally higher than in the United States. Interest paid by
foreign issuers may be subject to withholding and other foreign
taxes that may decrease the net return on foreign investments as
compared to investments the Fund may make in securities of
domestic institutions. Additional risks include the potential
impact of adverse future political and economic developments, the
possibility that a foreign jurisdiction may impose or change
withholding taxes on income payable with respect to foreign
securities, the possible seizure, nationalization or expropriation
of one or more foreign issuers or foreign deposits and the
possible adoption of foreign governmental restrictions such as
exchange controls. The Fund's investment adviser takes these
foreign investment risks into consideration when making investment
decisions for the Fund.
VARIABLE AND FLOATING RATE INSTRUMENTS
While the Fund will generally only invest in securities that
mature within 397 days of the date of purchase, it may invest in
variable and floating rate instruments that have stated final
maturities in excess of 397 days if such instruments meet and
comply with conditions established by the Securities and Exchange
Commission.
As a diversified series of a registered investment
company, 75% of the assets of the Fund is subject to
the following limitations: (a) the Fund may not invest
more than 5% of its total assets in the securities of
INVESTMENT any one issuer, except obligations of the United
RESTRICTIONS States Government and its agencies and
instrumentalities, and (b) the Fund may not own more
than 10% of the outstanding voting securities of any
one issuer. The Fund is subject to additional
requirements governing money market funds that use the
amortized cost method to value assets. These
requirements generally prohibit the Fund
from investing more than 5% of its total assets in the securities
of any single issuer, except obligations of the United States
Government and its agencies and instrumentalities.
The Fund also operates under certain investment restrictions that,
together with its investment objective, are deemed fundamental
policies of the Fund--i.e., they may only be changed with the
approval of the holders of a majority of the Fund's outstanding
shares. The Fund may not:
(i) acquire any illiquid securities if, as a result, more than 10%
of the market value of its net assets would be in investments that
are illiquid; (ii) enter into reverse repurchase agreements
exceeding one-third of the market value of its total assets, less
liabilities other than obligations created by reverse repurchase
agreements; (iii) borrow money, except from banks for
extraordinary or emergency purposes and then only in amounts up to
20% of the value of the Fund's total assets (taken at cost at the
time of borrowing) and except in connection with permitted reverse
repurchase agreements; or mortgage, pledge or hypothecate any
assets except in connection with any such borrowing in amounts up
to 20% of the value of the Fund's net assets at the time of
borrowing; (iv) purchase securities while borrowings (including
reverse
7
<PAGE>
repurchase agreements) exceed 5% of its total assets; or (v)
invest more than 25% of its assets in any one industry, except
that the Fund may invest more than 25% of its assets in securities
and other instrumentalities issued by banks and bank holding
companies organized under the laws of the United States or any
state thereunder.
In addition, the Directors have adopted as an operating policy,
which may not be changed without approval of a majority of the
outstanding shares, that the Fund may not: (i) purchase any short-
term debt securities unless such securities are rated as described
in Investment Objectives and Policies--Quality Information or, if
not so rated, securities determined to be of comparable quality in
accordance with procedures established by the Directors; (ii)
purchase securities that cannot be offered for public sale in the
United States without first being registered under the Securities
Act of 1933, as amended, including but not limited to securities
that can be purchased pursuant to Rule 144A of said Act; and (iii)
lend its securities.
For a more detailed discussion of the above investment
restrictions, see Investment Restrictions and Additional
Information in the Statement of Additional Information.
DIRECTORS
MANAGEMENT OF THE Pursuant to the Articles of Incorporation and Bylaws
FUND of BNY Hamilton Funds, Inc., the Directors decide
matters of general policy and review the actions of
the Fund's adviser, administrator, distributor and
other service providers. The Statement of Additional
Information contains the name and general business
experience of each Director.
INVESTMENT ADVISER
The Bank of New York serves as the Fund's investment adviser (the
"Adviser"). The Adviser, which has its principal offices at 48
Wall Street, New York, New York 10286, is New York's first bank,
founded by Alexander Hamilton in 1784, and is one of the largest
commercial banks in the United States, having over $53 billion in
assets at the end of 1995. It is the leading retail bank in the
greater New York suburban area, having 384 branches at the end of
1995. As of December 31, 1995, the Adviser provided administrative
or advisory services to approximately $54 billion in assets.
The Adviser manages the investments of the Fund and is responsible
for all purchases and sales of the Fund's portfolio securities.
The Adviser's fee accrues daily and is payable monthly at the
annual rate of .10% of the Fund's average daily net assets.
ADMINISTRATOR
BNY Hamilton Distributors, Inc. ("BNY Hamilton Distributors")
serves as the administrator (the "Administrator") to, and will
assist generally in supervising the operations of, the Fund. BNY
Hamilton Distributors is a Delaware corporation organized to
administer and distribute mutual funds; its offices are located at
3435 Stelzer Road, Columbus, Ohio 43219-3035.
The Administration Agreement requires the Administrator to provide
facilities, equipment and personnel to carry out administrative
services for the Fund, including, among other things, providing
the services of persons who may be appointed as officers and
directors of BNY
8
<PAGE>
Hamilton Funds, Inc., overseeing the performance of the transfer
agent (as described in "Fund and Other Shareholder Services--
General-Transfer Agent"), supervising purchase and redemption
orders (made via telephone, mail and direct deposit) and
monitoring the Distributor's compliance with the rules and
regulations of the National Association of Securities Dealers and
federal and state securities laws (also see "Distributor" below).
The Administrator is responsible for coordinating and overseeing
compliance by the Directors with Maryland corporate requirements
(as the Fund is organized as a Maryland corporation; see
"Organization"). The Administrator also assists in updating and
printing the Fund's prospectus and statement of additional
information, administering shareholder meetings, producing proxy
statements and annual and semi-annual reports, monitoring the
Adviser's compliance with the stated investment objective and
restrictions of the Fund and monitoring the custodian, fund
accounting, transfer agency, administration, distribution,
advisory and legal services that are provided to the Fund.
The Administration Agreement permits the Administrator to delegate
certain of its responsibilities to other service providers.
Pursuant to this authority, The Bank of New York performs certain
administrative functions for the Administrator. The Bank of New
York is not an affiliated person of BNY Hamilton Distributors.
The Fund pays administration fees that are accrued daily and
payable monthly at the rate of .10% of its average daily net
assets.
DISTRIBUTOR
In addition to acting as the Administrator, BNY Hamilton
Distributors is the exclusive underwriter and distributor of
shares of the Fund (the "Distributor").
The Distributor makes a continuous offering of the Fund's shares
and will bear the costs and expenses of distributing to selected
dealers and prospective investors copies of any prospectuses,
statements of additional information and annual and interim
reports of the Fund (after such items have been prepared, set in
type and sent by the Fund at its expense to existing shareholders)
that are used in connection with the offering of shares, and the
costs and expenses of preparing, printing and distributing any
other literature used by the Distributor or furnished by it for
use by selected dealers in connection with the offering of the
Fund's shares for sale to the public.
CUSTODIAN AND FUND ACCOUNTING AGENT
FUND AND OTHER The Bank of New York, 90 Washington Street, New York,
SHAREHOLDER New York 10286, serves as the Fund's custodian. The
SERVICES-- Fund has also entered into a Cash Management and Re-
GENERAL lated Services Agreement with The Bank of New York
pursuant to which The Bank of New York, as custodian,
receives and disburses funds in connection with pur-
chases and redemptions of the Fund's shares.
The Bank of New York also serves as the fund accounting agent for
the Fund with responsibility for calculating the net asset value
of, and maintaining the books and records of, each class of the
Fund's shares.
9
<PAGE>
TRANSFER AGENT
BISYS Fund Services, Inc. is the transfer agent for each class of
shares of the Fund. BISYS Fund Services, Inc. is a wholly-owned
subsidiary of The BISYS Group, Inc. ("BISYS"). BISYS owns BNY
Hamilton Distributors, Inc., the Fund's Administrator and
Distributor. The transfer agent maintains the account records of
the shareholders of each of the Fund's classes and administers the
distribution of any dividends or distributions declared by the
Fund.
DISTRIBUTION PLAN
The Directors have adopted a distribution plan ("12b-1 Plan") with
respect to Hamilton Classic Shares of the Fund, which will permit
the Fund to pay the Distributor up to .25% per annum of average
daily net assets of the Hamilton Classic Shares. These expenses
include, but are not limited to, fees paid to broker-dealers,
telemarketing expenses, advertising costs, printing costs, and the
cost of distributing materials borne by the Distributor in
connection with sales or selling efforts on behalf of the Hamilton
Classic Shares.
The Hamilton Classic Shares of the Fund also bear the costs
associated with implementing and operating the 12b-1 Plan (such as
costs of printing and mailing service agreements). Each item for
which a payment may be made under the 12b-1 Plan may constitute an
expense of distributing Hamilton Classic Shares as the Securities
and Exchange Commission construes such term under Rule 12b-1 of
the Investment Company Act of 1940 (the "1940 Act").
If expenses reimbursable under the 12b-1 Plan exceed .25% per
annum of average daily net assets, they will be carried forward
from month to month to the extent they remain unpaid, but not
beyond the fiscal year in which they are incurred. All or a part
of any such amount carried forward will be paid at such time, if
ever, as the Directors determine. The Hamilton Classic Shares will
not be charged for interest, carrying or other finance charges on
any reimbursed distribution or other expense incurred and not
paid.
SHAREHOLDER SERVICING PLAN
BNY Hamilton Funds, Inc. has adopted Shareholder Servicing Plans
(the "Plans") pursuant to which Hamilton Premier Shares and
Hamilton Classic Shares are sold to certain institutions
("Shareholder Organizations") that enter into servicing agreements
("Shareholder Servicing Agreements") with BNY Hamilton Funds, Inc.
The Bank of New York and the Administrator have each entered into
Shareholder Servicing Agreements with respect to Hamilton Premier
Shares and Hamilton Classic Shares, and it is expected that other
organizations, including certain affiliates of The Bank of New
York and the Administrator, may enter into Shareholder Servicing
Agreements in the future. The Shareholder Servicing Agreements
require the Shareholder Organizations to provide support services
to their customers ("Customers") who are beneficial owners of
Hamilton Premier Shares or Hamilton Classic Shares in return for
payment by the Fund of .25% (on an annualized basis) of the
average daily net asset value of the Hamilton Premier Shares or
Hamilton Classic Shares beneficially owned by Customers of the
Shareholder Organizations. Holders of Hamilton Premier Shares or
Hamilton Classic Shares will bear all fees paid to Shareholder
Organizations
10
<PAGE>
for their services with respect to such shares. The Plans do not
cover, and the fees thereunder are not payable to, Shareholder
Organizations with respect to Hamilton Shares.
The services to be provided by Shareholder Organizations include
the following: aggregating and processing purchase and redemption
requests from Customers and placing net purchase and redemption
orders with the Distributor; providing Customers with a service
that invests the assets of their accounts in Hamilton Premier
Shares or Hamilton Classic Shares pursuant to specific
preauthorized instructions; processing dividend payments from the
Fund on behalf of Customers; providing information periodically to
Customers regarding their position in Hamilton Premier Shares or
Hamilton Classic Shares; arranging for bank wires; responding to
Customer inquiries regarding services performed by the Shareholder
Organizations; providing sub-accounting with respect to shares
beneficially owned by Customers or the information necessary for
sub-accounting; forwarding shareholder communications from the
Fund to Customers; and other similar services if requested by the
Fund.
The Fund will accrue payments made pursuant to the Plans daily.
The Shareholder Servicing Agreements require each Shareholder
Organization to waive a portion of any payment such organization
is entitled to receive pursuant to the Plans to the extent
necessary to assure that Plan payments required to be accrued to
the Hamilton Premier Shares or Hamilton Classic Shares on any day
do not exceed the income to be accrued to such shares on that day.
BNY Hamilton Funds, Inc. understands that Shareholder
Organizations may charge fees to their Customers who are the
beneficial owners of Hamilton Premier Shares or Hamilton Classic
Shares in connection with their Customer accounts. These fees
would be in addition to any amounts the Fund may pay a Shareholder
Organization under a Shareholder Servicing Agreement. Under the
terms of the Shareholder Servicing Agreements, Shareholder
Organizations are required to disclose the compensation payable to
them by the Fund and any other compensation payable by their
Customers in connection with the investment of their assets in the
Fund. Customers of Shareholder Organizations should read this
Prospectus in conjunction with the terms governing their accounts
with their Shareholder Organizations.
Conflict-of-interest restrictions may apply to an institution's
receipt of compensation paid by the Fund in connection with the
investment of fiduciary funds in Hamilton Premier Shares or
Hamilton Classic Shares. Institutions, including banks regulated
by the Comptroller of the Currency, the Federal Reserve Board or
the Federal Deposit Insurance Corporation, and investment advisers
and other money managers subject to the jurisdiction of the
Securities and Exchange Commission, the Department of Labor or
state securities commissions, are urged to consult their legal
advisers before investing fiduciary funds in Hamilton Premier
Shares.
Banks may act as Shareholder Organizations. The Glass-Steagall Act
and other applicable laws, among other things, prohibit banks from
engaging in the business of underwriting securities. If a bank
were prohibited from acting as a Shareholder Organization, its
shareholder clients would be permitted by the Fund to remain
shareholders of the Fund and alternative means for continuing the
servicing of such shareholders would be sought. In such event,
changes in the operation of the Fund might occur and a shareholder
serviced by such bank might no longer be able to avail itself any
of automatic investment or other services then being provided by
the
11
<PAGE>
bank. It is not expected that shareholders would suffer any
adverse financial consequences as a result of any of these
occurrences.
In connection with the sale of Hamilton Premier Shares and
Hamilton Classic Shares, the Fund obtains representations from
Shareholder Organizations (including The Bank of New York and the
Administrator) that they are or will be licensed as dealers as
required by applicable law or will not engage in activities which
would require them to be so licensed.
FEE WAIVERS
Except as noted in this Prospectus and the Statement of Additional
Information, the Fund's service contractors bear all expenses in
connection with the performance of their services and the Fund
(and each class thereof) bears the expenses incurred in its
operation. From time to time during the course of the Fund's
fiscal year, each of the Administrator and the Adviser may
voluntarily elect not to receive payment of fees under their
respective agreements described above and/or to assume certain
expenses of the Fund, while retaining the ability to be reimbursed
by the Fund for such amounts prior to the end of the fiscal year.
This will have the effect of increasing yield to investors at the
time such fees are not waived by, or amounts are assumed by, the
Administrator or the Adviser and decreasing yield when such fees
or amounts are no longer waived by the Administrator or the
Adviser.
Purchase orders for Hamilton Shares of the Fund must
be transmitted to the transfer agent by telephone c/o
the Distributor (1-800-363-7925) or by terminal
access.
SHAREHOLDER
SERVICES--
HAMILTON SHARES
PURCHASES VIA PROCEDURES ESTABLISHED BY THE BANK OF
NEW YORK
Shares may be purchased through procedures established
by The Bank of New York in connection with certain of
its customers accounts. The Fund expects that The Bank
of New York will transmit orders on behalf of its
customers for the purchase of Fund shares on an omnibus basis.
This Prospectus should be read in conjunction with any material
provided by The Bank of New York regarding such procedures.
REGULAR REDEMPTION
Redemption orders for Hamilton Shares must be transmitted to the
transfer agent by telephone c/o the Distributor in the manner
described at the beginning of this section. While the Fund seeks
to maintain the net asset value per Hamilton Share at $1.00, there
can be no assurance that it will be able to do so, and the
proceeds paid upon redemption may be more or less than the amount
invested depending upon a share's net asset value at the time of
redemption.
12
<PAGE>
Hamilton Premier Shares may be purchased by clients of
SHAREHOLDER The Bank of New York and other financial institutions
SERVICES-- (which may include banks) and their affiliates that
HAMILTON PREMIER have entered into a Shareholder Servicing Agreement
SHARES with BNY Hamilton Funds, Inc. on behalf of the Fund.
Investors should contact their financial institution
to determine if they are eligible to purchase Hamilton
Premier Shares and to receive instructions for such
purchase.
PURCHASES VIA PROCEDURES ESTABLISHED BY THE BANK OF NEW YORK
Hamilton Premier Shares may be purchased through procedures
established by The Bank of New York in connection with certain of
its customer accounts. In many instances, these procedures will
include instructions under which a customer's account is swept
automatically on a daily basis, and amounts (federal funds) in
excess of a minimum balance agreed to by The Bank of New York and
its customer are invested in the Fund. The Fund expects that The
Bank of New York will transmit orders on behalf of its customers
for the purchase of Fund shares arising from this automatic
investment program on the day after excess balances are swept.
This Prospectus should be read in conjunction with any material
provided by The Bank of New York regarding such procedures.
Similar arrangements may also be available from Shareholder
Organizations other than The Bank of New York.
REGULAR REDEMPTION
Investors should contact their Shareholder Organization for
appropriate instructions on redemption orders for Hamilton Premier
Shares. While the Fund seeks to maintain the net asset value per
Hamilton Premier Share at $1.00, there can be no assurance that it
will be able to do so, and the proceeds paid upon redemption may
be more or less than the amount invested depending upon a share's
net asset value at the time of redemption.
Hamilton Classic Shares may be purchased directly from
SHAREHOLDER the Distributor, without any sales charge by the Fund.
SERVICES-- The minimum initial investment is $2,000 and the
HAMILTON CLASSIC minimum subsequent investment is $100.
SHARES
An investor desiring to purchase Hamilton Classic
Shares by mail should complete an Account Application
and mail the application and a check payable to "BNY
Hamilton Money Fund", to BNY Hamilton Funds,
Department L-1685, Columbus, Ohio 43260-1685. All
subsequent payments should be mailed to BNY Hamilton
Funds, Inc., P.O. Box 806, Newark, New Jersey 07101-
0806. An investor desiring to purchase Hamilton
Classic Shares by wire should call the transfer agent at 1-800-
952-6276 and place a purchase order. The investor's bank should be
instructed to transmit immediately available funds by wire to The
Bank of New York, ABA No. 021000018, BNY Hamilton Funds, DDA No.
8900275847, BNY Hamilton Money Fund for purchase of shares in the
investor's name. It is important that the wire include the
investor's name, address and tax identification number (social
security number for individuals), indicate whether a new account
is being established or a subsequent investment is being made to
an established account and indicate the name of the
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<PAGE>
Fund. If a subsequent investment is being made, the investor's
Fund account number should be included. An investor should contact
his or her bank for information on remitting funds in this manner,
including any charges imposed by the bank for wiring funds.
A fee will be imposed by the transfer agent if any check used for
investment in an account does not clear. All payments should be in
U.S. dollars. THIRD PARTY CHECKS WILL NOT BE ACCEPTED. Purchase
orders in proper form are effected on a day in which the Federal
Reserve Bank of New York and the New York Stock Exchange are open
for business (a "Business Day") at the net asset value per share
next determined after receipt by the transfer agent at its office
of both an order and federal funds. Purchases will not be effected
until payments made in other than federal funds are converted to
federal funds, which is ordinarily within two business days of
receipt.
TELETRADE PURCHASES
Although this privilege may not be used to make an initial
purchase, an investment in Hamilton Classic Shares automatically
entitles an investor to purchase additional Hamilton Classic
Shares (minimum of $500 and maximum of $50,000 per transaction)
without charge by telephone unless the investor indicates on the
Account Application or in a subsequent written notice to the
transfer agent that he or she does not wish to use the TeleTrade
privilege. Appropriate information concerning the investor's bank
must be provided on the Account Application or in a subsequent
signature guaranteed letter of instruction to the transfer agent
before the TeleTrade privilege may be used. The proceeds will be
transferred between the checking, NOW or bank money market account
designated in one of these documents and the investor's Fund
account. Only an account maintained at a domestic financial
institution which is an Automated Clearing House member may be so
designated. TeleTrade purchases will be effected at the net asset
value next determined after receipt of payment by the Fund's
transfer agent. The Fund may modify this privilege at any time or
charge a service fee upon notice to shareholders. No such fee
currently is contemplated. An investor who has selected the
TeleTrade privilege may request TeleTrade purchases by telephoning
the transfer agent at 1-800-952-6276.
INDIVIDUAL RETIREMENT ACCOUNTS
Investors may purchase Hamilton Classic Shares through an
individual retirement account ("IRA") made available by BNY
Hamilton Funds, Inc. For details regarding the purchase of
Hamilton Classic Shares through an IRA, please call 1-800-4BNY-FND
(1-800-426-9363). Investors are advised to consult their own legal
counsel or tax adviser regarding these investments. Individuals
who open an IRA may also open a non-working spousal IRA with a
minimum investment of $250. Investors should read the IRA
Disclosure Statement and the Bank Custodial Agreement for further
details as to eligibility, service fees and tax implications.
AUTOMATIC INVESTMENT PROGRAM
The Fund also makes available an Automatic Investment Program,
which permits an investor to purchase Hamilton Classic Shares
(minimum $100 per transaction) at regular intervals selected by
the investor. Provided the investor's financial institution allows
automatic
14
<PAGE>
withdrawals, shares are purchased by transferring funds from the
checking, bank money market or NOW account designated by the
investor. At the investor's option, the account designated will be
debited in the specified amount, and shares will be purchased,
once a month, on either the first or fifteenth day, or twice a
month, on both days. Only an account maintained at a domestic
financial institution which is an Automated Clearing House member
may be so designated. The minimum initial investment required for
investors establishing an Automatic Investment account is $100. To
establish an Automatic Investment account, an investor must check
the appropriate box and supply the necessary information on the
Account Application or subsequently file a written request with
the transfer agent. Such applications are available from the
Distributor. An investor may cancel this privilege or change the
amount of purchase at any time by mailing written notification to
the transfer agent at BNY Hamilton Funds, Department L-1685,
Columbus, Ohio 43260-1685 and notification will be effective three
business days following receipt. The Fund may modify or terminate
this privilege at any time or charge a service fee, although no
such fee is currently contemplated.
GOVERNMENT DIRECT DEPOSIT PROGRAM (SPECIFIC GUIDELINES FOR
INVESTORS RECEIVING INCOME FROM THE FEDERAL GOVERNMENT)
If an investor receives federal salary, social security, or
certain veteran's, military or other payments from the federal
government, he or she is eligible for the Direct Deposit Program.
With this Program, an investor may purchase Hamilton Classic
Shares (minimum of $100 and maximum of $50,000 per transaction) by
having these payments automatically deposited into his or her Fund
account. For instructions on how to enroll in the Direct Deposit
Program, an investor should call the transfer agent at 1-800-952-
6276. Death or legal incapacity will terminate an investor's
participation in the Direct Deposit Program. An investor may elect
at any time to terminate his participation by notifying the
appropriate federal agency. Further, the Fund may terminate an
investor's participation upon 30 days' notice to the investor.
EMPLOYEE DIRECT DEPOSIT PROGRAM (EMPLOYEES AND RETIREES OF THE
BANK OF NEW YORK)
In certain circumstances, employees and retirees of The Bank of
New York and its affiliates may purchase Hamilton Classic Shares
by having payments automatically deposited into their specific
Fund account. Call 1-800-4BNY-FND (1-800-426-9363) for details.
For employees and retirees of The Bank of New York and its
affiliates, the minimum initial investment is $500 and the minimum
subsequent investment is $40.
REGULAR REDEMPTION
An investor may redeem shares in any amount by sending a written
request to BNY Hamilton Funds, Department L-1685, Columbus, Ohio
43260-1685. Redemption orders are effected upon receipt by the
transfer agent at its office.
Redemption requests must be signed by each person designated in
the Fund's records as an owner of the shares to be redeemed,
including each joint owner on redemption requests for joint
accounts. A redemption request for (i) an amount in excess of
$50,000 per day (ii) any amount if the proceeds are to be sent
elsewhere than to the address of record, and (iii) an
15
<PAGE>
amount of $50,000 or less if the address of record has not been on
file with the transfer agent for a period of 60 days, must be
accompanied by a signature guarantee. The guarantor of a signature
must be a bank that is a member of the FDIC, a trust company, a
member firm of a national securities exchange or other eligible
guarantor institution. The transfer agent will not accept
guarantees from notaries public. Guarantees must be signed by an
authorized signatory of the guarantor institution and "Signature
Guaranteed" must appear with the signature.
TELETRADE REDEMPTIONS
An investor may redeem shares in the same manner and subject to
the same limitations as described under "Purchases of Shares--
TeleTrade" earlier in this section. An investment in Hamilton
Classic Shares automatically entitles an investor to redeem his or
her shares by telephone unless it is indicated on the Account
Application that he or she does not wish to use the TeleTrade
privilege. In most cases redemption proceeds will be on deposit in
the investor's account at a domestic financial institution which
is an Automated Clearing House member bank two business days after
receipt of the redemption request. An investor may also request
the redemption proceeds be sent by check. Checks will be sent only
to the registered owner(s) and only to the address of record. An
investor who has selected the TeleTrade privilege may request
TeleTrade redemptions by telephoning the transfer agent at 1-800-
952-6276. Neither the Fund nor any of its service contractors will
be liable for any loss or expense for acting upon any telephone
instructions that are reasonably believed to be genuine. In
attempting to confirm that telephone instructions are genuine, the
Fund will use such procedures as it considers reasonable as
described in "Redemption of Shares" in the Statement of Additional
Information.
WIRE REDEMPTION
An investment in Hamilton Classic Shares automatically entitles an
investor to redeem shares by wire unless the investor indicates on
the Account Application or in a subsequent signature guaranteed
written notice to the transfer agent that he or she does not wish
to use this method of redemption. Appropriate information
concerning the investor's bank must be provided on the Account
Application or in a subsequent signature guaranteed letter of
instruction to the transfer agent before shares may be redeemed by
wire. Shareholders may instruct the transfer agent to redeem
shares in the Fund on written, telegraphic, or telephone
instructions from any person representing to be the investor and
believed by the transfer agent to be genuine. The responsibility
of the transfer agent and certain other parties for telephonic
instruction believed to be genuine is discussed in "TeleTrade
Redemptions" earlier in this section. The proceeds of redemption
will normally be wired in federal funds to the commercial bank
specified by the investor in the Account Application. Redemption
proceeds must be in an amount of at least $1,000, and may be
subject to limits as to frequency and overall amount. Wire
redemptions may be terminated or modified by the Fund at any time.
A shareholder should contact his or her bank for information on
any charges imposed by the bank in connection with the receipt of
redemption proceeds by wire.
During periods of substantial economic or market change, telephone
wire redemptions may be difficult to implement. If an investor is
unable to contact the transfer agent by telephone,
16
<PAGE>
shares may also be redeemed by delivering the redemption request
in person to the transfer agent or by mail as described above
under "Regular Redemption." For additional information concerning
wire redemptions, see the Statement of Additional Information and
the Account Application.
CHECK REDEMPTION
An investor in Hamilton Classic Shares may request on the Account
Application that the Fund provide redemption checks ("Checks")
that may be used by the investor to draw on the investor's
Hamilton Classic Shares. Checks will be sent only to the
registered owner(s) and only to the address of record. The Account
Application must be manually signed by the registered owner(s).
Checks may be made payable to the order of any person in the
amount of $500 or more. Dividends are earned until the Check
clears the Fund. When a Check is presented to the transfer agent
for payment, the transfer agent, as the investor's agent, will
cause the Fund to redeem a sufficient number of the investor's
shares to cover the amount of the Check. All cleared Checks will
be returned to the investor on a monthly basis. There is no charge
to the investor for the use of the Checks; however, the transfer
agent will impose a charge for stopping payment of a Check upon
the request of the investor, or if the transfer agent cannot honor
a Check due to insufficient funds or other valid reasons. Because
dividends accrue daily, Checks should not be used to close an
account, as a small balance is likely to result.
OTHER REDEMPTION INFORMATION
Redemption orders are effected at the net asset value per share
next determined after receipt of the order by the transfer agent.
The Fund ordinarily will make payment for all shares redeemed
within seven days after receipt by the transfer agent of a request
in proper form, except as provided by the rules of the Securities
and Exchange Commission. However, if the shares to be redeemed
have been purchased by check or TeleTrade, the Fund will, upon the
clearance of the purchase check or TeleTrade payment, mail the
redemption proceeds within seven business days. Where redemption
is requested other than by mail, shares purchased by check or
TeleTrade will not be redeemed for a period of seven days after
their purchase. This procedure does not apply to situations where
the Fund receives payment in cash or immediately available funds
for the purchase of shares. During the period prior to the time
the shares are redeemed, dividends on such shares will accrue and
be payable, and an investor will be entitled to exercise all other
rights of beneficial ownership. An investor having purchased
shares by wire must have filed an Account Application before any
redemption requests can be honored.
The Fund reserves the right to redeem accounts (other than non-
working spousal IRA accounts) involuntarily, upon 60 days' written
notice, if the account's net asset value falls below the $500
minimum balance as a result of redemptions. Accounts that fall
below $500 solely as a result of market fluctuations will not be
subject to redemption by the Fund.
AUTOMATIC WITHDRAWAL PLAN
Investors having a $5,000 minimum account may request withdrawal
of a dollar amount in multiples of $50 on a monthly, quarterly,
semi-annual or annual basis. At the investor's option,
17
<PAGE>
monthly withdrawals will be made on either the first or fifteenth
day of the month and quarterly, semi-annual or annual withdrawals
will be made on either the first or fifteenth day of the month
selected. To participate in the automatic withdrawal plan, an
investor must check the appropriate box and supply the necessary
information on the Account Application which may be obtained from
the Distributor or subsequently file a signature guaranteed
written request with the transfer agent.
PURCHASE OF
SHARES
Fund shares are sold at the net asset value per share
next determined after receipt of a purchase order by
the transfer agent. The Fund does not impose any fee
for purchase orders placed directly with the transfer
agent without the assistance of a broker-dealer.
Broker-dealers (other than the Distributor) and others
who process purchase orders on behalf of Customers may
charge a fee for their services.
Purchase orders for shares are accepted by the Fund
only on a Business Day as described in "Shareholder
Services--Hamilton Classic Shares."
Purchase orders received by the transfer agent before 2:30 p.m.
New York City time on a Business Day will be executed as of 2:30
p.m. New York City time, if payment is received by 4:00 p.m. New
York City time. Orders received after 2:30 p.m. New York City
time, and orders for which payment has not been received by 4:00
p.m. New York City time, will not be accepted. The Fund may in its
discretion reject any order to purchase shares. Payment for orders
which are not received or paid for in a timely manner or are not
accepted by the Fund will be returned after prompt notification to
the sending institution. On those days when the New York Stock
Exchange or the Custodian closes early as a result of such day
being a partial holiday or otherwise, the right is reserved to
advance the time on that day by which purchase orders and
redemption requests must be received.
Payment for shares may be made only in federal funds or other
funds immediately available to the transfer agent. THE FUND WILL
NOT PERMIT SHARES PURCHASED BY CHECK TO BE REDEEMED UNTIL PAYMENT
FOR THE PURCHASE HAS BEEN COLLECTED, WHICH MAY TAKE UP TO TEN
BUSINESS DAYS AFTER PURCHASE. The Fund reserves the right to
suspend the sale of shares to the public at any time, in response
to conditions in the securities markets or otherwise.
Investors in Hamilton Shares, Hamilton Premier Shares and Hamilton
Classic Shares are automatically entitled to purchase additional
Fund shares by telephone unless they notify the transfer agent in
writing that they do not wish to use this telephone privilege.
There is no charge for the telephone purchase privilege. For
details concerning this privilege for the Hamilton Classic Shares,
see "Shareholder Services--Hamilton Classic Shares--TeleTrade
Purchases."
The Distributor, from time to time, at its expense, will provide
compensation to dealers in connection with sales of shares of the
Fund and of other funds in the BNY Hamilton Family of Funds. Such
compensation will include non-cash payments which may take the
form of (1) gift certificates, (2) tickets for entertainment
events, (3) trips, including the provision of travel arrangements
and lodging at vacation resorts and (4) merchandise. Dealers may
not use sales of
18
<PAGE>
the Fund's shares to qualify for this compensation to the extent
such sales may be prohibited by laws of any state or any self-
regulatory agency, such as The National Association of Securities
Dealers, Inc. None of the aforementioned compensation is paid for
by any series of BNY Hamilton Funds, Inc. or its shareholders.
Federal regulations require that each investor provide a certified
Taxpayer Identification Number (social security number for
individuals) upon opening or reopening an account with the Fund.
Investors should refer to the section entitled "Taxes" for further
information about this requirement.
In the interest of economy and convenience and because of its
operating procedures, the Fund will not issue certificates
representing ownership of the Fund's shares. All shares purchased
will be confirmed and credited to investors' accounts on books
maintained by the Adviser or its agents for each class of the
Fund.
Redemption orders are effected at the net asset value
REDEMPTION OF per share next determined after receipt of the order
SHARES by the transfer agent. Payment for shares for which a
redemption order is received by the transfer agent
prior to 2:30 p.m. New York City time on a Business
Day is normally made in federal funds wired to the
redeeming shareholder on the same Business Day.
Payment for shares for which a redemption order is
received after 2:30 p.m. New York City time on a
Business Day is normally made in federal funds wired
to the redeeming shareholder on the next Business Day
following receipt of
payment. In order to allow The Bank of New York to most
effectively manage the Fund, investors are urged to initiate
redemptions of shares as early in the day as possible and to
notify the transfer agent at least one day in advance of
redemptions in excess of $5 million. The Fund reserves the right
to wire redemption proceeds up to seven days after receiving the
redemption order if, in the judgment of the Adviser, an earlier
payment could adversely affect the Fund. Investors in Hamilton
Shares, Hamilton Premier Shares and Hamilton Classic Shares are
automatically entitled to redeem shares, without charge, by
telephone, unless they notify the transfer agent in writing that
they do not wish to use this telephone privilege.
None of the Fund, the Distributor, the transfer agent or the
Fund's other service contractors will be responsible for any loss
or expense for acting upon telephone instructions that they
believe to be genuine. In attempting to confirm that telephone
instructions are genuine, the Fund and its service contractors
will use such procedures as they consider reasonable as described
in Redemption of Shares in the Statement of Additional
Information. To the extent that the Fund or its service
contractors do not use reasonable procedures to form their belief
as to the genuineness of accountholders' instructions, it and/or
its service contractors may be responsible for such instructions
as are fraudulent or unauthorized.
Redemption orders submitted directly to the transfer agent without
the assistance of a broker-dealer or other person, and orders
submitted by the Distributor for its brokerage customers, are
processed without charge. Broker-dealers (other than the
Distributor) and others who process redemption orders on behalf of
their customers may charge a fee for their services.
19
<PAGE>
With respect to Hamilton Shares and Hamilton Premier Shares, the
Fund may suspend the right of redemption or postpone the date of
payment upon redemption (as well as suspend or postpone the
recordation of the transfer of its shares) for such periods as are
permitted under the 1940 Act. The Fund reserves the right to
redeem Hamilton Shares and Hamilton Premier Shares in any account
at their net asset value if the value of the account is less than
$500,000 as a result of redemptions. The shareholder having the
account will first be notified in writing that its account has a
value of less than $500,000 and will be allowed 60 days to make
additional investments to bring the value of its account to
$500,000 before the redemption is processed by the Fund. In
addition, the Fund may redeem Hamilton Shares and Hamilton Premier
Shares under certain special circumstances described in the
Statement of Additional Information under "Redemption of Shares".
Hamilton Shares and Hamilton Premier Shares may be redeemed
through procedures established by The Bank of New York in
connection with certain of its customer accounts. In many
instances, these procedures will include instructions under which
Hamilton Shares and Hamilton Premier Shares are redeemed
automatically in amounts necessary to maintain a specific
previously agreed upon balance in the customer's account at The
Bank of New York. This Prospectus should be read in conjunction
with any material provided by The Bank of New York regarding such
procedures. Similar arrangements may also be available from
Shareholder Organizations other than The Bank of New York.
An investor may exchange shares between the Fund and
any other fund in the BNY Hamilton Family of Funds
described in the combined prospectus for BNY Hamilton
Equity Income Fund, BNY Hamilton Intermediate
Government Fund and BNY Hamilton Intermediate New York
Tax-Exempt Fund (hereinafter referred to as the
"Combined Prospectus").
EXCHANGE OF SHARES
Shareholders of the Fund must request and obtain a
current copy of the Combined Prospectus before
exchanging their investment in the Fund for an initial
investment in one of the other members of the BNY
Hamilton Family of Funds. Investors considering such
an exchange of shares are urged to read the Combined Prospectus
carefully prior to exchange.
An exchange may be made so long as the shares to be exchanged have
a value of at least $500, and the shares to be purchased in the
exchange may legally be sold in the state of the investor's
residence. If a shareholder is establishing a NEW account by
exchange, the shares being purchased by exchange must have a value
at least equal to the minimum initial investment required by the
specific fund into which the exchange is being made (currently
$2,000 for each of the funds described in the Combined
Prospectus). Shares will be exchanged on the basis of relative net
asset value per share.
An investment in the Fund automatically entitles an investor to
use the exchange privilege unless he or she indicates on the
Account Application or in a subsequent written notice to the
transfer agent that he or she does not wish to use this privilege.
The Combined Prospectus for funds of the BNY Hamilton Family of
Funds into which an exchange is being made may be obtained from
the investor's Service Organization or the Distributor. A
shareholder may
20
<PAGE>
exchange Fund shares by telephone by calling the transfer agent at
1-800-952-6276. See "Shareholder Services--Hamilton Classic
Shares--TeleTrade Redemptions" for a description of the Fund's
policy regarding responsibility for telephone instructions. When
Fund shares are exchanged for shares of another portfolio in the
BNY Hamilton Family of Funds which are sold with a sales load, the
applicable sales load, if any, will be deducted at the time of
exchange. An investor desiring to use the exchange privilege
should read the Statement of Additional Information and consult
his or her Service Organization or the Distributor for further
information applicable to use of the exchange privilege. The BNY
Hamilton Family of Funds reserves the right to reject any exchange
request and the exchange privilege may be modified or terminated
at any time. At least 60 days' notice will be given to
shareholders of any material modification or termination except
where notice is not required under regulations of the Securities
and Exchange Commission.
Exchanges are in effect redemptions from one member of the BNY
Hamilton Family of Funds and purchases of another member of the
BNY Hamilton Family of Funds and the usual purchase and redemption
procedures and requirements are applicable to exchanges. Also see
"Purchase of Shares" and "Redemption of Shares" in this Prospectus
and the Combined Prospectus.
The net investment income for each class of the Fund's
shares will be declared as dividends daily and paid
monthly within five (5) Business Days after the end of
the month. Dividends and distributions will be payable
to shareholders of record at the time of declaration.
DIVIDENDS AND DISTRIBUTIONS
The net investment income of each class of the Fund for
each Business Day will be determined immediately prior
to the determination of net asset value. Net investment
income for other days will be determined on the prior Business
Day. Shares of each class of the Fund will begin earning dividends
on the Business Day their purchase is effective. See "Purchase of
Shares" and "Redemption of Shares". The Directors may, without
action by the shareholders, revise the dividend policy or postpone
the payment of a dividend by the Fund if it incurs or anticipates
any large unexpected expense, loss or fluctuation in net assets
that in the Directors' opinion might have a significant adverse
effect on shareholders.
Dividends on shares of the Fund generally are determined in the
same manner regardless of class, except that Hamilton Premier
Shares and Hamilton Classic Shares bear the fees paid to their
respective Shareholder Organizations separately for those general
services described under "Fund and Other Shareholder Services--
General--Shareholder Servicing Plan". In addition, Hamilton
Classic Shares bear all 12b-1 fees, and each class of shares bears
certain other miscellaneous "class specific expenses" (i.e.,
certain cash management, registration and transfer agency
expenses).
The Fund does not expect to realize long-term capital gains or
losses. However, should the Fund do so, any net realized gains
will be distributed at least annually.
21
<PAGE>
Net asset value per share for each class of shares of
the Fund will be determined by subtracting from the
NET ASSET value of the Fund's total assets attributable to that
VALUE class of shares the amount of the Fund's liabilities
attributable to shares of that class, dividing the
remainder by the number of its outstanding shares of
that class and rounding to the nearest one cent.
Expenses, including the fees payable to the Adviser and
the Administrator, are accrued daily. The Fund will value all
portfolio securities using the amortized cost method. This method
attempts to maintain a constant net asset value per share of
$1.00. No assurances can be given that this goal will be attained.
See "Net Asset Value" in the Statement of Additional Information
for more information on valuation of portfolio securities of the
Fund.
The Fund computes the net asset value of each class of shares once
daily on Monday through Friday, except that the net asset value of
a particular class need not be computed on a day in which no
orders to purchase or redeem shares of that class have been
received or on the holidays listed under "Net Asset Value" in the
Statement of Additional Information. The Fund will compute net
asset value of its classes at 2:30 P.M. New York City time.
BNY Hamilton Funds, Inc. is an open-end management
investment company organized as a Maryland corporation
on May 1, 1992. The Articles of Incorporation currently
permit BNY Hamilton Funds, Inc. to issue 20,000,000,000
ORGANIZATION shares of common stock, par value $.001 per share, of
which 9,000,000,000 shares have been allocated to BNY
Hamilton Money Fund (3,000,000,000 as Hamilton Shares,
3,000,000,000 as Hamilton Premier Shares and
3,000,000,000 as Hamilton Classic Shares). The Directors may
increase the number of shares the Fund is authorized to issue
without the approval of shareholders. The Directors also have the
power to designate one or more series or classes of shares of
common stock and to classify and reclassify any unissued shares
with respect to such series or classes.
Shareholders of each series of BNY Hamilton Funds, Inc. are
entitled to one vote for each share and to the appropriate
fractional vote for each fractional share. There is no cumulative
voting and the Fund's shares have no preemptive or conversion
rights. All shareholders will vote together as a single class on
matters affecting the Fund generally, including matters relating
to the Fund's investment advisory agreement, investment objective
and fundamental investment restrictions. Shareholders of a
particular class will vote separately on any matters relating only
to that class. For example, to the extent shareholder votes are
necessary, holders of Hamilton Premier Shares and Hamilton Classic
Shares will vote separately on matters pertaining to their
respective shareholder servicing arrangements and holders of
Hamilton Classic Shares will vote separately on matters relating
to the class' distribution plan under Rule 12b-1.
Shares offered hereby must be fully-paid upon issuance and
thereafter will be non-assessable by BNY Hamilton Funds, Inc. and
the particular Fund to which they belong. The Fund does not intend
to hold meetings of shareholders. The Directors may call meetings
of shareholders for action by shareholder vote as may be required
by the 1940 Act or permitted by the Articles of Incorporation or
Bylaws of BNY Hamilton Funds, Inc.
22
<PAGE>
BNY Hamilton Funds, Inc., if requested to do so by the holders of
at least 10% of the shares of all series aggregated as a class,
will call a meeting of shareholders for the purpose of voting upon
the removal of a director or directors and will assist in
communications with other shareholders as required by Section
16(c) of the 1940 Act. For further organization information,
including certain shareholder rights, see "Description of Shares"
in the Statement of Additional Information.
The following discussion of tax consequences is based
on the United States federal tax laws in effect on the
date of this Prospectus. These laws and regulations are
TAXES subject to change by legislative, judicial or
administrative action. Investors are urged to consult
their own tax advisors with respect to specific
questions as to federal taxes and with respect to the
applicability of state, local or foreign taxes. See
Taxes in the Statement of Additional Information. Annual
statements as to the federal tax status of distributions, if
applicable, will be mailed to shareholders shortly after the end
of the taxable year for each member of the BNY Hamilton Family of
Funds.
The Fund intends to qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as
amended. As a regulated investment company, the Fund will not be
subject to federal income taxes on the net investment income and
capital gains distributed to shareholders, provided that the Fund
distributes at least 90% of its net investment income and realized
net short-term capital gains in excess of net long-term
capital losses.
Distributions of net investment income and realized net short-term
capital gains in excess of net long-term capital losses will be
taxable to shareholders of the Fund as ordinary income, whether
such distributions are taken in cash or reinvested in additional
shares. Such distributions to corporate shareholders will not be
eligible for the dividends-received deduction.
Distributions of net long-term capital gains in excess of net
short-term capital losses will be taxable to shareholders of the
Fund as long-term capital gains regardless of how long a
shareholder has held shares in the Fund and regardless of whether
taken in cash or reinvested in additional shares. Long-term
capital gains distributions to corporate shareholders will not be
eligible for the dividends-received deduction.
UNLESS A SHAREHOLDER INCLUDES ITS TAXPAYER IDENTIFICATION NUMBER
(SOCIAL SECURITY NUMBER FOR INDIVIDUALS) ON THE ACCOUNT
APPLICATION AND CERTIFIES THAT IT IS NOT SUBJECT TO BACKUP
WITHHOLDING, THE FUND MAY BE REQUIRED TO WITHHOLD AND REMIT TO THE
U.S. TREASURY 31% OF TAXABLE DISTRIBUTIONS AND OTHER REPORTABLE
PAYMENTS TO THE SHAREHOLDER. SHAREHOLDERS SHOULD BE AWARE THAT
UNDER REGULATIONS PROMULGATED BY THE INTERNAL REVENUE SERVICE, THE
FUND MAY BE FINED UP TO $50 ANNUALLY FOR EACH ACCOUNT FOR WHICH A
CERTIFIED TAXPAYER IDENTIFICATION NUMBER IS NOT PROVIDED. IN THE
EVENT THAT SUCH A FINE IS IMPOSED WITH RESPECT TO ANY UNCERTIFIED
ACCOUNT IN ANY YEAR, A CORRESPONDING CHARGE MAY BE MADE AGAINST
THAT ACCOUNT.
23
<PAGE>
The Fund will send to its shareholders annual and
semi-annual reports. The financial statements
appearing in the annual reports will be audited by
ADDITIONAL independent auditors. Shareholders will also receive
INFORMATION confirmations of each purchase and redemption and
monthly statements, reflecting all account activity,
including dividends reinvested in additional shares or
credited as cash. Written inquiries should be
addressed to the Fund as follows:
BNY Hamilton Funds
Department L-1685
Columbus, OH 43260-1685
The Fund may make historical performance information available and
may advertise yield and effective yield as those terms are defined
in the Statement of Additional Information under Performance Data.
Performance information will be calculated separately for each
class of the Fund's shares. Because of the service fees borne by
Hamilton Premier Shares and the service and distribution fees
borne by Hamilton Classic Shares, the net yield of shares of those
classes can be expected, at any given time, to be lower than the
net yield of Hamilton Shares. In addition, each class of shares
bears certain miscellaneous "class specific expenses" (i.e.,
certain registration, cash management and transfer agency
expenses, which will likely differ between classes). The yield for
each class of shares may be compared to the yield of other mutual
funds with similar investment objectives and services and to other
relevant indices or to rankings prepared by independent services
or other financial or industry publications that monitor the
performance of mutual funds. For example, the yield for each class
of shares may be compared to Money Fund Report, a service of
IBC/Donoghue, Inc. Yield data as reported in national financial
publications, including but not limited to Money, Forbes, Barrons,
The Wall Street Journal and The New York Times, or in publications
of a local or regional nature, may also be used in comparing the
Fund's yield. ALL PERFORMANCE FIGURES WILL BE BASED ON HISTORICAL
EARNINGS AND ARE NOT INTENDED TO INDICATE FUTURE PERFORMANCE.
Performance information may be obtained by calling the Distributor
at 1-800-426-9363.
24
<PAGE>
BNY HAMILTON MONEY FUND
PROSPECTUS
APRIL 29, 1996
. HAMILTON SHARES
. HAMILTON PREMIER SHARES
. HAMILTON CLASSIC SHARES
[ART]
B N Y HAMILTON
FUNDS
BNYMM496P
PLEASE DO NOT REMOVE THE MAILING LABEL. We need this information to make
certain that your name is correctly maintained in all our files -- and in order
not to send you inappropriate mail. If there is an error in your name and
address, please correct the label and return in the enclosed courtesy envelope.
Thank you.
<PAGE>
[ART]
B N Y HAMILTON
FUNDS
COMBINED PROSPECTUS FOR BNY HAMILTON EQUITY INCOME FUND
BNY HAMILTON INTERMEDIATE GOVERNMENT FUND
BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FUND OBJECTIVE FOR INVESTORS SEEKING
---- --------- ---------------------
<S> <C> <C>
BNY HAMILTON EQUITY To provide long-term capital Capital appreciation, higher than
INCOME FUND appreciation greater than the market average income with
appreciation of, and yield greater relatively low volatility
than the yield of, the Standard &
Poor's 500 Index; equal emphasis is
placed on attaining income and
capital appreciation
- -------------------------------------------------------------------------------------------------
BNY HAMILTON To earn as high a level of current Current income from U.S. Government
INTERMEDIATE GOVERNMENT income as is consistent with securities, minimal credit risk and
FUND preservation of capital, moderate relatively stable share price
stability in net asset value and
minimal credit risk
- -------------------------------------------------------------------------------------------------
BNY HAMILTON To provide income that is exempt Triple tax-free income, moderate
INTERMEDIATE NEW YORK from federal, New York State and New risk and relative stability of
TAX-EXEMPT FUND York City income taxes while principal
maintaining relative stability of
principal
</TABLE>
- --------------------------------------------------------------------------------
INVESTMENTS IN ANY OF THE FUNDS ARE NOT BANK DEPOSITS OR OBLIGATIONS OF OR
GUARANTEED OR INSURED BY THE BANK OF NEW YORK, AND THE SHARES IN ANY OF THE
FUNDS ARE NEITHER INSURED NOR GUARANTEED BY THE UNITED STATES GOVERNMENT, THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENTAL AGENCY. INVESTMENTS IN ANY OF THE FUNDS INVOLVE INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL.
This Prospectus sets forth concisely the information that a prospective
investor should know about the three (3) members of BNY Hamilton Funds, Inc.
noted in the chart above (hereinafter referred to as the "Funds") before
investing and should be retained for future reference. Additional information
about the Funds and the other fund in the BNY Hamilton Family of Funds has been
filed with the Securities and Exchange Commission in the Statement of
Additional Information for BNY Hamilton Funds, Inc., dated April 29, 1996. This
information is incorporated by reference and is available without charge upon
request from the Funds' distributor, BNY Hamilton Distributors, Inc., 125 West
55th Street, New York, NY 10019, Attention: BNY Hamilton Funds, Inc., 1-800-
426-9363.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
THE DATE OF THIS PROSPECTUS IS APRIL 29, 1996.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Fee Table.................................................................. 1
Financial Highlights....................................................... 3
Investment Objectives and Policies......................................... 6
Description of Securities.................................................. 7
Additional Investment Information and Risk Considerations.................. 11
Investment Restrictions.................................................... 22
Management of the Funds.................................................... 23
Summary of Shareholder Services............................................ 24
Fund and Other Shareholder Services........................................ 25
Purchase of Shares......................................................... 26
Redemption of Shares....................................................... 32
Exchange of Shares......................................................... 33
Dividends and Distributions................................................ 34
Net Asset Value............................................................ 35
Organization............................................................... 35
Taxes...................................................................... 36
Additional Information..................................................... 37
Appendix................................................................... 38
</TABLE>
<PAGE>
FEE TABLE _________________________________________________________________
The following table illustrates the expenses an investor in any one of the
Funds will incur. In addition, investments are subject to the annual fund
operating expenses (after expense waivers/reimbursements) set forth below.
<TABLE>
<CAPTION>
BNY Hamilton BNY Hamilton BNY Hamilton
Equity Intermediate Intermediate
Income Government New York Tax-
Fund Fund Exempt Fund
------------ ------------ -------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Sales Load Imposed on Purchases*...... 4.50% 3.00% 3.00%
Sales Load Imposed on Reinvested
Dividends............................ None None None
Deferred Sales Load................... None None None
Redemption Fees....................... None None None
Exchange Fees......................... None None None
ANNUAL FUND OPERATING EXPENSES AFTER
EXPENSE WAIVERS/REIMBURSEMENTS:
(as a percentage of average daily net
assets)
Management Fees....................... .80% .70% .55%
12b-1 Fees after expense
waivers/reimbursements**............. .00% .00% .00%
Other Expenses........................ .20% .36% .35%
----- ----- -----
Total Fund Operating Expenses after
expense waivers/reimbursements....... 1.00% 1.06% .90%
===== ===== =====
</TABLE>
- --------
* The sales load is not applicable to certain purchases. See "Purchase of
Shares".
** Although each Fund has adopted a 12b-1 distribution plan permitting payment
of up to .25% per annum of average daily net assets, none of the Funds has
implemented the plan as of the date of this Prospectus. The Funds will not
implement their 12b-1 Plans until such future date as their Board of
Directors deems appropriate.
1
<PAGE>
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) redemption at the end of each time
period:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
BNY Hamilton Equity Income Fund................ $55 $76 $98 $163
BNY Hamilton Intermediate Government Fund...... $41 $63 $87 $156
BNY Hamilton Intermediate New York Tax-Exempt
Fund.......................................... $39 $58 $78 $137
</TABLE>
This table is designed to assist investors in understanding the various direct
and indirect costs that an investor would bear. The Adviser and Administrator
(each as defined in "Management of the Funds") have agreed to limit expenses of
the BNY Hamilton Intermediate New York Tax-Exempt Fund to .90% of its average
daily net assets. Had such expenses not been limited, the Management Fees would
have been .70%; Other Expenses would have been .50%; and Total Fund Operating
Expenses would have been 1.20%. Expenses are not limited by the Adviser or the
Administrator for the BNY Hamilton Equity Income Fund and the BNY Hamilton
Intermediate Government Fund. Management reserves the right to implement or
discontinue expense limitations at any time. See "Fund and Other Shareholder
Services--Fee Waivers".
For a description of contractual fee arrangements or the fees and expenses
included in Other Expenses, see "Management of the Funds" and "Fund and Other
Shareholder Services". In connection with the example, please note that $1,000
is less than the generally applicable minimum initial investment required for
each of the Funds and that there are no redemption or exchange fees of any
kind. See "Purchase of Shares" and "Redemption of Shares".
THE ABOVE EXAMPLES ARE HYPOTHETICAL AND ARE INCLUDED SOLELY FOR ILLUSTRATIVE
PURPOSES. THEY SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
PERFORMANCE; ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
2
<PAGE>
FINANCIAL HIGHLIGHTS ______________________________________________________
The following selected data for an outstanding share of each of the Funds
included in this Prospectus was audited by Deloitte & Touche LLP, independent
accountants, whose report thereon was unqualified. This information should be
read in conjunction with the financial statements and related notes that appear
in the Statement of Additional Information. Further information about the
performance of any of the Funds is contained in the Funds' annual report to
shareholders, which may be obtained from the Funds upon request and without
charge.
BNY HAMILTON EQUITY INCOME FUND
<TABLE>
<CAPTION>
For the
period
August 10,
1992*
Year Ended December 31, through
----------------------------- December
1995 1994 1993 31, 1992
-------- -------- -------- ----------
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value at beginning of
period........................... $ 10.70 $ 11.30 $ 10.43 $ 10.00
-------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income............ 0.32 0.31 0.29 0.11
Net realized and unrealized gain
(loss) on investments........... 2.41 (0.60) 0.94 0.47
-------- -------- -------- --------
Total from investment operations. 2.73 (0.29) 1.23 0.58
-------- -------- -------- --------
DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment in-
come............................ (0.32) (0.31) (0.28) (0.12)
Distributions from capital gains. (0.12) -- (0.08) (0.03)
-------- -------- -------- --------
Total dividends and
distributions................... (0.44) (0.31) (0.36) (0.15)
-------- -------- -------- --------
Net asset value at end of period.. $ 12.99 $ 10.70 $ 11.30 $ 10.43
======== ======== ======== ========
TOTAL RETURN+..................... 25.78% (2.58)% 11.94% 5.86%**
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period
(000's omitted).................. $169,841 $135,131 $112,849 $20,440
Ratio to average net assets of:
Expenses, net of waiver from The
Bank of New York................ 1.00% 1.04% 1.09% 1.10%***
Expenses, prior to waiver from
The Bank of New York............ 1.00% 1.04% 1.12% 2.12%***
Net investment income, net of
waiver from The Bank of
New York........................ 2.66% 2.89% 2.82% 3.33%***
Portfolio turnover rate........... 58% 51% 50% 25%
Average commission rate paid per
share traded..................... $ .0557
</TABLE>
*Commencement of investment operations.
**Not annualized.
***Annualized.
+Total return does not consider the effect of the sales load.
3
<PAGE>
BNY HAMILTON INTERMEDIATE GOVERNMENT FUND
<TABLE>
<CAPTION>
For the
period
August 10,
1992*
Year Ended December 31, through
-------------------------- December
1995 1994 1993 31, 1992
------- ------- ------- ----------
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value at beginning of
period............................... $ 9.10 $10.12 $ 9.87 $10.00
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income................ 0.53 0.50 0.51 0.18
Net realized and unrealized gain
(loss) on investments............... 0.84 (1.02) 0.27 (0.13)
------- ------- ------- -------
Total from investment operations..... 1.37 (0.52) 0.78 0.05
------- ------- ------- -------
DIVIDENDS AND DISTRIBUTION
Dividends from net investment income. (0.53) (0.50) (0.51) (0.18)
Distribution from capital gains...... -- -- (0.02) --
------- ------- ------- -------
Total dividends and distribution..... (0.53) (0.50) (0.53) (0.18)
------- ------- ------- -------
Net asset value at end of period...... $ 9.94 $ 9.10 $10.12 $ 9.87
======= ======= ======= =======
TOTAL RETURN+......................... 15.40% (5.17)% 8.03% 0.51%**
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's
omitted)............................ $60,659 $59,328 $72,069 $25,575
Ratio to average net assets of:
Expenses, net of waiver from The
Bank of New York................... 1.06% 1.07% 0.86% 0.75%***
Expenses, prior to waiver from The
Bank of New York................... 1.06% 1.10% 1.15% 1.64%***
Net investment income, net of waiver
from The Bank of New York.......... 5.52% 5.30% 5.04% 4.62%***
Portfolio turnover rate.............. 48% 49% 67% 63%
</TABLE>
* Commencement of investment operations.
**Not annualized.
***Annualized.
+Total return does not consider the effect of the sales load.
4
<PAGE>
BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND
<TABLE>
<CAPTION>
For the
period
August 10,
1992*
Year Ended December 31, through
-------------------------- December
1995 1994 1993 31, 1992
------- ------- ------- ----------
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value at beginning of
period............................... $ 9.59 $ 10.37 $ 9.97 $ 10.00
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income................ 0.39 0.39 0.38 0.15
Net realized and unrealized gain
(loss) on investments............... 0.75 (0.78) 0.40 (0.03)+
------- ------- ------- -------
Total from investment operations..... 1.14 (0.39) 0.78 0.12
------- ------- ------- -------
DIVIDENDS
Dividends from net investment income. (0.39) (0.39) (0.38) (0.15)
------- ------- ------- -------
Net asset value at end of period...... $ 10.34 $ 9.59 $ 10.37 $ 9.97
======= ======= ======= =======
TOTAL RETURN++........................ 12.08% (3.81)% 7.99% 1.18%**
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's
omitted)............................ $40,931 $43,213 $55,871 $19,717
Ratio to average net assets of:
Expenses, net of waiver from The
Bank of New York and Administrator. 0.90% 0.85% 0.68% 0.60%***
Expenses, prior to waiver from The
Bank of New York and Administrator. 1.20% 1.20% 1.30% 1.96%***
Net investment income, net of waiver
from The Bank of New York and Ad-
ministrator........................ 3.89% 3.92% 3.74% 3.79%***
Portfolio turnover rate.............. 4% 18% 6% --
</TABLE>
*Commencement of investment operations.
**Not annualized.
***Annualized.
+ The amount shown is not in accordance with the change in the aggregate gains
and losses of the portfolio securities during the period August 10, 1992
through December 31, 1992 due to the timing of sales and repurchases of
shares of the Fund.
++Total return does not consider the effect of the sales load.
5
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES ________________________________________
The investment objective of each of the Funds is described below, together with
a summary of the policies each Fund will employ in its efforts to achieve its
objective. There can be no assurance that the Funds will attain their
respective investment objectives.
The Equity Income Fund's investment objectives
BNY HAMILTON EQUITY are to provide long-term capital appreciation
INCOME FUND (THE "EQUITY greater than the appreciation of, and yield
INCOME FUND") greater than the yield of, the Standard & Poor's
500 Index. Equal emphasis is placed on attaining
income and capital appreciation. The
Equity Income Fund will invest primarily in common stock and convertible
securities issued by domestic corporations, and may also invest in securities
issued by foreign corporations. In connection with its investment objectives,
the Equity Income Fund seeks to achieve capital appreciation in excess of the
market average represented by the Standard & Poor's 500 Index. During periods
of rapid market capital appreciation, the effect of the Equity Income Fund's
dual investment objectives will likely be that its net asset value will not
rise as rapidly as the market generally. Conversely, during periods of rapid
market depreciation, the Equity Income Fund's net asset value would not be
expected to decline as rapidly as the market.
The Equity Income Fund will invest in common stocks and securities convertible
into common stocks. The securities in which the Equity Income Fund may invest
include those listed on any domestic or foreign securities exchange or traded
in the over-the-counter market. Under normal circumstances, the Equity Income
Fund intends to invest at least 65% of the value of its total assets in equity
or equity-related securities (such as preferred stock or corporate debt that is
convertible to common stocks) that pay dividends or interest.
BNY HAMILTON INTERMEDIATE The Intermediate Government Fund's investment
GOVERNMENT FUND (THE objective is to earn as high a level of income as
"INTERMEDIATE GOVERNMENT is consistent with the preservation of capital,
FUND") moderate stability in net asset value and minimal
credit risk. The Intermediate Government Fund
will attempt to accomplish this objective by
investing in obligations issued or guaranteed by
the
United States Government and backed by the full faith and credit of the United
States. The Intermediate Government Fund may also invest in obligations issued
or guaranteed by United States Government agencies or instrumentalities where
the Intermediate Government Fund must look principally to the issuing or
guaranteeing agency for ultimate repayment. Examples of agencies or
instrumentalities issuing these obligations are the Federal Farm Credit Systems
and the Federal Home Loan Banks. Although the United States Government or its
agencies or instrumentalities are ultimately responsible for payment of these
obligations, they do not guarantee the market value of such obligations. Under
normal circumstances, the Intermediate Government Fund will invest at least 65%
of the value of its total assets in guaranteed Government securities.
In an effort to manage interest rate risk and principal stability of the
Intermediate Government Fund's net asset value, the Intermediate Government
Fund will invest in a portfolio of debt instruments which, during normal market
conditions, will have a dollar weighted average maturity not less than three
nor more than ten years.
The Intermediate New York Tax-Exempt Fund's
BNY HAMILTON INTERMEDIATE investment objective is to provide investors with
NEW YORK TAX-EXEMPT FUND income that is exempt from federal, New York
(THE "INTERMEDIATE NEW State and New York City income taxes while
YORK TAX-EXEMPT FUND") maintaining relative stability of principal. The
Intermediate New York Tax-Exempt Fund will seek
to accomplish this objective by investing
6
<PAGE>
primarily in bonds issued by New York State and the Commonwealth of Puerto Rico
and their respective authorities, agencies, instrumentalities and political
subdivisions, which bonds are exempt from federal, New York State and New York
City income taxes. (These type of bonds are hereinafter referred to as
"Municipal Obligations").
In an effort to manage interest rate risk and principal stability of the
Intermediate New York Tax-Exempt Fund's net asset value, the Intermediate New
York Tax-Exempt Fund will invest in a portfolio of debt instruments and/or
Municipal Obligations which, during normal market conditions, will have a
dollar weighted average maturity of no more than eight nor less than three
years.
During normal conditions, the Intermediate New York Tax-Exempt Fund will
attempt to invest 100%, and as a fundamental policy at least 80%, of its net
assets in Municipal Obligations. If, due to market conditions or supply
limitations, Municipal Obligations are not available, the Intermediate New York
Tax-Exempt Fund MAY TEMPORARILY INVEST MORE THAN 20% OF THE VALUE OF ITS NET
ASSETS IN FIXED INCOME SECURITIES THAT ARE SUBJECT TO FEDERAL, NEW YORK STATE
OR NEW YORK CITY INCOME TAXES. These securities may include (i) securities
issued or guaranteed by the United States Government; (ii) commercial paper;
(iii) certificates of deposit of the 100 largest domestic banks; or (iv)
corporate debt. To provide liquidity, the Intermediate New York Tax-Exempt Fund
will invest a portion of its assets in short-term Municipal Obligations and may
temporarily increase investment in short-term Municipal Obligations for
defensive purposes if, in the opinion of the investment adviser, adverse market
conditions so warrant. For a further discussion of the types of securities that
the Intermediate New York Tax-Exempt Fund may invest in for temporary defensive
purposes and the associated risks, see "Additional Investment Information and
Risk Considerations--Taxable Investments" later in this Prospectus.
DESCRIPTION OF SECURITIES _________________________________________________
The following paragraphs describe the types of securities in which the Funds
are permitted to invest, along with the specific Fund(s) intending to make such
investments.
EQUITY SECURITIES. The Equity Income Fund may invest in common stock, which
includes the common stock of any class or series of domestic or foreign
corporation or any similar equity interest, such as a trust or partnership
interest. These investments may or may not pay dividends and may or may not
carry voting rights. Common stock occupies the most junior position in a
company's capital structure.
CONVERTIBLE SECURITIES. The Equity Income Fund may invest in convertible
securities, which include any debt securities or preferred stock that may be
converted into common stock or that carry the right to purchase common stock.
Convertible securities entitle the holder to exchange the securities for a
specified number of shares of common stock, usually of the same company, at
specified prices within a certain period of time. They also entitle the holder
to receive interest or dividends until the holder elects to exercise the
conversion privilege.
The terms of any convertible security determine its ranking in a company's
capital structure. In the case of subordinated convertible debentures, the
holder's claims on assets and earnings are subordinate to the claims of other
creditors, and are senior to the claims of preferred and common stockholders.
In the case of convertible preferred stock, the holder's claims on assets and
earnings are subordinate to the claims of all creditors and are senior to the
claims of common stockholders. As a result of their ranking in a company's
capitalization, convertible securities that are rated by nationally recognized
securities rating organizations are generally rated below other securities of
the company and many convertible securities are not rated. The Equity Income
Fund does not have any rating criteria applicable to its investments in
convertible securities.
7
<PAGE>
FOREIGN EQUITY INVESTMENTS. The Equity Income Fund may invest in the securities
of foreign issuers. The Equity Income Fund does not expect more than 15% of its
foreign investments to be in securities that are not listed on a securities
exchange or, in the case of debt securities, that are not United States dollar-
denominated. Foreign investments may be made directly in securities of foreign
issuers or in the form of American Depository Receipts ("ADRs") and Global
Depository Receipts ("GDRs"). Generally, ADRs and GDRs are receipts issued by a
bank or trust company that evidence ownership of underlying securities issued
by a foreign corporation and that are designed for use in the domestic, in the
case of ADRs, or global, in the case of GDRs, securities markets. The Equity
Income Fund only expects to invest in ADRs and GDRs which are initiated and
maintained by the issuers of the underlying securities (so-called "sponsored"
ADRs and GDRs).
Since investments in foreign securities may involve foreign currencies, the
value of the assets of the Equity Income Fund as measured in United States
dollars may be affected by changes in currency rates and in exchange control
regulations, including currency blockage. The Equity Income Fund may enter into
forward commitments for the purchase or sale of foreign currencies in
connection with the settlement of foreign securities transactions or to hedge
the underlying currency exposure related to foreign investments, but it will
not enter into such commitments for speculative purposes. In addition, to the
extent that the Equity Income Fund invests in foreign commercial paper, the
paper must not be subject to foreign withholding tax at the time of purchase.
For a description of additional risks associated with investing in foreign
securities, see "Additional Investment Information and Risk Considerations".
MORTGAGE-BACKED SECURITIES AND ASSET-BACKED SECURITIES. The Intermediate
Government Fund may invest in mortgage-backed securities, including
collateralized mortgage obligations ("CMOs") and stripped mortgage-backed
securities. A mortgage pass-through security is a pro-rata interest in a pool
of mortgages where the cash flow generated from the mortgage collateral is
passed through to the security holder. CMOs are pass-through securities
collateralized by mortgages or mortgage-backed securities. CMOs are issued in
classes and series that have different maturities and often are retired in
sequence. Mortgage-backed securities evidence an undivided interest in mortgage
pools. These securities are subject to more rapid repayment than their stated
maturity would indicate because prepayment of principal on mortgages in the
pool are passed through to the holder of the securities. During periods of
declining interest rates, prepayment of mortgages in the pool can be expected
to increase. The pass-through of these prepayments would have the effect of
reducing the Intermediate Government Fund's positions in these securities and
requiring it to reinvest the prepayments at interest rates prevailing at the
time of reinvestment.
Stripped mortgage-backed securities are derivative multiclass mortgage
securities which may be issued by agencies or instrumentalities of the United
States Government or by private originators of, or investors in, mortgage
loans, including savings and loan associations, mortgage banks, commercial
banks, investment banks and special purpose subsidiaries of the foregoing.
Stripped mortgage-backed securities issued by parties other than agencies or
instrumentalities of the United States Government are considered, under current
guidelines of the staff of the Securities and Exchange Commission, to be
illiquid securities.
Stripped mortgage-backed securities are structured with two or more classes of
securities that receive different proportions of the interest and principal
distributions on a pool of mortgage assets. A common type of stripped mortgage-
backed security will have at least one class receiving only a small portion of
the interest and a larger portion of the principal from the mortgage assets,
while the other classes will receive primarily interest and only a small
portion of the principal. In the most extreme case, one class will receive all
of the interest (the interest-only or "IO" class), while the other class will
receive all of the principal (the principal-only or "PO" class). The yield to
maturity on an IO class is extremely sensitive to the rate of principal
payments (including prepayments) on the related underlying mortgage assets, and
a rapid rate of principal payments may have a material adverse effect on such a
security's yield to maturity. If the underlying mortgage assets experience
greater than anticipated prepayments of principal, the Intermediate Government
Fund may fail to recoup fully its
8
<PAGE>
initial investment in these securities even if the securities are rated AAA by
Standard & Poor's Corporation ("S&P") or Aaa by Moody's Investors Services
("Moody's").
The Intermediate Government Fund may also invest in asset-backed securities.
Asset-backed securities represent participation in payment streams generated by
particular assets such as motor vehicle or credit card debt receivables. The
asset-backed securities in which the Intermediate Government Fund may invest
are subject to the Intermediate Government Fund's overall credit requirements.
Asset-backed securities in general, however, are subject to certain risks. Most
of these risks are related to limited interests in the applicable collateral.
For example, credit card debt receivables are generally unsecured and the
debtors are entitled to the protection of a number of state and federal
consumer credit laws, many of which may have the effect of reducing the balance
due. Additionally, if a letter of credit is issued on behalf of an asset-backed
security (which typically would guarantee payment up to a stated amount by a
bank), and the stated amount in the letter of credit is exhausted, holders of
asset-backed securities may also experience delays in payments or losses if the
full amounts due on the underlying sales contracts are not realized.
MUNICIPAL OBLIGATIONS. The Intermediate New York Tax-Exempt Fund will invest
primarily in Municipal Obligations. Municipal Obligations include notes and
bonds issued by or on behalf of New York State and the Commonwealth of Puerto
Rico and their respective political subdivisions, agencies, authorities and
instrumentalities, the interest on which is exempt from federal, New York State
and New York City income taxes. Such securities are traded primarily in the
over-the-counter market.
Tax-exempt bonds are issued to obtain funds for various public purposes,
including the construction of a wide range of public facilities such as
airports, bridges, highways, housing, hospitals, mass transportation, schools,
streets, water and sewer works and gas and electric utilities. Tax-exempt bonds
may also be issued in connection with the refunding of outstanding obligations,
obtaining funds to lend to other public institutions and for general operating
expenses. Industrial development bonds ("IDBs"), which are considered tax-
exempt bonds if the interest paid thereon is exempt from federal income taxes,
are issued by or on behalf of public authorities to obtain funds to provide
privately operated facilities for business and manufacturing, housing and
pollution control and for airport, mass transit, port and parking facilities.
Two principal classifications of tax-exempt bonds are "general obligation" and
"revenue." General obligation bonds are secured by the issuer's pledge of its
full faith, credit and taxing power for the payment of principal and interest.
Revenue bonds are payable only from the revenues derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise tax or other specific revenue source. Although IDBs are issued
by municipal authorities, they are generally secured by the revenues derived
from payments of the industrial user. The payment of the principal and interest
on IDBs is dependent solely on the ability of the user of the facilities
financed by the bonds to meet its financial obligations and the pledge, if any,
of real and personal property so financed as security for such payment.
Tax-exempt notes are of short maturity, generally one year or less. They
include such securities as Tax Anticipation Notes, Revenue Anticipation Notes,
Bond Anticipation Notes and Construction Loan Notes. Tax-exempt commercial
paper consists of short-term obligations generally having a maturity of less
than nine months.
INTEREST EARNED FROM CERTAIN TAX-EXEMPT SECURITIES (INCLUDING CERTAIN IDBS)
THAT ARE PRIVATE ACTIVITY BONDS, AS DEFINED IN THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE"), IS TREATED AS A PREFERENCE ITEM FOR PURPOSES OF
THE ALTERNATIVE MINIMUM TAX. IN THE EVENT THAT THE INTERMEDIATE NEW YORK TAX-
EXEMPT FUND INVESTS IN SUCH SECURITIES, NO MORE THAN 20% OF ITS NET ASSETS
WOULD BE INVESTED IN SUCH SECURITIES, TOGETHER WITH SECURITIES THE INTEREST ON
WHICH IS SUBJECT TO FEDERAL, NEW YORK STATE OR NEW YORK CITY INCOME TAX.
9
<PAGE>
RISK FACTORS REGARDING MUNICIPAL OBLIGATIONS. Investors should note that either
general obligation or revenue bonds may be adversely affected by local
political and economic conditions and developments within a particular state
that adversely affect issuers of such tax-exempt securities. Adverse conditions
in a state's significant industry could have a correspondingly adverse effect
on specific issuers within the state or on anticipated revenue of the issuing
state; conversely, an improving economic outlook for a significant industry may
have a positive effect on such issuers or revenue. Other factors that could
affect a tax-exempt security include the change in a state's economy (for
example, from an industrial or agricultural based economy to a service based
economy); demographic factors such as population growth or decline and foreign
immigration, ecological or environmental issues unique to a particular industry
or area within the state and statutory limitations on the state's ability to
increase taxes.
SPECIAL RISK FACTORS REGARDING NEW YORK STATE MUNICIPAL OBLIGATIONS. Investors
in the Intermediate New York Tax-Exempt Fund should consider carefully the
special risks inherent in investments in Municipal Obligations. These risks
result from the financial condition of New York State, certain of its public
bodies and municipalities and New York City. Beginning in early 1975, New York
State, New York City and other entities faced serious financial difficulties
which jeopardized the credit standing and impaired the borrowing abilities of
such entities and contributed to high interest rates on, and lower market
prices for, debt obligations issued by them. A recurrence of such financial
difficulties or a failure of certain financial recovery programs could result
in defaults or declines in the market values of various Municipal Obligations
in which the Intermediate New York Tax-Exempt Fund may invest. If there should
be a default or other financial crisis relating to New York State, New York
City, a State or City agency, or other municipality, the market value and
marketability of outstanding Municipal Obligations in the Intermediate New York
Tax-Exempt Fund's portfolio and the interest income to the Fund could be
adversely affected. Moreover, the effects of the Federal Tax Reform Act of 1986
and conforming State tax legislation have added substantial uncertainty to
estimates of the State's tax revenues. In 1991, Moody's and S&P downgraded
certain obligations backed by New York State and have since placed other bonds
on a watch list for possible future downgrade. Potential recurring revenue
shortfalls in future fiscal years may adversely affect New York State.
The foregoing is only a summary and is based on information from statements
relating to securities offerings of New York issuers. A more detailed
description of special factors affecting investments in Municipal Obligations
of which investors should be aware is set forth under "Special Considerations
Relating to Investments in New York Municipal Obligations" in the Statement of
Additional Information.
Since the Intermediate New York Tax-Exempt Fund is classified as a non-
diversified series of a registered investment company, it is not limited by the
Investment Company Act of 1940 (the "1940 Act") as to the proportion of its
assets that it may invest in the obligations of a single issuer. This
classification may cause the Intermediate New York Tax-Exempt Fund to be more
susceptible to adverse economic, political or regulatory developments affecting
a single issuer than would be the case if the Fund's investments were required
to be diversified across many Municipal Obligations.
QUALITY INFORMATION. The Intermediate New York Tax-Exempt Fund will limit its
investments to investment grade Municipal Obligations, which are Municipal
Obligations rated in the four highest investment rating categories by Moody's
or S&P. Securities rated in the lowest of these rating categories (Baa by
Moody's and BBB by S&P) are normally considered to have adequate payment
protection parameters, although adverse conditions are more likely to lead to a
weakened capacity to pay principal and interest, as compared to securities
rated in the three higher categories. Securities rated Baa or BBB are
characterized by Moody's and S&P as investment grade but are considered by
Moody's to have speculative characteristics as well. The Intermediate New York
Tax-Exempt Fund may also invest in short-term municipal obligations rated MIG-1
or MIG-2 by Moody's or SP-1+ or SP-1 by S&P. If market conditions warrant, the
Intermediate New York Tax-Exempt Fund may invest in tax-exempt commercial paper
rated Prime-1 by Moody's or A-1 by S&P. In the event that a security held by
the Intermediate New York Tax-Exempt Fund has its rating dropped below the
tolerance described above, the decision whether to sell or to retain such
security will be at the discretion of the investment adviser.
10
<PAGE>
For a further description of securities ratings see "Appendix A--Description of
Securities Ratings" in the Statement of Additional Information.
ADDITIONAL INVESTMENT INFORMATION AND RISK CONSIDERATIONS _________________
The following paragraphs describe other types of securities transactions in
which the Funds may engage. Generally, the following types of securities and
transactions involve more risk than those discussed above in Description of
Securities. Unless otherwise noted, the following paragraphs are applicable to
all of the Funds.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. Each of the Funds may purchase
securities on a when-issued or delayed delivery basis. Delivery of and payment
for these securities may take as long as a month or more after the date of the
purchase commitment. The value of these securities is subject to market
fluctuation during this period and no interest or income accrues to a Fund
until settlement. Each Fund will maintain with its custodian a separate account
with a segregated portfolio of liquid assets consisting of cash, U.S.
Government securities or other liquid high-grade debt securities in an amount
at least equal to these commitments. When entering into a when-issued or
delayed delivery transaction, a Fund will rely on the other party to consummate
the transaction; if the other party fails to do so, the Fund may be
disadvantaged. It is the current policy of each of the Funds not to enter into
when-issued commitments exceeding in the aggregate 25% of the market value of
the Fund's total assets less liabilities excluding the obligations created by
these commitments.
REPURCHASE AGREEMENTS. Each of the Funds may enter into repurchase agreements
with brokers, dealers or banks that meet the credit guidelines established by
the Board of Directors (the "Directors") of BNY Hamilton Funds, Inc. In a
repurchase agreement, a Fund buys a security from a seller that has agreed to
repurchase it on a mutually agreed upon date and at a price reflecting the
interest rate effective for the term of the agreement. The term of the
agreement is usually from overnight to one week. A repurchase agreement may be
viewed as a fully collateralized loan of money by a Fund to the seller. A Fund
always receives, as collateral, securities with a market value at least equal
to the purchase price plus accrued interest and this value is maintained during
the term of the agreement. If the seller defaults and the collateral value
declines, a Fund might incur a loss. If bankruptcy proceedings are commenced
with respect to the seller, a Fund's realization upon the collateral may be
delayed or limited. Investments in certain repurchase agreements and certain
other investments that may be considered illiquid are limited as set forth
under "Investment Restrictions".
LOANS OF PORTFOLIO SECURITIES. Subject to applicable investment restrictions,
each Fund is permitted to lend its securities. These loans must be secured
continuously by cash, U.S. Government securities or other liquid high-grade
short-term debt obligations in an account segregated by the custodian or by a
letter of credit at least equal to the market value of the securities loaned
plus accrued interest or income. For more information, see "Investment
Objectives and Policies--Loans of Portfolio Securities" in the Statement of
Additional Information.
REVERSE REPURCHASE AGREEMENTS. Each of the Funds is permitted to enter into
reverse repurchase agreements. In a reverse repurchase agreement, a Fund sells
a security and agrees to repurchase it on a mutually agreed upon date and at a
price reflecting the interest rate effective for the term of the agreement.
This may also be viewed as the borrowing of money by a Fund. A Fund will not
invest the proceeds of a reverse repurchase agreement for a period which
exceeds the duration of the reverse repurchase agreement. A Fund may not enter
into reverse repurchase agreements exceeding in the aggregate one-third of the
market value of its total assets, less liabilities other than the obligations
created by reverse repurchase agreements. Each Fund will establish and maintain
with its custodian a separate account with a segregated portfolio of liquid
assets consisting of
11
<PAGE>
cash, U.S. Government securities or other liquid high-grade debt securities in
an amount at least equal to its purchase obligations under its reverse
repurchase agreements.
Reverse repurchase agreements involve the risk that the market value of the
securities retained by a Fund may decline below the price of the securities it
has sold but is obligated to repurchase under the agreement. In the event the
buyer of securities under a reverse repurchase agreement files for bankruptcy
or becomes insolvent, a Fund's use of proceeds from the agreement may be
restricted pending a determination by the other party or its trustee or
receiver whether to enforce a Fund's obligation to repurchase the securities.
INVESTMENT COMPANY SECURITIES. The Funds may invest in the securities of other
investment companies to the extent permitted under the 1940 Act. These limits
require that, as determined immediately after a purchase is made, (i) not more
than 5% of the value of a Fund's total assets will be invested in the
securities of any one investment company, (ii) not more than 10% of the value
of such Fund's total assets will be invested in securities of investment
companies as a group and (iii) not more than 3% of the outstanding voting stock
of any one investment company will be owned by such Fund. As a shareholder of
another investment company, a Fund would bear, along with other shareholders,
its pro rata portion of the other investment company's expenses, including
advisory fees. These expenses would be in addition to the advisory and other
expenses that such Fund bears directly in connection with its own operations.
TAXABLE INVESTMENTS (INTERMEDIATE NEW YORK TAX-EXEMPT FUND). The Intermediate
New York Tax-Exempt Fund will attempt to invest 100% of its net assets in
Municipal Obligations; however, it is permitted to invest up to 20% of the
value of its total assets in securities the interest income on which is subject
to federal, New York State or New York City income tax. If, in adverse market
conditions, the Fund's investment adviser determines, in its judgment, that
Municipal Obligations satisfying the Intermediate New York Tax-Exempt Fund's
investment objectives are not available, the investment adviser may, FOR
DEFENSIVE PURPOSES ONLY, TEMPORARILY INVEST MORE THAN 20% OF ITS NET ASSETS IN
DEBT SECURITIES THE INTEREST ON WHICH IS SUBJECT TO FEDERAL, NEW YORK STATE OR
NEW YORK CITY INCOME TAXES.
Investments in taxable securities will be substantially in securities issued or
guaranteed by the United States Government (such as bills, notes and bonds),
its agencies, instrumentalities or authorities, highly-rated corporate debt
securities (rated AA or better by S&P, or Aa or better by Moody's), prime
commercial paper (rated A-1+ by S&P or P-1 by Moody's) and certificates of
deposit of the 100 largest domestic banks in terms of assets, which are subject
to regulatory supervision by the United States Government or state governments
and the 50 largest foreign banks in terms of assets with branches or agencies
in the United States. Investments in certificates of deposit of foreign banks
and foreign branches of United States banks involve certain risks not generally
associated with investments in domestic banks. While domestic banks are
required to maintain certain reserves and are subject to other regulations,
such requirements and regulations may not apply to foreign branches.
Investments in foreign banks and branches may also be subject to other risks,
including future political and economic developments, the seizure or
nationalization of foreign deposits and the establishment of exchange controls
or other restrictions.
PUTS (INTERMEDIATE NEW YORK TAX-EXEMPT FUND). The Intermediate New York Tax-
Exempt Fund may purchase without limit Municipal Obligations together with the
right to resell them at an agreed price or yield within a specified period
prior to maturity. This right to resell is known as a put. The aggregate price
paid for securities with puts may be higher than the price that would otherwise
be paid. Consistent with the Intermediate New York Tax-Exempt Fund's investment
objective and subject to the supervision of the Directors, the purpose of this
practice is to permit the Intermediate New York Tax-Exempt Fund's portfolio to
be fully invested in tax-exempt securities while maintaining the necessary
liquidity to purchase securities on a when-issued basis, to meet unusually
large redemptions requests, to purchase at a later date securities other than
those subject to the put and to facilitate the investment adviser's ability to
manage the portfolio actively. The principal risk of puts is that the put
writer may default on its obligation to repurchase. The Intermediate New York
Tax-Exempt Fund's investment adviser will monitor each writer's ability to meet
its obligations under puts.
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The amortized cost method is used by the Intermediate New York Tax-Exempt Fund
to value Municipal Obligations with maturities of less than 60 days because the
Directors have determined that this method of valuation will provide an
accurate estimate of market value; when these securities are subject to puts
separate from the underlying securities, no value is assigned to the puts. The
cost of any such put is carried as an unrealized loss from the time of purchase
until it is exercised or expires. See "Investment Objectives and Policies" in
the Statement of Additional Information for valuation procedure if the
Intermediate New York Tax-Exempt Fund invests in Municipal Obligations with
maturities of 60 days or more that are subject to separate puts.
PRIVATELY PLACED AND CERTAIN UNREGISTERED SECURITIES. Each of the Funds may
acquire, in privately negotiated transactions, restricted securities that
cannot be offered for public sale in the United States without first being
registered under the Securities Act of 1933, as amended (the "Securities Act").
The price a Fund pays for these securities, or receives upon resale, may be
lower than the price the Fund would pay or receive for similar securities with
a more liquid market. Accordingly, the valuation of these securities by a Fund
will reflect any limitations on their liquidity. (As a matter of policy, the
Intermediate New York Tax-Exempt Fund may invest up to 25% of its total assets
in Municipal Obligations issued as part of privately negotiated transactions
between an issuer and one or more purchasers.) Each of the Funds may also
purchase certain unregistered securities sold to institutional investors under
Rule 144A of the Securities Act ("Rule 144A Securities"). Rule 144A Securities
that have a readily available market may be deemed to be liquid for purposes of
each Fund's 15% limitation on investments in illiquid securities. The
investment adviser will monitor the liquidity of such restricted securities
under the supervision of, and pursuant to guidelines established by, the
Directors. In establishing and maintaining these guidelines, the Directors take
into account factors such as trading activity, availability of reliable price
information and other relevant information. Investing in Rule 144A Securities
could have the effect of increasing the level of a Fund's illiquidity to the
extent that qualified institutional buyers become, for a time, uninterested in
purchasing these securities. Acquisition by a Fund of illiquid investments (any
investment that cannot be disposed of within three (3) Business Days in the
normal course of business at approximately the amount at which it was valued by
a Fund) is subject to the 15% limitation described under Investment
Restrictions.
HEDGING. Hedging is a means of transferring risk that an investor does not wish
to assume during an uncertain market environment. The Funds are permitted to
enter into these transactions solely (a) to hedge against changes in the market
value of portfolio securities and against changes in the market value of
securities intended to be purchased or (b) to close out or offset existing
positions.
Hedging activity in the Equity Income Fund may include selling futures
contracts on stock indexes, options on stock index futures traded on a national
exchange or board of trade and options on securities and on stock indexes
traded on national securities exchanges. The Equity Income Fund may also hedge
a portion of its portfolio by selling stock index futures contracts or
purchasing puts on these contracts to limit exposure to an actual or
anticipated market decline. Hedging activity in the Intermediate Government
Fund and the Intermediate New York Tax-Exempt Fund may include selling futures
contracts on debt securities and indexes of debt securities and purchasing or
writing (selling) options on these futures, on debt securities and on indexes
of debt securities traded on registered securities exchanges and contract
markets. All hedging transactions must be appropriate for reduction of risk;
they cannot be for speculation.
Under regulations of the Commodity Exchange Act of 1936, as amended (the
"Commodity Exchange Act"), an investment company registered under the 1940 Act
is exempt from the definition of "commodity pool operator", and therefore not
subject to regulation under the Commodity Exchange Act, provided that the
entity agrees to restrict its investments in commodity futures and commodity
options contracts to (i) bona fide hedging transactions within the meaning of
the Commodity Futures Trading Commission's regulations, without any limitation
on quantity, and (ii) other futures and options transactions in which the
aggregate initial margin and premiums do not exceed 5% of the liquidation value
of the entity's portfolio after taking into account unrealized profits and
unrealized losses on any such contracts. The Funds will only use commodity
futures and commodity options contracts in a manner consistent with these
requirements.
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STOCK INDEX FUTURES (EQUITY INCOME FUND). The Equity Income Fund may purchase
and sell stock index futures contracts as a hedge against changes resulting
from market conditions in the values of securities that are held in its
portfolio or that it intends to purchase or when such purchase or sale is
economically appropriate for the reduction of risks inherent in the ongoing
management of the Equity Income Fund. A stock index futures contract is an
agreement in which one party agrees to deliver to the other an amount of cash
equal to a specific dollar amount times the difference between the value of a
specific stock index at the close of the last trading day of the contract and
the price at which the agreement is made. When the contract is executed, each
party deposits with a broker or in a segregated custodial account a specified
percentage of the contract amount, called the initial margin, and during the
term of the contract, the amount of the deposit is adjusted based on the
current value of the futures contract by payments of variation margin to or
from the broker or segregated account. In the case of options on stock index
futures, the holder of the option pays a premium and receives the right, upon
exercise of the option at a specified price during the option period, to assume
the option writer's position in a stock index futures margin account; if
exercised on the last trading day, cash in an amount equal to the difference
between the option exercise price and the closing level of the relevant index
on the expiration date is delivered.
The Equity Income Fund may not purchase or sell stock index futures if,
immediately thereafter, the sum of the amount of margin deposits on its
existing futures positions would exceed 5% of the market value of its total
assets. In instances involving the purchase of stock index futures contracts by
the Equity Income Fund, an amount of cash, cash equivalents or United States
Government securities equal to the market value of the futures contracts will
be deposited in a segregated account with the Equity Income Fund's custodian to
collateralize the position and thereby insure that the use of such futures is
unleveraged.
The Equity Income Fund may hedge a portion of its portfolio by selling stock
index futures contracts or purchasing puts on these contracts to limit exposure
to an actual or anticipated market decline. This provides an alternative to
liquidation of securities positions. Conversely, during a market advance or
when the investment adviser anticipates an advance, the Equity Income Fund may
hedge a portion of its portfolio by purchasing stock index futures, options on
these futures or options on stock indexes. This affords a hedge against the
Equity Income Fund's not participating in a market advance when it is not fully
invested and serves as a temporary substitute for the purchase of individual
securities which may later be purchased in a more advantageous manner. The
Equity Income Fund will sell options on stock index futures and on stock
indexes only to close out existing hedge positions.
In the case of options on stock indexes, the holder of the option pays a
premium and receives the right, upon exercise of the option at a specified
price during the option period, to receive cash equal to the dollar amount of
the difference between the closing price of the relevant index and the option
exercise price times a specified multiplier.
The Equity Income Fund will sell stock index futures only if the amount
resulting from the multiplication of the then current level of the indexes upon
which its futures contracts are based by the number of futures contracts which
would be outstanding does not exceed one-third of the value of its net assets.
Also, the Equity Income Fund may not purchase or sell stock index futures or
purchase options on futures if, immediately thereafter, the sum of the amount
of margin deposits on its existing futures positions and premiums paid for such
options would exceed 5% of the market value of its total assets. When the
Equity Income Fund purchases stock index futures contracts, it will deposit an
amount of liquid assets consisting of cash, U.S. Government securities or other
liquid high-grade debt securities equal to the market value of the futures
contracts in a segregated account with its custodian.
The Equity Income Fund's successful use of stock index futures contracts and
options on indices depends upon the investment adviser's ability to predict the
direction of the market and is subject to various additional risks. The
correlation between movement in the price of the stock index future and the
price of the securities being hedged is imperfect and the risk from imperfect
correlation increases as the composition of the Equity Income
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Fund's portfolio diverges from the composition of the relevant index. In
addition, if the Equity Income Fund purchases futures to hedge against market
advances before it can invest in common stock in an advantageous manner and the
market declines, there may a be loss on the futures contracts. Particularly in
the case of options on stock indices, the Equity Income Fund's ability to
establish and maintain positions will depend on market liquidity. In addition,
the ability of the Equity Income Fund to close out a futures position or an
option depends on a liquid secondary market. There is no assurance that liquid
secondary markets will exist for any particular futures contract or option at
any particular time. The risk of loss to the Equity Income Fund is
theoretically unlimited when the Equity Income Fund sells an uncovered futures
contract because there is an obligation to make delivery unless the contract is
closed out, regardless of fluctuations in the price of the underlying security.
The Equity Income Fund's ability to engage in hedging activities may be limited
by certain federal income tax considerations. See "Taxes" in the Statement of
Additional Information.
OPTIONS ON SECURITIES (EQUITY INCOME FUND). The Equity Income Fund may purchase
put options only on equity securities held in its portfolio and write call
options on stocks only if they are covered as described below, and such call
options must remain covered so long as the Equity Income Fund is obligated as a
writer. The Equity Income Fund does not presently intend to purchase put
options and write call options on stocks that are not traded on national
securities exchanges or listed on the Nasdaq National Market(R). Put options
purchased and call options written by the Equity Income Fund are considered to
be illiquid securities as they may be difficult to convert into cash during
volatile market conditions.
The Equity Income Fund may, from time to time, write call options on its
portfolio securities. The Equity Income Fund may only write call options that
are "covered", meaning that it either owns the underlying security or has an
absolute and immediate right to acquire that security, without additional cash
consideration (or for additional cash consideration held in a segregated
account by its custodian), upon conversion or exchange of other securities
currently held in its portfolio. In addition, the Equity Income Fund will not
permit the call to become uncovered prior to the expiration of the option or
termination through a closing purchase transaction as described below. If the
Equity Income Fund writes a call option, the purchaser of the option has the
right to buy (and the Equity Income Fund has the obligation to sell) the
underlying security at the exercise price throughout the term of the option.
The initial amount paid to the Equity Income Fund by the purchaser of the
option is the "premium". The Equity Income Fund's obligation to deliver the
underlying security against payment of the exercise price will terminate either
upon expiration of the option or earlier if the Equity Income Fund is able to
effect a "closing purchase transaction" through the purchase of an equivalent
option on an exchange. There can be no assurance that a closing purchase
transaction can be effected at any particular time or at all.
The Equity Income Fund would not be able to effect a closing purchase
transaction after it had received notice of exercise. In order to write a call
option, the Equity Income Fund is required to comply with the rules of The
Options Clearing Corporation and the various exchanges with respect to
collateral requirements. The Equity Income Fund may not purchase call options
on individual stocks except in connection with a closing purchase transaction.
It is possible that the cost of effecting a closing transaction may be greater
than the premium received by the Equity Income Fund for writing the option.
The Equity Income Fund may also purchase listed put options. If the Equity
Income Fund purchases a put option, it has the option to sell a given security
at a specified price at any time during the term of the option.
Purchasing put options may be used as a portfolio investment strategy when the
investment adviser perceives significant short-term risk but substantial long-
term appreciation for the underlying security. The put option acts as an
insurance policy, as it protects against significant downward price movement
while it allows full participation in any upward movement. If the Equity Income
Fund is holding a stock that it feels has strong fundamentals, but for some
reason may be weak in the near term, it may purchase a listed put on such
security, thereby giving itself the right to sell such security at a certain
strike price throughout the term of the option. Consequently, the Equity Income
Fund will exercise the put only if the price of such security falls below the
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strike price of the put. The difference between the put's strike price and the
market price of the underlying security on the date the Equity Income Fund
exercises the put, less transaction costs, will be the amount by which it will
be able to hedge against a decline in the underlying security. If during the
period of the option the market price for the underlying security remains at or
above the put's strike price, the put will expire worthless, representing a
loss of the price the Equity Income Fund paid for the put, plus transaction
costs. If the price of the underlying security increases, the profit the Equity
Income Fund realizes on the sale of the security at such price will be reduced
by the premium paid for the put option less any amount for which the put may be
sold.
STOCK INDEX OPTIONS (EQUITY INCOME FUND). Except as described below, the Equity
Income Fund will write call options on indices only if on such date it holds a
portfolio of stocks at least equal to the value of the index times the
multiplier times the number of contracts. When the Equity Income Fund writes a
call option on a broadly-based stock market index, it will segregate or put
into escrow with its custodian, as collateral for the option, any combination
of "qualified securities" (which consists of cash, United States Government
securities or other liquid high-grade debt obligations) with a market value at
the time the option is written of not less than 100% of the current index value
times the multiplier times the number of contracts.
If the Equity Income Fund has written an option on an industry or market
segment index, it will segregate or put into escrow with its custodian, or
pledge to a broker as collateral for the option, one or more "qualified
securities", all of which are stocks of issuers in such industry or market
segment, with a market value at the time the option is written of not less than
100% of the current index value times the multiplier times the number of
contracts.
If at the close of business on any Business Day the market value of such
qualified securities so segregated, escrowed, or pledged falls below 100% of
the current index value times the multiplier times the number of contracts, the
Equity Income Fund will so segregate, escrow or pledge an amount in cash,
Treasury bills or other liquid, high-grade, short-term debt obligations equal
in value to the difference. In addition, when the Equity Income Fund writes a
call on an index that is in-the-money at the time the call is written, it will
segregate with its custodian or pledge to the broker as collateral cash, U.S.
Government or other liquid high-grade, short-term debt obligations equal in
value to the amount by which the call is in-the-money times the multiplier
times the number of contracts. Any amount segregated pursuant to the foregoing
sentence may be applied to the Equity Income Fund's obligation to segregate
additional amounts in the event that the market value of the qualified
securities falls below 100% of the current index value times the multiplier
times the number of contracts. However, if the Equity Income Fund holds a call
on the same index as the call written where the exercise price of the call held
is equal to or less than the exercise price of the call written or greater than
the exercise price of the call written if the difference is maintained in cash,
short term U.S. Government securities or other high-grade short-term debt
obligations in a segregated account with its custodian, it will not be subject
to the requirements described in this paragraph.
RISKS OF TRANSACTIONS IN STOCK OPTIONS (EQUITY INCOME FUND). Writing of options
involves the risk that there will be no market in which to effect a closing
transaction. An option position may be closed out only on an exchange that
provides a secondary market for an option of the same series. Although the
Equity Income Fund will generally write only call options for which there
appears to be an active secondary market, there is no assurance that a liquid
secondary market on an exchange will exist for any particular option, or at any
particular time, and for some options no secondary market on an exchange may
exist. If the Equity Income Fund as a covered call option writer is unable to
effect a closing purchase transaction in a secondary market, it will not be
able to sell the underlying security until the option expires or it delivers
the underlying security upon exercise.
RISKS OF OPTIONS ON INDICES (EQUITY INCOME FUND). The Equity Income Fund's
purchase and sale of options on indices will be subject to the risks described
above under "Risks of Transactions in Stock Options". In addition, the
distinctive characteristic of options on indices create certain risks that are
not present with stock options.
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Since the value of an index option depends upon movements in the level of the
index rather than the price of a particular stock, whether the Equity Income
Fund will realize a gain or loss on the purchase or sale of an option on an
index will depend upon movements in the level of stock prices in the stock
market generally or in an industry or market segment rather than movements in
the price of a particular stock. Accordingly, successful use by the Equity
Income Fund of options on indices will be subject to the investment adviser's
ability to predict correctly movements in the direction 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.
Index prices may be distorted if trading of certain stocks included in the
index is interrupted. Trading in index options also may be interrupted in
certain circumstances, such as if trading is halted in a substantial number of
stocks included in the index. If this occurred, the Equity Income Fund would
not be able to close out options that it had purchased or written and, if
restrictions on exercise were imposed, might not be able to exercise an option
that it was holding, which could result in substantial losses to the Equity
Income Fund. It is the Equity Income Fund's policy to purchase or write options
only on indices that include a number of stocks sufficient to minimize the
likelihood of a trading halt in the index, for example, the S&P 100 or S&P 500
index option.
Trading in index options commenced in April 1983 with the S&P 100 option
(formerly called the CBOE 100). Since that time, a number of additional index
option contracts have been introduced, including options on industry indices.
Although the markets for certain index option contracts have developed rapidly,
the markets for other index options are still relatively illiquid. The ability
to establish and close out positions in such options will be subject to the
development and maintenance of a liquid secondary market. It is not certain
that this market will develop in all index option contracts. The Equity Income
Fund will not purchase or sell index option contracts unless and until, in the
investment adviser's opinion, the market for such options has developed
sufficiently that the risk in connection with these transactions is no greater
than the risk in connection with options on stock.
FINANCIAL FUTURES CONTRACTS AND OPTIONS ON FUTURES, DEBT SECURITIES AND INDEXES
OF DEBT SECURITIES (INTERMEDIATE GOVERNMENT FUND AND INTERMEDIATE NEW YORK TAX-
EXEMPT FUND). The Intermediate Government Fund and the Intermediate New York
Tax-Exempt Fund may (a) sell futures contracts on debt securities and indexes
of debt securities and (b) purchase or write (sell) options on these futures,
on debt securities and on indexes of debt securities traded on registered
securities exchanges and contract markets. (The Intermediate New York Tax-
Exempt Fund may enter into these transactions with respect to municipal and
non-municipal debt securities.)
Presently, futures contracts are available in several types of fixed income
securities, including U.S. Treasury bonds and notes, Government National
Mortgage Association modified pass-through mortgage backed securities, three-
month U.S. Treasury bills and bank certificates of deposit.
When a futures contract is entered into, each party deposits with a broker or
in a segregated custodial account a good faith deposit of approximately 1 1/2-
2% of the contract amount, called the "initial margin". Additionally, during
the term of the contract, the amount of the deposit is adjusted daily based on
the current value of the futures contract by payments of "variation margin" to
or from the broker or segregated account.
Although most interest rate futures contracts call for making or taking
delivery of the underlying securities, these obligations are typically canceled
or closed out before the scheduled settlement date. The closing is accomplished
by purchasing (or selling) an identical futures contract to offset a short (or
long) position. Such an offsetting transaction cancels the contractual
obligations established by the original futures transaction. Other financial
futures contracts call for cash settlements rather than delivery of securities.
If the price of the offsetting futures transaction varies from the price of the
original futures transaction, the hedger will realize a gain or loss
corresponding to the difference. That gain or loss will tend to offset the
unrealized loss or gain on the hedged securities position, but may not always
or completely do so.
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Financial futures contracts obligate the seller to deliver a specific type of
security, at a specified time for a specified price. The contracts may be
satisfied by actual delivery of the securities or by an offsetting transaction.
There are risks associated with the use of futures contracts for hedging
purposes. In certain market conditions, as with rising interest rates, futures
contracts may not completely offset a decline in value of portfolio securities.
It may not always be possible to execute a buy or sell order at the desired
price or to close out an open position due to market conditions, limits on open
positions, and/or daily price fluctuation limits. Changes in market interest
rates may differ substantially from those anticipated when hedge positions were
established. If the Intermediate Government Fund or the Intermediate New York
Tax-Exempt Fund has purchased futures to hedge against rising interest rates
and interest rates decline, the value of the Fund's portfolio will increase,
but at least part of the benefit of the increase will be lost because of losses
in the futures positions. The Intermediate Government Fund and the Intermediate
New York Tax-Exempt Fund may have to sell securities to meet daily maintenance
margin requirements. The risk of loss to the Intermediate Government Fund and
the Intermediate New York Tax-Exempt Fund is theoretically unlimited when an
uncovered futures contract is sold because there is an obligation to make
delivery unless the contract is closed out, regardless of fluctuations in the
price of the underlying security.
The Intermediate Government Fund and the Intermediate New York Tax-Exempt Fund
intend to engage in transactions in futures contracts and options on futures
contracts as a hedge against changes, resulting from market conditions, in the
value of securities which are held in the Intermediate Government Fund or the
Intermediate New York Tax-Exempt Fund's portfolio or which the Intermediate
Government Fund or the Intermediate New York Tax-Exempt Fund intend to
purchase. In accordance with current Commodity Futures Trading Commission
("CFTC") regulations, neither the Intermediate Government Fund nor the
Intermediate New York Tax-Exempt Fund will enter into any financial futures
contract or purchase related options (as defined in the CFTC regulations) if
immediately thereafter, the aggregate initial margin for its outstanding
futures contracts and premiums paid for such options would exceed 5% of the
fair market value of its total assets. In addition, neither the Intermediate
Government Fund nor the Intermediate New York Tax-Exempt Fund will enter into
any financial futures contract or purchase related options (as defined in the
CFTC regulations) if immediately thereafter the sum of initial and net
cumulative variation margins on its outstanding futures contracts, together
with premiums paid on options thereon, would exceed 20% of its total assets.
When either the Intermediate Government Fund or the Intermediate New York Tax-
Exempt Fund attempts to hedge its portfolio by selling an interest rate futures
contract, purchasing a put option thereon or writing a call option thereon, it
will own an amount of United States Government securities corresponding to the
open futures or option position. With respect to long positions assumed by the
Intermediate Government Fund or the Intermediate New York Tax-Exempt Fund, they
will segregate with the custodian, or in a margin account with a broker, an
amount of liquid assets consisting of cash, U.S. Government securities or other
liquid high-grade debt securities permitted by CFTC regulations equal to the
market value of the futures contracts and thereby insure that the use of
futures contracts is unleveraged.
The Intermediate Government Fund and the Intermediate New York Tax-Exempt Fund
may purchase call options and write (sell) put options on debt securities to
close out open option positions, purchase put options to protect their holding
from a decline in market value, and write call options. The Intermediate
Government Fund and the Intermediate New York Tax-Exempt Fund may also purchase
put options and write call options on futures contracts that are traded on an
United States exchange or board of trade and enter into closing transactions
with respect to these options. The Intermediate Government Fund and the
Intermediate New York Tax-Exempt Fund may use options on futures contracts
under the same conditions it uses put and call options on debt securities. The
effect of a futures contract may also be created by simultaneous purchase of a
put option and sale of a call option on the same security. When the
Intermediate Government Fund or the Intermediate New York Tax-Exempt Fund
purchases a put option or call option, the maximum risk of loss is the price of
the option purchased. The use of options as a hedge rather than financial
futures contracts may result in partial hedges because of the limits inherent
in the exercise prices. Neither the Intermediate Government Fund nor the
Intermediate New York Tax-Exempt Fund will invest more than 5% of its net
assets in premiums on put options.
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The Intermediate Government Fund may utilize futures contracts on bond indexes
or related put and call options on these index contracts. The Intermediate
Government Fund's strategies in employing these contracts would be similar to
the strategies applicable to futures and options contracts generally. The
Intermediate Government Fund may also buy put options and sell call options on
bond indexes.
The Intermediate New York Tax-Exempt Fund may also utilize futures contracts on
municipal bond indexes or related put and call options on these index
contracts. The Intermediate New York Tax-Exempt Fund's strategies in employing
these contracts would be similar to the strategies applicable to futures and
options contracts generally. The Intermediate New York Tax-Exempt Fund may also
buy put options and sell call options on municipal bond indexes. The
Intermediate New York Tax-Exempt Fund may also purchase put options or write
(sell) call options on non-municipal debt securities. In the event that options
on municipal debt securities become available, the Intermediate New York Tax-
Exempt Fund will consider purchasing or selling these options.
The hedging activities of the Intermediate Government Fund and the Intermediate
New York Tax-Exempt Fund are subject to several additional restrictions. The
ability of the Intermediate Government Fund and the Intermediate New York Tax-
Exempt Fund to engage in hedging activities may be further limited by certain
income tax considerations. See "Taxes" in the Statement of Additional
Information.
To the extent the Intermediate Government Fund or the Intermediate New York
Tax-Exempt Fund use hedging instruments that do not involve specific portfolio
securities, offsetting price changes between the hedging instruments and the
securities being hedged will not always be possible, and the market value
fluctuations of the portfolio may not be completely eliminated. When using
hedging instruments that do not specifically correlate with securities in
either the Intermediate Government Fund or the Intermediate New York Tax-Exempt
Fund's portfolio, the investment adviser will attempt to create a very closely
correlated hedge.
Hedging activities based on non-municipal debt securities or indexes may not
correlate as closely to the Intermediate New York Tax-Exempt Fund portfolio as
hedging activities based on municipal debt securities or indexes. Less closely
correlated hedges are likely to occur if the Intermediate New York Tax-Exempt
Fund hedges municipal securities with a futures contract on United States
Government obligations, other non-municipal securities or an index that does
not include municipal securities. This type of hedging activity may be
especially useful where closely correlated hedging activities based on
municipal securities or indexes are not available.
The Intermediate Government Fund and the Intermediate New York Tax-Exempt Fund
may purchase put options on interest rate futures contracts that are traded on
United States commodity exchanges, and write (i.e., sell) put and call options
on such futures contracts. The Intermediate Government Fund and the
Intermediate New York Tax-Exempt Fund only intend to engage in options on
futures contracts for bona fide hedging purposes in compliance with CFTC
regulations. An option on a futures contract gives the purchaser the right, but
not the obligation, to assume a position in a futures contract (which position
may be a long or short position) at a specified exercise price at any time
during the option exercise period. The writer of the option is required upon
exercise to assume an offsetting futures position (which position may be a long
or short position). Upon exercise of the option, the assumption of offsetting
futures positions by the writer and holder of the option will be accompanied by
delivery of the accumulated balance in the writer's futures margin account that
represents the amount by which the market price of the futures contract, at
exercise, exceeds, in the case of a call, or is less than, in the case of a
put, the exercise price of the option on the futures contract. Currently,
options can be purchased or written with respect to futures contracts on United
States Treasury bonds and United States Treasury notes on the Chicago Board of
Trade.
When the Intermediate Government Fund or the Intermediate New York Tax-Exempt
Fund hedges its portfolio by purchasing a put option or writing a call option
on a futures contract, it will own a long futures position or an amount of
high-grade debt securities corresponding to the open option position. When the
Intermediate Government Fund or the Intermediate New York Tax-Exempt Fund
writes a put option on a futures contract, it
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may, rather than establish a segregated account, sell the futures contract
underlying the put option or purchase a similar put option. In instances
involving the purchase of a call option on a futures contract, the Intermediate
Government Fund or the Intermediate New York Tax-Exempt Fund will deposit in a
segregated account with its custodian an amount in cash, cash equivalents or
liquid, high-grade, fixed-income debt securities equal to the market value of
the obligation underlying the futures contract, less any amount held in the
initial variation margin accounts.
The holder or writer of an option may terminate its position by selling or
purchasing an option of the same series. There is no guarantee that such
closing transactions can be effected at any particular time or at all.
The Intermediate Government Fund and the Intermediate New York Tax-Exempt Fund
will be required to deposit initial and variation margin with respect to put
and call options on futures contracts written by them pursuant to the
Intermediate Government Fund and the Intermediate New York Tax-Exempt Fund's
futures commissions merchants' requirements, which are similar to those
applicable to interest rate futures contracts described above.
MUNICIPAL BOND INDEX FUTURES CONTRACTS (INTERMEDIATE NEW YORK TAX-EXEMPT FUND).
Futures contracts on municipal bond indexes began trading on the Chicago Board
of Trade in 1985. These contracts, which provide for cash settlement rather
than delivery of securities, are based on the Bond Buyer Municipal Bond Index,
an index of 40 actively traded municipal bonds. To make the index as
representative as possible of price trends in the municipal securities market,
twice a month new issues are added to the index and an equal number of the
least actively traded issues are dropped from the index. Each bond in the index
is priced daily by a group of five brokers.
Municipal bond index contracts are designed to provide a way to hedge municipal
bond portfolios, since prices of existing futures on taxable securities do not
always correlate well with municipal bond prices. Because the municipal bond
index contract should correlate better with the Intermediate New York Tax-
Exempt Fund's price changes than Treasury bond futures contracts, the
investment adviser expects to do most of its hedging using municipal bond index
contracts. However, there may be times when the investment adviser believes
that Treasury bond contracts correspond well with municipal bond prices and
trades at a price that makes hedging with these contracts less expensive than
hedging with municipal bond index contracts. Accordingly, the Intermediate New
York Tax-Exempt Fund intends to use both the Treasury bond and the municipal
bond index contracts for hedging purposes.
RISKS OF FUTURES TRANSACTIONS (INTERMEDIATE GOVERNMENT FUND AND INTERMEDIATE
NEW YORK TAX-EXEMPT FUND). The Intermediate Government Fund and the
Intermediate New York Tax-Exempt Fund's successful use of futures contracts and
options thereon will depend upon the ability of their investment adviser to
predict movements in the direction of interest rates and other factors
affecting markets for securities, and upon the degree of correlation between
prices of the futures contracts and the prices of the securities being hedged.
As a result, even a correct forecast of interest rate changes may not result in
a successful hedging transaction. Although futures contracts and options
thereon may limit exposure to loss, they may also limit the potential for
capital gains. For example, if the Intermediate Government Fund or the
Intermediate New York Tax-Exempt Fund has hedged against the possibility of an
increase in interest rates which would adversely affect the price of securities
in its portfolio and prices of such securities increase instead, there would be
a loss of part or all of the benefit of the increased value of its securities
because it will have offsetting losses in its futures positions. In addition,
in such situations, if either the Intermediate Government Fund or the
Intermediate New York Tax-Exempt Fund has insufficient cash to meet daily
variation margin requirements, it may have to sell securities to meet such
requirements. Such sales of securities may be, but will not necessarily be, at
increased prices which reflect the rising market. The Intermediate Government
Fund and the Intermediate New York Tax-Exempt Fund may have to sell securities
at a time when it is disadvantageous to do so. Where futures are purchased to
hedge against the possible increase in price of securities before the
Intermediate Government Fund or the Intermediate New York Tax-Exempt Fund is
able to invest its cash in an orderly fashion, it is possible that the market
may decline instead; if the Fund's investment adviser then concludes not to
invest in securities at that time because
20
<PAGE>
of concern as to possible future market decline or for other reasons, there
would be a realized loss on the futures contract that is not offset by a
reduction in the price of the securities purchased. The risk of loss to the
Intermediate Government Fund or the Intermediate New York Tax-Exempt Fund is
theoretically unlimited if no investment in securities is made as a result of
the market conditions noted above. Although the Intermediate Government Fund
and the Intermediate New York Tax-Exempt Fund will enter into futures contracts
only on exchanges where there appears to be a liquid market, there can be no
assurance that such liquidity will always exist.
Brokerage commissions on any of the Funds' financial futures and options
transactions and premium costs for purchasing options may tend to reduce a
Fund's yield.
For further information about any of the Funds' hedging activities, see
"Investment Objectives and Policies--Hedging Activities" in the Statement of
Additional Information.
FOREIGN INVESTMENT RISK (EQUITY INCOME FUND). The Equity Income Fund may invest
in certain foreign securities. Investment in obligations of foreign issuers and
in foreign branches of domestic banks involve somewhat different investment
risks from those affecting obligations of United States 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. There may also be less government supervision and
regulation of foreign securities exchanges, brokers and issuers than in the
United States. Foreign securities markets have substantially less volume than
domestic securities exchanges, and securities of some foreign issuers are less
liquid and more volatile than securities of comparable domestic issuers.
Brokerage commissions and other transaction costs on foreign securities
exchanges are generally higher than in the United States. Dividends paid by
foreign issuers may be subject to withholding and other foreign taxes that may
decrease the net return on foreign investments as compared to dividends and
interest paid to the Equity Income Fund by domestic companies. Additional risks
include future political and economic developments, the possibility that a
foreign jurisdiction might impose or change withholding taxes on income payable
with respect to foreign securities, the possible seizure, nationalization or
expropriation of the foreign issuer or foreign deposits and the possible
adoption of foreign governmental restrictions such as exchange controls.
Since investments in foreign securities involve foreign currencies, the value
of their assets measured in United States dollars may be affected by changes in
currency rates and in exchange control regulations, including currency
blockage.
HIGH YIELD/HIGH RISK BONDS (COMMONLY KNOWN AS "JUNK BONDS") (EQUITY INCOME
FUND). Since the Equity Income Fund has no pre-established minimum quality
standards, a portion of the securities that it may hold, particularly high-
yield/high-risk securities, may be subject to additional risk. Corporate debt
securities that are below investment grade (securities rated Ba or lower by
Moody's or BB or lower by S&P) and unrated securities, which the Equity Income
Fund may purchase and hold, are subject to higher risk of non-payment of
principal or interest, or both, than higher grade debt securities. This greater
degree of risk generally offers higher potential yields. Although the Equity
Income Fund may invest in unrated convertible debt securities, the investment
adviser will not ordinarily invest in securities that, in its judgment, would
not be investment grade.
INTEREST RATE RISK (INTERMEDIATE GOVERNMENT FUND AND INTERMEDIATE NEW YORK TAX-
EXEMPT FUND). In general, the prices of debt securities vary inversely with
interest rates. If interest rates rise, debt security prices generally fall; if
interest rates fall, debt security prices generally rise. In addition, for a
given change in interest rates, longer-maturity debt securities fluctuate more
in price (gaining or losing more in value) than shorter-maturity debt
securities, and generally offer higher yields than shorter-maturity debt
securities, all other factors, including credit quality, being equal.
21
<PAGE>
INVESTMENT RESTRICTIONS ___________________________________________________
EQUITY INCOME FUND AND INTERMEDIATE GOVERNMENT FUND. As a diversified series of
a registered investment company, 75% of the total assets of each of the Equity
Income Fund and the Intermediate Government Fund's assets is subject to the
following limitations: (a) neither may invest more than 5% of its total assets
in the securities of any one issuer, except obligations of the United States
Government and its agencies and instrumentalities and (b) neither may own more
than 10% of the outstanding voting securities of any one issuer.
INTERMEDIATE NEW YORK TAX-EXEMPT FUND. As a non-diversified series of a
registered investment company, the Intermediate New York Tax-Exempt Fund is not
limited by the 1940 Act as to the proportion of its assets that it may invest
in the obligations of a single issuer. The Intermediate New York Tax-Exempt
Fund may be more susceptible to adverse economic, political or regulatory
developments affecting a single issuer than would be the case if it were a
diversified company. Although it is a non-diversified series, the Intermediate
New York Tax-Exempt Fund will observe certain diversification standards in
order to maintain its status as a regulated investment company under the Code.
See Taxes in the Statement of Additional Information.
CERTAIN FUNDAMENTAL POLICIES. Each Fund also operates under certain investment
restrictions that, together with their investment objectives, are deemed
fundamental policies--i.e., they may be changed only with the approval of the
holders of a majority of a Fund's outstanding shares.
The Equity Income Fund may not: (i) acquire any illiquid securities if, as a
result, more than 15% of the market value of its net assets would be in
investments that are illiquid; (ii) enter into reverse repurchase agreements
exceeding one-third of the market value of its total assets, less certain
liabilities; (iii) borrow money, except from banks for extraordinary or
emergency purposes and then only in amounts up to 20% of the value of the
Equity Income Fund's total assets (taken at cost at the time of borrowing) and
except in connection with permitted reverse repurchase agreements; or mortgage,
pledge or hypothecate any assets except in connection with any such borrowing
in amounts up to 20% of the value of the Equity Income Fund's net assets at the
time of borrowing; (iv) purchase securities while borrowings, as described in
clauses (ii) and (iii) above, exceed 5% of its total assets or (v) invest more
than 25% of its assets in securities of issuers in any one industry.
The Intermediate Government Fund may not: (i) acquire any illiquid securities
if as a result more than 15% of the market value of its net assets would be in
investments that are illiquid; (ii) borrow money, except from banks for
extraordinary or emergency purposes and then only in amounts up to 20% of the
value of the Intermediate Government Fund's total assets (taken at cost at the
time of borrowing) and except in connection with permitted reverse repurchase
agreements; or mortgage, pledge or hypothecate any assets except in connection
with such borrowing in amounts up to 20% of the value of the Intermediate
Government Fund's net assets at the time of such borrowing; (iii) purchase
securities while borrowings, as described in clause (ii) above, exceed 5% of
its total assets; (iv) purchase securities or other obligations of issuers of
the same industry if, after such purchase, the value of the Intermediate
Government Fund's investments in such industry would exceed 25% of the value of
its total assets, provided that this restriction will not apply to purchases of
securities issued or guaranteed by the United States Government, its agencies
or instrumentalities; (v) purchase the securities of an issuer if, after such
purchase, the Intermediate Government Fund owns more than 10% of the
outstanding voting securities of such issuer; (vi) make loans, except through
certain means; (vii) purchase puts, calls, straddles, spreads or any
combination thereof or commodities except for hedging purposes; (viii) purchase
securities on margin or make short sales, except for certain hedging purposes;
(ix) invest in fixed time deposits except in certain circumstances; (x) issue
senior securities or (xi) act as an underwriter of securities.
The Intermediate New York Tax-Exempt Fund may not: (i) acquire any illiquid
securities if as a result more than 15% of the market value of its net assets
would be in investments that are illiquid; (ii) borrow money, except
22
<PAGE>
from banks for extraordinary or emergency purposes and then only in amounts up
to 20% of the value of the Intermediate New York Tax-Exempt Fund's total assets
(taken at cost at the time of borrowing), and except in connection with
permitted reverse repurchase agreements; or mortgage, pledge or hypothecate any
assets except in connection with any such borrowing in amounts up to 20% of the
value of its net assets at the time of borrowing; (iii) purchase securities
while borrowings, including reverse repurchase agreements, exceed 5% of its
total assets; (iv) purchase securities other than those described under
"Investment Objectives and Policies"; (v) purchase securities of any one issuer
if, after such purchase, more than 5% of the value of its total assets would be
invested in the securities of any one such issuer, provided that this
limitation does not apply to securities issued by the United States Government,
its agencies or instrumentalities, or to permitted investments of up to 50% of
the Intermediate New York Tax-Exempt Fund's total assets; (vi) invest more than
20% of its total assets in investments that are not Municipal Obligations or
(vii) acquire industrial revenue bonds if as a result more than 5% of the total
assets would be invested in industrial revenue bonds where payment of principal
and interest is the responsibility of companies with fewer than three years of
operating history.
For a more detailed discussion of the above investment restrictions, see
"Investment Restrictions" and "Additional Information" in the Statement of
Additional Information.
MANAGEMENT OF THE FUNDS ___________________________________________________
DIRECTORS. Pursuant to the Articles of Incorporation and Bylaws of BNY Hamilton
Funds, Inc., the Directors decide matters of general policy and review the
actions of the Funds' investment adviser, administrator, distributor and other
service providers. The Statement of Additional Information contains the name
and general business experience of each director of BNY Hamilton Funds, Inc.
INVESTMENT ADVISER. The Bank of New York serves as the investment adviser (the
"Adviser") to each of the Funds. The Adviser, which has its principal offices
at 48 Wall Street, New York, New York 10286, is New York's first bank, founded
by Alexander Hamilton in 1784, and is one of the largest commercial banks in
the United States, having over $53 billion in assets at the end of 1995. It is
the leading retail bank in the greater New York suburban area, having 384
branches at the end of 1995. As of December 31, 1995, the Adviser provided
administrative or advisory services to approximately $54 billion in assets.
Robert G. Knott, Jr., Vice President, has been responsible for day-to-day
portfolio management for the Equity Income Fund since its inception. Mr. Knott
has been employed by the Adviser for the past 28 years. Currently, he is a
Group Head for the Adviser's Personal Asset Management Division.
Mark A. Hemenetz, Senior Vice President, has been responsible for the day-to-
day portfolio management of the Intermediate Government Fund since February
1993. Mr. Hemenetz has been employed by the Adviser for the past 14 years.
Currently, he is the Division Head of the Adviser's Fixed Income Management
Division.
Colleen M. Frey, Vice President, has been responsible for the day-to-day
portfolio management for the Intermediate New York Tax-Exempt Fund since its
inception. Ms. Frey has been employed by the Adviser for the past 29 years.
Currently, she is a Group Head for the Adviser's Tax-Exempt Bond Management
Division.
The Adviser manages the investments of each Fund and is responsible for all
purchases and sales of each Fund's portfolio securities. The Adviser's fee
accrues daily and is payable monthly at the annual rate of .60%, .50%, and .50%
of average daily net assets of the Equity Income Fund, the Intermediate
Government Fund, and the Intermediate New York Tax-Exempt Fund, respectively.
ADMINISTRATOR. BNY Hamilton Distributors, Inc. ("BNY Hamilton Distributors")
serves as the Funds' administrator (the "Administrator") and will assist
generally in supervising the operations of each Fund. BNY
23
<PAGE>
Hamilton Distributors is a Delaware corporation organized to administer and
distribute mutual funds; its offices are located at 3435 Stelzer Road,
Columbus, Ohio 43219-3035.
The Administrator has agreed to provide facilities, equipment and personnel to
carry out administrative services for the Funds, including, among other things,
providing the services of persons who may be appointed as officers or directors
of BNY Hamilton Funds, Inc., overseeing the performance of the Funds' transfer
agent, supervising purchase and redemption orders (made via telephone and mail)
and monitoring the Distributor's compliance with the rules and regulations of
the National Association of Securities Dealers and federal and state securities
laws. The Administrator will also be responsible for coordinating and
overseeing compliance by the Directors with Maryland corporate procedural
requirements (as BNY Hamilton Funds, Inc. is a Maryland corporation; see
"Organization"). In addition, the Administrator's duties include assisting in
the drafting and printing of prospectuses and statements of additional
information, administering shareholder meetings, producing proxy statements and
annual and semi-annual reports, monitoring the Adviser's compliance with the
stated investment objectives and restrictions of each Fund and monitoring the
custodian, fund accounting, transfer agency, administration, distribution,
advisory and legal services that are provided to the Funds.
The Administration Agreement permits the Administrator to delegate certain of
its responsibilities to other service providers. Pursuant to this authority,
The Administrator has delegated certain administrative functions to The Bank of
New York. The Bank of New York is not an affiliated person of BNY Hamilton
Distributors.
Each Fund pays annual administration fees, accrued daily and payable monthly,
of .20% of average daily net assets of each Fund up to $400 million (taken on
an individual Fund by Fund basis), and .15% of average daily net assets of each
Fund (taken on an individual Fund by Fund basis) in excess of $400 million.
DISTRIBUTOR. In addition to acting as the Administrator, BNY Hamilton
Distributors is the exclusive underwriter and distributor of shares of each
Fund (the "Distributor").
The Distributor makes a continuous offering of each Fund's shares and bears the
costs and expenses of distributing to selected dealers and prospective
investors copies of any prospectuses, statements of additional information and
annual and interim reports of the Funds (after such items have been prepared,
set in type and sent by the Funds at their expense to existing shareholders)
that are used in connection with the offering of shares, and the costs and
expenses of preparing, printing and distributing any other literature used by
the Distributor or furnished by it for use by selected dealers in connection
with the offering of each Fund's shares for sale to the public.
The Administrator (and Distributor) is a wholly owned subsidiary of The BISYS
Group, Inc.
SUMMARY OF SHAREHOLDER SERVICES ___________________________________________
A Fund's telephone representative will be happy to answer any questions you may
have.
Telephone For Information Regarding
1-800-4BNY-FND . Any of the Funds' investment objectives
(1-800-426-9363) and policies
. Opening an account
8 a.m. to 9 p.m., Eastern time
1-800-952-6276 . Current account balances
8 a.m. to 9 p.m., Eastern time
. Shareholder address/telephone changes
24
<PAGE>
You should note that neither the Funds nor their service contractors will be
responsible for any loss or expense for acting upon telephone instructions that
they believe to be genuine. In attempting to confirm that telephone
instructions are genuine, the Funds will use procedures considered reasonable,
as described in "Redemption of Shares" in the Statement of Additional
Information. To the extent that any of the Funds does not use reasonable
procedures to form its belief as to the genuineness of accountholders'
instructions, it and/or its service contractors may be responsible for such
instructions that are fraudulent or unauthorized.
The Funds want you to be kept current regarding the status of your
account. To assist you, the following statements and reports will be
sent to you:
CONFIRMATION STATEMENTS After every transaction that affects your
account balance or your account
registration.
ACCOUNT STATEMENTS Monthly, showing any activity during
the month, any income credited during
the month and the current value of your
account.
FINANCIAL REPORTS Every six months, one copy of most Fund
reports and year-end tax information
will be mailed to each household,
regardless of how many accounts are in
the household.
FUND AND OTHER SHAREHOLDER SERVICES _______________________________________
CUSTODIAN AND FUND ACCOUNTING AGENT. The Bank of New York, 90 Washington
Street, New York, New York 10286, serves as each Fund's custodian. BNY Hamilton
Funds, Inc. has also entered into a Cash Management and Related Services
Agreement with The Bank of New York pursuant to which The Bank of New York, as
custodian, will receive and disburse funds in connection with the purchases and
redemptions of each Fund's shares.
The Bank of New York also serves as the fund accounting agent for each Fund
with responsibility for calculating the net asset value of each Fund and for
maintaining each Fund's books and records.
TRANSFER AGENT. BISYS Fund Services, Inc. ("BISYS"), 3435 Stelzer Road,
Columbus, Ohio, 43219-3035, serves as each Fund's transfer agent. BISYS is a
wholly-owned subsidiary of The BISYS Group, Inc. As transfer agent, BISYS
maintains the records of each shareholder's account, answers shareholder
inquiries concerning accounts, processes purchases and redemptions of each
Fund's shares, acts as dividend and distribution disbursing agent and performs
other shareholder service functions.
DISTRIBUTION PLAN. The Directors have adopted a plan of distribution under Rule
12b-1 of the 1940 Act with respect to each Fund (collectively, the "12b-1
Plans"). The 12b-1 Plans have not been implemented for any of the Funds;
however, they may be implemented at such future date as the Directors deem
appropriate.
Under each of the 12b-1 Plans, the relevant Fund may reimburse the Distributor
for expenses incurred by it in connection with the distribution of that Fund's
shares. Such distribution expenses will include expenses incurred in connection
with advertising and marketing such Fund's shares and expenses incurred in
connection with preparing, printing and distributing prospectuses for such Fund
(except those used for regulatory purposes or for distribution to existing
shareholders of the Fund) and in implementing and operating the 12b-1 Plan.
Under each of the 12b-1 Plans, reimbursements for distribution expenses may not
25
<PAGE>
exceed .25% (annualized) of the relevant Fund's average daily net assets,
excluding from such calculation, however, all shares acquired via a transfer of
assets from customer accounts at The Bank of New York. These amounts may be
reduced pursuant to undertakings by the Distributor. Payments for distribution
expenses under the 12b-1 Plans are subject to Rule 12b-1 under the 1940 Act.
Except for expenses related to telemarketing operations established for the BNY
Hamilton Family of Funds, it is presently contemplated that the Distributor
will not be reimbursed for any of its overhead expenses by a Fund under its
12b-1 Plan.
Each 12b-1 Plan provides that if in any month the Distributor is due more
monies than are immediately payable because of the percentage limitation
described above, the unpaid amount will be "carried forward" from month to
month while the 12b-1 Plan is in effect until such time as it may be paid. Any
"carried forward" amounts will not be payable beyond the fiscal year during
which the amounts are accrued. No interest, carrying or other finance charge is
borne by a Fund with respect to amounts "carried forward."
FEE WAIVERS. Except as noted in this Prospectus and the Statement of Additional
Information, the Funds' service contractors bear all expenses in connection
with the performance of their services and each Fund bears the expenses
incurred in its operation. From time to time during the course of the Funds'
fiscal year, each of the Administrator and the Adviser may voluntarily elect
not to receive payment of fees under their respective agreements described
above and/or to assume certain expenses of a Fund while retaining the ability
to be reimbursed by a Fund for such amounts prior to the end of the fiscal
year. This will have the effect of increasing yield to investors at the time
such fees are not received or amounts are assumed by the Administrator or the
Adviser and decreasing yield when such fees or amounts are reimbursed to the
Administrator or the Adviser. See the Fee Table for each Fund.
PURCHASE OF SHARES ________________________________________________________
The following table summarizes the available methods of investment in each of
the Funds along with their respective minimum investment requirements. Unless
otherwise noted, the investment method shown in the table is applicable to each
Fund described in this Prospectus.
<TABLE>
<CAPTION>
MINIMUM INVESTMENT REQUIRED
----------------------------------------
Type of Investment Initial Investment Additional Investment
- ------------------ ------------------ ---------------------
<S> <C> <C>
Regular Account $2,000 $100
- -------------------------------------------------------------------------------
Regular Account with Automatic In-
vestment Program $ 500 $100
- -------------------------------------------------------------------------------
Regular Accounts for employees and
retirees of The Bank of New York and
its affiliates, and employees of
each of the Administrator,
Distributor and their affiliates (1) $ 500 $ 40
- -------------------------------------------------------------------------------
Individual Retirement Account
("IRA")(2) $ 250 $ 40
- -------------------------------------------------------------------------------
</TABLE>
(1) Available exclusively for employees and retirees of The Bank of New York
and its affiliates and for the employees of BNY Hamilton Distributors,
Inc., and their affiliates. The employees of The Bank of New York and its
affiliates may make investments through payroll deduction.
(2) Not available for the Intermediate New York Tax-Exempt Fund.
Shares of any of the Funds may be purchased at the net asset value per share
plus applicable sales charge (commonly referred to as a "load") as described in
the following chart next determined after the purchase order and federal funds
are received by the specific Fund. See "Purchase of Shares--Purchases at Net
Asset Value" later in this section for a discussion of purchases of shares that
are not assessed any sales load. Also see "Net Asset Value".
26
<PAGE>
TABLE OF SALES CHARGES
(Equity Income Fund)
<TABLE>
<CAPTION>
Sales Charge
as Percentage of
-----------------
Public Net
Offering Amount Dealer
Amount of Investment Price Invested Reallowance
- -------------------- -------- -------- -----------
<S> <C> <C> <C>
Less than $100,000................................ 4.50% 4.71% 4.00%
$100,000--$249,999................................ 3.50 3.63 3.10
$250,000--$499,999................................ 2.50 2.56 2.20
$500,000--$749,999................................ 1.50 1.52 1.30
$750,000--$999,999................................ 1.00 1.01 1.00
Over $1,000,000................................... None None None
</TABLE>
TABLE OF SALES CHARGES
(Intermediate Government Fund and Intermediate New York Tax-Exempt Fund)
<TABLE>
<CAPTION>
Sales Charge
as Percentage of
-----------------
Public Net
Offering Amount Dealer
Amount of Investment Price Invested Reallowance
- -------------------- -------- -------- -----------
<S> <C> <C> <C>
Less than $100,000................................ 3.00% 3.09% 2.70%
$100,000--$249,999................................ 2.50 2.56 2.20
$250,000--$499,999................................ 2.00 2.04 1.70
$500,000--$749,999................................ 1.50 1.52 1.20
$750,000--$999,999................................ 1.00 1.01 1.00
$1,000,000 and over .............................. None None None
</TABLE>
As you can see by looking at the Tables of Sales Charges above, larger
purchases of shares may result in lower sales charges. If requested, purchases
by you, your spouse and your minor children will be combined when computing the
applicable sales charge. Also see "Rights of Accumulation" later in this
section.
The Distributor, from time to time, at its expense, will also provide
additional compensation to dealers in connection with sales of shares of any of
the Funds. Such compensation will include non-cash payments which may take the
form of (1) gift certificates, (2) tickets for entertainment events, (3) trips,
including the provision of travel arrangements and lodging at vacation resorts
and (4) merchandise. Dealers may not use sales of the Funds' shares to qualify
for this compensation to the extent such sales may be prohibited by laws of any
state or any self-regulatory agency, such as The National Association of
Securities Dealers, Inc. (None of the aforementioned compensation is paid for
by any Fund or its shareholders).
INITIAL INVESTMENTS. Orders for purchases of a Fund's shares received by 4:00
P.M. (New York City time) on any Business Day and transmitted to the Fund's
transfer agent by 5:00 P.M. (New York City time) will be based on the next
determined public offering price. (For purposes of this Prospectus, "Business
Day" is defined to mean any day on which both the New York Stock Exchange and
the Custodian are open for business.) Investors will begin to earn dividends on
the next Business Day after receipt of the purchase order. On those days when
the New York Stock Exchange or the Custodian closes early as a result of such
day being a partial holiday or otherwise, the right is reserved to advance the
time on that day by which purchase and redemption requests must be received.
Prospective investors may purchase a Fund's shares by check, by federal funds
wire, by bank wire, or by direct deposit. Additional investments may also be
made through an Automatic Investment Program. See the tables on the following
pages.
27
<PAGE>
METHOD OF PURCHASE
FOR INITIAL INVESTMENTS
BY CHECK
. Complete and sign a New Account Application and mail it,
together with a check payable to the specific Fund, to:
BNY Hamilton Funds, Department L-1685, Columbus, Ohio
43260-1685.
. The Funds will not permit shares purchased by check to be
redeemed until payment for the purchase has been
collected, which may take up to ten (10) Business Days
after purchase.
. Purchases by check must be payable in United States
dollars and drawn on United States banks. THE FUNDS WILL
NOT ACCEPT THIRD-PARTY CHECKS.
BY FEDERAL FUNDS WIRE
. An investor desiring to purchase shares by wire should
call the transfer agent at 1-800-952-6276 and place a
purchase order.
. Have your bank wire federal funds to the BNY Hamilton
Funds' bank account (see below). In order to ensure
prompt receipt by a Fund of a federal funds wire, an
investor should take the following steps:
A. Instruct your bank to wire the specified amount to the
specific Fund's account as follows (be sure to have your
bank include the name of the specific Fund selected, and
state that the wire is for a new account):
The Bank of New York New
York, NY 10286
ABA #021000018
BNY Hamilton Funds
DDA #8900275847
Attn: (specific Fund
selected)
Ref:(your account number,
your account name and
taxpayer identification
number)
B. Complete the New Account Application and mail it to the
address shown in "By Check" above.
. Federal funds purchase orders will only be accepted on
Business Days as defined herein. Your bank may charge a
service fee for wiring funds.
BY BANK WIRE . Follow the same procedure outlined under "By Federal
Funds Wire" above. Your bank may charge a service fee for
wiring funds.
BY DIRECT DEPOSIT
. In certain circumstances, employees and retirees of The
Bank of New York and its affiliates may purchase Fund
shares by having payments automatically deposited into
their specific Fund account.
. Call 1-800-4BNY-FND (1-800-426-9363) for details.
28
<PAGE>
METHOD OF PURCHASE
FOR ADDITIONAL INVESTMENTS
BY CHECK
. Make check payable to the specific Fund and send to: BNY
Hamilton Funds, P.O. Box 0806, Newark, New Jersey 07101-
0806. If possible, please include the tear-off payment stub
that accompanies a Fund's confirmation statement.
BY FEDERAL FUNDS WIRE
. Have your bank wire federal funds according to the
instructions at left, except the wire should state that it
is an additional investment.
. Please include your account number.
BY AUTOMATIC INVESTMENT PROGRAM
. You may arrange, through the Automatic Investment Program,
for systematic purchases of Fund shares (minimum of $100)
by direct debit from your account at any domestic financial
institution that is an Automated Clearing House member.
. To elect this feature, please complete Section 7 on the New
Account Application.
. See Purchase of Shares--Automatic Investment Program or
Call 1-800-4BNY-FND (1-800-426-9363) for further details on
this investment option.
BY BANK WIRE . The procedure is identical to "By Federal Funds Wire"
above.
BY DIRECT DEPOSIT
. Call 1-800-4BNY-FND (1-800-426-9363) for details.
. Additional purchases will be processed in accordance with
your instructions.
RIGHTS OF ACCUMULATION. When buying shares of any of the Funds, your current
aggregate investment determines any sales charge (as stated in the Tables of
Sales Charges appearing earlier in this section) that you pay. If your current
aggregate investment in shares of any of the Funds accumulates to $100,000 or
beyond, the sales percentage charged to you on subsequent investments is
decreased as shown in the relevant Table of Sales Charges.
Your current aggregate investment is the combination of your immediate
investment along with the aggregate of all shares that you beneficially own in
a Fund (or a combination of investments you beneficially own, if you own shares
in more than one member of the BNY Hamilton Family of Funds) and on which you
paid a sales charge (including shares that carry no sales charge but were
obtained through an exchange and can be traced back to shares that were
acquired with such a charge).
EXAMPLE:
If you beneficially own shares of any of the Funds that can be traced
back to the purchase of shares carrying a sales charge (or any
combination of such shares) with an aggregate value of $90,000 and then
buy shares of the Intermediate Government Fund or Intermediate New York
Tax-Exempt Fund with a current value of $10,000, you would pay a sales
charge of 2.50% (the charge applicable to a $100,000 purchase for those
two Funds) on your $10,000 purchase.
If, in the example above, your additional purchase of $10,000 is made
in the Equity Income Fund, you will be assessed a sales charge of 3.50%
(the charge applicable to a $100,000 purchase for the Equity Income
Fund) on your $10,000 purchase.
To qualify for a reduced sales charge, you must notify the Funds at the time of
investment. The reduced sales charge is subject to confirmation of your
holdings through a check of appropriate records.
29
<PAGE>
LETTER OF INTENT. An investor qualifying for, and wishing to take advantage of,
a reduced sales charge may do so by signing a letter of intent (the "Letter")
in which the investor commits to acquire a number of shares that will increase
his or her aggregate investment in the Funds to $100,000 or more. A copy of the
Letter can be obtained by calling 1-800-4BNY-FND (1-800-426-9363). Each
investor is advised to read the Letter carefully before signing, as you will be
bound by its terms.
While signing a Letter will not bind you to purchase, or the Funds to sell, the
full amount indicated at the sales charge in effect at the time of signing, you
must complete the intended purchase to obtain the reduced sales charge.
You will be permitted to claim credit for all shares purchased during the 13-
month period beginning up to 90 days before the date you sign the Letter. All
investments you make during the 13-month period will be entitled to the
discounted sales charge applicable to the aggregate investment. An adjustment
will be made to reflect any reduced sales charge applicable to shares purchased
during the 90-day period prior to the date of your Letter.
If your aggregate investment exceeds the amount indicated in your Letter, an
adjustment will be made to reflect any further reduced sales charge applicable
to your aggregate investment. The adjustment will be in the form of additional
shares credited to your account at the then current offering price taking into
account the discounted sales charge applicable to your aggregate investment to
a single purchase of the total amount of the total purchase. Should this
adjustment move your investment into a lower sales charge bracket (see the
Tables of Sales Charges earlier in this section), all shares purchased during
the 13-month period will be assessed the lower sales charge.
When you sign a Letter, the relevant Fund(s) will hold in escrow an amount of
your existing shares equal to 5% of the total amount of your commitment. After
the terms of the Letter are fulfilled, the escrow will be released. If your
aggregate investment in shares is less than the amount to which you committed,
you will be requested to remit an amount equal to the difference between the
sales charge actually paid and the sales charge applicable to the aggregate
purchases actually made. If such remittance is not received within 20 days, the
Funds will redeem an appropriate number of shares held in the 5% escrow to
satisfy the difference.
AUTOMATIC INVESTMENT PROGRAM. You may arrange, through the Automatic Investment
Program, for systematic investments in your Fund account(s) in amounts of $100
or more by direct debit from your account at the financial institution
designated by you on the new account application. At your option, your
checking, NOW or bank money market account designated by you will be debited in
the specified amount, and Fund shares will be purchased, once a month, on
either the first or fifteenth day, or twice a month on both days. Only accounts
maintained at a domestic financial institution which permits automatic
withdrawals and is an Automated Clearing House member are eligible.
The Automatic Investment Program enables shareholders to invest a fixed dollar
amount at predetermined intervals, an investment strategy known as "dollar cost
averaging". By applying this technique consistently over time, investors
usually purchase more shares during periods of low share prices and fewer
shares as share prices increase. Of course, you may also implement dollar cost
averaging on your own initiative or through other entities.
To be effective, dollar cost averaging should be carried out consistently for a
sustained period of time. You should understand, however, that purchases made
through the Automatic Investment Program will be made by the Fund without
regard to share price on the day of investment or to market trends. In
addition, while you may find dollar cost averaging to be beneficial, it will
not prevent a loss if you ultimately redeem your shares at a price that is
lower than their purchase price.
You may cancel this privilege or change the amount of purchase at any time by
mailing written notification to:
BNY Hamilton Funds
Department L-1685
Columbus, OH 43260-1685
Notification will be effective three business days following receipt. The Fund
may modify or terminate this privilege at any time or charge a service fee,
although no such fee currently is contemplated.
30
<PAGE>
PURCHASES AT NET ASSET VALUE. The following types of transactions will not be
assessed a sales charge:
. Reinvestment of dividends or distributions (see "Dividends and
Distributions");
. Employer-sponsored employee pension or retirement plans making direct
investments in the Equity Income Fund or the Intermediate Government
Fund;
. Investments in accounts set up by, or investments made from accounts
currently registered on the Bank of New York Trust Accounting System,
provided appropriate notification of such status is given at the time of
investment;
. Any purchase of shares by an investor who owned the shares of any of the
Funds (including BNY Hamilton Money Fund, not included herein) before
July 11, 1994, for so long as that investor continues to maintain an
investment in any of the Funds (including BNY Hamilton Money Fund);
. Any purchase of shares by members of certain classes of individuals,
including members of the Directors, full-time employees (and retirees) of
The Bank of New York (or any of its subsidiaries) and the spouses and
minor children of such employees (and retirees), and the employees of
each of the Administrator and the Distributor and their affiliates;
. Exchanges from the Equity Income Fund to the other Funds included in this
Prospectus, and exchanges from any Fund included in this Prospectus to
BNY Hamilton Money Fund. FOR EXCHANGES THAT WILL BE REQUIRED TO PAY A
SALES CHARGE, SEE "OTHER PURCHASE INFORMATION" BELOW.
OTHER PURCHASE INFORMATION. Investors may purchase Equity Income Fund or
Intermediate Government Fund shares, or a combination of those two Funds, in
increments of 10% through an individual retirement account made available by
BNY Hamilton Funds, Inc., as described in the Minimum Investment Required table
earlier in this section. Please refer to a "BNY Hamilton Funds Individual
Retirement Account" kit for details, which you may obtain by calling 1-800-
4BNY-FND (1-800-426-9363). Investors are also advised to consult with their own
legal counsel or tax adviser regarding these investments.
Exchanges from the Intermediate Government Fund or the Intermediate New York
Tax-Exempt Fund to the Equity Income Fund will be required to pay the 1.50%
differential in sales charge between the respective Funds. Exchanges from BNY
Hamilton Money Fund to any Fund included in this Prospectus will be assessed a
sales charge consistent with the relevant Table of Sales Charges shown earlier
in this section.
Any purchase of shares by an investor who initially purchased shares of the
Equity Income Fund between July 11, 1994 and June 28, 1995 will be assessed a
sales charge consistent with the Table of Sales Charges shown for the
Intermediate Government Fund and Intermediate New York Tax-Exempt Fund earlier
in this section for so long as that investor continues to maintain an
investment in the Equity Income Fund.
In the interest of economy and convenience and because of its operating
procedures, a Fund will not issue certificates representing ownership of its
shares. All shares purchased will be confirmed to you and credited to your
account on the specific Fund's books maintained by the transfer agent. You will
have the same rights and ownership with respect to such shares as if
certificates had been issued.
To assure that checks are collected by a Fund, withdrawals of investments made
by check will not be permitted until payment for the purchase has been
received, which may take up to ten (10) Business Days after the date of
purchase. A Fund will charge a $15.00 processing fee for checks returned
unpaid. This charge may be deducted from the account of the investor that
requested the purchase. In addition, you may be prohibited or restricted from
making future purchases in any of the Funds.
Investors may also invest in any of the Funds by purchasing shares through
registered broker-dealers, which are required to effect the transaction at the
public offering price next determined after receipt of the order by the broker-
dealer and are required to transmit such orders promptly to the specific Fund.
Broker-dealers who make purchases for their customers may charge a fee for such
services.
Federal regulations require that investors provide a social security or
taxpayer identification number upon opening or re-opening an account. Investors
should refer to the New Account Application for further information about this
requirement.
31
<PAGE>
REDEMPTION OF SHARES ______________________________________________________
Investors may withdraw all or any portion of the shares in their account at any
time by redeeming such shares. INVESTORS SHOULD BE AWARE THAT, UNLIKE A SAVINGS
ACCOUNT, A REDEMPTION IN ANY OF THE FUNDS IS A TAXABLE EVENT. CONSULT YOUR TAX
ADVISER FOR THE POTENTIAL TAX SITUATIONS THAT MAY ARISE AS A RESULT OF A
REDEMPTION OF SHARES.
METHOD OF REDEMPTION. A Fund will redeem shares at the next determined net
asset value per share. A Fund's net asset value per share will be determined on
each Business Day at 4:00 p.m. (New York City time). If an investor has
specifically requested that share certificates be issued, certificates
representing a specific Fund's shares being redeemed must be returned with the
redemption request. The Funds recommend that share certificates be sent via
registered mail. The value of the shares redeemed may be more or less than
their original cost, depending upon a Fund's then-current net asset value.
BY
MAIL
. Send your request to: BNY Hamilton Funds, Department L-
1685, Columbus Ohio 43260-1685. (BE SURE TO INCLUDE THE
NAME OF THE SPECIFIC FUND.)
BY
TELEPHONE (1) . This option must have previously been elected. Call the
specific Fund and request that the redemption proceeds be
mailed to the address listed in the specific Fund's
account records or wired to the investor's bank as listed
in the specific Fund's records.
BY SYSTEMATIC
WITHDRAWAL . YOUR ACCOUNT MUST HAVE A VALUE OF $10,000 OR MORE.
. The record owner of shares may request a declining
balance withdrawal, a fixed dollar withdrawal, a fixed
share withdrawal, or a fixed percentage withdrawal (based
on the current value of shares in the account) on a
monthly, quarterly, semi-annual or annual basis.
. Further information about establishing a Systematic
Withdrawal Plan may be obtained by calling 1-800-426-
9363.
BY
DRAFT (2) . Redemption checks may be made payable to the order of any
person in the amount of $500 or more. THIS REDEMPTION
OPTION IS NOT AVAILABLE TO INVESTORS IN THE EQUITY INCOME
FUND.
. Redemption checks are free, but the transfer agent will
impose a fee for stopping payment of a redemption check
at your request or if the transfer agent cannot honor the
redemption check because of insufficient funds or any
other valid reason.
. SHARES FOR WHICH CERTIFICATES HAVE BEEN ISSUED MAY NOT BE
REDEEMED BY REDEMPTION CHECK.
32
<PAGE>
(1) In times of drastic market conditions, the telephone redemption option may
be difficult to implement. If you experience difficulty in making a
telephone redemption, you may make your request by regular mail or express
mail and it will be implemented at the net asset value per share next
determined after the request is received.
(2) This privilege may be modified or terminated at any time by the
Intermediate Government Fund or the Intermediate New York Tax-Exempt Fund
upon notice to investors.
Each Fund will redeem its shares at the net asset value next determined after
the request is received in good order. "Good order" means that the request to
redeem shares includes the following documentation: (i) a letter of instruction
or a stock assignment containing the account number and taxpayer identification
number(s) of the shareholder(s), specifying the number of shares or dollar
amount to be redeemed and signed by all registered owners of the shares in the
exact names in which they are registered; (ii) any required signature
guarantees, see Further Redemption Information below; and (iii) other
supporting legal documents, if required, in the case of estates, trusts,
guardianships, custodianships, corporations, pension and profit-sharing plans
and other organizations. The Funds may adopt certain procedures as described in
"Redemption of Shares" in the Statement of Additional Information to verify
information provided with a redemption request. Shareholders who are uncertain
of the requirements for redemption should consult with a BNY Hamilton Funds,
Inc. representative by calling 1-800-952-6276.
DISCRETIONARY REDEMPTION BY A FUND. If the value of a shareholder's holdings
falls below $500 because of a redemption of shares, the shareholder's remaining
shares may be involuntarily redeemed after 60 days' written notice, unless the
value of the account is increased to $500 or more.
FURTHER REDEMPTION INFORMATION. Normally, a Fund will make payment for all
shares redeemed under these procedures within one Business Day of receipt of
the request, but in no event will payment be made more than three (3) Business
Days after receipt of a redemption request in good order. Notwithstanding the
foregoing, a Fund will not make payments to investors redeeming shares that
were purchased by check until payment for the purchase has been collected,
which may take up to ten (10) Business Days after the date of purchase. A Fund
reserves the right to suspend redemption or postpone the date of redemption at
times when the New York Stock Exchange is closed or when trading on the
Exchange is restricted, under certain emergency circumstances and during
periods when such suspension is permitted by the Securities and Exchange
Commission. See the Statement of Additional Information; "Redemption of
Shares--Further Redemption Information".
To change the address listed in a specific Fund's account records or the name
of the commercial bank or account designated to receive redemption proceeds, an
investor must send a written request to: BNY Hamilton Funds, Department L-1685,
Columbus, Ohio 43260-1685. Such requests must be signed by each shareholder,
and, for requests to change the bank or account designated to receive
redemption proceeds, each signature must be guaranteed.
EXCHANGE OF SHARES ________________________________________________________
An investor may exchange shares between any of the Funds or between shares of
the Funds and BNY Hamilton Money Fund (not included herein) without charge. An
exchange may be made so long as the shares to be exchanged have a value of at
least $500. Accordingly, when establishing a NEW account by exchange, shares of
the Fund being exchanged must have a value at least equal to the minimum
initial investment required by the fund into which the exchange is being made
(currently $2,000 for each of the Funds described in this Prospectus and the
"Hamilton Classic Shares" of BNY Hamilton Money Fund. Shares will be exchanged
on the basis of relative net asset value per share, and will not be assessed
the sales charge except as described in
33
<PAGE>
"Purchase of Shares--Other Purchase Information". Investors who wish to
exchange their shares for shares of BNY Hamilton Money Fund will not be
credited for any sales charge previously paid. Exchanges are in effect
redemptions from one Fund and purchases of another Fund and the usual purchase
and redemption procedures and requirements are applicable to exchanges. See
"Purchase of Shares" and "Redemption of Shares". BEFORE MAKING ANY EXCHANGE,
INVESTORS ARE ADVISED TO REVIEW THE SECTIONS OF THIS PROSPECTUS PERTAINING TO
THE SPECIFIC FUND OR THE APPROPRIATE SECTIONS OF THE PROSPECTUS FOR BNY
HAMILTON MONEY FUND INTO WHICH THE EXCHANGE IS BEING MADE.
SINCE AN EXCHANGE IS ESSENTIALLY A REDEMPTION FROM A SPECIFIC FUND,
SHAREHOLDERS WHO EXCHANGE SHARES IN ANY OF THE FUNDS FOR SHARES IN ANY OF THE
OTHER FUNDS MAY RECOGNIZE A CAPITAL GAIN OR LOSS FOR TAX PURPOSES. The Funds
reserve the right to discontinue, alter or limit the exchange privilege at any
time. At least 60 days' notice will be given to shareholders of any material
modification or termination. The exchange privilege will be honored only in
those states where such exchanges are legally permissible.
DIVIDENDS AND DISTRIBUTIONS _______________________________________________
EQUITY INCOME FUND. All of the Equity Income Fund's net investment income will
be declared as dividends monthly and paid monthly within five (5) Business Days
after the end of the month. Dividends and distributions will be payable to
shareholders of record at the time of declaration. The Directors may revise the
Equity Income Fund's dividend policy without shareholder action.
INTERMEDIATE GOVERNMENT FUND AND INTERMEDIATE NEW YORK TAX-EXEMPT FUND. All of
the Intermediate Government Fund and the Intermediate New York Tax-Exempt
Fund's net investment income will be declared as dividends daily and paid
monthly within five (5) Business Days after the end of the month. Dividends and
distributions will be payable to shareholders of record at the time of
declaration. The net investment income of the Intermediate Government Fund and
the Intermediate New York Tax-Exempt Fund for each Business Day will be
determined immediately prior to the determination of net asset value. Net
investment income for other days will be determined on the prior Business Day.
Shares of the Intermediate Government Fund and the Intermediate New York Tax-
Exempt Fund will begin earning dividends on the next Business Day after the
date of the investment. See Purchase of Shares and Redemption of Shares. The
Directors may revise the dividend policy of these Funds without shareholder
action.
Each of the Funds will distribute substantially all of any taxable net long-
term gains realized on investments to shareholders once annually in accordance
with requirements under the Code, as amended, and other applicable statutory
and regulatory requirements.
DIVIDEND AND GAIN DISTRIBUTION OPTIONS. Each Fund will pay dividends and gain
distributions, if any, in accordance with the current option on each
shareholder's account. If a shareholder does not select a dividend and gain
option, dividends and gains will be paid in additional shares. Shareholders may
choose to receive dividends in cash and any gain distributions in shares or
receive both dividends and any gain distributions in cash. A shareholder can
change the option selected on his or her account by notifying the transfer
agent in writing at least five (5) Business Days prior to a dividend or gain
distribution payment date. In the event that a shareholder redeems all shares
in an account between the record date and the payable date, the value of the
gain distributions declared and payable will be paid in cash regardless of the
existing election.
34
<PAGE>
NET ASSET VALUE ___________________________________________________________
Net asset value per share for each Fund will be determined by subtracting from
the value of the specific Fund's total assets the amount of its liabilities and
dividing the remainder by the number of its outstanding shares, rounding to the
nearest one cent. Expenses, including the fees payable to the Adviser and the
Administrator, are accrued daily. See "Net Asset Value" in the Statement of
Additional Information for more information on valuation of portfolio
securities for each Fund.
Each Fund will compute its net asset value once daily on Monday through Friday,
except that net asset value will not be computed on any day in which no orders
to purchase or redeem shares have been received or on the holidays listed under
Net Asset Value in the Statement of Additional Information. Each Fund computes
net asset value as of the close of regular trading of the New York Stock
Exchange (normally 4:00 P.M., New York City time).
ORGANIZATION ______________________________________________________________
BNY Hamilton Funds, Inc. is an open-end management investment company that was
organized as a Maryland corporation on May 1, 1992. As noted under Investment
Restrictions, the Equity Income Fund and the Intermediate Government Fund are
diversified series of, and the Intermediate New York Tax-Exempt Fund is a non-
diversified series of, BNY Hamilton Funds, Inc.
The Articles of Incorporation of BNY Hamilton Funds, Inc. currently permit the
company to issue 20,000,000,000 shares of common stock, par value $.001 per
share, which have been allocated among the Funds described in this Prospectus
as follows:
<TABLE>
<CAPTION>
Number of Shares of
Fund Common Stock Authorized
---- -----------------------
<S> <C>
Equity Income Fund..................................... 200,000,000
Intermediate Government Fund........................... 200,000,000
Intermediate New York Tax-Exempt Fund.................. 200,000,000
</TABLE>
BNY Hamilton Funds, Inc. currently consists of four series, although references
to the Funds throughout this Prospectus relate only to BNY Hamilton Equity
Income Fund, BNY Hamilton Intermediate Government Fund and BNY Hamilton
Intermediate New York Tax-Exempt Fund. The Directors may increase the number of
shares each Fund is authorized to issue without the approval of shareholders.
The Directors also have the power to designate one or more series or classes of
shares of common stock and to classify and reclassify any unissued shares with
respect to such series or classes.
Shareholders of each series of BNY Hamilton Funds, Inc. are entitled to one
vote for each share and to the appropriate fractional vote for each fractional
share. There is no cumulative voting and no shares have preemptive or
conversion rights. Shares of each Fund must be fully-paid upon issuance and
thereafter will be non-assessable by BNY Hamilton Funds, Inc. and the specific
Fund to which they belong. None of the series of BNY Hamilton Funds, Inc.
intends to hold meetings of shareholders annually. The Directors may call
meetings of shareholders for action by shareholder vote as may be required by
the 1940 Act, or as permitted by the Articles of Incorporation or Bylaws.
BNY Hamilton Funds, Inc., if requested to do so by the holders of at least 10%
of the shares of all series aggregated as a class, will call a meeting of
shareholders for the purpose of voting upon the question of the removal of a
director or directors and will assist in communications with other shareholders
as required by Section 16(c) of the 1940 Act. For further organization
information, including certain shareholder rights, see Description of Shares in
the Statement of Additional Information.
35
<PAGE>
TAXES _____________________________________________________________________
The following discussion of federal income tax consequences is based on the
United States federal tax laws in effect on the date of this Prospectus. These
laws and regulations are subject to change by legislative, judicial or
administrative action. Investors are urged to consult their own tax advisers
with respect to specific questions as to federal taxes and with respect to the
applicability of state, local or foreign taxes. See Taxes in the Statement of
Additional Information. Annual statements as to the federal tax status of
distributions, and for the Intermediate New York Tax-Exempt Fund, as to the
portion of the Fund's distribution that is attributable to interest that is
exempt from New York State and New York City personal income tax, if
applicable, will be mailed to shareholders shortly after the end of the year.
FEDERAL INCOME TAXES. Each Fund intends to qualify as a "regulated investment
company" under Subchapter M of the Code. As a regulated investment company,
each Fund will not be subject to federal income taxes on the net investment
income and capital gains distributed to shareholders, provided that each Fund
distributes at least 90% of its net investment income and realized net short-
term capital gains in excess of net long-term capital losses.
UNLESS A SHAREHOLDER INCLUDES HIS OR HER TAXPAYER IDENTIFICATION NUMBER (SOCIAL
SECURITY NUMBER FOR INDIVIDUALS) ON THE ACCOUNT APPLICATION AND CERTIFIES THAT
HE OR SHE IS NOT SUBJECT TO BACKUP WITHHOLDING, A FUND MAY BE REQUIRED TO
WITHHOLD AND REMIT TO THE U.S. TREASURY 31% OF TAXABLE DISTRIBUTIONS AND
OTHER REPORTABLE PAYMENTS TO THE SHAREHOLDER. SHAREHOLDERS SHOULD BE AWARE
THAT, UNDER REGULATIONS PROMULGATED BY THE INTERNAL REVENUE SERVICE, A FUND MAY
BE FINED UP TO $50 ANNUALLY FOR EACH ACCOUNT FOR WHICH A CERTIFIED TAXPAYER
IDENTIFICATION NUMBER IS NOT PROVIDED. IN THE EVENT THAT SUCH A FINE IS IMPOSED
WITH RESPECT TO ANY UNCERTIFIED ACCOUNT IN ANY YEAR, A CORRESPONDING CHARGE MAY
BE MADE AGAINST THAT ACCOUNT.
EQUITY INCOME FUND AND INTERMEDIATE GOVERNMENT FUND. Distributions from net
investment income and net realized short-term capital gains in excess of net
long-term capital losses will be taxable to shareholders of the Equity Income
Fund and the Intermediate Government Fund as ordinary income, whether such
distributions are taken in cash or reinvested in additional shares. Only a
portion of such dividends to corporate shareholders of the Equity Income Fund
will be eligible for the dividends-received deduction. Such distributions will
not be eligible for the dividends-received deduction to shareholders of the
Intermediate Government Fund.
Distributions of net long-term capital gains in excess of net short-term
capital losses will be taxable to shareholders of the Equity Income Fund and
the Intermediate Government Fund as long-term capital gains regardless of how
long the shareholders have held their shares and regardless of whether taken in
cash or reinvested in additional shares. Long-term capital gain distributions
to corporate shareholders will not be eligible for the dividends-received
deduction.
INTERMEDIATE NEW YORK TAX-EXEMPT FUND. The Intermediate New York Tax-Exempt
Fund intends to meet the requirements of the Code so that net interest income
on obligations that are exempt from federal income tax and held by the
Intermediate New York Tax-Exempt Fund when distributed to shareholders, and
designated by the Intermediate New York Tax-Exempt Fund as "exempt-interest
dividends", will be exempt from federal income tax in the hands of
shareholders.
Distributions from the Intermediate New York Tax-Exempt Fund's taxable net
investment income or from net realized short-term gains will be taxable to
shareholders as ordinary income, whether received in cash or in additional
shares. Distributions will not, generally, be eligible for the dividends-
received deduction. Distributions of net capital gains, i.e., the excess of net
long-term capital gains over net short-term capital losses, will be taxable to
shareholders as long-term capital gains, whether received in cash or additional
shares, regardless of how long a shareholder has held the shares.
36
<PAGE>
Shareholders are urged to consult their tax advisers concerning the effect of
federal income taxes in their individual circumstances. Under the Code,
interest on indebtedness incurred or continued to purchase or carry shares will
not be deductible to the extent that the interest relates to exempt-interest
dividends received by the shareholder. In addition, persons who may be
"substantial users" (or "related persons" of substantial users) of facilities
financed by industrial development bonds or private activity bonds should
consult their tax advisers before purchasing shares of the Intermediate New
York Tax-Exempt Fund.
A portion of the exempt-interest dividends distributed by the Intermediate New
York Tax-Exempt Fund may be treated as a preference item for purposes of the
federal alternative minimum tax. Moreover, exempt-interest dividends paid to a
corporate shareholder by the Intermediate New York Tax-Exempt Fund (whether or
not from interest on private activity bonds) will be taken into account in
determining its federal alternative minimum tax and certain other taxes.
NEW YORK STATE AND NEW YORK CITY TAXES (INTERMEDIATE NEW YORK TAX-EXEMPT FUND).
Shareholders who are generally subject to New York State and New York City
personal income tax on dividends will not be subject to such taxes on
distributions from the Intermediate New York Tax-Exempt Fund to the extent that
such distributions qualify as exempt-interest dividends that are attributable
to federally tax-exempt obligations of the State of New York, its subdivisions,
agencies and instrumentalities. To the extent that the Intermediate New York
Tax-Exempt Fund's distributions are derived from other income, including long-
term or short-term capital gains, such distributions will not be exempt from
New York State or New York City personal income taxes.
Dividends of the Intermediate New York Tax-Exempt Fund are not excluded in
determining New York State and New York City franchise taxes on corporations
and financial institutions.
Except during temporary defensive periods, the Intermediate New York Tax-Exempt
Fund will retain at least 80% of the value of its net assets in debt
obligations which are exempt from federal income tax and New York State and New
York City personal income taxes.
ADDITIONAL INFORMATION ____________________________________________________
Each Fund will send to its shareholders annual and semi-annual reports. The
financial statements appearing in the annual reports will be audited by
independent auditors. Shareholders will also receive confirmations of each
purchase and redemption and monthly statements, reflecting all account
activity, including dividends reinvested in additional shares or credited as
cash. Written inquiries about any of the Funds should be sent to BNY Hamilton
Funds, Department L-1685, Columbus, Ohio 43260-1685.
Any of the Funds may make historical performance information available and may
advertise yield and effective yield as those terms are defined in the Statement
of Additional Information under Performance Data. ALL PERFORMANCE FIGURES WILL
BE BASED ON HISTORICAL EARNINGS AND ARE NOT INTENDED TO INDICATE FUTURE
PERFORMANCE. Performance information may be obtained by calling the Distributor
at 1-800-426-9363.
37
<PAGE>
APPENDIX __________________________________________________________________
TAX-FREE VS. TAXABLE INCOME
A COMPARISON OF TAXABLE AND TAX-FREE YIELDS
FOR NEW YORK STATE RESIDENTS
NEW YORK STATE RESIDENT
<TABLE>
<CAPTION>
Tax-Free Yields
-------------------------------------
Single Joint Combined
Return Return Effective 4% 4.5% 5% 5.5% 6% 6.5% 7%
- ------ ------ --------- ---- ---- ---- ---- ----- ----- -----
TAXABLE EQUIVALENT YIELDS
-----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0-40,100 21.06 5.07 5.70 6.33 6.97 7.60 8.23 8.87
$0-24,000 21.06 5.07 5.70 6.33 6.97 7.60 8.23 8.87
$40,101-96,900 33.13 5.98 6.73 7.48 8.22 8.97 9.72 10.47
$24,001-
58,150 33.13 5.98 6.73 7.48 8.22 8.97 9.72 10.47
$96,901-147,700 35.92 6.24 7.02 7.80 8.58 9.36 10.14 10.92
$58,151-
121,300 35.92 6.24 7.02 7.80 8.58 9.36 10.14 10.92
$147,701-263,750 40.56 6.73 7.57 8.41 9.23 10.09 10.94 11.78
$121,301-
263,750 40.56 6.73 7.57 8.41 9.23 10.09 10.94 11.78
$263,751- 43.90 7.13 8.02 8.91 9.80 10.70 11.59 12.48
$263,751- 43.90 7.13 8.02 8.91 9.80 10.70 11.59 12.48
</TABLE>
To compare the yield of a taxable security with the yield of a tax-free
security, find your taxable income and read across. These tables incorporate
current federal and applicable New York State income tax rates for 1996 and
assume that all income would otherwise be taxable at the investor's highest tax
rates. Yield figures are only provided as examples.
Based upon net amount subject to federal income tax after itemized deductions
and exemptions. These tables do not reflect other possible tax factors such as
the alternative minimum tax, additional itemized deductions other than the New
York State income tax, personal exemptions, the phase out of exemptions and/or
itemized deductions and the possible partial disallowance of deductions.
Consequently, investors are urged to consult their own tax advisers in this
regard.
BNYEB496P
38
<PAGE>
BNY HAMILTON FUNDS, INC.
Statement of Additional Information
BNY HAMILTON MONEY FUND
BNY HAMILTON EQUITY INCOME FUND
BNY HAMILTON INTERMEDIATE GOVERNMENT FUND
BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND
APRIL 29, 1996
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS, BUT CONTAINS
ADDITIONAL INFORMATION WHICH SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS
FOR BNY HAMILTON MONEY FUND, DATED APRIL 29, 1996, AND THE COMBINED PROSPECTUS
FOR BNY HAMILTON EQUITY INCOME FUND, BNY HAMILTON INTERMEDIATE GOVERNMENT FUND,
AND BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND, DATED APRIL 29, 1996, AS
SUPPLEMENTED FROM TIME TO TIME, WHICH MAY BE OBTAINED UPON REQUEST FROM BNY
HAMILTON DISTRIBUTORS, INC., 125 WEST 55TH STREET, NEW YORK, NEW YORK 10019,
ATTENTION: BNY HAMILTON FUNDS, INC., 1-800-426-9363.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Cross-Reference
Page to Page in Prospectus
---- ----------------------------
Combined Prospectus
Money Gov't, N.Y. Tax and Equity
----- --------------------------
<S> <C> <C> <C>
General......................................... 2
Investment Objectives and
Policies....................................... 2 3 6
Investment Restrictions......................... 18 7 22
Directors and Officers.......................... 23 8 23
Investment Adviser.............................. 27 8 23
Administrator................................... 28 8 23
Distributor..................................... 28 9 24
Fee Waivers..................................... 12 26
Fund, Shareholder and Other Services............ 29 9 25
Purchase of Shares.............................. 29 12-15, 18 26
Redemption of Shares............................ 30 12-17, 19 32
Exchange of Shares.............................. 30 20 33
Dividends and Distributions..................... 30 21 34
Net Asset Value................................. 31 22 35
Performance Data................................ 33
Portfolio Transactions and
Brokerage...................................... 35
Description of Shares........................... 37 22 35
Taxes........................................... 38 23 36
Special Considerations Relating to Investments
in New York Municipal Obligations............. 42 10
Additional Information.......................... 52 24 37
Appendix A -- Description of
Securities Ratings............................ 54
</TABLE>
1
<PAGE>
GENERAL
BNY Hamilton Funds, Inc. is an open-end investment company, currently consisting
of four series: BNY Hamilton Money Fund, BNY Hamilton Intermediate Government
Fund, BNY Hamilton Intermediate New York Tax-Exempt Fund and BNY Hamilton Equity
Income Fund (individually, a "Fund" and collectively, the "Funds"). The Bank of
New York (the "Adviser") will serve as investment adviser to each of the Funds.
This Statement of Additional Information provides additional information with
respect to the Funds and should be read in conjunction with the current
Prospectus relating to each Fund. The Funds' executive offices are located at
3435 Stelzer Road, Columbus, Ohio 43219-3035.
INVESTMENT OBJECTIVES AND POLICIES
BNY HAMILTON MONEY FUND (the "Money Fund") is designed to be an economical and
convenient means of making substantial investments in money market instruments.
The Fund's investment objective is to earn as high a level of current income as
is consistent with preservation of capital and maintenance of liquidity by
investing in high quality money market instruments. The Fund will attempt to
accomplish this objective by maintaining a dollar-weighted average portfolio
maturity of not more than 90 days and by investing in United States dollar-
denominated securities described in the Money Fund's Prospectus and in this
Statement of Additional Information that meet certain rating criteria, present
minimal credit risks and have remaining maturities of 397 days or less. See
"Quality and Diversification Requirements."
BNY HAMILTON INTERMEDIATE GOVERNMENT FUND (the "Intermediate Government Fund")
is designed for conservative bond investors looking for a relatively stable,
high quality investment. See "Quality and Diversification Requirements." The
Fund's investment objective is to earn as high a level of current income as is
consistent with the preservation of capital, moderate stability in net asset
value and minimal credit risk. The Fund will invest in obligations issued or
guaranteed by the United States Government and backed by the full faith and
credit of the United States. The Fund may also invest in obligations issued or
guaranteed by United States Government agencies or instrumentalities, where the
Fund must look principally to the issuing or guaranteeing agency for ultimate
repayment. The Fund may purchase or sell financial futures contracts and options
in an effort to reduce the volatility of its portfolio, moderate market risk and
minimize fluctuations in net asset value. For a discussion of these investments,
see "Hedging Activities."
BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND (the "Intermediate New York
Tax-Exempt Fund") is designed to be an economical and convenient means of making
substantial investments in debt obligations that are exempt from federal, New
York State and New York City income tax. The Fund's investment objective is to
provide investors with income that is exempt from federal, New York State and
New York City income taxes while maintaining relative stability of principal.
The Fund will invest primarily in bonds issued by the State of New York and its
political subdivisions and by Puerto Rico and its political subdivisions. During
normal market conditions, the Adviser will attempt to invest 100%, and as a
fundamental policy at least 80%, of the Fund's assets in bonds and notes that
are exempt from federal, New York State and New York City income taxes. There
may be occasions, due to market conditions or supply limitations, when such
securities are not available. In these situations, the Adviser may invest in
other fixed income securities that may be subject to federal, New York State or
New York City income taxes. Such investments would be considered temporary. The
Adviser will invest a portion of the Fund's assets in short-term investments to
provide liquidity. Investments in short-term investments may be increased for
defensive purposes if, in the opinion of the Adviser, market conditions so
warrant. The Fund seeks to maintain a current yield that is greater than that
obtainable from a portfolio of short-term tax-exempt obligations, subject to
certain quality restrictions. See "Quality and Diversification Requirements."
The Fund may seek to moderate market risk and minimize fluctuations in its net
asset value per share through the use of financial futures contracts and
options. See "Hedging Activities."
2
<PAGE>
BNY HAMILTON EQUITY INCOME FUND (the "Equity Income Fund") is designed for
conservative investors who are interested in participating in the equity markets
while receiving current income greater than the yield of the Standard & Poor's
500 Index. The Fund's investment objectives are to provide long-term capital
appreciation greater than the appreciation of, and yield greater than the yield
of, the Standard & Poor's 500 Index. Equal emphasis is placed on attaining
income and capital appreciation. The Fund will invest primarily in common stock
and convertible securities of domestic and foreign corporations. In connection
with its investment objectives, the Fund seeks to achieve capital appreciation
in excess of the market average represented by the Standard & Poor's 500 Index.
During periods of rapid market capital appreciation, the effect of the Fund's
dual investment objectives will likely be that the net asset value of the Fund
will not rise as rapidly as the market generally. Conversely, during periods of
rapid market depreciation, the Fund's net asset value would not be expected to
decline as rapidly as the market.
The following discussion supplements the information regarding investment
objectives and policies of the respective Funds as set forth above and in their
respective prospectuses.
GOVERNMENT AND MONEY MARKET INSTRUMENTS
As discussed in the Prospectuses, each Fund may invest in money market
instruments to the extent consistent with its investment objectives and
policies. A description of the various types of money market instruments that
may be purchased by the Funds appears below. See "Quality and Diversification
Requirements".
UNITED STATES GOVERNMENT OBLIGATIONS. Each of the Funds may invest in
obligations issued or guaranteed by the United States Government or by its
agencies or instrumentalities. Obligations issued or guaranteed by federal
agencies or instrumentalities may or may not be backed by the "full faith and
credit" of the United States. Securities that are backed by the full faith and
credit of the United States include Treasury bills, Treasury notes, Treasury
bonds, and obligations of the Government National Mortgage Association, the
Farmers Home Administration, and the Export-Import Bank. In the case of
securities not backed by the full faith and credit of the United States, each
Fund must look principally to the agency issuing or guaranteeing the obligation
for ultimate repayment and may not be able to assert a claim against the United
States itself in the event the agency or instrumentality does not meet its
commitments. Securities in which each Fund may invest that are not backed by the
full faith and credit of the United States include, but are not limited to,
obligations of the Tennessee Valley Authority, the Federal National Mortgage
Association and the United States Postal Service, each of which has the right to
borrow from the United States Treasury to meet its obligations, and obligations
of the Federal Farm Credit System and the Federal Home Loan Banks, both of whose
obligations may be satisfied only by the individual credits of each issuing
agency.
FOREIGN GOVERNMENT OBLIGATIONS. Each of the Funds, subject to its applicable
investment policies, may also invest in short-term obligations of foreign
sovereign governments or of their agencies, instrumentalities, authorities or
political subdivisions. These securities may be denominated in United States
dollars or, in the case of the Equity Income Fund, in another currency. See
"Foreign Investments".
BANK OBLIGATIONS. Each of the Funds, unless otherwise noted in its respective
Prospectus or below, may invest in negotiable certificates of deposit, time
deposits and bankers' acceptances of (i) banks, savings and loan associations
and savings banks that have more than $2 billion in total assets and are
organized under the laws of the United States or any state, (ii) foreign
branches of these banks or of foreign banks of equivalent size ("Euros") and
(iii) United States branches of foreign banks of equivalent size ("Yankees").
The Funds will not invest in obligations for which the Adviser, or any of its
affiliated persons, is the ultimate obligor or accepting bank. Each of the
Funds, other than the Intermediate New York Tax-Exempt Fund, may also invest in
obligations of international banking institutions designated or supported by
national governments to promote economic reconstruction, development or trade
between nations (e.g., the European Investment Bank, the Inter-American
Development Bank, or the World Bank).
3
<PAGE>
COMMERCIAL PAPER. Each of the Funds may invest in commercial paper, including
Master Notes. Master Notes are obligations that provide for a periodic
adjustment in the interest rate paid and permit daily changes in the amount
borrowed. Master Notes are governed by agreements between the issuer and the
Adviser 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
maintained with or 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
Treasury bill auction rate, the rate on Master Notes is subject to change.
Repayment of Master Notes 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 Notes
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 that satisfies such Fund's
quality restrictions. See "Quality and Diversification Requirements." Although
there is no secondary market for Master Notes, such obligations are considered
by the Funds to be liquid because they are payable immediately upon demand. The
Funds do not have any specific percentage limitation on investments in Master
Notes.
REPURCHASE AGREEMENTS. Each of the Funds may enter into repurchase agreements
with brokers, dealers or banks that meet the credit guidelines approved by the
Board of Directors of BNY Hamilton Funds, Inc. (the "Directors"). In a
repurchase agreement, a Fund buys a security from a seller that has agreed to
repurchase the same security at a mutually agreed upon date and price. The
resale price is normally in excess of the purchase price, reflecting an agreed
upon interest rate. This interest rate is effective for the period of time the
Fund is invested in the agreement and is not related to the coupon rate on the
underlying security. A repurchase agreement may also be viewed as a fully
collateralized loan of money by a Fund to the seller. The period of these
repurchase agreements will usually be short, from overnight to one week, and at
no time will the Funds invest in repurchase agreements for more than one year.
The securities that are subject to repurchase agreements, however, may have
maturity dates in excess of one year from the effective date of the repurchase
agreement. The Funds will always receive securities as collateral whose market
value is, and during the entire term of the agreement remains, at least equal to
100% of the dollar amount invested by the Funds in each agreement plus accrued
interest, and the Funds will make payment for such securities only upon physical
delivery or upon evidence of book entry transfer to the account of the Funds'
custodian. If the seller defaults, a Fund might incur a loss if the value of the
collateral securing the repurchase agreement declines and might incur
disposition costs in connection with liquidating the collateral. In addition, if
bankruptcy proceedings are commenced with respect to the seller of the security,
realization upon the collateral by a fund may be delayed or limited. See
"Investment Restrictions" in the Prospectuses and this Statement of Additional
Information.
CORPORATE BONDS AND OTHER DEBT SECURITIES
As discussed in the combined Prospectus for Equity Income Fund, Intermediate
Government Fund and Intermediate New York Tax-Exempt Fund (the "Combined
Prospectus"), the Intermediate Government Fund may invest in bonds and other
debt securities of domestic issuers to the extent consistent with its investment
objective and policies. A description of these investments appears in the
Combined Prospectus and below. See "Quality and Diversification Requirements."
For information on short-term investments in these securities, see "Money Market
Instruments."
ASSET-BACKED SECURITIES. Asset-backed securities directly or indirectly
represent a participation interest in, or are secured by and payable from, a
stream of payments generated by particular assets such as motor vehicle or
credit card receivables. Payments of principal and interest may be guaranteed up
to certain amounts and for a certain time period by a letter of credit issued by
a financial institution unaffiliated with the entities issuing the securities.
The
4
<PAGE>
asset-backed securities in which a Fund may invest are subject to the Fund's
overall credit requirements. Asset-backed securities in general, however, are
subject to certain risks. Most of these risks are related to limited interests
in applicable collateral. For example, credit card debt receivables are
generally unsecured and the debtors are entitled to the protection of a number
of state and federal consumer credit laws, many of which give such debtors the
right to set off certain amounts on credit card debt, thereby reducing the
balance due. Additionally, if the letter of credit is exhausted, holders of
asset-backed securities may also experience delays in payments or losses if the
full amounts due on underlying sales contracts are not realized.
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities are often subject to more
rapid repayment than their stated maturity date would indicate as a result of
the pass-through of prepayments of principal on the underlying mortgage
obligations. During periods of declining interest rates, prepayment of mortgages
underlying mortgage-backed securities can be expected to accelerate.
Accordingly, the Fund's ability to maintain positions in mortgage-backed
securities will be affected by reductions in the principal amount of such
securities resulting from such prepayments, and its ability to reinvest the
returns of principal at comparable yields is subject to generally prevailing
interest rates at that time. The Fund's net asset value will vary with changes
in the values of the Fund's portfolio securities. To the extent that the Fund
invests in mortgage-backed securities, such values will vary with changes in
market interest rates generally and the differentials in yields among various
kinds of mortgage-backed securities.
TAX-EXEMPT OBLIGATIONS
As discussed in the Combined Prospectus, the Intermediate New York Tax-Exempt
Fund may invest in tax-exempt obligations to the extent consistent with the
Fund's investment objective and policies. A description of the various types of
tax-exempt obligations that the Fund may purchase appears below. See "Quality
and Diversification Requirements."
MUNICIPAL BONDS. Municipal bonds are debt obligations issued by the states,
territories and possessions of the United States and the District of Columbia,
by their political subdivisions and by duly constituted authorities and
corporations. For example, states, territories, possessions and municipalities
may issue municipal bonds to raise funds for various public purposes such as
airports, housing, hospitals, mass transportation, schools, water and sewer
works. They may also issue municipal bonds to refund outstanding obligations and
to meet general operating expenses. Public authorities issue municipal bonds to
obtain funding for privately operated facilities, such as housing and pollution
control facilities, for industrial facilities and for water supply, gas,
electricity and waste disposal facilities.
Municipal bonds may be general obligation or revenue bonds. General obligation
bonds are secured by the issuer's pledge of its full faith, credit and taxing
power for the payment of principal and interest. Revenue bonds are payable from
revenues derived from particular facilities, from the proceeds of a special
excise tax or from other specific revenue sources. They are not usually payable
from the general taxing power of a municipality.
MUNICIPAL NOTES. Municipal notes are subdivided into three categories of short-
term obligations: municipal notes, municipal commercial paper and municipal
demand obligations.
Municipal notes are short-term obligations with a maturity at the time of
issuance normally ranging up to one year. The principal types of municipal notes
include tax anticipation notes, bond anticipation notes, revenue anticipation
notes, grant anticipation notes and project notes. Notes sold in anticipation of
collection of taxes, a bond sale, or receipt of other revenues are usually
general obligations of the issuing municipality or agency.
5
<PAGE>
Municipal commercial paper typically consists of very short-term, unsecured,
negotiable promissory notes that are sold to meet the seasonal working capital
or interim construction financing needs of a municipality or agency. While these
obligations are intended to be paid from general revenues or refinanced with
long-term debt, they frequently are backed by letters of credit, lending
agreements, note repurchase agreements or other credit facility agreements
offered by banks or institutions.
Municipal demand obligations are subdivided into two types: Variable Rate Demand
Notes and Master Notes.
Variable Rate Demand Notes are tax-exempt municipal obligations or participation
interests that provide for a periodic adjustment in the interest rate paid on
the notes. They permit the holder to demand payment of the notes, or to demand
purchase of the notes at a purchase price equal to the unpaid principal balance
plus accrued interest, either directly by the issuer or by drawing on a bank
letter of credit or guaranty issued with respect to such note. The issuer of the
Variable Rate Demand Note may have a corresponding right to prepay at its
discretion the outstanding principal of the note plus accrued interest upon
notice comparable to that required for the holder to demand payment. The
Variable Rate Demand Notes in which each Fund may invest are payable, or are
subject to purchase, on demand usually on notice of seven calendar days or less.
The terms of the notes will provide that interest rates are adjustable at
intervals ranging from daily to six months, and the adjustments are usually
based upon the prime rate of a bank or other appropriate interest rate index
specified in the respective notes.
Master Notes are tax-exempt municipal obligations that provide for a periodic
adjustment in the interest rate paid and permit daily changes in the amount
borrowed. The interest on such obligations is, in the opinion of counsel for the
borrower, exempt from federal income tax. For a description of the attributes of
Master Notes, see "Money Market Instruments" above. Although there is no
secondary market for Master Notes, such obligations are considered by each Fund
to be liquid because they are payable immediately upon demand. The Funds have no
specific percentage limitations on investments in Master Notes.
PUTS. The Intermediate New York Tax-Exempt Fund may purchase, without limit,
municipal bonds or notes together with the right to resell the bonds or notes to
the seller at an agreed price or yield within a specified period prior to the
maturity date of the bonds or notes. Such a right to resell is commonly known as
a "put." The aggregate price for bonds or notes with puts may be higher than the
price for bonds or notes without puts. Consistent with the Fund's investment
objective and subject to the supervision of the Directors, the purpose of this
practice is to permit the Fund to be fully invested in tax-exempt securities
while preserving the necessary liquidity to purchase securities on a when-issued
basis, to meet unusually large redemptions, and to purchase at a later date
securities other than those subject to the put. The principal risk of puts is
that the writer of the put may default on its obligation to repurchase. The
Adviser will monitor each writer's ability to meet its obligations under puts.
Puts may be purchased as a feature of the underlying bond or note, or as an
independent security. When the Intermediate New York Tax-Exempt Fund purchases
puts as independent securities, it may exercise the puts prior to their
expiration date in order to fund obligations to purchase other securities or to
meet redemption requests. These obligations may arise during periods in which
proceeds from sales of Fund shares and from recent sales of portfolio securities
are insufficient to meet obligations or when the funds available are otherwise
allocated for investment. In addition, puts may be exercised prior to the
expiration date in order to take advantage of alternative investment
opportunities or in the event the Adviser revises its evaluation of the
creditworthiness of the issuer of the underlying security. In determining
whether to exercise puts prior to their expiration date and in selecting which
puts to exercise, the Adviser will consider the amount of cash available to the
Fund, the expiration dates of the available puts, any future commitments for
securities purchases, alternative investment opportunities, the desirability of
retaining the underlying securities in the Fund's portfolio and the yield,
quality and maturity dates of the underlying securities.
The Intermediate New York Tax-Exempt Fund will value any municipal bonds and
notes subject to puts with remaining maturities of less than 60 days by the
amortized cost method. If the Intermediate New York Tax-Exempt Fund invests in
municipal bonds and notes with maturities of 60 days or more that are subject to
puts separate from the underlying securities, the puts and the underlying
securities will be valued at fair value as determined in
6
<PAGE>
accordance with procedures established by the Directors. The Directors will, in
connection with the determination of the value of a put, consider, among other
factors, the creditworthiness of the writer of the put, the duration of the put,
the dates on which or the periods during which the put may be exercised and the
applicable rules and regulations of the Securities and Exchange Commission.
Prior to investing in such securities, the Intermediate New York Tax-Exempt
Fund, if deemed necessary based upon the advice of counsel, will apply to the
Securities and Exchange Commission for an exemptive order, which may not be
granted, relating to the valuation of such securities.
Since the value of a put is partly dependent on the ability of the put writer to
meet its obligation to repurchase, the Intermediate New York Tax Exempt Fund's
policy is to enter into put transactions only with municipal securities dealers
or municipal issuers who are approved by the Adviser. Each dealer will be
approved on its own merits, and it is the Intermediate New York Tax-Exempt
Fund's general policy to enter into put transactions only with those dealers
that are determined to present minimal credit risks. In connection with such
determination, the Directors will review regularly the Adviser's list of
approved dealers, taking into consideration, among other things, the ratings, if
available, of their equity and debt securities, their reputation in the
municipal securities markets, their net worth, their efficiency in consummating
transactions and any collateral arrangements, such as letters of credit,
securing the puts written by them. Commercial bank dealers normally will be
members of the Federal Reserve System, and other dealers will be members of the
National Association of Securities Dealers, Inc. or members of a national
securities exchange. Other put writers will have outstanding debt rated Baa or
better by Moody's Investors Service, Inc. ("Moody's") or BBB or better by
Standard & Poor's Corporation ("S&P") or will be of comparable quality in the
Adviser's opinion or such put writers' obligations will be collateralized and of
comparable quality in the Adviser's opinion. The Directors have directed the
Adviser not to enter into put transactions with any dealer that in the judgment
of the Adviser present more than a minimal credit risk. In the event that a
dealer should default on its obligation to repurchase an underlying security,
the Intermediate New York Tax-Exempt Fund is unable to predict whether all or
any portion of any loss sustained could subsequently be recovered from such
dealer.
BNY Hamilton Funds, Inc. has been advised by counsel that the Funds should be
considered the owner of the securities subject to the puts so that the interest
on the securities is tax-exempt income to the Fund. Such advice of counsel is
based on certain assumptions concerning the terms of the puts and the attendant
circumstances.
EQUITY INVESTMENTS
As discussed in the Combined Prospectus, the Equity Income Fund may invest in
common stocks and securities convertible into common stocks to the extent
consistent with its investment objective and policies. The securities in which
the Fund may invest include those listed on any domestic or foreign securities
exchange or traded in the over-the-counter market. A discussion of the various
types of equity investments which may be purchased by this Fund appears in the
Combined Prospectus and below. See "Quality and Diversification Requirements."
EQUITY SECURITIES. The common stock in which the Equity Income Fund may invest
includes the common stock of any class or series of domestic or foreign
corporations or any similar equity interest, such as trust or partnership
interest. These investments may or may not pay dividends and may or may not
carry voting rights. Common stock occupies the most junior position in a
company's capital structure.
CONVERTIBLE SECURITIES. The convertible securities in which the Equity Income
Fund may invest include any debt securities or preferred stock that may be
converted into common stock or that carry the right to purchase common stock.
Convertible securities entitle the holder to exchange the securities for a
specified number of shares of common stock, usually of the same company, at
specified prices within a certain period of time. They also entitle the holder
to receive interest or dividends until the holder elects to exercise the
conversion privilege.
The terms of any convertible security determine its ranking in a company's
capital structure. In the case of subordinated convertible debentures, the
holders' claims on assets and earnings are subordinated to the claims of other
creditors and are senior to the claims of preferred and common shareholders. In
the case of convertible
7
<PAGE>
preferred stock, the holders' claims on assets and earnings are subordinated to
the claims of all creditors and are senior to the claims of common shareholders.
FOREIGN INVESTMENTS
The Money and Equity Income Funds may invest in certain foreign securities but
do not expect to invest more than 65% and 20% of their respective total assets
at the time of purchase in securities of foreign issuers. All investments of the
Money Fund must be United States dollar-denominated. The Equity Income Fund does
not expect more than 15% of its foreign investments to be in securities that are
not listed on a securities exchange or that are not United States dollar-
denominated. In the case of the Money Fund, any foreign commercial paper must
not be subject to foreign withholding tax at the time of purchase. Foreign
investments may be made directly in securities of foreign issuers or in the form
of American Depository Receipts ("ADRs") and Global Depository Receipts
("GDRs"). Generally, ADRs and GDRs are receipts issued by a bank or trust
company that evidence ownership of underlying securities issued by a foreign
corporation and that are designed for use in the domestic, in the case of ADRs,
or global, in the case of GDRs, securities markets.
Since investments in foreign securities may involve foreign currencies, the
value of a Fund's assets as measured in United States dollars may be affected by
changes in currency rates and in exchange control regulations, including
currency blockage. The Equity Income Fund may enter into forward commitments for
the purchase or sale of foreign currencies in connection with the settlement of
foreign securities transactions or to hedge the underlying currency exposure
related to foreign investments, but the Fund will not enter into such
commitments for speculative purposes. See "Additional Investment Information" in
the Combined Prospectus.
For a description of the risks associated with investing in foreign securities,
see "Additional Investment Information" in the Prospectus for the Money Fund and
the Combined Prospectus. To the extent that the Intermediate New York Tax-Exempt
Fund invests in municipal bonds and notes backed by credit support arrangements
with foreign financial institutions, the risks associated with investing in
foreign securities may be relevant.
ADDITIONAL INVESTMENTS
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. Each of the Funds may purchase
securities on a when-issued or delayed delivery basis. For example, delivery of
and payment for these securities can take place a month or more after the date
of the purchase commitment. The purchase price and the interest rate payable, if
any, on the securities are fixed on the purchase commitment date or at the time
the settlement date is fixed. The value of such securities is subject to market
fluctuation and no interest accrues to a Fund until settlement takes place. At
the time a Fund makes the commitment to purchase securities on a when-issued or
delayed delivery basis, it will record the transaction, reflect the value each
day of such securities in determining its net asset value and, if applicable,
calculate the maturity for the purposes of average maturity from that date. At
the time of its acquisition, a when-issued security may be valued at less than
the purchase price. A Fund will make commitments for such when-issued
transactions only when it has the intention of actually acquiring the
securities. To facilitate such acquisitions, each Fund will maintain with the
Custodian a segregated account with liquid assets, consisting of cash, U.S.
Government securities or other appropriate securities, in an amount at least
equal to such commitments. On delivery dates for such transactions, each Fund
will meet its obligations from maturities or sales of the securities held in the
segregated account and/or from cash flow. If a Fund chooses to dispose of the
right to acquire a when-issued security prior to its acquisition, it could, as
with the disposition of any other portfolio obligation, incur a gain or loss due
to market fluctuation. It is the current policy of each Fund not to enter into
when-issued commitments exceeding in the aggregate 25% of the market value of
the Fund's total assets, less liabilities other than the obligations created by
when-issued commitments.
INVESTMENT COMPANY SECURITIES. The Equity Income Fund, the Intermediate
Government Fund and the Intermediate New York Tax-Exempt Fund may invest in the
securities of other investment companies to the extent permitted under the
Investment Company Act of 1940 (the "1940 Act"). These limits require that, as
determined immediately after a purchase is made, (i) not more than 5% of the
value of the Fund's total assets will be invested
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in the securities of any one investment company, (ii) not more than 10% of the
value of its total assets will be invested in the aggregate in securities of
investment companies as a group and (iii) not more than 3% of the outstanding
voting stock of any one investment company will be owned by the Fund. As a
shareholder of another investment company, a Fund would bear, along with other
shareholders, its pro rata portion of the other investment company's expenses,
including advisory fees. These expenses would be in addition to the advisory and
other expenses that a Fund bears directly in connection with its own operations.
REVERSE REPURCHASE AGREEMENTS. Each of the Funds may enter into reverse
repurchase agreements. In a reverse repurchase agreement, a Fund sells a
security and agrees to repurchase the same security at a mutually agreed upon
date and price. This may also be viewed as the borrowing of money by a Fund. The
Funds will invest the proceeds of borrowings under reverse repurchase
agreements. In addition, the Funds will enter into a reverse repurchase
agreement only when the interest income to be earned from the investment of the
proceeds is greater than the interest expense of the transaction. The Funds will
not invest the proceeds of a reverse repurchase agreement for a period which
exceeds the duration of the reverse repurchase agreement. A Fund may not enter
into reverse repurchase agreements exceeding in the aggregate one-third of the
market value of its total assets, less liabilities other than the obligations
created by reverse repurchase agreements. Each Fund will establish and maintain
with the Custodian a separate account with a segregated portfolio of securities
in an amount at least equal to its purchase obligations under its reverse
repurchase agreements. If interest rates rise during the term of a reverse
repurchase agreement, entering into the reverse repurchase agreement may have a
negative impact on the Money Fund's ability to maintain a net asset value of
$1.00 per share. See "Investment Restrictions."
LOANS OF PORTFOLIO SECURITIES. Each of the Equity Income Fund, Intermediate New
York Tax-Exempt Fund, and Intermediate Government Fund may lend its securities
if such loans are secured continuously by liquid assets consisting of cash, U.S.
Government securities or other liquid, high-grade debt securities or by a letter
of credit in favor of the Fund at least equal at all times to 100% of the market
value of the securities loaned, plus accrued interest. While such securities are
on loan, the borrower will pay the Fund any income accruing thereon. Loans will
be subject to termination by the Funds in the normal settlement time, currently
five Business Days after notice, or by the borrower on one day's notice (as used
herein, "Business Day" shall denote any day on which the New York Stock Exchange
and the Custodian are both open for business). Borrowed securities must be
returned when the loan is terminated. Any gain or loss in the market price of
the borrowed securities that occurs during the term of the loan inures to a Fund
and its respective shareholders. The Funds may pay reasonable finders' and
custodial fees in connection with a loan. In addition, the Funds will consider
all facts and circumstances including the creditworthiness of the borrowing
financial institution, and the Funds will not make any loans for terms in excess
of one year. The Funds will not lend their securities to any director, officer,
employee, or affiliate of BNY Hamilton Funds, Inc., or the Adviser, the
Administrator or the Distributor, unless otherwise permitted by applicable law.
PRIVATELY PLACED AND CERTAIN UNREGISTERED SECURITIES. The Equity Income Fund,
Intermediate New York Tax-Exempt Fund, and Intermediate Government Fund may
invest in privately placed, restricted, Rule 144A and other unregistered
securities as described in the Combined Prospectus.
QUALITY AND DIVERSIFICATION REQUIREMENTS
The Money Fund, Intermediate Government Fund and Equity Income Fund are each
classified as a "diversified" series of a registered investment company under
the 1940 Act. This means that with respect to 75% of its total assets (1) the
Fund may not invest more than 5% of its total assets in the securities of any
one issuer, except obligations of the United States Government, its agencies and
instrumentalities, and (2) the Fund may not own more than 10% of the outstanding
voting securities of any one issuer. As for the remaining 25% of each Fund's
assets not subject to the limitations described above, there is no limitation on
investment of these assets under the 1940 Act, so that all of such assets may be
invested in the securities of any one issuer, subject to the limitation of any
applicable state securities laws, or, with respect to the Money Fund, as
described below. Investments not subject to the limitations described above
could involve an increased risk to a Fund should an issuer, or a state or
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its related entities, be unable to make interest or principal payments or should
the market value of such securities decline.
The Intermediate New York Tax-Exempt Fund is classified as a non-diversified
series of a registered investment company so that it is not limited by the 1940
Act as to the proportion of its assets that it may invest in the obligations of
a single issuer. However, the Fund will comply with the diversification
requirements of the Internal Revenue Code of 1986, as amended, and has therefore
adopted an investment restriction, which applies to 50% of the value of the
assets of the Fund and which may not be changed without shareholder vote,
prohibiting the Fund from purchasing securities of any issuer if, as a result,
more than 5% of the assets of the Fund would be invested in the securities of a
single issuer. See "Investment Restrictions". The Fund also intends to comply
with the diversification requirements of the Internal Revenue Code of 1986, as
amended, for qualification thereunder as a regulated investment company. See
"Taxes". As a nondiversified series of an investment company, the Intermediate
New York Tax-Exempt Fund may be more susceptible to adverse economic, political
or regulatory developments affecting a single issuer than would be the case if
the Fund were a diversified company.
With respect to the Intermediate New York Tax-Exempt Fund, for purposes of
diversification and concentration under the 1940 Act, identification of the
issuer of municipal bonds or notes depends on the terms and conditions of the
obligation. If the assets and revenues of an agency, authority, instrumentality
or other political subdivision are separate from those of the government
creating the subdivision and the obligation is backed only by the assets and
revenues of the subdivision, such subdivision is regarded as the sole issuer.
Similarly, in the case of an industrial development revenue bond or pollution
control revenue bond, if the bond is backed only by the assets and revenues of
the nongovernmental user, the nongovernmental user is regarded as the sole
issuer. If in either case the creating government or another entity guarantees
an obligation, the guaranty is regarded as a separate security and treated as an
issue of such guarantor. Since securities issued or guaranteed by states or
municipalities are not voting securities, there is no limitation on the
percentage of a single issuer's securities that a Fund may own so long as it
does not invest more than 5% of its total assets that are subject to the
diversification limitation in the securities of such issuer, except obligations
issued or guaranteed by the United States Government. Consequently, the Fund may
invest in a greater percentage of the outstanding securities of a single issuer
than would an investment company that invests in voting securities. See
"Investment Restrictions."
MONEY FUND. In order to attain its objective of maintaining a stable net asset
value of $1.00 per share, the Money Fund will (i) limit its investment in the
securities (other than U.S. Government securities) of any one issuer to no more
than 5% of Fund's assets, measured at the time of purchase, except for
investments held for not more than three Business Days (subject, however, to the
Fund's investment restriction No. 4 set forth under "Investment Restrictions"
below); and (ii) limit investments to securities that present minimal credit
risks. In order to limit the credit risk of its investments, the Fund will not
purchase any security (other than a United States Government security) unless it
is rated in the highest rating category assigned to short-term debt securities
(so-called "first tier" securities) by at least two nationally recognized
statistical rating organizations such as Moody's (i.e., P-1 rating) and S&P
(i.e., A-1 rating) or, if not so rated, it is determined to be of comparable
quality. Determinations of comparable quality shall be made in accordance with
procedures established by the Directors. These standards must be satisfied at
the time an investment is made. If the quality of the investment later declines,
the Fund may continue to hold the investment, subject in certain circumstances
to a finding by the Directors that disposing of the investment would not be in
the Fund's best interest.
In addition, the Directors have adopted procedures that (i) require the Fund to
maintain a dollar-weighted average portfolio maturity of not more than 90 days
and to invest only in securities with a remaining maturity of 397 days or less,
and (ii) require the Fund, in the event of certain downgradings of or defaults
on portfolio holdings, to reassess promptly whether the security presents
minimal credit risks and, in certain circumstances, to determine whether
continuing to hold the security is in the best interests of the Fund.
INTERMEDIATE GOVERNMENT FUND. During normal market conditions, the Intermediate
Government Fund's portfolio will have a dollar weighted average maturity of not
less than three nor more than ten years. The Fund's portfolio will include a
variety of securities that are issued or guaranteed by the United States
Treasury, by various
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agencies of the United States Government or by various instrumentalities that
have been established or sponsored by the United States Government. Under normal
market conditions, the Fund will invest at least 65% of the value of its total
assets in Government securities.
INTERMEDIATE NEW YORK TAX-EXEMPT FUND. The Intermediate New York Tax-Exempt Fund
invests principally in a portfolio of "high quality" and "investment grade" New
York municipal bonds. On the date of investment (i) New York municipal bonds
must be rated within the four highest ratings of Moody's, currently Aaa, Aa, A
and Baa, or of S&P, currently AAA, AA, A and BBB, (ii) New York short-term
municipal obligations must be rated MIG-2 or higher by Moody's or SP-1 or higher
by S&P and (iii) New York tax-exempt commercial paper must be rated Prime-1 or
higher by Moody's or A-1 or higher by S&P or, if not rated by either Moody's or
S&P, issued by an issuer either (a) having an outstanding debt issue rated A or
higher by Moody's or S&P or (b) having comparable quality in the opinion of the
Adviser. The Fund may invest in other tax-exempt securities that are not rated
if, in the opinion of the Adviser, such securities are of comparable quality to
the rated securities discussed above. In addition, at the time the Fund invests
in any commercial paper, bank obligation or repurchase agreement, the issuer
must have outstanding debt rated A or higher by Moody's or S&P, the issuer's
parent corporation, if any, must have outstanding commercial paper rated Prime-1
by Moody's or A-1 by S&P, or if no such ratings are available, the investment
must be of comparable quality in the Adviser's opinion.
EQUITY INCOME FUND. The Equity Income Fund may invest in convertible debt
securities, for which there are no specific quality requirements. In addition,
at the time the Fund invests in any commercial paper, bank obligation or
repurchase agreement, the issuer must have outstanding debt rated A or higher by
Moody's or S&P; the issuer's parent corporation, if any, must have outstanding
commercial paper rated Prime-2 or better by Moody's or A-2 or better by S&P; or
if no such ratings are available, the investment must be of comparable quality
in the Adviser's opinion. At the time the Fund invests in any other short-term
debt securities, they must be rated A or higher by Moody's or S&P, or if
unrated, the investment must be of comparable quality in the Adviser's opinion.
In determining suitability of investment in a particular unrated security, the
Adviser takes into consideration asset and debt service coverage, the purpose of
the financing, history of the issuer, existence of other rated securities of the
issuer, and other relevant conditions, such as comparability to other issuers.
HEDGING ACTIVITIES
Hedging is a means of transferring that risk which an investor does not desire
to assume during an uncertain market environment. In the case of the income
funds, interest rates have become increasingly volatile in recent years, and
with the advent of financial futures contracts, options on financial instruments
and indexes of debt securities, the Adviser believes it is now possible to
reduce the effects of interest rate fluctuations.
INTERMEDIATE GOVERNMENT FUND AND INTERMEDIATE NEW YORK TAX-EXEMPT FUND. The
Intermediate Government and Intermediate New York Tax-Exempt Funds may (i) sell
futures contracts on debt securities and indexes of debt securities and (ii)
purchase or write (sell) options on such futures and options on debt securities
and on indexes of debt securities. The Intermediate New York Tax-Exempt Fund may
also enter into the above-described transactions with respect to municipal debt
securities and on indexes of municipal debt securities. The purpose of any such
transaction is to hedge against changes in the market value of securities in the
Fund's portfolio caused by fluctuating interest rates, and to close out or
offset existing positions in such futures contracts or options. The Funds will
not engage in financial futures or options transactions for speculation, but
only as a hedge against changes in the market values of securities held by the
Funds and where the transactions are appropriate to reduction of risk. The Funds
may not enter into futures contracts or related options if, immediately
thereafter, the sum of the amount of initial and variation margin deposits on
outstanding futures contracts and premiums paid for related options would exceed
20% of the market value of their respective total assets. In addition, the Funds
may not enter into futures contracts or purchase or sell related options (other
than offsetting existing positions) if immediately thereafter the sum of the
amount of initial margin deposits on outstanding futures contracts and premiums
paid for related options would exceed 5% of the market value of their respective
total assets.
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SPECIAL CONSIDERATIONS RELATING TO HEDGING ACTIVITIES. Each of the Intermediate
Government and Intermediate New York Tax-Exempt Funds may take positions in
financial futures contracts and options traded on registered securities
exchanges and contract markets solely as a hedge. However, for a hedge to be
completely successful, the price changes of the hedging instruments should equal
the price changes of the securities being hedged. To the extent the hedging
instrument utilized does not involve specific securities in the portfolio, such
equal price changes will not always be possible. Thus, hedging activities may
not be completely successful in eliminating market value fluctuations of the
portfolios. When using hedging instruments that do not specifically correlate
with securities in a Fund's portfolio, the Adviser will attempt to create a very
closely correlated hedge. In particular, hedging activities of the Intermediate
New York Tax-Exempt Fund based upon non-municipal debt securities or indexes may
not correlate as closely to the Fund's portfolio as hedging activities based
upon municipal debt securities or indexes. Nevertheless, hedging activities may
be useful to the Intermediate New York Tax-Exempt Fund, especially where closely
correlated hedging activities based upon municipal securities or indexes are not
available. See "Risks Associated with Futures Contracts" below. Further, the use
of options rather than financial futures contracts to hedge portfolio securities
may result in partial hedges because of the limits inherent in the exercise
prices.
Risks in the use of futures contracts result from the possibility that changes
in market interest rates may differ substantially from the changes anticipated
when hedge positions were established. For example, if either Fund has hedged
against the possibility of an increase in interest rates and instead interest
rates decline, the value of the Fund's portfolio will increase, but the Fund
will lose at least part of the benefit of that increased value because it will
have losses in its futures positions. In addition, in such situations, if the
Fund has insufficient cash, it may have to sell securities to meet daily
maintenance margin requirements resulting from losses in its futures positions.
While the Funds will not ordinarily incur brokerage commissions on the portfolio
securities that they purchase, each Fund will pay brokerage commissions on its
financial futures and options transactions. The Funds will also incur premium
costs for purchasing put and call options. Brokerage commissions and premium
costs may tend to reduce the yield of the Funds.
Each Fund's ability to engage in hedging activities and certain portfolio
transactions may be further limited by various investment restrictions of either
Fund and certain income tax considerations. For example, the amount of assets
that either Fund is permitted to invest in option and futures contracts is
limited as described above; furthermore, the limitations on the percentage of
gross income that either Fund may realize from transactions in these securities
may restrict its ability to effect transactions in these securities. See
"Taxes."
FINANCIAL FUTURES CONTRACTS. Financial futures obligate the seller to deliver a
specific type of security called for in the contract, at a specified future
time, and for a specified price. Financial futures may be satisfied by actual
delivery of the securities or by entering into an offsetting transaction. In
offsetting or closing out an existing futures position, the seller of the
original contract enters into a futures contract to take delivery of the same
security at the same time as specified in the original futures contract.
Although financial futures contracts, by their terms, call for actual delivery
or acceptance of securities, in most cases the contracts are closed out before
the settlement date without making or taking delivery of the securities. Closing
out is accomplished by an offsetting transaction as described above. If the
price in the offsetting transaction (purchase) varies from the price in the
original futures contract (sale), the seller will realize a gain or loss on the
transaction. That gain or loss will tend to offset in whole or in part the
unrealized loss or gain that the securities held in the Funds' portfolio have
experienced, but may not always do so.
A public market exists in financial futures covering a number of debt
securities, including long-term United States Treasury bonds, ten-year United
States Treasury notes, Government National Mortgage Association modified pass-
through mortgage backed certificates, three-month United States Treasury bills,
three-month domestic bank certificates of deposit and three-month Eurodollar
certificates of deposit. A public market also exists for futures contracts on
The Bond Buyer Index of forty long-term municipal bonds. In addition, other
financial futures contracts may be developed and traded. The Funds may utilize
any such contracts and associated put and call options for which there is an
active trading market. Financial futures are traded on contract markets such as
the
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Chicago Board of Trade and the New York Futures Exchange, which are regulated by
the Commodity Futures Trading Commission, a federal agency.
When futures contracts are entered into, both buyer and seller are required,
under regulations of the applicable contract market, to post good faith deposits
with the brokers handling the trades or with a third party custodian as security
for the performance of their promise to buy or sell securities. This deposit,
the amount of which is determined by the contract market on which the futures
contract is traded, is called "initial margin." Each day, the investor's account
will be credited with any net gains due to favorable price movements during the
day's trading of contracts. Similarly, net losses, due to unfavorable price
movements during the day, will require the investor to make additional deposits
to the account. These daily settlement payments are called "variation margin."
Initial margin requirements are established by the contract markets and may be
changed, but brokers may require their customers to maintain margins higher than
those established by the contract markets.
In financial futures trading, margin does not involve any loan or borrowing.
Instead, it is a good faith deposit in the case of initial margin and a daily
settlement of gains and losses in the case of variation margin. Initial margin
deposits are held by the broker or a third party custodian in a segregated
customer account in the name of the investor, with the investor retaining all
rights and claims of ownership pursuant to federal regulation. The initial
margin deposits may be in the form of liquid securities such as Treasury bills
or bonds, the interest on which accrues to the investor, and which are returned
to the investor when it closes out a financial futures position. Variation
margin calls and payments must be made in cash.
The sale of futures contracts is for the purpose of hedging the Funds'
securities portfolio. For example, if interest rates were expected to increase,
the Funds might sell futures contracts. If interest rates did increase, the
value of the securities in the portfolio would decline. The value of the Funds'
hedging instruments would increase at approximately the same rate (depending on
the correlation between value in the futures markets and the prices of the
Funds' portfolio securities and limits, under regulations of the applicable
contract market, on the price movements per day of the hedging instrument),
thereby offsetting all or part of such decline in the value of the underlying
portfolio securities. The Funds could accomplish similar results by selling
securities with long maturities and investing in securities with short
maturities when interest rates are expected to increase or by buying securities
with long maturities and selling securities with short maturities when interest
rates are expected to decline, but might sacrifice some yield by so doing.
OPTIONS ON FUTURES CONTRACTS. The Intermediate Government and Intermediate New
York Tax-Exempt Funds may also purchase put options and write call options on
futures contracts that are traded on a United States exchange or board of trade
and enter into closing transactions with respect to such options to terminate an
existing position. The Funds may use their options on futures contracts in
connection with hedging strategies. Generally, these strategies would be
employed under the same market and market sector conditions in which the Funds
use put and call options on debt securities. See "Options" below. The purchase
of put options on futures contracts is analogous to the purchase of puts on debt
securities so as to hedge a Fund's portfolio of debt securities against the risk
of rising interest rates.
The writing of a call option on a futures contract constitutes a partial hedge
against declining prices of the debt securities that are deliverable upon
exercise of the futures contract. If the futures price at expiration is below
the exercise price, the Funds will retain the full amount of the option premium,
which provides a partial hedge against any decline that may have occurred in the
Funds' holdings of debt securities.
RISKS ASSOCIATED WITH FUTURES CONTRACTS. There are risks associated with the use
of futures contracts for hedging purposes. The price of a futures contract will
vary from day to day and should parallel (but not necessarily equal) the changes
in price of the underlying deliverable securities. The difference between these
two price movements is called "basis." There are occasions when basis becomes
distorted. For instance, in a rising interest rate environment, the increase in
value of the hedging instruments may not completely offset the decline in value
of the securities in the portfolio. Conversely, when interest rates decline, the
loss in the hedged position may be greater than the capital appreciation that a
Fund experiences in its securities positions. Distortions in basis are more
likely
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to occur when the securities hedged are not the security subject to the futures
contract or part of the index covered by the futures contract. Further, if
market values do not fluctuate, a Fund will sustain a loss at least equal to the
commissions on the financial futures transactions.
All investors in the futures market are subject to initial margin and variation
margin requirements. Rather than providing additional variation margin, an
investor may close out a futures position. Changes in the initial and variation
margin requirements may influence an investor's decision to close out the
position. The normal relationship between the securities and futures markets may
become distorted if changing margin requirements do not reflect changes in value
of the securities. The liquidity of the futures market depends on participants
entering into offsetting transactions rather than making or taking delivery of
the underlying securities. In the event investors decide to make or take
delivery (which is unlikely), liquidity in the futures market could be reduced,
thus producing temporary basis distortion. Finally, the margin requirements in
the futures market are substantially lower than margin requirements in the
securities market. Therefore, increased participation by speculators in the
futures market may cause temporary basis distortion.
In the futures market, it may not always be possible to execute a buy or sell
order at the desired price, or to close out an open position due to market
conditions, limits on open positions, and/or daily price fluctuation limits.
Each market establishes a limit on the amount by which the daily market price of
a futures contract may fluctuate. Once the market price of a futures contract
reaches its daily price fluctuation limit, positions in the commodity can be
neither taken nor liquidated unless traders are willing to effect trades at or
within the limit. The holder of a futures contract (including a Fund) may
therefore be locked into its position by an adverse price movement for several
days or more, which may be to its detriment. If a Fund could not close its open
position during this period it would continue to be required to make daily cash
payments of variation margin. The risk of loss to a Fund is theoretically
unlimited when the Fund writes (sells) an uncovered futures contract because the
Fund is obligated to make delivery unless the contract is closed out, regardless
of fluctuations in the price of the underlying security. When a Fund purchases a
put option or call option, however, the maximum risk of loss to the Fund is the
price of the put option or call option purchased. See "Options."
OPTIONS. In connection with their hedging activities, the Intermediate
Government and Intermediate New York Tax-Exempt Funds may purchase put options
or write (sell) call options on financial futures and debt securities.
The Funds may purchase put options as a defensive measure to minimize the impact
of market price declines on the value of certain of the securities in each
Fund's portfolio. Each Fund may, in addition, write call options only to the
extent necessary to neutralize the Fund's position in portfolio securities,
i.e., balance changes in the market value of the portfolio securities and the
changes in the market value of the call options. The Funds may also purchase
call options and sell put options to close out open positions.
The premium that a Fund receives from writing a call option will reflect, among
other things, the current market price of the underlying security, the
relationship of the exercise price to such market price, the historical price
volatility of the underlying security, the option period, supply and demand, and
interest rates.
A put option gives the purchaser of the option the right to sell, and the writer
of the option the obligation to buy, the underlying security at the exercise
price at any time during the option period. The Funds will only purchase put
options on securities that, in the opinion of the Adviser, have investment
characteristics similar to those of securities in each Fund's portfolio. The
purchase of a put option would be intended to protect a Fund from the risk of a
decline in the value of a security below the exercise price of the option. A
Fund may ultimately sell the option in a closing sale transaction, exercise it
or permit it to expire. Profit or loss from such a transaction will depend on
whether the sale price is more or less than the premium paid to purchase the put
option plus the related transaction costs.
A call option gives the purchaser of the option the right to buy, and the writer
of the option the obligation to sell, the underlying security at the exercise
price at any time during the option period, regardless of the market price of
the security. The premium paid to the writer is the consideration for
undertaking the obligations under the option
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contract. When a call option is written by the Funds, the Funds will make
arrangements with the Custodian to segregate the related portfolio securities
until the option is either exercised or the Funds close out the option as
described below. A call option sold by a Fund exposes the Fund during the term
of the option to possible loss of opportunity to realize appreciation in the
market price of the related portfolio security or to possible continued holding
of a security which might otherwise have been sold to protect against
depreciation in the market price of the security.
The Funds will purchase call options to close out open positions. In order to
close out a position, the Funds may make a "closing purchase transaction" -- the
purchase of a call option on the same security with the same exercise price and
expiration date as the option which it has previously written on a particular
security. The Funds may effect a closing purchase transaction to realize a
profit (or loss) if the amount paid to purchase a call option is less (or more)
than the amount received from the sale thereof, to prevent an underlying
security from being called or, in the case of a call option, to permit the sale
of the underlying security prior to the expiration date of the option.
Furthermore, effecting a closing purchase transaction in the case of a call
option will permit a Fund to write another call option with either a different
exercise price or expiration date or both. If a Fund desires to sell a
particular security from its portfolio on which it has written a call option, it
will effect a closing purchase transaction prior to or concurrently with the
sale of the security.
Because increases in the market price of a call option will generally reflect
increases in the market price of an underlying security, any loss resulting from
the repurchase of a call option is likely to be offset in whole or in part by
unrealized appreciation of the underlying security owned by the Funds. From time
to time, the Funds may purchase an underlying security in the cash market for
delivery in accordance with an exercise notice of a call option assigned to it,
rather than delivering such security from its portfolio, in which case
additional transaction costs will be incurred.
Options written by the Funds will normally have expiration dates between three
and nine months from the date written. The exercise price of the options may be
below ("in-the-money"), equal to ("at-the-money") or above ("out-of-the-money")
the current market values of the underlying securities at the time the options
are written. The Funds may engage in buy-and-write transactions in which the
Fund simultaneously purchases a security and writes a call option thereon. Where
a call option is written against a security subsequent to the purchase of that
security, the resulting combined position is also referred to as a buy-and-
write. A buy-and-write transaction using an in-the-money call option may be
utilized when it is expected that the price of the underlying security will
remain flat or decline moderately during the option period. In such a
transaction, a Fund's maximum gain will be the premium received from writing the
option reduced by any excess of the price paid by the Fund for the underlying
security over the exercise price. Buy-and-write transactions using at-the-money
call options may be utilized when it is expected that the price of the
underlying security will remain at or advance moderately during the option
period. In such a transaction, a Fund's gain will be equal to the premium
received from writing the option. Buy-and-write transactions using out-of-the-
money call options may be utilized when it is expected that the premiums
received from writing the call option plus the appreciation in the market price
of the underlying security up to the exercise price will be greater than the
appreciation in the price of the underlying security alone. In any of the
foregoing situations, if the market price of the underlying security declines,
the Funds may or may not realize a loss, depending on the extent to which such
decline is offset by the premium received.
The Funds may purchase put options to protect holdings in an underlying security
against a substantial decline in market value. Such hedge protection is provided
only during the life of the put option when a Fund as the holder of the put
option is able to sell the underlying security at the put exercise price
regardless of any decline in the underlying security's market price. By using
put options in this manner, a Fund will reduce any profit it might otherwise
have realized in its underlying security by the premium paid for the put option
and by transaction costs.
The Funds may also create the effect of a futures contract position by
simultaneous purchase of a put and sale of a call option on the same security.
For example, the simultaneous purchase of a put option and the sale of a call
option at the same price and for the same exercise dates provide the Funds with
the same hedged position as is
15
<PAGE>
created by the sale of a futures contract. By varying the price of the options
the Funds are exposed to price changes within the range of the different option
prices.
The Funds will not invest more than 5% of their respective net assets in
premiums on put options. See "Portfolio Transactions and Brokerage."
INDEX TRANSACTIONS. The Intermediate Government and Intermediate New York Tax-
Exempt Funds may utilize futures contracts on bond indexes (municipal bond
indexes in the case of the Intermediate New York Tax-Exempt Fund), or related
put and call options on such index contracts, so long as there is an active
trading market for the contracts. These contracts would be utilized as a hedge
against changes in the market value of securities in a Fund's portfolio. Each
Fund's strategy in employing such contracts would be similar to the strategies
discussed above regarding transactions in futures and options contracts
generally.
A bond index or municipal bond index assigns relative values to the bonds
included in the index. The index fluctuates with changes in the market values of
those securities included. For example, the municipal bond index traded on the
Chicago Board of Trade is The Bond Buyer Index, which includes forty tax-exempt
long-term revenue and general obligation bonds.
An index futures contract is an agreement pursuant to which two parties agree to
take or make delivery of an amount of cash equal to a specified dollar amount
times the difference between the index value at the close of the last trading
day of the contract and the price at which the index contract was originally
written. Thus, the index contract is similar to traditional futures contracts
except that settlement is made in cash. Initial and variation margins are
payable by the holders of both long and short positions in the index future. No
physical delivery of the underlying bonds in the index is made.
The Funds may also buy put options and sell call options on applicable bond, or
municipal bond, index futures or on applicable bond, or municipal bond indexes.
Options on index futures are similar to options on debt instruments except that
an option on an index future gives the purchaser the right, in return for the
premium paid, to assume a position in an index contract rather than to purchase
or sell a debt instrument at a specified exercise price at any time during the
period of the option. Upon exercise of the option, the delivery of the futures
position by the writer of the option to the holder of the option will be
accompanied by delivery of the accumulated balance of the writer's futures
margin account which represents the amount by which the market price of the
index futures contract, at exercise, exceeds, in the case of a call, or is less
than, in the case of a put, the exercise price of the option on the index
future.
Options on indexes are also similar to options on debt instruments, except that
rather than the right to take or make delivery of a debt instrument at a
specified price, an option on an index gives the holder the right to receive,
upon exercise of the option, an amount of cash if the closing level of the index
upon which the option is based is greater than, in the case of a call, or less
than, in the case of a put, the exercise price of the option. Unlike options on
debt instruments, gain or loss depends on the price movements in the securities
included in the index rather than price movements in individual debt
instruments.
EQUITY INCOME FUND
STOCK INDEX FUTURES, RELATED OPTIONS AND OPTIONS ON STOCK INDEXES. The Equity
Income Fund may attempt to reduce the risk of investment in equity securities by
hedging a portion of its portfolio securities through the use of stock index
futures, options on stock index futures traded on a national securities exchange
or board of trade and options on securities and on stock indexes traded on
national securities exchanges. The Equity Income Fund's policies with respect
to hedging activities are discussed at length in the Combined Prospectus.
A stock index assigns relative weightings to the common stocks in the index, and
the index generally fluctuates with changes in the market values of these
stocks. A stock index futures contract is an agreement in which one party agrees
to deliver to the other an amount of cash equal to a specific dollar amount
times the difference
16
<PAGE>
between the value of a specific stock index at the close of the last trading day
of the contract and the price at which the agreement is made. Initial and
variation margins are payable by the holders of positions in the stock index
future. In the case of options on stock index futures, the holder of the option
pays a premium and receives the right, upon exercise of the option at a
specified price during the option period, to assume the option writer's position
in a stock index futures contract. If the option is exercised by the holder
before the last trading day, the option writer delivers to the option holder
cash in an amount equal to the difference between the option exercise price and
the closing level of the relevant index on the date the option expires. In the
case of options on stock indexes, the holder of the option pays a premium and
receives the right, upon exercise of the option at a specified price during the
option period, to receive cash equal to the dollar amount of the difference
between the closing price of the relevant index and the option exercise price
times a specified multiple, called the "multiplier."
During a market decline or when the Adviser anticipates a decline, the Equity
Income Fund may hedge a portion of its portfolio by selling stock index futures
contracts, purchasing put options on such contracts or purchasing put options on
stock indexes in order to limit exposure to the decline. The Fund may ultimately
sell a put option in a closing sale transaction, exercise it or permit it to
expire. Profit or loss from such a transaction will depend on whether the sale
price is more or less than the premium paid to purchase the put option plus the
related transaction costs. This strategy provides an alternative to liquidation
of securities positions and the corresponding costs of such liquidation.
Conversely, during a market advance or when the Adviser anticipates an advance,
the Fund may hedge a portion of its portfolio by purchasing stock index futures
contracts, purchasing call options on such contracts or purchasing call options
on stock indexes. This strategy affords a hedge against a Fund's not
participating in a market advance at a time when it is not fully invested and
serves as a temporary substitute for the purchase of individual securities which
may later be purchased in a more advantageous manner. The Fund will sell options
on stock index futures and on stock indexes only to close out existing hedge
positions.
The Equity Income Fund will not engage in transactions in stock index futures
contracts or related options for speculation. The Fund will use these
instruments only as a hedge against changes resulting from market conditions in
the values of securities held in the Fund's portfolio or which it intends to
purchase and where the transaction is economically appropriate to the reduction
of risks inherent in the ongoing management of the Fund. In addition, the Fund
will sell stock index futures only if the amount resulting from the
multiplication of the then current level of the indexes upon which its futures
contracts are based and the number of futures contracts which would be
outstanding do not exceed one-third of the value of the Fund's net assets. The
Fund also may not purchase or sell stock index futures or purchase options on
futures if, immediately thereafter, the sum of the amount of margin deposits on
the Fund's existing futures positions and premiums paid for such options would
exceed 5% of the market value of the Fund's total assets. When a Fund purchases
stock index futures contracts, it will deposit an amount of cash and cash
equivalents equal to the market value of the futures contracts in a segregated
account with the Fund's Custodian.
The Equity Income Fund's successful use of stock index futures contracts,
options on such contracts and options on indexes depends upon the Adviser's
ability to predict movements in the direction of the market and is subject to
various additional risks. The correlation between movements in the price of the
stock index future and the price of the securities being hedged is imperfect and
the risk from imperfect correlation increases as the composition of the Fund's
portfolio diverges from the composition of the relevant index. In addition, if
the Fund purchases futures to hedge against market advances before it can invest
in common stock in an advantageous manner and the market declines, the Fund
might create a loss on the futures contract. Particularly in the case of options
on stock index futures and on stock indexes, the Fund's ability to establish and
maintain positions will depend on market liquidity.
For a discussion of the risks associated with index futures contracts, see
"Hedging Activities -- Intermediate Government Fund and Intermediate New York
Tax-Exempt Fund." See also "Portfolio Transactions and Brokerage."
OPTIONS ON SECURITIES. The Fund may purchase put options only on equity
securities held in its portfolio and write call options on stocks only if they
are covered, and such call options must remain covered so long as the Fund is
17
<PAGE>
obligated as a writer. The Fund does not presently intend to purchase put
options and write call options on stocks that are not traded on national
securities exchanges or listed on the Nasdaq National Market(R) ("NASDAQ").
The Fund may, from time to time, write call options on its portfolio securities.
The Fund may write only call options that are "covered", meaning that the Fund
either owns the underlying security or has an absolute and immediate right to
acquire that security, without additional cash consideration (or for additional
cash consideration held in a segregated account by its custodian), upon
conversion or exchange of other securities currently held in its portfolio. In
addition, the Fund will not permit the call to become uncovered prior to the
expiration of the option or termination through a closing purchase transaction
as described below. If the Fund writes a call option, the purchaser of the
option has the right to buy (and the Fund has the obligation to sell) the
underlying security at the exercise price throughout the term of the option.
The amount paid to the Fund by the purchaser of the option is the "premium".
The Fund's obligation to deliver the underlying security against payment of the
exercise price would terminate either upon expiration of the option or earlier
if the Fund were to effect a "closing purchase transaction" through the purchase
of an equivalent option on an exchange. There can be no assurance that a
closing purchase transaction can be effected.
The Fund would not be able to effect a closing purchase transaction after it had
received notice of exercise. In order to write a call option, the Fund is
required to comply with the rules of The Options Clearing Corporation and the
various exchanges with respect to collateral requirements. The Fund may not
purchase call options on individual stocks except in connection with a closing
purchase transaction. It is possible that the cost of effecting a closing
transaction may be greater than the premium received by the Fund for writing the
option.
The Fund may also purchase listed put options. If the Fund purchases a put
option, it has the option to sell a given security at a specified price at any
time during the term of the option.
Purchasing put options may be used as a portfolio investment strategy when the
investment adviser perceives significant short-term risk but substantial long-
term appreciation for the underlying security. The put option acts as an
insurance policy, as it protects against significant downward price movement
while it allows full participation in any upward movement. If the Fund is
holding a stock that it feels has strong fundamentals, but for some reason may
be weak in the near term, it may purchase a listed put on such security, thereby
giving itself the right to sell such security at a certain strike price
throughout the term of the option. Consequently, the Fund will exercise the put
only if the price of such security falls below the strike price of the put. The
difference between the put's strike price and the market price of the underlying
security on the date the Fund exercises the put, less transaction costs, will be
the amount by which the Fund will be able to hedge against a decline in the
underlying security. If during the period of the option the market price for
the underlying security remains at or above the put's strike price, the put will
expire worthless, representing a loss of the price the Fund paid for the put,
plus transaction costs. If the price of the underlying security increases, the
profit the Fund realizes on the sale of the security will be reduced by the
premium paid for the put option less any amount for which the put may be sold.
================================================================================
INVESTMENT RESTRICTIONS
FUNDAMENTAL POLICIES
In addition to its investment objectives, each Fund is subject to certain
investment restrictions that are deemed fundamental policies, i.e., policies
that cannot be changed without the approval of the holders of a majority of the
outstanding voting securities of the Fund, as defined under "Additional
Information" below. See "Organization" and "Additional Information." The
investment restrictions of each Fund follow.
The MONEY FUND may not:
1. Acquire illiquid securities, including repurchase agreements with more than
seven days to maturity or fixed time deposits with a duration of over seven
calendar days, if as a result thereof, more than 10% of the market value of
the Fund's net assets would be in investments that are illiquid;
18
<PAGE>
2. Enter into reverse repurchase agreements exceeding in the aggregate one-third
of the market value of the Fund's total assets, less liabilities other than
obligations created by reverse repurchase agreements;
3. Borrow money, except from banks for extraordinary or emergency purposes and
then only in amounts not to exceed 20% of the value of the Fund's total
assets, taken at cost, at the time of such borrowing and except in connection
with permitted reverse repurchase agreements, or mortgage, pledge, or
hypothecate any assets except in connection with any such borrowing and in
amounts not to exceed 20% of the value of the Fund's total assets at the time
of such borrowing. The Fund will not purchase securities while borrowings
(including reverse repurchase agreements) exceed 5% of the Fund's total
assets. This borrowing provision is included to facilitate the orderly sale
of portfolio securities, for example, in the event of abnormally heavy
redemption requests, and is not for investment purposes and shall not apply
to reverse repurchase agreements;
4. Purchase the securities or other obligations of any issuer if, immediately
after such purchase, more than 5% of the value of the Fund's total assets
would be invested in securities or other obligations of any one such issuer.
This limitation shall not apply to issues of the United States Government,
its agencies or instrumentalities and to permitted investments of up to 25%
of the Fund's total assets;
5. Purchase the securities or other obligations of issuers in the same industry
if, immediately after such purchase, the value of its investment in such
industry would exceed 25% of the value of the Fund's total assets, except
that the Fund will invest more than 25% of its assets in securities and other
instruments issued by banks and bank holding companies. For purposes of
industry concentration, there is no percentage limitation with respect to
investments in securities issued or guaranteed by the United States
Government, its agencies or instrumentalities, negotiable certificates of
deposit, time deposits, and bankers' acceptances of United States branches of
United States banks;
6. Make loans, except through purchasing or holding debt obligations, or
entering into repurchase agreements, or loans of portfolio securities in
accordance with the Fund's investment objective and policies (see "Investment
Objectives and Policies");
7. Purchase or sell puts, calls, straddles, spreads or any combination thereof;
real estate; commodities; or commodity contracts or interests in oil, gas, or
mineral exploration, development or lease programs. However, the Fund may
purchase bonds or commercial paper issued by companies which invest in real
estate or interest therein including real estate investment trusts;
8. Purchase securities on margin, make short sales of securities or maintain a
short position, provided that this restriction shall not be deemed to be
applicable to the purchase or sale of when-issued securities or of securities
for delivery at a future date;
9. Acquire securities of other investment companies, except as permitted by the
1940 Act or the rules thereunder;
10. Act as an underwriter of securities; or
11. Issue senior securities as defined in the 1940 Act, except insofar as the
Fund may be deemed to have issued a senior security by reason of (a)
entering into any repurchase agreement or reverse repurchase agreement; (b)
permitted borrowings of money; or (c) purchasing securities on a when-issued
or delayed delivery basis.
The INTERMEDIATE GOVERNMENT FUND may not:
1. Acquire illiquid securities, including repurchase agreements with more than
seven days to maturity or fixed time deposits with a duration of over seven
calendar days, if as a result thereof, more than 15% of the market value of
the Fund's net assets would be in investments that are illiquid;
19
<PAGE>
2. Borrow money, except from banks for extraordinary or emergency purposes and
then only in amounts up to 20% of the value of the Fund's total assets, taken
at cost at the time of such borrowing and except in connection with reverse
repurchase agreements permitted by Investment Restriction 10, or mortgage,
pledge, or hypothecate any assets except in connection with any such
borrowing in amounts up to 20% of the value of the Fund's net assets at the
time of such borrowing. The Fund will not purchase securities while
borrowings (including reverse repurchase agreements) exceed 5% of the Fund's
total assets. This borrowing provision facilitates the orderly sale of
portfolio securities, for example, in the event of abnormally heavy
redemption requests. This provision is not for investment purposes.
Collateral arrangements for premium and margin payments in connection with
the Fund's hedging activities are not deemed to be a pledge of assets;
3. Purchase the securities or other obligations of any one issuer if,
immediately after such purchase, more than 5% of the value of the Fund's
total assets would be invested in securities or other obligations of any one
such issuer. This limitation shall not apply to securities issued or
guaranteed by the United States Government, its agencies or instrumentalities
and to permitted investments of up to 25% of the Fund's total assets;
4. Purchase the securities of an issuer if, immediately after such purchase, the
Fund owns more than 10% of the outstanding voting securities of such issuer.
This limitation shall not apply to permitted investments of up to 25% of the
Fund's total assets;
5. Purchase the securities or other obligations of issuers in the same industry
if, immediately after such purchase, the value of its investment in such
industry would exceed 25% of the value of the Fund's total assets, except
that the Fund will invest more than 25% of its assets in securities issued or
guaranteed by the United States Government, its agencies or
instrumentalities;
6. Make loans, except through the purchase or holding of debt obligations
(including privately placed securities) or the entering into of repurchase
agreements, or loans of portfolio securities in accordance with the Fund's
investment objective and policies;
7. Purchase or sell puts, calls, straddles, spreads or any combination thereof;
real estate; commodities; commodity contracts, except for the Fund's interest
in hedging activities as described under "Investment Objectives and
Policies"; or interest in oil, gas, or mineral exploration or development
programs. However, the Fund may purchase debt obligations secured by
interests in real estate or issued by companies which invest in real estate
or interests therein including real estate investment trusts;
8. Purchase securities on margin, make short sales of securities or maintain a
short position, except in the course of the Fund's hedging activities, unless
at all times when a short position is open the Fund owns an equal amount of
such securities or securities convertible into such securities or maintains
in a segregated account liquid short-term securities with a market value at
all times equal to or greater than the Fund's purchase obligation or short
position; provided that this restriction shall not be deemed to be applicable
to the purchase or sale of when-issued or delayed delivery securities;
9. Invest in fixed time deposits with a duration of from two Business Days to
seven calendar days if more than 10% of the Fund's total assets would be
invested in such deposits;
10. Issue any senior security, except as appropriate to evidence indebtedness
which constitutes a senior security and which the Fund is permitted to incur
pursuant to Investment Restriction 2 and except that the Fund may enter into
reverse repurchase agreements, provided that the aggregate of senior
securities, including reverse repurchase agreements, shall not exceed one-
third of the market value of the Fund's total assets, less liabilities other
than obligations created by reverse repurchase agreements. The Fund's
arrangements in connection with its hedging activities as described in
"Investment Objectives and Policies" shall not be considered senior
securities for purposes hereof;
11. Acquire securities of other investment companies, except as permitted by the
1940 Act or the rules thereunder; or
20
<PAGE>
12. Act as an underwriter of securities.
The INTERMEDIATE NEW YORK TAX-EXEMPT FUND may not:
1. Acquire illiquid securities, including repurchase agreements with more than
seven days to maturity or fixed time deposits with a duration of over seven
calendar days, if as a result thereof, more than 15% of the market value of
the Fund's net assets would be in investments that are illiquid;
2. Borrow money, except from banks for extraordinary or emergency purposes and
then only in amounts up to 20% of the value of the Fund's total assets, taken
at cost at the time of such borrowing and except in connection with reverse
repurchase agreements permitted by Investment Restriction 10, or mortgage,
pledge, or hypothecate any assets except in connection with any such
borrowing in amounts up to 20% of the value of the Fund's net assets at the
time of such borrowing. The Fund will not purchase securities while
borrowings (including reverse repurchase agreements) exceed 5% of the Fund's
total assets. This borrowing provision facilitates the orderly sale of
portfolio securities, for example, in the event of abnormally heavy
redemption requests. This provision is not for investment purposes.
Collateral arrangements for premium and margin payments in connection with
the Fund's hedging activities are not deemed to be a pledge of assets;
3. Purchase securities or other obligations of any one issuer if, immediately
after such purchase, more than 5% of the value of the Fund's total assets
would be invested in securities or other obligations of any one such issuer.
Each state and political subdivision, agency or instrumentality of such state
and each multi-state agency of which such state is a member will be a
separate issuer if the security is backed only by the assets and revenue of
that issuer. If the security is guaranteed by another entity, the guarantor
will be deemed to be the issuer. This limitation shall not apply to
securities issued or guaranteed by the United States Government, its agencies
or instrumentalities or to permitted investments of up to 50% of the Fund's
total assets;
4. Purchase the securities or other obligations of issuers in the same industry
if, immediately after such purchase, the value of the Fund's investment in
such industry would exceed 25% of the value of the Fund's total assets,
except that the Fund will invest more than 25% of its assets in securities
issued or guaranteed by the United States Government, New York State and the
Commonwealth of Puerto Rico and their respective authorities, agencies,
instrumentalities and political subdivisions;
5. Purchase industrial revenue bonds if, as a result of such purchase, more than
5% of total Fund assets would be invested in industrial revenue bonds where
payment of principal and interest are the responsibility of companies with
fewer than three years of operating history (including predecessors);
6. Make loans, except through the purchase or holding of debt obligations
(including privately placed securities) or the entering into of repurchase
agreements, or loans of portfolio securities in accordance with the Fund's
investment objective and policies (see "Investment Objectives and Policies");
7. Purchase or sell puts, calls, straddles, spreads or any combination thereof
except to the extent that securities subject to a demand obligation, stand-by
commitments and puts may be purchased (see "Investment Objectives and
Policies"); real estate; commodities; commodity contracts, except for the
Fund's interest in hedging activities as described under "Investment
Objectives and Policies"; or interests in oil, gas, or mineral exploration or
development programs. However, the Fund may purchase municipal bonds, notes
or commercial paper secured by interest in real estate;
8. Purchase securities on margin, make short sales of securities or maintain a
short position, except in the course of the Fund's hedging activities, unless
at all times when a short position is open the Fund owns an equal amount of
such securities or owns securities which, without payment of any further
consideration, are convertible into or exchangeable for securities of the
same issue as, and equal in amount to, the securities sold
21
<PAGE>
short; provided that this restriction shall not be deemed to be applicable to
the purchase or sale of when-issued or delayed delivery securities;
9. Invest in fixed time deposits with a duration of from two Business Days to
seven calendar days if more than 5% of the Fund's total assets would be
invested in such deposits;
10. Issue any senior security, except as appropriate to evidence indebtedness
which constitutes a senior security and which the Fund is permitted to incur
pursuant to Investment Restriction 2 and except that the Fund may enter into
reverse repurchase agreements, provided that the aggregate of senior
securities, including reverse repurchase agreements, shall not exceed one-
third of the market value of the Fund's total assets, less liabilities other
than obligations created by reverse repurchase agreements. The Fund's
arrangements in connection with its hedging activities as described in
"Investment Objectives and Policies" shall not be considered senior
securities for purposes hereof;
11. Acquire securities of other investment companies, except as permitted by the
1940 Act or the rules thereunder; or
12. Act as an underwriter of securities.
The EQUITY INCOME FUND may not:
1. Acquire illiquid securities, including repurchase agreements with more than
seven days to maturity or fixed time deposits with a duration of over seven
calendar days, if as a result thereof, more than 15% of the market value of
the Fund's net assets would be in investments that are illiquid;
2. Borrow money, except from banks for extraordinary or emergency purposes and
then only in amounts not to exceed 20% of the value of the Fund's total
assets, taken at cost, at the time of such borrowing and except in connection
with reverse repurchase agreements permitted by Investment Restriction 12, or
mortgage, pledge, or hypothecate any assets except in connection with any
such borrowing in amounts not to exceed 20% of the value of the Fund's net
assets at the time of such borrowing. The Fund will not purchase securities
while borrowings exceed 5% of the Fund's total assets. This borrowing
provision is included to facilitate the orderly sale of portfolio securities,
for example, in the event of abnormally heavy redemption requests, and is not
for investment purposes. Collateral arrangements for premium and margin
payments in connection with the Fund's hedging activities are not deemed to
be a pledge of assets;
3. Purchase the securities or other obligations of any one issuer if,
immediately after such purchase, more than 5% of the value of the Fund's
total assets would be invested in securities or other obligations of any one
such issuer. This limitation shall not apply to issues of the United States
Government, its agencies or instrumentalities and to permitted investments of
up to 25% of the Fund's total assets;
4. Purchase the securities or other obligations of issuers in the same industry
if, immediately after such purchase, the value of its investments in such
industry would exceed 25% of the value of the Fund's total assets. For
purposes of industry concentration, there is no percentage limitation with
respect to investments in securities of the United States Government, its
agencies or instrumentalities;
5. Purchase the securities of an issuer if, immediately after such purchase, the
Fund owns more than 10% of the outstanding voting securities of such issuer;
6. Make loans, except through the purchase or holding of debt obligations
(including privately placed securities), or the entering into of repurchase
agreements, or loans of portfolio securities in accordance with the Fund's
investment objectives and policies (see "Investment Objectives and
Policies");
22
<PAGE>
7. Purchase or sell puts, calls, straddles, spreads or any combination thereof;
real estate; commodities or commodity contracts, except for the Fund's
interests in hedging activities as described under "Investment Objectives and
Policies"; or interests in oil, gas or mineral exploration or development
programs. However, the Fund may purchase securities or commercial paper
issued by companies which invest in real estate or interests therein,
including real estate investment trusts;
8. Purchase securities on margin, make short sales of securities, or maintain a
short position, except in the course of the Fund's hedging activities,
provided that this restriction shall not be deemed to be applicable to the
purchase or sale of when-issued securities or delayed delivery securities;
9. Invest in fixed time deposits with a duration of from two Business Days to
seven calendar days if more than 10% of the Fund's total assets would be
invested in such deposits;
10. Acquire securities of other investment companies, except as permitted by the
1940 Act or the rules thereunder;
11. Act as an underwriter of securities; or
12. Issue any senior security, except as appropriate to evidence indebtedness
which constitutes a senior security and which the Fund is permitted to incur
pursuant to Investment Restriction 2 and except that the Fund may enter into
reverse repurchase agreements, provided that the aggregate of senior
securities, including reverse repurchase agreements, shall not exceed one-
third of the market value of the Fund's total assets, less liabilities other
than obligations created by reverse repurchase agreements. The Fund's
arrangements in connection with its hedging activities as described in
"Investment Objectives and Policies" shall not be considered senior
securities for purposes hereof.
UNDERTAKING IN RESPONSE TO STATE SECURITIES REGULATIONS
In order to satisfy the requirements of certain state securities regulations,
the Equity Income Fund has undertaken not to invest more than 5% of its net
assets in warrants and to further restrict its investment in warrants so that
not more than 2% of net assets will be invested in warrants that are not listed
on the New York Stock Exchange or the American Stock Exchange. This is not,
however, a fundamental policy and may be changed by the Directors at any time
without the approval of the shareholders of the Equity Income Fund.
================================================================================
DIRECTORS AND OFFICERS
The directors and executive officers of BNY Hamilton Funds, Inc., their business
addresses and their principal occupations during the past five years are:
<TABLE>
<CAPTION>
Position with Principal Occupations
Name and Address Funds During Past Five Years
- --------------------------- ---------------------- ---------------------------
<S> <C> <C>
Mr. Eugene Sullivan* Director and Chairman Director, The Bank of New
BNY Hamilton Distributors of the Board York Company, Inc., 1977
125 West 55th Street to 1991; Director, W.R.
New York, NY 10019 Grace & Co., 1990 to
Age 75 present; Professor of
Management, St. John's
University, 1987 to
Present.
</TABLE>
23
<PAGE>
<TABLE>
<S> <C> <C>
Edward L. Gardner Director Chairman of the Board,
411 Theodore Fremd Ave. President and Chief
Rye, New York Executive Officer,
10580 Industrial Solvents
Age 61 Corporation, 1981 to
Present; Chairman of the
Board, Blue Grass Chemical
Specialties Inc., 1982 to
Present; Chairman of the
Board, Big Brothers/Big
Sisters of New York City,
1992 to Present; National
Vice-Chairman, Big
Brothers/Big Sisters of
America, 1993 to Present;
President, Big
Brothers/Big Sisters of
America Foundation, 1994
to Present; Vice President
of the Board, The Sherry
Netherland Hotel, 1991 to
Present; Member, Points of
Light Foundation, 1995 to
Present; Member, The
National Assembly, 1992 to
Present; Member, Alvin
Ailey Dance Theatre
Foundation, Inc., 1989 to
Present; Member, The
Institute for Art and
Urban Resources, Inc. 1985
to 1994; Member, Mercy
College, 1989 to Present;
Member, Westchester/
Putnam Regional Board of
Directors, The Bank of New
York, 1982 to Present;
Member, Westchester County
Association, 1986 to
Present.
Mr. Peter Herrick* Director Vice Chairman (1990-92)
42 Sunnybrook Road and Director, The Bank of
Bronxville, New York New York; President and
10708 Director, The Bank of New
Age 69 York Company, Inc. (1984-
1992); Trustee, HRE
Properties, 1990 to
Present; Member, New York
State Banking Board, 1990-
1993; Director, Mastercard
International, 1987-
1992.
Leif H. Olsen Director President, Leif H. Olsen
49 Locust Avenue, Suite 301 Investments, Inc., a
New Canaan, Connecticut registered investment
06840 adviser; 1987 to Present.
Age 70
</TABLE>
24
<PAGE>
<TABLE>
<S> <C> <C>
Mr. Stephen Stamas* Director Chairman, New York
Windcrest Partners Philharmonic, 1989 to
122 E. 42nd Street Present.
49th Floor
New York, New York 10168
Age 65
Richard E. Stierwalt Chief Executive Special Consultant, The
125 West 55th Street Officer BISYS Group, Inc., March
New York, New York 10019 1995 to Present; Chairman
Age 41 and Chief Executive Officer
of the Concord Holding
Corporation, July 1993 to
March 1995; Director,
Managing Director and
Chief Executive Officer of
the Concord Holding
Corporation, February 1987
to July 1993; Director and
Chief Executive Officer of
BNY Hamilton Distributors,
Inc., May 1992 to Present.
William B. Blundin President Vice Chairman of BISYS
125 West 55th Street Fund Services, March 1995
New York, New York 10019 to Present; Vice Chairman
Age 58 of Concord Holding
Corporation, July 1993 to
March 1995; Director and
President of Concord
Holding Corporation,
February 1987 to July 1993;
Director and President of
BNY Hamilton Distributors,
Inc., May 1992 to Present.
Ann E. Bergin Vice President Vice President, BISYS Fund
Services, March 1995 to
Present; Vice President,
125 West 55th Street Administration, Concord
New York, New York 10019 Financial Group, August
Age 36 1991 to March 1995;
Assistant Vice President,
Dreyfus Service
Corporation, 1982 to August
1991.
William J. Tomko Vice President Vice President of BISYS Fund
3435 Stelzer Road Services, Inc., 1989 to Present.
Columbus, Ohio 43219
Age 37
Martin Dean Treasurer Manager, Mutual Fund Accounting,
3435 Stelzer Road BISYS Fund Services, Inc., May
Columbus, Ohio 43219 1994 to Present. Senior Manager,
Age 31 KPMG Peat Marwick, 1989 to May 1994.
George O. Martinez Secretary Senior Vice President and Director of
3435 Stelzer Road Adminstration and Regulatory Services of
Columbus, Ohio 43219 BISYS Fund Services, Inc., April
Age 36 1995 to Present; Vice President and
Associate General Counsel of
Alliance Capital Management L.P.,
1989 to April 1995.
Karen Doyle Assistant Treasurer Manager, BISYS Fund Services, Inc.,
125 West 55th Street March 1995 to Present; Assistant
New York, New York 10019 Vice President, Administration,
Age 38 Concord Financial Group, October
1994 to March 1995; Assistant
Treasurer, The Bank of New York,
1979 to October, 1994.
Robert L. Tuch Assistant Secretary Senior Counsel of BISYS Fund
3435 Stelzer Road Services, Inc., June 1991 to Present;
Columbus, Ohio 43219 Vice President and Associate General
Age 45 Counsel with National Securities
Research Corp., July 1990 to June 1991.
</TABLE>
25
<PAGE>
<TABLE>
<S> <C> <C>
Alaina V. Metz Assistant Secretary Chief Administrator, Administration
3435 Stelzer Road and Regulatory Services of BISYS
Columbus, Ohio 43219 Fund Services, Inc., June 1995 to
Age 28 Present; Supervisor of Mutual Fund
Legal Department, Alliance Capital
Management, May 1989 to June 1995.
</TABLE>
* Interested person
The Directors are paid an annual fee of $10,000 and an additional $800 for each
meeting of Board of Directors that they attend, plus out-of-pocket expenses.
The Directors are not paid any pension or retirement benefits. The Directors
may hold various other directorships unrelated to the Funds.
By virtue of the responsibilities assumed by the Adviser and the Administrator
(see "Investment Adviser", "Administrator" and "Distributor") and the services
provided by BNY Hamilton Distributors, Inc., the Funds have no employees; their
officers are provided and compensated by BNY Hamilton Distributors, Inc. BNY
Hamilton Funds, Inc.'s officers conduct and supervise the business operations of
the Funds.
26
<PAGE>
================================================================================
INVESTMENT ADVISER
The investment adviser to the Funds is The Bank of New York, a bank organized
under the laws of the State of New York with its principal offices at 48 Wall
Street, New York, New York 10286. The Bank of New York is subject to regulation
by the New York State Banking Department and is a member bank of the Federal
Reserve System. Through offices in New York City and abroad, The Bank of New
York offers a wide range of services, primarily to governmental, institutional,
corporate and individual customers in the United States and throughout the
world.
Under the terms of the Advisory Agreements, the investment advisory services The
Bank of New York provides to BNY Hamilton Funds, Inc. are not exclusive. The
Bank of New York is free to and does render similar investment advisory services
to others. The Bank of New York serves as investment adviser to personal
investors and acts as fiduciary for trusts, estates and employee benefit plans.
Certain of the assets of trusts and estates under management are invested in
common trust funds for which The Bank of New York serves as trustee. The
accounts managed or advised by The Bank of New York have varying investment
objectives and The Bank of New York invests assets of such accounts in
investments substantially similar to, or the same as, those that are expected to
constitute the principal investments of the Funds. Such accounts are supervised
by officers and employees of The Bank of New York who may also be acting in
similar capacities for the Funds. See "Portfolio Transactions and Brokerage."
The Bank of New York has voluntarily agreed to limit the expenses of the
Intermediate New York Tax-Exempt Fund to .90% of the Fund's average daily net
assets. The limitation will be accomplished by waiving all or a portion of its
advisory, accounting, custodial and certain other service fees and, if
necessary, reimbursing expenses. This voluntary limitation of expenses may be
modified or terminated at any time. There are currently no waivers or
reimbursements of expenses with respect to the Money Fund, the Intermediate
Government Fund and the Equity Income Fund.
For the fiscal years ended December 31, 1993, 1994, and 1995, The Bank of New
York received advisory fees from the funds as follows:
<TABLE>
<CAPTION>
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Money Fund $139,895 $301,506 $677,979
Intermediate Government Fund 135,160 316,370 308,254
Intermediate New York Tax-Exempt Fund 51,991 164,340 195,647
Equity Income Fund 469,189 789,873 936,192
The above chart reflects advisory fee waivers by The Bank of New York as
follows:
<CAPTION>
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Money Fund $139,895 $ 48,945 $ -0-
Intermediate Government Fund 135,160 22,326 -0-
Intermediate New York Tax-Exempt Fund 31,438 97,652 20,367
Equity Income Fund 20,563 -0- -0-
</TABLE>
The Advisory Agreement for each Fund must be specifically approved at least
annually (i) by a vote of the holders of a majority of the Fund's outstanding
shares or by its Directors and (ii) by a vote of a majority of the Directors of
the Fund who are not "interested persons" as defined by the 1940 Act cast in
person at a meeting called for the purpose of voting on such approval. See
"Directors and Officers." Each of the Advisory Agreements will terminate
automatically if assigned and is terminable at any time without penalty by a
vote of a majority of the Directors or by a vote of the holders of a majority of
a Fund's outstanding shares on 60 days' written notice to the Adviser and by the
Adviser on 90 days' written notice to BNY Hamilton Funds, Inc. See "Additional
Information."
The Bank Holding Company Act of 1956 and the Glass-Steagall Act, as interpreted
by the Board of Governors of the Federal Reserve System, generally prohibit The
Bank of New York Company, Inc. and its subsidiaries, including The Bank of New
York, from sponsoring, organizing or controlling a registered open-end
investment company continuously engaged in the issuance of its shares, such as
the Corporation. This prohibition does not extend to providing investment
advice, custodial and certain other services. The Bank of New York believes
that it may perform the services for the Funds contemplated by the Advisory
Agreement without violating the Glass-Steagall Act or other applicable banking
laws or regulations. It is, however, possible that future changes in either
federal or state statutes and regulations concerning the permissible activities
of banks or trust companies, as well as further judicial or administrative
decisions and interpretations of present and future statutes and regulations,
might prevent The Bank of New York from continuing to perform such services for
the Funds.
27
<PAGE>
If The Bank of New York were prohibited from acting as investment adviser to the
Funds, it is expected that the Directors would recommend to the Funds'
shareholders that they approve the Funds' entering into new investment advisory
agreements with another qualified adviser selected by the Directors.
================================================================================
ADMINISTRATOR
BNY Hamilton Distributors, Inc. serves as the Fund's administrator (the
"Administrator") and will assist generally in supervising the operations of the
Fund. The Administrator is a Delaware corporation organized to administer and
distribute mutual funds; its offices are located at 3435 Stelzer Road, Columbus,
Ohio 43219-3035.
The Administrator has agreed to provide facilities, equipment and personnel to
carry out administrative services for the Funds, including, among other things,
providing the services of persons who may be appointed as officers and directors
of BNY Hamilton Funds, Inc., overseeing the performance of the transfer
agent for each Fund, supervising purchase and redemption orders (made via
telephone and mail) and monitoring the Distributor's compliance with the
National Association of Securities Dealers, federal and state securities laws.
The Administrator will also be responsible for coordinating and overseeing
compliance by the Directors with Maryland corporate procedural requirements as
the Funds are series of a Maryland corporation. See "Description of Shares". The
Administrator is also responsible for updating and printing the Funds'
prospectuses and statements of additional information, administering shareholder
meetings, producing proxy statements and annual and semiannual reports,
monitoring the Adviser's compliance with the stated investment objectives and
restrictions of each Fund and ensuring that custodian, fund accounting, transfer
agency, administration, distribution, advisory and legal services are provided
to the Fund in accordance with the respective agreements governing each
relationship.
The Administration Agreement permits the Administrator to delegate certain of
its responsibilities to other service providers. Pursuant to this authority, The
Bank of New York performs certain administrative functions for the
Administrator. The Bank of New York is not an otherwise affiliated person of the
Administrator.
The Money Fund will pay the Administrator an annual fee, accrued daily and
payable monthly, of .10% of average daily net assets. The Intermediate
Government, Intermediate New York Tax-Exempt and Equity Income Funds will each
pay the Administrator an annual fee, accrued daily and payable monthly, of .20%
of their respective average daily net assets up to $400 million (taken on an
individual Fund by Fund basis), and .15% of their respective average daily net
assets (taken on an individual Fund by Fund basis) in excess of $400 million.
The Administrator has also agreed to waive all or a portion of its fees to the
extent necessary to limit expenses as described under "the Adviser".
For the fiscal years ended December 31, 1993, 1994, and 1995, the Funds paid
administration fees as follows:
<TABLE>
<CAPTION>
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Money Fund $279,790 $350,451 $677,980
Intermediate Government Fund 108,127 135,479 123,301
Intermediate New York Tax-Exempt Fund 48,110 91,346 64,804
Equity Income Fund 163,251 263,291 312,064
</TABLE>
The above chart reflects administration fee waivers from the Intermediate New
York Tax-Exempt Fund of $34,527, $13,452, and $21,601 for the fiscal years ended
December 31, 1993, 1994, and 1995, respectively. There were no waivers of
administration fees from any other Fund during the last three fiscal years.
The Administration Agreement between BNY Hamilton Funds, Inc. and the
Administrator may be renewed or amended by the Directors without a shareholder
vote.
================================================================================
DISTRIBUTOR
In addition to acting as the Administrator, BNY Hamilton Distributors, Inc. acts
as each Fund's exclusive Distributor and holds itself available to receive
purchase orders for Fund shares. The Distribution Agreements for each Fund must
be approved in the same manner as the Advisory Agreements as described above
under "Investment Adviser". The Distribution Agreements will terminate
automatically if assigned by either party thereto and are terminable at any time
without penalty by a vote of a majority of the Directors or by a vote of the
holders of a majority of a Fund's outstanding shares as defined under
"Additional Information."
28
<PAGE>
Pursuant to the Distribution Agreements, the Distributor has agreed to act as
the exclusive underwriter of the shares of each Fund and engages in such selling
efforts on a continuous basis. Effective July 11, 1994, the Intermediate
Government Fund and the Intermediate New York Tax-Exempt Fund implemented a
front end load of up to 3.00% as more fully described under "Purchase of Shares"
in the Combined Prospectus. The Equity Income Fund, which implemented a front
end load of up to 3.00% on July 11, 1994, increased its sales load to 4.50%
effective June 29, 1995. Also see "Purchase of Shares" in the Combined
Prospectus. As of December 31, 1995, the Intermediate Government Fund, the
Intermediate New York Tax-Exempt Fund and the Equity Income Fund had paid
aggregate underwriting commissions (i.e., front-end sales commissions) of $891,
$6,084 and $23,796, respectively. Of these amounts, the Distributor retained
$87, $680 and $2,599, respectively.
The Directors have adopted a distribution plan ("12b-1 Plan") with respect to
Hamilton Classic Shares of the Money Fund, which will permit the Money Fund to
reimburse the Distributor for distribution expenses in an amount up to .25% per
annum of average daily net assets of the Hamilton Classic Shares. These expenses
include, but are not limited to, fees paid to broker-dealers, telemarketing
expenses, advertising costs, printing costs, and the cost of distributing
materials borne by the Distributor in connection with sales or selling efforts
on behalf of the Hamilton Classic Shares. The Hamilton Classic Shares of the
Money Fund also bear the costs associated with implementing and operating the
12b-1 Plan (such as costs of printing and mailing service agreements). Each item
for which a payment may be made under the 12b-1 Plan may constitute an expense
of distributing Hamilton Classic Shares of the Fund as the Securities and
Exchange Commission construes such term under Rule 12b-1 of the 1940 Act. If
expenses reimbursable under the 12b-1 Plan exceed .25% per annum of average
daily net assets, they will be carried forward from month to month to the extent
they remain unpaid. All or a part of any such amount carried forward will be
paid at such time, if ever, as the Directors determine. The Hamilton Classic
Shares of the Money Fund will not be charged for interest, carrying or other
finance charges on any reimbursed distribution or other expense incurred and not
paid, nor will any expense be carried forward past the fiscal year in which it
is incurred.
Payments for distribution expenses under the 12b-1 Plan are subject to Rule 12b-
1 (the "Rule") under the Investment Company Act of 1940 (the "1940 Act").
Payments under the 12b-1 Plan are also subject to the conditions imposed by Rule
18f-3 under the 1940 Act and a Rule 18f-3 Multiple Class Plan which has been
adopted by the Directors for the benefit of the Fund. The Rule defines
distribution expenses to include the cost of "any activity which is primarily
intended to result in the sale of shares". The Rule provides, among other
things, that the Fund may bear such expenses only pursuant to a plan adopted in
accordance with the Rule. In accordance with the Rule, the 12b-1 Plan provides
that a report of the amounts expensed under the Plan, and the purposes for which
such expenditures were incurred, will be made to the Directors for their review
at least quarterly. The 12b-1 Plan for Hamilton Classic Shares provides that it
may not be amended to increase materially the costs which Hamilton Classic
Shares of the Fund may bear for distribution pursuant to the 12b-1 Plan without
shareholder approval, and the 12b-1 Plan provides that any other type of
material amendment must be approved by a majority of the Directors, and by a
majority of the Directors, and by a majority of the Directors who are neither
"interested persons" (as defined in the 1940 Act) of BNY Hamilton Funds, Inc.
nor have any direct or indirect financial interest in the operation of the 12b-1
Plan being amended or in any related agreements, by vote cast in person at a
meeting called for the purpose of considering such amendments. In addition, as
long as the 12b-1 Plan for the Hamilton Classic Shares is in effect, the
nomination of the Directors who are not interested persons of BNY Hamilton
Funds, Inc. (as defined in the 1940 Act) must be committed to the non-interested
Directors.
================================================================================
FUND, SHAREHOLDER AND OTHER SERVICES
BISYS Fund Services, Inc. ("BISYS"), 3435 Stelzer Road, Columbus, Ohio 43219-
3035, serves as transfer agent for the Funds. As transfer agent, BISYS is
responsible for maintaining account records detailing the ownership of Fund
shares and for crediting income, capital gains and other changes in share
ownership to investors' accounts. BISYS is also the dividend disbursing agent
for the Funds.
The Directors, in addition to reviewing actions of the Funds' investment
adviser, administrator and distributor, as set forth below, decide upon matters
of general policy. The Money Fund has entered into Shareholder Servicing
Agreements with respect to Hamilton Premier Shares and Hamilton Classic Shares
with The Bank of New York. The Bank of New York (as a "Shareholder Servicing
Agent") will perform certain shareholder support services to include: (i)
aggregating and processing purchase and redemption orders; (ii) placing purchase
and redemption orders with the Distributor; (iii) providing necessary personnel
and facilities to establish and maintain customer accounts and records; (iv)
processing dividend payments; and (v) providing periodic information to
beneficial owners showing their positions in Hamilton Premier Shares. Pursuant
to the Shareholder Servicing Agreement, the Hamilton Premier Shares and Hamilton
Classic Shares will pay The Bank of New York (and any other Shareholder
Servicing Agent) an annual shareholder servicing fee of .25%, to be accrued
daily and payable monthly, of the average net assets represented by such
Shareholder Servicing Agent's participation in the Money Fund.
The Bank of New York, 90 Washington Street, New York, New York 10286, serves as
the Custodian and Fund Accounting Agent for each Fund.
29
<PAGE>
Deloitte & Touche LLP, Two World Financial Center, New York, New York 10281,
are the independent auditors of the Funds and must be approved at least annually
by the Directors to continue in such capacity. They perform audit services for
the Funds including the examination of financial statements included in the
annual report to shareholders.
PURCHASE OF SHARES
Investors may open Fund accounts and purchase shares as described in the
Prospectus for the Money Fund under the "Shareholder Services" sections for each
class of shares, and in the prospectus for the Money Fund and the Combined
Prospectus under "Purchase of Shares".
With respect to the Equity Income Fund, in addition to cash, the Equity Income
Fund may accept securities in payment for Fund shares sold at the applicable
public offering price (net asset value), although the Fund would expect to
accept securities in payment for Fund shares only infrequently. Generally, the
Equity Income Fund will only consider accepting securities (i) to increase its
holdings in one or more portfolio securities or (ii) if the Adviser determines
that the offered securities are a suitable investment for the Fund and in a
sufficient amount for efficient management. Although no minimum has been
established, it is expected that the Equity Income Fund would not accept
securities with a value of less than $100,000 per issue in payment for shares.
The Fund may reject in whole or in part offers to pay for Fund shares with
securities and may discontinue its practice of accepting securities as payment
for Fund shares at any time without notice. The Fund will not accept restricted
securities in payment for shares. The Fund will value accepted securities in
the manner provided for valuing portfolio securities of the Fund. See "Net
Asset Value--Equity Income Fund".
30
<PAGE>
================================================================================
REDEMPTION OF SHARES
Investors may redeem shares as described in the Prospectus for the Money Fund
under the "Shareholder Services" sections for each class of shares, and in the
Prospectus for the Money Fund and the Combined Prospectus under "Redemption of
Shares." Shareholders redeeming shares of the Money Fund should be aware that
this Fund attempts to maintain a stable net asset value of $1.00 per share;
however, there can be no assurance that it will be able to continue to do so
and, in that case, the net asset value of the Fund's shares might deviate from
$1.00 per share. Accordingly, a redemption request might result in payment of a
dollar amount that differs from the number of shares redeemed. In the case of
the other Funds, the principal value fluctuates so that the proceeds of an
investor's shares when redeemed may be more or less than their original cost.
See "Net Asset Value" in the Prospectus for the Money Fund and below.
Shareholders redeeming their shares by telephone should be aware that neither of
the Funds nor any of their service contractors will be liable for any loss or
expense for acting upon any telephone instructions that are reasonably believed
to be genuine. In attempting to confirm that telephone instructions are
genuine, the Funds will use such procedures as are considered reasonable,
including recording those instructions and requesting information as to account
registration (such as the name in which an account is registered, the account
number, recent transactions in the account, and the account holder's social
security or taxpayer's identification number, address and/or bank). To the
extent the Funds fail to use reasonable procedures as a basis for its belief, it
and/or its service contractors may be liable for instructions that prove to be
fraudulent or unauthorized.
If a Fund determines that it would be detrimental to the best interests of the
remaining shareholders of the Fund to make payment wholly or partly in cash, the
Fund may pay the redemption price, in lieu of cash, in whole or in part by a
distribution in kind of securities from the portfolio of the Fund in conformity
with the applicable rule of the Securities and Exchange Commission. If shares
are redeemed in kind, the redeeming shareholder might incur transaction costs in
converting the assets into cash. The method of valuing portfolio securities is
described under "Net Asset Value," and such valuation will be made as of the
same time the redemption price is determined.
FURTHER REDEMPTION INFORMATION. The Funds reserve the right to suspend the right
of redemption and to postpone the date of payment upon redemption as follows:
(i) during periods when the New York Stock Exchange is closed for other than
weekends and holidays or when trading on such Exchange is restricted, (ii)
during periods in which an emergency exists that causes disposal of, or
evaluation of the net asset value of, the portfolio securities to be not
reasonably practicable or (iii) for such other periods as the Securities and
Exchange Commission may permit.
================================================================================
EXCHANGE OF SHARES
An investor may exchange shares between any member of the BNY Hamilton Family of
Funds as described under "Exchange of Shares" in the Prospectus for the Money
Fund and "Purchase of Shares - Other Purchase Information" and "Exchange of
Shares" in the Combined Prospectus. For complete information, the Prospectus of
the Fund into which an exchange is being made must be read prior to the
exchange. Requests for exchange are made in the same manner as requests for
redemptions. See "Redemption of Shares." Shares of the Fund to be acquired are
purchased for settlement when the proceeds from redemption become available. In
the case of investors in certain states, state securities laws may restrict the
availability of the exchange privilege. Shareholders of the Money Fund who wish
to exchange their shares for shares in any of the other Funds will be assessed
the sales charge consistent with the tables shown in "Purchase of Shares" in the
Combined Prospectus.
================================================================================
DIVIDENDS AND DISTRIBUTIONS
Each Fund declares and pays dividends and distributions as described under
"Dividends and Distributions" in such Fund's Prospectus.
Net investment income of each class of shares in the Money Fund consists of
accrued interest or discount and amortized premium applicable to the specific
31
<PAGE>
class less the accrued expenses of the Fund applicable to the specific class
during that dividend period, including the fees payable to the Administrator,
allocated to each class of shares. See "Net Asset Value." Determination of the
net investment income for each class of shares of the Money Fund will be made
immediately prior to the determination of net asset value at 2:30 P.M., New York
City time, on each Business Day.
Dividends on each Hamilton Share, Hamilton Premier Share and Hamilton Classic
Share of the Money Fund are determined in the same manner and are paid in the
same amount regardless of class, except that Hamilton Premier Shares and
Hamilton Classic Shares bear the fees paid to Shareholder Organizations on their
behalf for those general services described under Fund and Other Shareholder
Services--Shareholder Servicing Plan in the Money Fund Prospectus, and Hamilton
Classic Shares bear all 12b-1 fees. In addition, each class of shares of the
Money Fund bears certain other miscellaneous "class specific expenses" (i.e.,
certain cash management, registration and transfer agency expenses).
Determination of the Intermediate Government and Intermediate New York Tax-
Exempt Funds' net investment income will be made immediately prior to the
determination of net asset value at 4:00 P.M., New York City time, on each
Business Day. Net investment income for days other than Business Days is
determined as of 4:00 P.M., New York time, on the preceding Business Day. See
"Purchase of Shares" in the Combined Prospectus and this Statement of Additional
Information. Shares redeemed earn a dividend on the Business Day that the
redemption becomes effective. See "Redemption of Shares" in each Prospectus.
================================================================================
NET ASSET VALUE
Each of the Funds will compute its net asset value once daily on Monday through
Friday as described under "Net Asset Value" in the relevant Prospectus, except
that net asset value need not be computed on a day in which no orders to
purchase or redeem Fund shares have been received or on the following holidays:
New Year's Day, Martin Luther King Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day (observed), Labor Day, Columbus Day, Veterans
Day, Thanksgiving Day and Christmas Day. In addition, net asset value need not
be computed on any other day that the New York Stock Exchange is closed for
business.
MONEY FUND. In the case of the Money Fund, all portfolio securities will be
valued by the amortized cost method. The purpose of this method of calculation
is to attempt to maintain a constant net asset value of $1.00 per share for each
class of shares. No assurances can be given that this goal will be attained. The
amortized cost method of valuation values a security at its cost at the time of
purchase and thereafter assumes a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating interest rates on
the market value of the instrument. If a difference of more than .5% occurs
between valuation based on the amortized cost method and valuation based on
market value, the Directors will take steps necessary to reduce such deviation,
such as changing dividend policy, shortening the average portfolio maturity or
realizing gains or losses. See "Taxes."
Valuing the Money Fund's instruments on the basis of amortized cost and use of
the term "money market fund" are permitted by Rule 2a-7 of the 1940 Act. Rule
2a-7 prohibits money market funds that use the amortized cost method to value
assets from investing more than 5% of their total assets in the securities of
any single issuer, except obligations of the United States government and its
agencies and instrumentalities. The Money Fund intends to conduct its
investment activities in a manner consistent with the requirements of Rule 2a-7.
This is not, however, a fundamental policy and may be changed by the Directors
at any time without the approval of the shareholders of the Money Fund.
The Directors oversee the Adviser's adherence to the Securities and Exchange
Commission's rules, and have established procedures designed to stabilize net
asset value of each class of shares of the Money Fund at $1.00. Each day net
asset value is computed, each class of shares of the Money Fund will calculate
the net asset value of each class of its shares by using both the amortized cost
method and market valuations. At such intervals as they deem appropriate, the
Directors consider the extent to which net asset value as calculated by using
market valuations would deviate from $1.00 per share. Immediate action will be
taken by the Directors if the variance between market value and amortized cost
exceeds .50%.
32
<PAGE>
If the Directors believe that a deviation from the Money Fund's amortized cost
per share may result in material dilution or other unfair results to
shareholders, the Directors have agreed to take such corrective action, if any,
as they deem appropriate to eliminate or reduce, to the extent reasonably
practicable, the dilution or unfair results. Such corrective action could
include selling portfolio instruments before maturity to realize capital gains
or losses or to shorten average portfolio maturity; withholding dividends;
redeeming shares in kind; establishing net asset value by using available market
quotations; and such other measures as the Directors may deem appropriate.
During periods of declining interest rates, the Money Fund's yield based on
amortized cost may be higher than the yield based on market valuations. Under
these circumstances, a shareholder of either class of shares of the Money Fund
would be able to obtain a somewhat higher yield than would result if the Money
Fund used market valuations to determine its net asset value. The converse
would apply in a period of rising interest rates.
INTERMEDIATE GOVERNMENT AND INTERMEDIATE NEW YORK TAX-EXEMPT FUNDS. In the case
of the Intermediate Government and the Intermediate New York Tax-Exempt Funds,
portfolio securities with a maturity of 60 days or more, including securities
listed on an exchange or traded over the counter, will be valued using prices
supplied daily by an independent pricing service or services that (i) are based
on the last sale price on a national securities exchange, or in the absence of
recorded sales, at the readily available closing bid price on such exchange or
at the quoted bid price in the over-the-counter market, if such exchange or
market constitutes the broadest and most representative market for the security,
and (ii) in other cases, take into account various factors affecting market
value, including yields and prices of comparable securities, indication as to
value from dealers and general market conditions. If such prices are not
supplied by the Funds' independent pricing service, such securities will be
priced in accordance with procedures adopted by the Directors. All portfolio
securities with a remaining maturity of less than 60 days are valued by the
amortized cost method, because the Directors have determined that this method
will approximate market value. Because of the large number of municipal bond
issues outstanding and the varying maturity dates, coupons and risk factors
applicable to each issuer's books, no readily available market quotations exist
for most municipal securities.
EQUITY INCOME FUND. In the case of the Equity Income Fund, the value of
investments listed on a domestic securities exchange, other than options on
stock indexes, is based on the last sale price as of the close of regular
trading hours on the New York Stock Exchange or, in the absence of recorded
sales, at the average of readily available closing bid and asked prices on such
exchange. Securities listed on a foreign exchange are valued at the last quoted
sale price available before the time when net assets are valued. Unlisted
securities are valued at the average of the quoted bid and asked prices in the
over-the-counter market. The value of each security for which readily available
market quotations exist is based on a decision as to the broadest and most
representative market for such security. For purposes of calculating net asset
value per share, all assets and liabilities initially expressed in foreign
currencies will be converted into United States dollars at the prevailing market
rates available at the time of valuation.
Options on stock indexes traded on national securities exchanges are valued at
the close of options trading on such exchanges, which is currently 4:10 P.M.,
New York City time. Stock index futures and related options, which are traded on
commodities exchanges, are valued at their last sales price as of the close of
such commodities exchanges, which is currently 4:15 P.M., New York City time.
Securities or other assets for which market quotations are not readily available
are valued at fair value in accordance with procedures established by and under
the general supervision and responsibility of the Fund's Directors. Such
procedures include the use of independent pricing services which use prices
based upon yields or prices of securities of comparable quality, coupon,
maturity and type; indications as to values from dealers; and general market
conditions. Short-term investments, which mature in 60 days or less, are valued
at amortized cost if their original maturity was 60 days or less, or by
amortizing their value on the 61st day prior to maturity, if their original
maturity when acquired by a Fund was more than 60 days, unless this is
determined not to represent fair value by the Directors.
33
<PAGE>
Trading in securities on most foreign exchanges and over-the-counter markets is
normally completed before the close of the New York Stock Exchange and may also
take place on days on which the New York Stock Exchange is closed. If events
materially affecting the value of foreign securities occur between the time when
the exchange on which they are traded closes and the time when a Fund's net
asset value is calculated, such securities will be valued at fair value in
accordance with procedures established by and under the general supervision of
the Funds' Directors.
================================================================================
PERFORMANCE DATA
From time to time, the Funds may quote performance in terms of yield, actual
distributions, total return, or capital appreciation in reports, sales
literature, and advertisements published by the Funds. Current performance
information for the Funds may be obtained by calling the number provided on the
cover page of this Statement of Additional Information.
YIELD QUOTATIONS. As required by regulations of the Securities and Exchange
Commission, current yield for each class of shares of the Money Fund is
computed by determining the net change exclusive of capital changes in the value
of a hypothetical pre-existing account having a balance of one share at the
beginning of a seven-day calendar period, dividing the net change in account by
the value of the account at the beginning of the period, and multiplying the
return over the seven-day period by 365/7. For purposes of the calculation, net
change in account value reflects the value of additional shares purchased with
dividends from the original share and dividends declared on both the original
share and any such additional shares, but does not reflect realized gains or
losses or unrealized appreciation or depreciation. Effective yield for each
class of shares of the Money Fund is computed by annualizing the seven-day
return with all dividends reinvested in additional Fund shares.
The current and effective seven-day yields for the Hamilton class of shares of
the Money Fund as of December 31, 1995 were 5.49% and 5.64%, respectively. The
current and effective seven-day yields for the Hamilton Premier class of shares
of the Money Fund as of December 31, 1995 were 5.22% and 5.36%, respectively.
The current and effecitve seven-day yields, for the Hamilton Classic class of
shares of the Money Fund as of December 31, 1995 were 4.99% and 5.12%,
respectively.
As required by regulations of the Securities and Exchange Commission, the
annualized yield for each of the Intermediate Government Fund, the Intermediate
New York Tax-Exempt Fund and the Equity Income Fund is computed by dividing
the Fund's net investment income per share earned during a 30-day period by the
net asset value on the last day of the period. The average daily number of
shares outstanding during the period that are eligible to receive dividends will
be used in determining the net investment income per share. Income will be
computed by totaling the interest earned on all debt obligations, and in the
case of the Equity Income Fund, dividends earned on all equity securities,
during the period and subtracting from that amount the total of all recurring
expenses incurred during the period. The 30-day yield will then be annualized on
a bond-equivalent basis assuming semi-annual reinvestment and compounding of net
investment income, as described under "Additional Information" in the Combined
Prospectus.
The 30-day yields for the Intermediate Government Fund, Intermediate New York
Tax-Exempt Fund, and Equity Income Fund as of December 31, 1995 were 5.06%
3.46% and 2.45%, respectively. Without reimbursement of expenses, the 30-day
yield for the Intermediate New York Tax-Exempt Fund as of December 31, 1995
would have been 3.23%.
TOTAL RETURN QUOTATIONS. As required by regulations of the Securities and
Exchange Commission, the annualized total return of the Intermediate Government
Fund, the Intermediate New York Tax-Exempt Fund and the Equity Income Fund for a
period will be computed by assuming a hypothetical initial payment of $10,000.
It will then be assumed that all of the dividends and distributions by the Fund
over the period are reinvested and that the entire amount will be redeemed at
the end of the period. The annualized total return will then be calculated by
determining the annual rate required for the initial payment to grow to the
amount which would have been received upon redemption.
Aggregate total returns, reflecting the cumulative percentage change over a
measuring period, may also be calculated. The total returns for the
Intermediate Government Fund, the Intermediate New York Tax-Exempt
34
<PAGE>
Fund and the Equity Income Fund for the one year ended December 31, 1995 and
from inception (August 10, 1992) to December 31, 1995 were 11.96% and 15.24%;
8.68% and 14.25%; and 20.17% and 38.70%, respectively. The average annual total
return for the Intermediate Government Fund, the Intermediate New York Tax-
Exempt Fund and the Equity Income Fund for the one year ended December 31, 1995
and from inception (August 10, 1992) to December 31, 1995 were 11.96% and 4.27%;
8.68% and 4.00%; and 20.17% and 10.12%, respectively.
All return figures shown in the preceding paragraph reflect a 3.00% sales charge
(commonly referred to as a "sales load") for the Intermediate Government Fund
and Intermediate New York Tax-Exempt Fund, and a 4.50% sales charge for the
Equity Income Fund. Although none of the Funds imposed a 3.00% sales load until
July 11, 1994, and the Equity Income Fund did not impose a 4.50% sales load
until June 29, 1995, the above figures assume that the respective sales loads
have been in effect since the inception date (August 10, 1992).
GENERAL. A Fund's performance will vary from time to time depending upon market
conditions, the composition of its portfolio, and its operating expenses.
Consequently, any given performance quotation should not be considered
representative of a Fund's performance for any specified period in the future.
In addition, because performance will fluctuate, it may not provide a basis for
comparing an investment in a Fund with certain bank deposits or other
investments that pay a fixed yield or return for a stated period of time.
From time to time, the yields and the total returns of the Funds may be quoted
in and compared to other mutual funds with similar investment objectives in
advertisements, shareholder reports or other communications to shareholders.
The Funds may also include calculations in such communications that describe
hypothetical investment results. (Such performance examples will be based on an
express set of assumptions and are not indicative of the performance of any
Fund.) Such calculations may from time to time include discussions or
illustrations of the effects of compounding in advertisements. "Compounding"
refers to the fact that, if dividends or other distributions on a Fund
investment are reinvested by being paid in additional Fund shares, any future
income or capital appreciation of a Fund would increase the value, not only of
the original Fund investment, but also of the additional Fund shares received
through reinvestment. As a result, the value of the Fund investment would
increase more quickly than if dividends or other distributions had been paid in
cash. The Funds may also include discussions or illustrations of the potential
investment goals of a prospective investor (including but not limited to tax
and/or retirement planning), investment management techniques, policies or
investment suitability of a Fund, economic conditions, legislative developments
(including pending legislation), the effects of inflation and historical
performance of various asset classes, including but not limited to stocks, bonds
and Treasury bills. From time to time, advertisements or communications to
shareholders may summarize the substance of information contained in shareholder
reports (including the investment composition of a Fund), as well as, the views
of the investment adviser as to current market, economic trade and interest rate
trends, legislative, regulatory and monetary developments, investments
strategies and related matters believed to be of relevance to a Fund. The Funds
may also include in advertisements charts, graphs or drawings which illustrate
the potential risks and rewards of investment in various investment vehicles,
including but not limited to stocks, bonds, Treasury bills and shares of a Fund.
In addition, advertisements or shareholder communications may include a
discussion of certain attributes or benefits to be derived by an investment in a
Fund. Such advertisements or communications may include symbols, headlines or
other material which highlight or summarize the information discussed in more
detail therein. With proper authorization, a Fund may reprint articles (or
excerpts) written regarding the Fund and provide them to prospective
shareholders. Performance information with respect to the Funds is generally
available by calling 1-800-426-9363.
Comparative performance information may be used from time to time in advertising
the Funds' shares, including, but not limited to, data from Lipper Analytical
Services, Inc., the S&P 500 Composite Stock Price Index, the Dow Jones
Industrial Average, the Lehman Brothers indexes, the Frank Russell Indexes and
other industry publications. The Money Fund may compare the performance of each
class of shares to Money Fund Report, a service of IBC/Donoghue's as well as
yield data reported in other national financial publications.
FROM TIME TO TIME, THE FUNDS MAY INCLUDE GENERAL COMPARATIVE INFORMATION SUCH AS
STATISTICAL DATA REGARDING INFLATION, SECURITIES INDICES OR THE FEATURES OF
PERFORMANCE OF ALTERNATIVE INVESTMENTS, IN ADVERTISEMENTS, SALES
35
<PAGE>
LITERATURE AND REPORTS TO SHAREHOLDERS. THE FUNDS MAY ALSO INCLUDE CALCULATIONS,
SUCH AS HYPOTHETICAL COMPOUNDING EXAMPLES, WHICH DESCRIBE HYPOTHETICAL
INVESTMENT RESULTS IN SUCH COMMUNICATIONS. SUCH PERFORMANCE EXAMPLES WILL BE
BASED ON AN EXPRESS SET OF ASSUMPTIONS AND ARE NOT INDICATIVE OF THE PERFORMANCE
OF ANY FUND. IN ADDITION, IN SUCH COMMUNICATIONS, THE INVESTMENT ADVISER MAY
OFFER OPINIONS ON CURRENT ECONOMIC CONDITIONS.
================================================================================
PORTFOLIO TRANSACTIONS AND BROKERAGE
Fixed-income and debt securities and municipal bonds and notes are generally
traded at a net price with dealers acting as principal for their own accounts
without a stated commission. The price of the security usually includes profit
to the dealers. In underwritten offerings, securities are purchased at a fixed
price which includes an amount of compensation to the underwriter, generally
referred to as the underwriter's concession or discount. On occasion, certain
securities may be purchased directly from an issuer, in which case no
commissions or discounts are paid.
PORTFOLIO TURNOVER. A Fund's investment policies may lead to frequent changes
in investments, particularly in periods of rapidly fluctuating interest rates.
A change in securities held by a Fund is known as "portfolio turnover" and may
involve the payment by the Fund of dealer spreads or underwriting commissions,
and other transaction costs, on the sale of securities, as well as on the
reinvestment of the proceeds in other securities. A Fund's portfolio turnover
rate is calculated by dividing the lesser of purchases or sales of portfolio
securities for the fiscal year by the monthly average of the value of the
portfolio securities owned during the year. Securities whose maturity or
expiration date at the time of acquisition were one year or less are excluded
from the calculation. For the fiscal years ended December 31, 1993, 1994, and
1995, the portfolio turnover rates for the Intermediate New York Tax-Exempt Fund
and the Equity Income Fund were 6%, 18% and 4%; 50% 51% and 58%, respectively.
It is anticipated that the Intermediate New York Tax-Exempt Fund and the Equity
Income Fund will continue to have a portfolio turnover rate of less than 100%.
For the fiscal years ended December 31, 1993, 1994, and 1995, the portfolio
turnover rates for the Intermediate Government Fund were 67%, 49% and 48%,
respectively. It is anticipated that the Intermediate Government Fund will
continue to have a portfolio turnover rate of not greater than 200%. The fixed
income securities in which the Fund will invest are generally traded at a net
price with dealers acting as principal for their own accounts and without
brokerage commissions. However, other expenses, such as custodial fees and
wire charges may be higher during periods of higher turnover.
MONEY, INTERMEDIATE GOVERNMENT AND INTERMEDIATE NEW YORK TAX-EXEMPT FUNDS.
Portfolio transactions for the Money Fund, the Intermediate Government Fund and
the Intermediate New York Tax-Exempt Fund will be undertaken principally to
accomplish a Fund's objective in relation to expected movements in the general
level of interest rates. The Money Fund, the Intermediate Government Fund and
the Intermediate New York Tax-Exempt Fund may engage in short-term trading
consistent with their objectives.
The Money Fund's policy of investing only in securities with maturities of less
than 397 days will result in high portfolio turnover. Since brokerage
commissions are not normally paid on investments that the Fund makes, turnover
resulting from such investments should not adversely affect the net asset value
or net income of the Fund.
EQUITY INCOME FUND. In connection with portfolio transactions for the Equity
Income Fund, the overriding objective is to obtain the best possible execution
of purchase and sale orders. In selecting a broker, the Adviser considers a
number of factors including: the price per unit of the security; the broker's
reliability for prompt, accurate confirmations and on-time delivery of
securities; the firm's financial condition; as well as the commissions charged.
A broker may be paid a brokerage commission in excess of that which another
broker might have charged for effecting the same transaction if, after
considering the foregoing factors, the Adviser decides that the broker chosen
will provide the best possible execution. The Adviser will monitor the
reasonableness of the brokerage commissions paid in light of the execution
received. The Directors will review regularly the reasonableness of
36
<PAGE>
commissions and other transaction costs incurred by the Equity Income Fund in
light of facts and circumstances deemed relevant from time to time, and, in that
connection, will receive reports from the Adviser and published data concerning
transaction costs incurred by institutional investors generally. Research
services provided by brokers to which the Adviser has allocated brokerage
business in the past include economic statistics and forecasting services,
industry and company analyses, portfolio strategy services, quantitative data,
and consulting services from economists and political analysts. Research
services furnished by brokers are used for the benefit of all the Adviser's
clients and not solely or necessarily for the benefit of an individual fund. The
Adviser believes that the value of research services received is not
determinable and does not significantly reduce its expenses. The Equity Income
Fund will not reduce its fee to the Adviser by any amount that might be
attributable to the value of such services.
For the fiscal years ended December 31, 1993, 1994, and 1995, the Equity Income
Fund paid aggregate broker commissions of $160,671, $157,942, and $203,878,
respectively.
Subject to the overriding objective of obtaining the best possible execution of
orders, the Adviser may allocate a portion of the Equity Income Fund's portfolio
brokerage transactions to affiliates of the Adviser. In order for affiliates of
the Adviser to effect any portfolio transactions for the Equity Income Fund, the
commissions, fees or other remuneration received by such affiliates must be
reasonable and fair compared to the commissions, fees, or other remuneration
paid to other brokers in connection with comparable transactions involving
similar securities being purchased or sold on a securities exchange during a
comparable period of time. Furthermore, the Directors, including a majority of
the Directors who are not "interested persons," have adopted procedures which
are reasonably designed to provide that any commissions, fees, or other
remuneration paid to such affiliates are consistent with the foregoing standard.
Portfolio securities will not be purchased from or through or sold to or through
the Funds' Administrator, Distributor or Adviser or any "affiliated person," as
defined in the 1940 Act, of the Co-Administrators, Distributor or Adviser when
such entities are acting as principals, except to the extent permitted by law.
In addition, the Funds will not purchase securities during the existence of any
underwriting group relating thereto of which the Adviser or an affiliate of the
Adviser is a member, except to the extent permitted by law.
On those occasions when the Adviser deems the purchase or sale of a security to
be in the best interests of a Fund as well as other customers, including the
other Funds, to the extent permitted by applicable laws and regulations, the
Adviser may, but is not obligated to, aggregate the securities to be sold or
purchased for the Fund with those to be sold or purchased for other customers in
order to obtain best execution, including lower brokerage commissions if
appropriate. In such event, allocation of the securities so purchased or sold as
well as any expenses incurred in the transaction will be made by the Adviser, in
the manner it considers to be most equitable and consistent with the Adviser's
fiduciary obligations to the Fund. In some instances, this procedure might
adversely affect a Fund.
If a Fund effects a closing purchase transaction with respect to an option
written by it, normally such transaction will be executed by the same broker-
dealer who executed the sale of the option. The writing of options by a Fund
will be subject to limitations established by each of the exchanges governing
the maximum number of options in each class which may be written by a single
investor or group of investors acting in concert, regardless of whether the
options are written on the same or different exchanges or are held or written in
one or more accounts or through one or more brokers. The number of options which
a Fund may write may be affected by options written by the Adviser for other
investment advisory clients. An exchange may order the liquidation of positions
found to be in excess of these limits, and it may impose certain other
sanctions.
37
<PAGE>
DESCRIPTION OF SHARES
BNY Hamilton Funds, Inc. (the "Corporation") is a registered, open-end
investment company organized under the laws of the State of Maryland. The
Articles of Incorporation of the Corporation currently permit the Corporation to
issue 20,000,000,000 shares of common stock, par value $.001 per share, of which
shares have been classified as follows:
<TABLE>
<CAPTION>
Number of Shares of Common
Name of Series Allocated
- -------------- --------------------------
<S> <C>
BNY Hamilton Money Fund
- Hamilton Shares............................. 3,000,000,000
- Hamilton Premier Shares..................... 3,000,000,000
- Hamilton Classic Shares..................... 3,000,000,000
BNY Hamilton Equity Income Fund..................... 200,000,000
BNY Hamilton Intermediate Government Fund........... 200,000,000
BNY Hamilton Intermediate New York Tax-Exempt Fund.. 200,000,000
Undesignated Common Stock........................... 10,400,000,000
</TABLE>
Shares of the Corporation do not have preemptive or conversion rights and are
fully paid and nonassessable by the Corporation. The rights of redemption and
exchange are described in the appropriate Prospectus and elsewhere in this
Statement of Additional Information.
The shareholders of each Fund are entitled to a full vote for each full share
held and to a fractional vote for each fractional share. Subject to the 1940 Act
and Maryland law, the Directors themselves have the power to alter the number
and the terms of office of the Directors, to lengthen their own terms, or to
make their terms of unlimited duration subject to certain removal procedures,
and to appoint their own successor; provided, however, that immediately after
such appointment the requisite majority of the Directors have been elected by
the shareholders of the Funds. The voting rights of shareholders are not
cumulative so that holders of more than 50% of the shares voting can, if they
choose, elect all Directors being selected while the holders of the remaining
shares would be unable to elect any Directors. It is the intention of the
Corporation not to hold annual shareholder meetings. The Directors may call
shareholder meetings for action by shareholder vote as may be required by either
the 1940 Act or the Articles of Incorporation.
The Corporation, if requested to do so by the holders of at least 10% of
shareholders of all series aggregated as a class, will call a meeting of
shareholders for the purpose of voting upon the question of the removal of a
director or directors and will assist in communications with other shareholders
as required by Section 16(c) of the 1940 Act.
The Articles of Incorporation contain a provision permitted under the Maryland
General Corporation Law that under certain circumstances eliminates the personal
liability of the Directors to the Corporation or its shareholders. The Articles
of Incorporation and the Bylaws of the Corporation provide that the Corporation
will indemnify the Directors, officers and employees of the Funds to the full
extent permitted by the Maryland General Corporation Law, which permits
indemnification of such persons against liabilities and expenses incurred in
connection with proceedings in which they may be involved because of their
offices or employment with the Corporation. However, nothing in the Articles of
Incorporation or the Bylaws of the Corporation protects or indemnifies a
Director, officer or employee against any liability to the Corporation or its
shareholders to which he or she would otherwise be subject by reason of willful
malfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office.
For information relating to mandatory redemption of Fund shares or, under
certain circumstances, their redemption at the option of the Funds, see
"Redemption of Shares" in the Prospectuses.
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<PAGE>
No single person beneficially owns 25% or more of the Corporation's voting
securities. The following table sets forth the name, address and percentage of
ownership of each person who is known by the Registrant to own, of record or
beneficially, 5% or more of any class of the Corporation's outstanding equity
securities as of March 31, 1996:
<TABLE>
<CAPTION>
Fund Of Record % Beneficial Owner %
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Money The Bank of New York 7.18% The Bank of New York 7.43%
Profit Sharing Plan C 48 Wall Street
48 Wall Street New York, NY 10286
New York, NY 10286
Duke University 9.01%
100 N. Tryon Street
Charlotte, NC 28202
Rensselaer Polytechnic
Institute 5.65%
2144 Burdett Avenue
Troy, NY 12180
Intermediate Government The Bank of New York 35.15% The Bank of New York 46.09%
Profit Sharing Plan B 48 Wall Street
48 Wall Street New York, NY 10286
New York, NY 10286
The Bank of New York 6.57%
Employee Incentive
Savings Plan
48 Wall Street
New York, NY 10286
Intermediate New York
Tax-Exempt NONE Robert J. Milano 8.72%
860 United Nations Plaza
New York NY 10017
Equity Income The Bank of New York 42.30% The Bank of New York 46.66%
Profit Sharing Plan A 48 Wall Street
48 Wall Street New York, NY 10286
New York, NY 10286
</TABLE>
The Corporation's officers and directors, taken as a group, own less than 1% of
the shares of each of the Funds.
================================================================================
TAXES
Each Fund generally will be treated as a separate corporation for federal income
tax purposes, and thus the provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), generally will be applied to each Fund
39
<PAGE>
separately, rather than the Corporation as a whole. Net long-term and short-term
capital gains, net income, and operating expenses therefore will be determined
separately for each Fund.
Each Fund within the Corporation intends to qualify as a regulated investment
company under Subchapter M of the Code. Accordingly, each Fund must, among other
things, (a) derive at least 90% of its gross income from dividends, interest,
payments with respect to loans of stock and securities, gains from the sale or
other disposition of stock, securities or foreign currency and other income
(including but not limited to gains from options, futures, and forward
contracts) derived with respect to its business of investing in such stock,
securities or foreign currency; (b) derive less than 30% of its gross income
from the sale or other disposition of stock, securities, options, futures or
forward contracts (other than options, futures or forward contracts on foreign
currencies) held less than three months; and (c) diversify its holdings so that,
at the end of each fiscal quarter, (i) at least 50% of the value of the Fund's
assets is represented by cash, United States Government securities and other
securities, with such other securities limited, in respect of any one issuer, to
an amount not greater than 5% of the Fund's assets, and 10% of the outstanding
voting securities of such issuer and (ii) not more than 25% of the value of its
assets is invested in the securities of any one issuer (other than United States
Government securities or the securities of other regulated investment
companies). As a regulated investment company, a Fund (as opposed to its
shareholders) will not be subject to federal income taxes on the net investment
income and capital gains that it distributes to its shareholders, provided that
at least 90% of its net investment income and realized net short-term capital
gains in excess of net long-term capital losses for the taxable year is
distributed.
Under the Code, a Fund will be subject to a 4% excise tax on a portion of its
undistributed income if it fails to meet certain distribution requirements by
the end of the calendar year. Each Fund intends to make distributions in a
timely manner and accordingly does not expect to be subject to the excise tax.
For federal income tax purposes, dividends that are declared by a Fund in
October, November or December as of a record date in such month and actually
paid in January of the following year will be treated as if they were paid on
December 31 of the year declared. Therefore, such dividends will generally be
taxable to a shareholder in the year declared rather than the year paid.
Distributions of net investment income and realized net short-term capital gains
in excess of net long-term capital losses (other than exempt-interest dividends
distributed by the Intermediate New York Tax-Exempt Fund, as described below)
are generally taxable to shareholders of the Funds as ordinary income whether
such distributions are taken in cash or reinvested in additional shares. The
Equity Income Fund expects that a portion of these distributions to corporate
shareholders will be eligible for the 70% dividends-received deduction.
Prospective corporate investors should be aware that, under a proposal made by
President Clinton on March 19, 1996, the dividends received deduction applicable
to corporations investing in the Equity Income Fund would be reduced from 70% to
50%. These distributions from all other Funds will not be eligible for the
dividends-received deduction. Distributions of net long-term capital gains
(i.e., net long-term capital gains in excess of net short-term capital losses)
are taxable to shareholders of a Fund as long-term capital gains, regardless of
whether such distributions are taken in cash or reinvested in additional shares
and regardless of how long a shareholder has held shares in the Fund, and are
not eligible for the dividends-received deduction.
A gain or loss realized by a shareholder on the redemption, sale or exchange of
shares held as a capital asset will be capital gain or loss and such gain or
loss will be long-term if the holding period for the shares exceeds one year,
and otherwise will be short-term. Any loss realized by a shareholder on the
disposition of shares held six months or less will be treated as a long-term
capital loss to the extent of any distributions of net long-term capital gains
received by the shareholder with respect to such shares. Any such loss may be
disallowed in the case of the Intermediate New York Tax-Exempt Fund. See
"Intermediate New York Tax-Exempt Fund" below. Additionally, any loss realized
on a redemption or exchange of shares of a Fund will be disallowed to the extent
the shares disposed of are replaced within a period of 61 days beginning 30 days
before such disposition, such as pursuant to reinvestment of a dividend in
shares of the Fund.
Prospective investors in the Equity Income Fund, the Intermediate Government
Fund, and the Intermediate New York Tax-Exempt Fund should be aware that
distributions of net investment income or net long-term capital gains from these
Funds will have the effect of reducing the net asset value of the Funds' shares
by the amount of the distribution. If the net asset value is reduced below a
shareholder's cost, the distribution will nonetheless be taxable as described
above, even if the distribution represents a return of invested capital.
Investors should consider the tax implications of buying shares in these Funds
just prior to a distribution, when the price of shares may reflect the amount of
the forthcoming distribution.
Gains or losses on sales of securities by a Fund will be treated as long-term
capital gains or losses if the securities have been held by it for more than one
year except in certain cases where, if applicable, a Fund acquires a put or
writes a call thereon. Other gains or losses on the sale of securities will be
short-term capital gains or losses. Gains and losses on the sale, lapse or other
termination of options on securities will be treated as gains and losses from
40
<PAGE>
the sale of securities. If an option written by a Fund lapses or is 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. If securities are purchased by the 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. If
securities are sold by the Fund pursuant to the exercise of a call option
written by it, the Fund will include the premium received in the sale price for
the securities sold.
Under the Code, gains or losses attributable to dispositions of foreign currency
or to foreign currency contracts, or to fluctuations in exchange rates between
the time a Fund accrues income or receivables or expenses or other liabilities
denominated in a foreign currency and the time a Fund actually collects such
income or pays such liabilities, are treated as ordinary income or ordinary
loss. Similarly, gains or losses on the disposition of debt securities held by a
Fund, if any, denominated in foreign currency, to the extent attributable to
fluctuations in exchange rates between the acquisition and disposition dates,
are also treated as ordinary income or loss.
Forward currency contracts, options and futures contracts entered into by a Fund
may create "straddles" for federal income tax purposes and this may affect the
character and timing of gains or losses realized by a Fund on forward currency
contracts, options and futures contracts or on the underlying securities.
Straddles may also result in the loss of the holding period of underlying
securities for purposes of the 30% of gross income test described above, and
therefore, a Fund's ability to enter into options and futures contracts may be
limited.
Certain options, futures and foreign currency contracts held by a Fund at the
end of each fiscal year will be required to be "marked to market" for federal
income tax purposes -- i.e., treated as having been sold at market value. For
options and futures contracts, sixty percent of any gain or loss recognized on
these deemed sales and on actual dispositions will be treated as long-term
capital gain or loss, and the remainder will be treated as short-term capital
gain or loss, regardless of how long the Fund has held such options or futures.
Any gain or loss recognized on foreign currency contracts will be treated as
ordinary income, unless an election under Section 988 (a) (1) (B) of the Code is
made, in which case the rule for options and futures contracts will apply.
The Equity Income Fund may invest in equity securities of foreign issuers. If
the Equity Income Fund purchases shares in certain foreign investment companies,
the Equity Income Fund may be subject to federal income tax on a portion of an
"excess distribution" from such foreign investment companies or gain from the
disposition of such shares, even though such income may have to be distributed
as a taxable dividend by the Equity Income Fund to its shareholders. In
addition, certain interest charges may be imposed on the Equity Income Fund or
its shareholders in respect of unpaid taxes arising from such distributions or
gains. Alternatively, the Equity Income Fund would be required each year to
include in its income and distribute to shareholders a pro rata portion of a
foreign investment company's income, whether or not distributed to the Fund. If
proposed Treasury regulations become effective, the Equity Income Fund will be
able to make a "marked-to-market" election, i.e., treat the shares of foreign
investment companies as sold on the last day of the Equity Income Fund's taxable
year, and thereby avoid the special federal income tax and interest charge. If
this election becomes available, a special transition rule in the proposed
regulations would require the Equity Income Fund to mark-to-market all of its
shares in such companies on the first day of its taxable year for which the
mark-to-market rules are in effect and pay a non-deductible interest charge. The
gains the Equity Income Fund would recognize from the mark-to-market election
would be included in the net investment income the Equity Income Fund must
distribute to shareholders, notwithstanding that the Fund would receive no cash
in respect of such gains.
It is expected that the Money and Equity Income Funds may be subject to foreign
withholding taxes with respect to income received from sources within foreign
countries.
Each Fund may be subject to state or local taxes in jurisdictions in which the
Fund is deemed to be doing business. In addition, the treatment of a Fund and
its shareholders in those states that have income tax laws might differ from
treatment under the federal income tax laws. Shareholders should consult their
own tax advisors with respect to any state or local taxes.
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FOREIGN SHAREHOLDERS. Dividends of net investment income and distributions of
realized net short-term gains in excess of net long-term losses to a shareholder
who, as to the United States, is a non-resident alien individual, fiduciary of a
foreign trust or estate, foreign corporation or foreign partnership (a "foreign
shareholder") will be subject to United States withholding tax at the rate of
30% (or lower treaty rate) unless the dividends are effectively connected with a
United States trade or business of the shareholder, in which case the dividends
will be subject to tax on a net income basis at the graduated rates applicable
to United States individuals or domestic corporations. Distributions of net
long-term capital gains to foreign shareholders will not be subject to United
States tax unless the distributions are effectively connected with the
shareholder's trade or business in the United States or, in the case of a
foreign shareholder who is a non-resident alien individual, the shareholder was
present in the United States for more than 182 days during the taxable year and
certain other conditions are met.
In the case of a foreign shareholder who is a non-resident alien individual and
who is not otherwise subject to withholding as described above, a Fund may be
required to withhold United States federal income tax at the rate of 31% unless
IRS Form W-8 is provided.
Transfers by gift of shares of a Fund by a foreign shareholder who is a non-
resident alien individual will not be subject to United States federal gift tax,
but the value of shares of the Fund held by such a shareholder at his or her
death will be includible in his or her gross estate for United States federal
estate tax purposes.
INTERMEDIATE NEW YORK TAX-EXEMPT FUND. The Intermediate New York Tax-Exempt Fund
intends to qualify to pay exempt-interest dividends to its shareholders by
having, at the close of each quarter of its taxable year, at least 50% of the
value of its total assets consist of tax-exempt securities. An exempt-interest
dividend is that part of dividend distributions made by the Intermediate New
York Tax-Exempt Fund that consists of interest received by the Fund on tax-
exempt securities. Shareholders will not incur any federal income tax on the
amount of exempt-interest dividends received by them from the Intermediate New
York Tax-Exempt Fund. In view of the Intermediate New York Tax-Exempt Fund's
investment policies, it is expected that substantially all dividends will be
exempt-interest dividends, although the Intermediate New York Tax-Exempt Fund
may from time to time realize and distribute net short-term capital gains or
other minor amounts of taxable income.
Interest on indebtedness incurred or continued by a shareholder, whether a
corporation or an individual, to purchase or carry shares of the Intermediate
New York Tax-Exempt Fund is not deductible to the extent it relates to exempt-
interest dividends received by the shareholder. Any loss incurred on the sale or
redemption of the Intermediate New York Tax-Exempt Fund's shares held six months
or less will be disallowed to the extent of exempt-interest dividends received
with respect to such shares.
Interest on certain tax-exempt bonds that are private activity bonds within the
meaning of the Code is treated as a tax preference item for purposes of the
alternative minimum tax, and any such interest received by the Intermediate New
York Tax-Exempt Fund and distributed to shareholders will be so treated for
purposes of any alternative minimum tax liability of shareholders. The
Intermediate New York Tax-Exempt Fund is permitted to invest up to 20% of its
assets in private activity bonds the interest from which is a preference item
for purposes of alternative minimum tax. Moreover, exempt-interest dividends
paid to a corporate shareholder by the Intermediate New York Tax-Exempt Fund
(whether or not from interest on private activity bonds) will be taken into
account (i) in determining the alternative minimum tax imposed on 75% of the
excess of adjusted current earnings over alternative minimum taxable income,
(ii) in calculating the environmental tax equal to .12% of a corporation's
modified alternative taxable income in excess of $2 million, and (iii) in
determining the foreign branch profits tax imposed on effectively connected
earnings and profits (with adjustments) of United States branches of foreign
corporations. Prospective corporate investors should be aware that, although
the environmental tax is currently scheduled to terminate for taxable years
beginning after December 31, 1995, the tax would be reinstated under a proposal
made by President Clinton on March 19, 1996. If enacted in its current form,
President Clinton's proposal would reinstate the environmental tax for taxable
years beginning after December 31, 1995 and before January 1, 2007.
Holders of shares of the Intermediate New York Tax-Exempt Fund who are subject
to New York State and New York City personal income taxes on dividends will not
be subject to such tax on distributions from the Intermediate New York Tax-
Exempt Fund to the extent that the distributions qualify as exempt-interest
dividends and represent income attributable to federally tax-exempt obligations
of the State of New York and its subdivisions,
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agencies and instrumentalities (as well as certain other federally tax-exempt
obligations the interest on which is exempt from New York State and New York
City personal income taxes, such as, for example, certain obligations of Puerto
Rico). To the extent that distributions from the Intermediate New York Tax-
Exempt Fund are derived from other income, including long- and short-term
capital gains and income from securities lending, such distributions will not be
exempt from New York State or New York City personal income taxes.
Distributions from the Intermediate New York Tax-Exempt Fund are not excluded in
determining New York State or City franchise taxes on corporations and financial
institutions.
Annual statements as to the portion of distributions of the Intermediate New
York Tax-Exempt Fund that is attributable to interest that is exempt from
federal income tax and New York State and City personal income tax will be
provided to shareholders shortly after the end of the Intermediate New York Tax-
Exempt Fund's taxable year.
================================================================================
SPECIAL CONSIDERATIONS RELATING TO INVESTMENTS IN NEW YORK MUNICIPAL
OBLIGATIONS
The following information is a summary of special factors affecting the
Intermediate New York Tax-Exempt Fund. It does not purport to be a complete
description and is based on information from official statements relating to
securities offerings of New York issuers and, with respect to information about
credit ratings, from newspaper reports.
GENERAL
New York (the "State") is the third most populous state in the nation and has a
relatively high level of personal wealth. The State's economy is diverse with a
comparatively large share of the nation's finance, insurance, transportation,
communications and services employment, and a very small share of the nation's
farming and mining activity. The State's location, air transport facilities and
natural harbors have made it an important link in international commerce.
Travel and tourism constitute an important part of the economy. The State has a
declining proportion of its workforce engaged in manufacturing and an increasing
proportion engaged in service industries. This transition reflects a national
trend.
The State has historically been one of the wealthiest states in the nation. For
decades, however, the State economy has grown more slowly that that of the
nation as a whole, resulting in the gradual erosion of its relative economic
affluence. Statewide, urban centers have experienced significant changes
involving migration of the more affluent to the suburbs and an influx of
generally less affluent residents. Regionally, the older Northeast cities have
suffered because of the relative success that the South and the West have had in
attracting people and business. New York City (the "City") has also had to face
greater competition as other major cities have developed financial and business
capabilities which make them less dependent on the specialized services
traditionally available almost exclusively in the City.
Although industry and commerce are broadly spread across the State, particular
activities are concentrated in the following areas: Westchester County --
headquarters for several major corporations; Buffalo -- diverse manufacturing
base; Rochester -- manufacture of photographic and optical equipment; Syracuse
and Utica-Rome area -- production of machinery and transportation equipment;
Albany-Troy-Schenectady -- government and education center and production of
electrical products; Binghampton -- original site of the International Business
Machines Corporation and continued concentration of employment in computer and
other high technology manufacturing; and New York City -- headquarters for the
nation's securities business and for a major portion of the nation's major
commercial banks, diversified financial institutions and life insurance
companies. In addition, the City houses the home offices of three major radio
and television broadcasting networks, most of the national magazines and a
substantial portion of the nation's book publishers. The City also retains
leadership in the design and manufacture of men's and women's apparel.
ECONOMIC OUTLOOK
The economic and financial condition of the State may be affected by various
financial, social, economic and political factors. Those factors can be very
complex, may vary from fiscal year to fiscal year, and are frequently the result
of actions taken not only by the State and its agencies and instrumentalities,
but also by entities, such as the federal government, that are not under the
control of the State. The State Financial Plan is based upon forecasts of
national and State economic activity. Economic forecasts have frequently failed
to predict accurately the timing and magnitude of changes in the national and
the State economies. Many uncertainties exist in forecasts of both the national
and State economies, including consumer attitudes toward spending, federal
financial and monetary policies, the availability of credit, and the condition
of the world economy, which would have an adverse effect on the State. There can
be no assurance that the State economy will not experience results in the
current fiscal year that are worse than predicted, with corresponding material
and adverse effects on the State's projections of receipts and
disbursements.
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The national economy began the current expansion in 1991 and has added over
7 million jobs since early 1992. However, the recession lasted longer in the
State and the State's economic recovery has lagged behind the nation's.
Although the State has added approximately 185,000 jobs since November 1992,
employment growth in the State has been hindered during recent years by
significant cutbacks in the computer and instrument manufacturing, utility,
defense, and banking industries.
The State has for many years had a very high State and local tax burden
relative to other States. The State and its localities have used these taxes to
develop and maintain their transportation networks, public schools and colleges,
public health systems, other social services and recreational facilities.
Despite these benefits, the burden of State and local taxation, in combination
with the many other causes of regional economic dislocation, may have
contributed to the decisions of some businesses and individuals to relocate
outside, or not locate within, the State.
To stimulate the State's economic growth, the State has developed programs,
including the provision of direct financial assistance, designed to assist
businesses to expand existing operations located within the State and to attract
new businesses to the State.
In addition, the State has provided various tax incentives to encourage
business relocation and expansion. These programs include direct tax abatements
from local property taxes for new facilities (subject to locality approval) and
investment tax credits that are applied against the State corporation franchise
tax. Furthermore, the State has created 40 "economic development zones" in
economically distressed regions of the State. Businesses in these zones are
provided a variety of tax and other incentives to create jobs and make
investments in the zones.
CURRENT FISCAL YEAR
The State's budget for the 1995-96 fiscal year was enacted by the
Legislature on June 7, 1995, more than two months after the start of the fiscal
year. Prior to adoption of the budget, the Legislature enacted appropriations
for disbursements considered to be necessary for State operations and other
purposes, including all necessary appropriations for debt service. The 1995-96
budget is the first to be enacted in the administration of the Governor, who
assumed office on January 1, 1995. It is the first budget in over half a
century which proposed and, as enacted, projects an absolute year-over-year
decline in General Fund disbursements.
In his Executive Budget, the Governor indicated that in the 1995-96 fiscal
year, the State Financial Plan, based on then-current law governing spending and
revenues, would be out of balance by almost $4.7 billion, as a result of the
projected structural deficit resulting from the ongoing disparity between
sluggish growth in receipts, the effect of prior-year tax changes, and the rapid
acceleration of spending growth; the impact of unfunded 1994-95 initiatives,
primarily for local aid programs; and the use of one-time solutions, primarily
surplus funds from the prior year, to fund recurring spending in the 1994-95
budget. The Governor proposed additional tax cuts, to spur economic growth and
provide relief for low- and middle-income tax payers, which were larger than
those ultimately adopted, and which added $240 million to the then projected
imbalance or budget gap, bringing the total to approximately $5 billion.
This gap is projected to be closed in the 1995-96 State Financial Plan
based on the enacted budget, through a series of actions, mainly spending
reductions and cost containment measures and certain reestimates that are
expected to be recurring, but also through the use of one-time solutions. The
State Financial Plan projects (i) nearly $1.6 billion in savings from cost
containment, disbursement reestimates, and other savings in social welfare
programs, including Medicaid, income maintenance, and various child and family
care programs; (ii) $2.2 billion in savings from State agency actions to reduce
spending on the State workforce, the State University of New York ("SUNY") and
the City University of New York ("CUNY"), mental hygiene programs, capital
projects, the prison system and fringe benefits; (iii) $300 million in savings
from local assistance reforms, including actions affecting school aid and
revenue sharing while proposing program legislations to provide relief from
certain mandates that increase local spending; (iv) over $400 million in revenue
measures, primarily a new Quick Draw Lottery game, changes to tax payment
schedules, and the sale of assets; and (v) $300 million from reestimates in
receipts.
The State economic forecast is marginally weaker than that on which the
initial formulation of the 1995-96 State Financial Plan was based. The forecast
calls for employment to increase in 1995 and 1996. Employment growth is
expected to slow significantly in 1996 as the pace of national economic growth
slackens, entire industries experience consolidations, and governmental
employment continues to shrink. Personal income is estimated to increase by 5.6
percent in 1995, and at a more moderate 4.0 percent in 1996.
STATE FINANCIAL PLAN
The State Constitution requires the Governor to submit to the Legislature a
balanced Executive Budget which contains a complete plan of expenditures (the
"State Financial Plan") for the ensuing fiscal year and all moneys and revenues
estimated to be available therefor, accompanied by bills containing all proposed
appropriations or reappropriations and any new or modified revenue measures to
be enacted in connection with the Executive
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Budget. A final budget must be approved before the statutory deadline of April
1. The State Financial Plan is updated quarterly pursuant to law.
The State's fiscal year which commences on April 1, 1996 and ends on March
31, 1997 is referred to herein as the State's 1996-97 fiscal year. The Governor
presented his 1996-97 Executive Budget to the Legislature on December 15, 1995,
one month before the legal deadline. The Governor may amend his budget up to 30
days after its submission. The Legislature and the Comptroller will review the
Governor's Executive Budget and are expected to comment on it. There can be no
assurance that the Legislature will enact the Executive Budget into law, or that
the State's adopted budget projections will not differ materially and adversely
from the projections set forth below.
The Governor's Executive Budget projects balance on a cash basis in the
General Fund. It reflects a continuing strategy of substantially reduced State
spending, including program restructurings, reductions in social welfare
spending, and efficiency and productivity initiatives. Total General Fund
receipts and transfers from other funds are projected to be $31.3 billion, a
decrease of $1.4 billion from total receipts projected in the current fiscal
year. Total General Fund disbursements and transfers to other funds are
projected to be $31.2 billion, a decrease of $1.5 billion from spending totals
projected for the current fiscal year. After adjustments and transfers for
comparability between the 1995-96 and 1996-97 State Financial Plans, the
Executive Budget proposes an absolute year-to-year decline in General Fund
spending of 5.8 percent. Spending from all funding sources (including federal
aid) is proposed to increase by only $239 million, or 0.4 percent from the prior
fiscal year.
In his 1996-97 Executive Budget, the Governor indicated that the 1996-97
General Fund Financial Plan (based on current law governing spending and
revenues) would have been out of balance by almost $3.9 billion as a result of
the underlying disparity between receipts and disbursements caused by
anticipated spending demands, the effect of current and prior-year tax changes,
and the use of one-time revenues to fund recurring spending in the 1995-96 State
Financial Plan.
The Executive Budget proposed to close this gap primarily through a series
of spending reductions and cost-containment measures. The Executive Budget
projects (i) over $1.8 billion in savings from cost containment and other
actions in social welfare programs, including Medicaid, welfare and various
health and mental health programs; (ii) $1.3 billion in federal revenues made
available from anticipated changes in the Medicaid program, including an
increase in the federal share of Medicaid; (iii) over $450 million in savings
from reforms and cost avoidance in educational services (including school aid
and higher education), while increasing basic operating assistance for school
districts in the upcoming school year and providing fiscal relief from certain
State mandates that increase local spending; and (iv) $350 million in savings
from efficiencies and reductions in other State programs. The assumption
regarding an increased share of federal Medicaid funding has received bipartisan
Congressional support and would benefit 32 states, including New York.
To make progress toward addressing recurring budgetary imbalances, the
1996-97 Executive Budget proposes significant actions to align recurring
receipts and disbursements in future fiscal years. The Governor has proposed
closing the 1996-97 fiscal year imbalance primarily through General Fund
expenditure reductions and without increases in taxes or deferrals of scheduled
tax reductions. However, there can be no assurance that the Legislature will
enact the Governor's proposals or that the State's actions will be sufficient to
preserve budgetary balance or to align recurring receipts and disbursements in
future fiscal years. The 1996-97 Executive Budget includes actions that will
have an effect on the budget outlook for State fiscal year 1997-98 and beyond.
The net impact of these and other factors is expected to produce a potential
imbalance in receipts and disbursements in State fiscal year 1997-98, which the
Governor will propose to close with further spending reductions. The Executive
Budget contains projections of a potential imbalance in the 1997-98 fiscal year
of $1.4 billion and in the 1998-99 fiscal year of $2.5 billion, assuming
implementation of the 1996-97 Executive Budget recommendations.
Uncertainties with regard to both the economy and potential decisions at
the federal level add further pressure on future budget balance in New York
State. For example, various proposals relating to federal tax and spending
policies could, if enacted, have a significant impact on the State's financial
condition in the current and future fiscal years. Specific budget and tax
proposals under consideration at the federal level but not included in the
State's 1996-97 Executive Budget forecast could also have a disproportionately
negative impact on the longer-term outlook for the State's economy as compared
to other states.
General Fund Receipts
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The four governmental fund types that comprise the State Financial Plan are
the General Fund, the Special Revenue Funds, the Capital Projects Funds, and the
Debt Service Funds. The General Fund is the principal operating fund of the
State and is used to account for all financial transactions, except those
required to be accounted for in another fund. It is the State's largest fund and
receives almost all State taxes and other resources not dedicated to particular
purposes. General Fund moneys are also transferred to other funds, primarily to
support certain capital projects and debt service payments in other fund types.
In the State's 1995-96 fiscal year, the General Fund is expected to account
for approximately 49 percent of total governmental fund disbursements and 71
percent of total State-funded disbursements. The General Fund is projected to be
balanced on a cash basis for the 1995-96 fiscal year. Total receipts and
transfers from other funds are projected to be $33.11 billion, a decrease of $48
million from total receipts in the prior fiscal year.
Personal income tax yield in the 1995-96 fiscal year is projected at
$17.285 billion, a decrease of $305 million from reported collections in the
State's 1994-95 fiscal year. The decrease reflects both the effects of the tax
reductions noted above and the fact that reported collections in the preceding
year were affected by net refund reserve transactions that buoyed collections in
that year by $862 million that will be unavailable in the current year. Without
these changes, the yield of the tax would have grown by more than $1.0 billion
(6 percent), reflecting liability growth for the 1995 tax year projected at
approximately the same rate. The income base for the tax is projected to rise
approximately 5 percent for the 1995 tax year.
User taxes and fees are expected to total $6.697 billion, an increase of
$73 million from reported 1994-95 results. Business tax receipts are projected
at $4.079 billion, a decline of $360 million from reported 1994-95 results.
Total receipts from other taxes in the 1995-96 fiscal year are projected at
$1.102 billion, $6 million less than in the preceding year. The estimates
reflect 1994 and 1995 legislation reducing the burden of the real property gains
tax and estate tax, as well as diversion of a portion of the real estate
transfer tax proceeds to the Environmental Protection Fund.
Miscellaneous receipts in the State's 1995-96 fiscal year are expected to
total $1.596 billion, an increase of $335 million above the amount received in
the prior State fiscal year. Transfers from other funds to the General Fund
consist primarily of tax revenues in excess of debt service requirements: 1995-
96 fiscal year excess sales tax revenues are projected to be $1.341 billion,
equal to the amount received in the 1994-95 fiscal year. All other transfers
are projected to increase by $215 million, primarily reflecting the receipt of
$220 million from the Mass Transportation Operating Assistance Fund.
General Fund Disbursements
Disbursements in the General Fund are projected to total $33.055 billion in
1995-96, a decrease of $344 million. Significant decreases from the prior year
result largely from cost-containment initiatives in Medicaid and other social
welfare programs.
Grants to local governments is the largest category of General Fund
disbursements, and accounts for 69 percent of overall General Fund resources.
Disbursements from this category are projected to total $22.910 billion in the
1995-96 State Financial Plan, a decrease of $392 million from 1994-95 levels.
Although spending in this category is reduced, direct payments to local
governments, including school aid and revenue sharing, are maintained largely at
last year's levels. Significant decreases from the prior year result largely
from cost-containment initiatives in Medicaid and other social welfare programs.
Disbursements for State operations are projected at $6.020 billion, a
decrease of $288 million or 4.6 percent. This reflects the impact of a 4.3
percent reduction in the workforce, including approximately 3,200 layoffs. In
addition, the 1995-96 enacted budget achieves significant savings from
productivity initiatives, the abolition of non-critical offices and commissions,
and privatization of certain functions. Most agencies will spend less in 1995-96
than in 1994-95, with the most significant reductions made in the State
University (offset by increases in tuition). Spending for the Department of
Correctional Services increases modestly, reflecting the impact of the
sentencing reform bill adopted by the Legislature as part of the 1995-96 budget.
Disbursements for general State charges are projected to total $2.080
billion in the 1995-96 State Financial Plan, and are virtually unchanged from
the 1994-95 level. The budgeted amount for general State charges assumes the
use of $110 million from a special reserve for pension supplementation,
established in 1970 and funded through
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State and local employer contributions in the early 1970s, to offset the State's
pension contribution. The Comptroller, as sole trustee of the Common Retirement
Fund and administrative head of the Retirement System, is in the process of
reviewing the legislation that directs the use of these reserves to determine
whether or not to commence legal proceedings to prevent such proposed use in the
enacted 1995-96 State budget as a violation of the State Constitution, and there
is a substantial likelihood that he will do so. The Executive considers the
proposed use of these reserves to be a credit for prior-year supplementation
payments and, therefore, in compliance with the State Constitution.
Debt service in the General Fund for 1995-96 reflects only the $9 million
interest cost of the State's commercial paper program. No cost is included for
a TRAN borrowing, since none is expected to be undertaken. The State's annual
Spring borrowing has been eliminated. Transfers in support of debt service are
projected to total $1.583 billion, an increase of $157 million or 11 percent.
Transfers in support of capital projects are projected to total $375 million, an
increase of $169 million, which reflects significant investments in both new and
ongoing capital programs. All other transfers are projected to total $78
million, an increase of $9 million from 1994-95 levels.
The 1995-96 opening fund balance of $158 million includes $157 million
which is reserved in the Tax Stabilization Reserve Fund, as well as $1 million
which is reserved in the Contingency Reserve Fund. The closing fund balance in
the General Fund of $213 million reflects a balance of $172 million in the Tax
Stabilization Reserve Fund, following an additional payment of $15 million
during the year, and a balance of $41 million in the Contingency Reserve Fund.
The 1995-96 State Financial Plan includes actions that will have an effect
on the budget outlook for State fiscal year 1996-97 and beyond. The Division of
the Budget estimates that the 1995-96 State Financial Plan contains actions that
provide nonrecurring resources or savings totalling approximately $900 million.
The Division of the Budget also estimates that the 1995-96 State Financial Plan
contains nonrecurring expenditures totalling nearly $250 million. The net amount
of nonrecurring resources used in the 1995-96 State Financial Plan, accordingly,
is estimated by the Division of the Budget at over $600 million.
Special Revenue Funds
Special Revenue Funds are used to account for the proceeds of specific
revenue sources, such as federal grants, that are legally restricted, either by
the Legislature or outside parties, to expenditures for specified purposes.
Projected receipts in this fund type total $25.547 billion, an increase of
$1.316 billion over the prior year. Projected disbursements in this fund type
total $26.002 billion, an increase of $1.641 billion over 1994-95 levels.
Disbursements from Federal funds, primarily the Federal share of Medicaid and
other social services programs, are projected to total $19.209 billion in the
1995-96 fiscal year. Remaining projected spending of $6.793 billion primarily
reflects aid to SUNY supported by tuition and dormitory fees, education aid
funded from lottery receipts, operating aid payments to the Metropolitan
Transportation Authority funded from the proceeds of dedicated transportation
taxes, and costs of a variety of self-supporting programs which deliver services
financed by user fees.
Capital Projects Funds
Capital Projects Funds are used to account for the financial resources used
for the acquisition, construction, or rehabilitation of major State capital
facilities and for capital assistance grants to certain local government or
public authorities. This fund type consists of the Capital Projects Fund, which
is supported by tax dollars transferred from the General Fund, and 37 other
capital funds established to distinguish specific capital construction purposes
supported by other revenues.
Disbursements from this fund type are projected to increase by $541 million
over prior-year levels, primarily reflecting higher spending for transportation
and mental hygiene projects. Total receipts in this fund type are projected at
$4.17 billion, not including $364 million expected to be available from the
proceeds of general obligation bonds.
Debt Service Funds
Debt Service Funds are used to account for the payment of principal of, and
interest on, long-term debt of the State and to meet commitments under lease-
purchase and other contractual-obligation financing arrangements. Disbursements
are projected at $2.506 billion in the 1995-96 fiscal year, an increase of $303
million or 13.8 percent
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from 1994-95. The transfer from the General Fund of $1.583 billion is expected
to finance 63 percent of these payments. The remaining payments are expected to
be financed by pledged revenues.
Cash Flow
For the second time in many years, the State will meet its cash flow needs
without relying on a spring borrowing. However, this achievement is predicated
on two actions: the issuance of all remaining LGAC bonds authorized in the 1990
statute; and the passage of proposed legislation permitting the State to use,
for cash flow purposes only, balances in the Lottery Fund. Temporary transfers
will be returned within five months so that all available Lottery moneys as well
as advances of additional aid can be paid to school districts in September.
The lingering impact of the 1994-95 receipts shortfall -- as well as the
impact of the potential $5 billion 1995-96 imbalance on cash operations --
exerts substantial pressures on the State's cash balance position in the first
three months of the fiscal year. These pressures are expected to abate later in
the 1995-96 fiscal year, as cash outlays decline from previous levels consistent
with cost-savings initiatives proposed in the Executive Budget.
PRIOR FISCAL YEARS
New York State's financial operations have improved during recent fiscal
years. During the period 1989-90 through 1991-92, the State incurred General
Fund operating deficits that were closed with receipts from the issuance of tax
and revenue anticipation notes ("TRANs"). First, the national recession, and
then the lingering economic slowdown in the New York and regional economy,
resulted in repeated shortfalls in receipts and three budget deficits. For its
1992-93, 1993-94, and 1994-95 fiscal years, the State recorded balanced budgets
on a cash basis, with substantial fund balances in 1992-93 and 1993-94, and a
smaller fund balance in 1994-95.
1994-95 Fiscal Year
The 1994-95 budget contained a significant investment in efforts to spur
economic growth. The budget included provisions to reduce the level of business
taxation in New York, with cuts in the corporate tax surcharge, the alternative
minimum tax imposed on business and the petroleum business tax, repeal of the
State's hotel occupancy tax, and reductions in the real property gains tax to
stimulate construction and facilitate the real estate industry's access to
capital. Complementing the elimination of the hotel tax was a $10 million
investment of State funds in the "I Love New York" program designed to spur
tourism activity throughout the State.
To help strengthen the State's economic recovery, the 1994-95 budget also
included more than $200 million in additional funding for economic development
programs. Special emphasis was placed on programs intended to enable New York
State to: (i) invest in high technology industries; (ii) expand access to
foreign markets; (iii) strengthen assistance to small businesses, particularly
those owned by women and minorities; (iv) retain and attract new manufacturing
jobs; (v) help companies and communities impacted by continued cutbacks in
federal defense spending and ongoing corporate downsizings; and (vi) bolster the
tourism industry. In addition, the budget included increased levels of support
for programs to rebuild and maintain State infrastructure, and provisions to
create 21 new economic development zones.
New York State ended its 1994-95 fiscal year with the General Fund in
balance. The closing fund balance of $158 million reflects $157 million in the
Tax Stabilization Reserve Fund and $1 million in the Contingency Reserve Fund
("CRF"). Compared to the State Financial Plan for 1994-95 as formulated on June
16, 1994, reported receipts fell short of original projections by $1.163
billion, primarily in the categories of personal income and business taxes. Of
this amount, the personal income tax accounts for $800 million, reflecting weak
estimated tax collections and lower withholding due to reduced wage and salary
growth, more severe reductions in brokerage industry bonuses than projected
earlier, and deferral of capital gains realizations in anticipation of potential
Federal tax changes. Business taxes fell short by $373 million, primarily
reflecting lower payments from banks as substantial overpayments of 1993
liability depressed net collections in the 1994-95 fiscal year. These
shortfalls were offset by better performance in the remaining taxes,
particularly the user taxes and fees, which exceeded projections by $210
million. Of this amount, $227 million was attributable to certain restatements
for accounting treatment purposes pertaining to the CRF and Local Government
Assistance Corporation ("LGAC"); these restatements had no impact on balance in
the General Fund.
Disbursements were also reduced from original projections by $848 million.
After adjusting for the net impact of restatements relating to the CRF and LGAC
which raised disbursements by $38 million, the variance is $886 million. Well
over two-thirds of this variance is in the category of grants to local
governments, primarily
48
<PAGE>
reflecting the conservative nature of the original estimates of projected costs
for social services and other programs. Lower education costs are attributable
to the availability of $110 million in additional lottery proceeds and the use
of LGAC bond proceeds.
The spending reductions also reflect $188 million in actions initiated in
January 1995 by the Governor to reduce spending to avert a potential gap in the
1994-95 State Financial Plan. These actions included savings from a hiring
freeze, halting the development of certain services, and the suspension of non-
essential capital projects. These actions, together with $71 million in other
measures comprised the Governor's $259 million gap-closing plan, submitted to
the Legislature in connection with the 1995-96 Executive Budget.
1993-94 Fiscal Year
The State ended its 1993-94 fiscal year with a balance of $1.140 billion in
the tax refund reserve account, $265 million in its Contingency Reserve Fund and
$134 million in its Tax Stabilization Reserve Fund. These fund balances were
primarily the result of an improving national economy, State employment growth,
tax collections that exceeded earlier projections and disbursements that were
below expectations. Deposits to the personal income tax refund reserve have the
effect of reducing reported personal income tax receipts in the fiscal year when
made and withdrawals from such reserve increase receipts in the fiscal year when
made. The balance in the tax refund reserve account will be used to pay taxpayer
refunds, rather than drawing from 1994-95 receipts.
1992-93 Fiscal Year
The State ended its 1992-93 fiscal year with a balance of $671 million in
the tax refund reserve account and $67 million in the Tax Stabilization Reserve
Fund. The State's 1992-93 fiscal year was characterized by performance that was
better than projected for the national and regional economies. National gross
domestic product, State personal income, and State employment and unemployment
performed better than originally projected in April 1992. This favorable
economic performance, particularly at year end, combined with a tax-induced
acceleration of income into 1992, was the primary cause of the General Fund
surplus. Personal income tax collections were more than $700 million higher than
originally projected (before reflecting the tax refund reserve account
transaction), primarily in the withholding and estimated payment components of
the tax. There were, however, large and mainly offsetting variances in other
categories of receipts.
CERTAIN LITIGATION
Certain litigation pending against New York or its officers or employees
could have a substantial or long-term adverse effect on New York finances. Among
the more significant of these cases are those that involve: (i) the validity of
agreements and treaties by which various Indian tribes transferred to New York
title to certain land in New York; (ii) certain aspects of New York's Medicaid
rates and regulations, including reimbursements to providers of mandatory and
optional Medicaid services, and the eligibility for and nature of home care
services; (iii) challenges to provisions of Section 2807-C of the Public Health
Law, which impose a 13% surcharge on inpatient hospital bills paid by commercial
insurers and employee welfare benefit plans and portions of Chapter 55 of the
laws of 1992, which require hospitals to impose and remit to the State an 11%
surcharge on hospital bills paid by commercial insurers and which require health
maintenance organizations to remit to the State a surcharge of up to 9%; (iv) an
action against the State of New York and New York City officials alleging that
the present level of shelter allowance for public assistance recipients is
inadequate under statutory standards to maintain proper housing; (v) challenges
to the practice of reimbursing certain Office of Mental Health patient care
expenses from the client's Social Security benefits; (vi) alleged responsibility
of New York officials to assist in remedying racial segregation in the City of
Yonkers; (vii) a claim that "Quick Draw", a game of the State Division of the
Lottery, violates the State Constitution provision which bars gambling; (viii)
an action against the State which contends that certain provisions of Ch. 119L.
1995 violates Article V(S)7 of the State Constitution which bars the
diminishment of benefits of membership in the retirement system; and (ix) a
claim that the State's Department of Environmental Conservation prevented the
completion of a cogeneration facility by the projected date by failing to
provide data in a timely manner and that the plaintiff thereby suffered damages.
In addition, aspects of petroleum business taxes are the subject of
administrative claims and litigation.
THE CITY OF NEW YORK
The fiscal health of the State of New York is closely related to the fiscal
health of its localities, particularly the City, which has required and
continues to require significant financial assistance from New York. On November
49
<PAGE>
29, 1995, the City submitted to the Control Board the Financial Plan for the
1996-1999 fiscal years, which is a modification to a financial plan submitted to
the Control Board on July 11, 1995 (the "July Financial Plan") and which relates
to the City, the Board of Education ("BOE") and CUNY. The July Financial Plan
set forth proposed actions to close a previously projected gap of approximately
$3.1 billion for the 1996 fiscal year. The proposed actions in the July
Financial Plan for the 1996 fiscal year included (i) a reduction in spending of
$400 million, primarily affecting public assistance and Medicaid payments by the
City; (ii) agency reduction programs, totaling $1.2 billion; (iii) transitional
labor savings, totaling $600 million; and (iv) the phase-in of the increased
annual pension funding cost due to revisions resulting from an actuarial audit
of the City pension systems, which would reduce such costs in the 1996 fiscal
year. Other proposed actions included (i) a delay in the proposed reduction in
the commercial rent tax, which would increase projected revenues by $62 million
in the 1996 fiscal year; (ii) $50 million of proposed additional State aid not
included in the adopted State budget and $75 million of proposed additional
federal aid; (iii) revenue initiatives totaling $190 million; and (iv) savings
from a proposed refunding of outstanding debt, totaling $50 million.
The 1996-1999 Financial Plan published on November 29, 1995, reflects
actual receipts and expenditures and changes in forecast revenues and
expenditures since the July Financial Plan, and projects revenues and
expenditures for the 1996 fiscal year balanced in accordance with GAAP. Changes
in the July Financial Plan for the 1996 fiscal year include (i) a $100 million
reduction in expenditures for other than personal services; (ii) debt service
savings, including savings from a proposed refunding of outstanding debt,
totaling $123 million; (iii) a $129 million increase in projected expenditures,
including $45 million in increased spending to pay for a portion of the cost of
student transit passes; and (iv) a $100 million increase in the General Reserve.
The Financial Plan also sets forth projections for the 1997 through 1999 fiscal
years and outlines a proposed gap-closing program to eliminate projected gaps of
$1.4 billion, $2.3 billion, and $2.7 billion for the 1997, 1998, and 1999 fiscal
years, respectively, after successful implementation of the gap-closing program
for the 1996 fiscal year.
On July 10, 1995, Standard & Poor's Ratings Group revised downward its
rating on City general obligation bonds from A- to BBB+ and removed City bonds
from CreditWatch. Standard & Poor's stated that "structural budgetary balance
remains elusive because of persistent softness in the City's economy,
highlighted by weak job growth and a growing dependence on the historically
volatile financial services sector". Other factors identified by Standard &
Poor's in lowering its rating on City bonds included a trend of using one-time
measures, including debt refinancings, to close projected budget gaps,
dependence on unratified labor savings to help balance the Financial Plan,
optimistic projections of additional federal and State aid or mandate relief, a
history of cash flow difficulties caused by State budget delays, and continued
high debt levels. Fitch Investors Service, Inc. continues to rate the City
general obligation bonds A-. Moody's Investors Service, Inc.'s rating for City
general obligation bonds is Baa1.
OTHER LOCALITIES
In addition to the City, certain localities, including the City of Yonkers,
could have financial problems leading to requests for additional State
assistance. Municipalities and school districts have engaged in substantial
short-term and long-term borrowings. In 1993, the total indebtedness of all
localities in the State other than New York City was approximately $17.7
billion.
From time to time, federal expenditure reductions could reduce, or in some
cases, eliminate, federal funding of some local programs, and accordingly might
impose substantial increased expenditure requirements on affected localities. If
the State, the City or any of the public authorities were to suffer serious
financial difficulties jeopardizing their respective access to the public credit
markets, the marketability of notes and bonds issued by localities within the
State could be adversely affected. Localities also face anticipated and
potential problems resulting from certain pending litigation, judicial decisions
and long-range economic trends. Long-range potential problems of declining urban
population, increasing expenditures and other economic trends could adversely
affect localities and require increasing State assistance in the future.
AUTHORITIES
The fiscal stability of the State is related, in part, to the fiscal
stability of its public authorities. Public authorities are not subject to the
constitutional restrictions on the incurrence of debt which apply to the State
itself and may issue bonds and notes within the amounts, and as otherwise
restricted by, their legislative authorization. As of September 30, 1994, there
were 18 public authorities that had aggregate outstanding debt of $70.3 billion.
50
<PAGE>
Some authorities also receive moneys from State appropriations to pay for the
operating costs of certain of their programs.
The Metropolitan Transit Authority (the "MTA"), which receives the bulk of
the appropriated moneys from the State, oversees the operation of the City's bus
and subway system by its affiliates, the New York City Transit Authority and
Manhattan and Bronx Surface Transit Operating Authority (collectively, the
"TA"). The MTA has depended and will continue to depend upon federal, state and
local government support to operate the transit system because fare revenues are
insufficient.
Over the past several years, the State has enacted several taxes (including
a surcharge on the profits of banks, insurance corporations and general business
corporations doing business in the 12-county region served by the MTA and a
special one-quarter of one percent regional sales and use tax) that provide
additional revenues for mass transit purposes, including assistance to the MTA.
In addition, a one-quarter of one percent regional mortgages recording tax paid
on certain mortgages creates an additional source of recurring revenues for the
MTA. Further, in 1993, the State dedicated a portion of the State petroleum
business tax to assist the MTA.
In 1993, State legislation authorized the funding of a five-year $9.56
billion MTA capital plan for the five-year period, 1992 through 1996 (the "1992-
96 Capital Program"). The MTA has received approval of the 1992-96 Capital
Program based on this legislation from the 1992-96 Capital Program Review Board,
as State law requires. This is the third five-year plan since the Legislature
authorized procedures for the adoption, approval and amendment of a five-year
plan in 1981 for a capital program designed to upgrade the performance of the
MTA's transportation systems and to supplement, replace and rehabilitate
facilities and equipment. The MTA, the Triborough Bridge and Tunnel Authority,
and the TA are collectively authorized to issue an aggregate of $3.1 billion of
bonds (net of certain statutory exclusions) to finance a portion of the 1992-96
Capital Program. The 1992-96 Capital Program is expected to be financed in
significant part through dedication of State petroleum business taxes referred
to above.
There can be no assurance that all the necessary governmental actions for
the Capital Program will be taken, that funding sources currently identified
will not be decreased or eliminated, or that the 1992-96 Capital Program, or
parts thereof, will not be delayed or reduced. Furthermore, the power of the
MTA to issue certain bonds expected to be supported by the appropriation of
State petroleum business taxes is currently the subject of a court challenge.
If the Capital Program is delayed or reduced, ridership and fare revenues may
decline, which could, among other things, impair the MTA's ability to meet its
operating expenses without additional State assistance.
51
<PAGE>
APPENDIX A
Description of Security Ratings
S&P
Corporate and Municipal Bonds
- -----------------------------
AAA Debt obligations rated AAA have the highest ratings assigned by S&P to a
debt obligation. Capacity to pay interest and repay principal is extremely
strong.
AA Debt obligations rated AA have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only in a small
degree.
A Debt obligations rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debts in
higher rated categories.
BBB Debt obligations rated BBB are regarded as having an adequate capacity to
pay interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debts in this category than for debts 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.
B Debt rated B has 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.
CCC Debt rated CCC has a currently indefinable 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.
CC The rating CC is typically applied to debt subordinated to senior debt that
is assigned an actual or implied CCC rating.
C The rating C is typically applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating.
NR No public rating has been requested, there may be insufficient information
on which to base a rating, or that S&P does not rate a particular type of
obligation as a matter of policy.
Commercial Paper, Including Tax-Exempt Commercial Paper
- -------------------------------------------------------
A Issues assigned this highest rating are regarded as having the greatest
capacity for timely payment. Issues in this category are further refined
with the designations 1, 2, and 3 to indicate the relative degree of
safety.
A-1 This designation indicates that the degree of safety regarding timely
payment is very strong.
53
<PAGE>
MOODY'S
Corporate and Municipal Bonds
- -----------------------------
Aaa Bonds that 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 edge." 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 that 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 that 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 that are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. 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 presented 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 issue so
rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
NR No public rating has been requested, there may be insufficient information
on which to base a rating, or that Moody's does not rate a particular type
of obligation as a matter of policy.
Commercial Paper, Including Tax-Exempt Commercial Paper
- -------------------------------------------------------
Prime-1 Issuers rated Prime-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations.
Prime-1 repayment will normally be evidenced by the following
characteristics:
-- Leading market positions in well established industries.
-- High rates of return on funds employed.
-- Conservative capitalization structures with moderate reliance on
debt and ample asset protection.
-- Broad margins in earnings 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.
54
<PAGE>
Short-Term Tax-Exempt Notes
- ---------------------------
MIG-1 The short-term tax-exempt note rating MIG-1 is the highest rating
assigned by Moody's for notes judged to be the best quality. Notes with
this rating enjoy strong protection from established cash flows of funds
for their servicing or from established and broad-based access to the
market for refinancing, or both.
MIG-2 MIG-2 rated notes are of high quality but with margins of protection not
as large as MIG-1.
55
<PAGE>
- --------------------------------------------------------------------------------
CHAIRMAN'S LETTER
January 17, 1996
DEAR SHAREHOLDER:
The BNY Hamilton Funds are pleased to provide you with the annual report for
1995. Growth in the Money Fund was strong. Net assets increased 176% to finish
the year at $947 million.
At year-end 1995, the 7-day current yield for the Hamilton Class of the BNY
Hamilton Money Fund was 5.49%. The full year total return was 5.84%. For the
Premier Class, the 7-day current yield at year-end was 5.22% and the full year
total return was 5.54%. The 7-day current yield for the Classic Class, which
was opened on December 4th, was 4.99% at year-end.*
Overnight repurchase agreements which were collateralized by U.S. Treasury
and Agency securities and commercial paper represented the largest asset sec-
tors in the Fund at year end. Analysis of interest rate trends, Federal Reserve
policy, supply and demand conditions in the money markets and spread relation-
ships are used to determine asset composition and maturities selection.
The Federal Funds rate began and ended 1995 at the 5.50% level. After one fi-
nal tightening measure to head off inflation pressures in February, the Federal
Reserve began easing monetary policy gradually during the second half of the
year in recognition of softening economic activity. According to Kevin J.
Bannon, Chief Investment Officer at The Bank of New York (Investment Advisor),
"We expect the Federal Reserve to pursue a more aggressive easing of monetary
policy in 1996." The Bank projects a year of continuing moderate economic
growth of approximately 2.0% and low inflation of approximately 2.5% with the
primary risks to this forecast leaning in the direction of lower versus higher
rates.
The Funds are pleased to announce the creation of a new class of shares, Ham-
ilton Classic Shares. The new class, started on December 4th to serve individ-
ual investors, provides a wider distribution network for the Fund.
The BNY Hamilton Money Fund maintains a "AAAm" rating by Standard and Poor's.
According to Standard and Poor's, this rating is historical and based upon the
Fund's credit quality, market price exposure and management. The rating signi-
fies that the Fund's safety is excellent and that it has a superior capacity to
maintain its $1.00 net asset value per share. Additionally, the Fund is listed
on the National Association of Insurance Commissioners (NAIC) approved list of
Class 1 Money Market Funds.
I would like to welcome all new BNY Hamilton Money Fund shareholders in the
Hamilton Class, Hamilton Premier Class, and Hamilton Classic Class and thank
all our existing shareholders for your investment in the Fund.
Sincerely,
/s/ Eugene J. Sullivan
Eugene Sullivan
Chairman of the Board
- --------
* Yields will fluctuate with market conditions. Past performance is no guaran-
tee of future results. Investments in money market funds are not insured or
guaranteed by the U.S. Government and there is no assurance the Fund will be
able to maintain a stable net asset value of $1.00 per share.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
- ------
TABLE OF CONTENTS
<TABLE>
<S> <C>
SCHEDULE OF INVESTMENTS.................................................. Page 1
STATEMENT OF ASSETS AND LIABILITIES...................................... 5
STATEMENT OF OPERATIONS.................................................. 5
STATEMENTS OF CHANGES IN NET ASSETS...................................... 6
FINANCIAL HIGHLIGHTS..................................................... 7
NOTES TO FINANCIAL STATEMENTS............................................ 8
REPORT OF INDEPENDENT ACCOUNTANTS........................................ 10
DIRECTORS AND OFFICERS................................................... 11
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
- ------
BNY HAMILTON MONEY FUND
Schedule of Investments
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
--------- ------------
<C> <S> <C>
COMMERCIAL PAPER--24.62%
ASSET BACKED SECURITIES--TRADE & LEASE RECEIVABLES
(PARTIAL SUPPORT)--6.22%
$15,200,000 Ciesco L.P., 5.55%+, 3/6/96........................ $ 15,047,683
12,000,000 Ford Credit Receivables Funding, 5.72%+, 1/2/96.... 11,998,093
20,000,000 Matterhorn Capital Corp., 5.74%+, 1/18/96.......... 19,945,789
12,000,000 Sceptre International Ltd., 5.70%+, 1/22/96........ 11,960,100
------------
58,951,665
------------
BANK HOLDING COMPANIES--1.26%
12,000,000 Chase Manhattan Corp., 5.60%+, 3/5/96.............. 11,880,533
------------
BANKS--DOMESTIC INDUSTRIES--0.84%
8,000,000 Norwest Corp., 5.55%+, 2/16/96..................... 7,943,267
------------
BANKS--FOREIGN INSTITUTIONS--2.52%
10,000,000 Chiao Tung Bank Co., Ltd., 5.70%+, 1/29/96......... 9,955,667
10,000,000 Royal Bank of Canada, 5.70%+, 1/29/96.............. 9,955,667
4,000,000 Toronto Dominion Holdings U.S.A., 5.60%+, 4/25/96.. 3,928,444
------------
23,839,778
------------
BROKERAGE SERVICES--3.15%
15,000,000 Lehman Brothers, Inc. 5.93%+, 1/4/96............... 14,992,587
15,000,000 Merrill Lynch & Company, Inc., 5.65%+, 3/29/96..... 14,792,833
------------
29,785,420
------------
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
--------- ------------
<C> <S> <C>
ELECTRICAL & ELECTRONIC EQUIPMENT--1.57%
$15,000,000 Avnet Inc., 5.65%+, 2/12/96........................ $ 14,901,125
------------
FINANCE COMPANIES--NON-CAPTIVE AND INDEPENDENT--
3.15%
10,000,000 General Electric Capital Corp., 5.50%+, 4/1/96..... 9,860,972
20,000,000 Transamerica Corp., 5.77%+, 1/5/96................. 19,987,178
------------
29,848,150
------------
FINANCIAL SERVICES--OTHER CREDIT INSTITUTIONS--
1.26%
12,000,000 International Lease Finance Corp., 5.72%+, 1/17/96. 11,969,493
------------
FOOD PROCESSING--0.41%
4,000,000 McCormick & Co., Inc., 5.56%%+, 4/30/96............ 3,925,867
------------
LEASING (WHOLESALE & RETAIL)--AUTOS, TRUCKS, &
RV'S--1.78%
10,000,000 Ford Motor Credit Co., 5.50%+, 4/1/96.............. 9,860,972
7,000,000 Hertz Corp., 5.76%+, 1/10/96....................... 6,989,920
------------
16,850,892
------------
PHARMACEUTICALS, HEALTH CARE, COSMETICS & SOAP--
0.89%
8,500,000 Sandoz, 5.68%+, 2/5/96............................. 8,453,061
------------
UTILITIES--1.57%
5,000,000 National Rural Utilities Cooperative Finance Corp.,
5.60%+, 2/16/96.................................... 4,964,222
10,000,000 National Rural Utilities Cooperative Finance Corp.,
5.63%+, 2/28/96.................................... 9,909,294
------------
14,873,516
------------
TOTAL COMMERCIAL PAPER
(Cost $233,222,767)................................ 233,222,767
------------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
1
<PAGE>
- --------------------------------------------------------------------------------
- ------
BNY HAMILTON MONEY FUND
Schedule of Investments (Continued)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------------
<C> <S> <C>
U.S. GOV'T AGENCIES & OBLIGATIONS--20.39%
UNITED STATES GOVERNMENT AGENCY SECURITIES--18.49%
Federal Farm Credit Bank,
$10,000,000 5.66%, 2/1/96....................................... $ 9,999,210
6,000,000 5.67%, 7/17/96...................................... 6,000,000
15,300,000 5.75%, 8/1/96....................................... 15,297,823
2,000,000 5.60%, 11/1/96...................................... 1,998,830
Federal Home Loan Bank,
15,345,000 5.49%+, 2/26/96..................................... 15,213,954
7,500,000 5.71%, 8/9/96....................................... 7,498,409
7,000,000 5.84%, 10/3/96...................................... 7,000,000
5,000,000 5.89%, 10/18/96..................................... 5,000,000
Federal Home Loan Mortgage Corporation,
12,000,000 5.52%+, 2/20/96..................................... 11,908,000
17,000,000 5.47%+, 3/1/96...................................... 16,845,017
8,000,000 5.44%+, 3/4/96...................................... 7,923,840
Federal National Mortgage Association,
10,000,000 5.48%+, 2/8/96...................................... 9,942,156
10,000,000 5.44%+, 3/6/96...................................... 9,901,778
10,000,000 5.51%+, 3/8/96...................................... 9,897,453
5,000,000 5.60%, 9/20/96...................................... 4,999,156
5,000,000 5.64%, 10/2/96...................................... 4,995,266
9,000,000 5.68%, 10/7/96...................................... 8,998,792
5,000,000 5.13%+, 10/30/96.................................... 4,784,113
10,000,000 5.60%, 11/1/96...................................... 9,989,234
7,000,000 5.47%, 11/14/96..................................... 6,997,358
------------
175,190,389
------------
UNITED STATES TREASURY NOTES--1.90%
14,000,000 5.50%, 4/30/96...................................... 13,995,962
4,000,000 5.875%, 5/31/96..................................... 4,000,375
------------
17,996,337
------------
TOTAL U.S. GOV'T AGENCIES & OBLIGATIONS
(Cost $193,186,726)................................. 193,186,726
------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------------
<C> <S> <C>
FLOATING RATE NOTES--5.78%
BANK HOLDING COMPANIES
--1.27%
$12,000,000 American Express Centurion Bank, 5.9075%, payable
monthly, interest resets monthly, next interest
reset date 1/16/96, final maturity 10/16/96 (a).... $ 11,997,157
------------
BROKERAGE SERVICES--2.11%
7,000,000 Bear Stearns Companies Inc., 6.02%, payable
monthly, interest resets monthly, next interest
reset date 1/24/96, final maturity 5/24/96 (a)..... 7,005,089
13,000,000 Bear Stearns Companies Inc., 6.02%, payable
monthly, interest resets weekly, next interest
reset date 1/2/96, final maturity 10/3/96 (a)...... 13,000,000
------------
20,005,089
------------
UNITED STATES GOVERNMENT AGENCY SECURITIES--2.40%
10,000,000 Federal Farm Credit Bank, 5.84%, payable quarterly,
interest resets weekly, next interest reset date
1/3/96, final maturity 11/8/96 (a)................. 9,990,672
7,000,000 Student Loan Marketing Association, 5.25%, payable
semi-annually, interest resets weekly, next
interest reset date 1/3/96, final maturity
3/14/96 (a)........................................ 7,000,000
5,795,000 Student Loan Marketing Association, 5.40%, payable
quarterly, interest resets weekly, next interest
reset date 1/3/96, final maturity 3/20/96 (a)...... 5,797,717
------------
22,788,389
------------
TOTAL FLOATING RATE NOTES
(Cost $54,790,635)................................. 54,790,635
------------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
- ------
BNY HAMILTON MONEY FUND
Schedule of Investments (Continued)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------------
<C> <S> <C>
TIME DEPOSITS--5.02%
$20,000,000 Comerica Bank, Detroit, 5.875%, 1/2/96............. $ 20,000,000
27,556,000 Huntington National Bank, 5.375%, 1/2/96........... 27,556,000
------------
TOTAL TIME DEPOSITS
(Cost $47,556,000)................................. 47,556,000
------------
CERTIFICATE OF DEPOSIT--FOREIGN INSTITUTIONS
--1.90%
6,000,000 Commerzbank, 5.74%, 2/6/96......................... 6,000,146
12,000,000 Westdeutsche Landesbank Girozentrale, 5.60%,
5/15/96 12,000,000
------------
TOTAL CERTIFICATE OF DEPOSIT--FOREIGN INSTITUTIONS
(Cost $18,000,146)................................. 18,000,146
------------
FIXED RATE DEBT OBLIGATIONS--1.26%
ASSET BACKED SECURITIES--OTHER ASSET BACKED
PROGRAMS--0.43%
4,040,283 Navistar Financial Corp., 5.75%, 11/15/96.......... 4,040,226
------------
BANK HOLDING COMPANIES
--0.83%
7,910,000 Nationsbank Corp., 4.75%, 8/15/96.................. 7,853,009
------------
TOTAL FIXED RATE DEBT OBLIGATIONS
(Cost $11,893,235)................................. 11,893,235
------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------------
<C> <S> <C>
REPURCHASE AGREEMENTS
--41.17%
REPURCHASE AGREEMENTS WITH BARCLAYS, DEZOETE--9.50%
$90,000,000 6.00%, due 1/2/96,
repurchase price $90,060,000 (Collateral--Federal
Home Loan Mortgage Corporation Bonds, 6.40%-9.00%,
10/15/00-11/1/24; Federal National Mortgage
Association Bonds, 5.00%-8.00%, 8/1/01-8/25/21;
aggregate market value plus accrued interest
$92,700,001) (Cost $90,000,000).................... $ 90,000,000
------------
REPURCHASE AGREEMENTS WITH DEAN WITTER REYNOLDS,
INC.
--8.45%
80,000,000 5.95%, due 1/2/96,
repurchase price $80,052,889
(Collateral--United States Treasury Notes, 5.625%-
8.25%, 8/31/97-7/15/98; Federal Home Loan Mortgage
Corporation Bonds, 5.60%-9.00%, 11/15/06-3/15/24;
Federal National Mortgage Association Bonds, 6.00%-
8.00%, 9/25/07-11/25/21; aggregate market value
plus accrued interest $82,380,077) (Cost
$80,000,000)....................................... 80,000,000
------------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
- ------
BNY HAMILTON MONEY FUND
Schedule of Investments (Continued)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------------
<C> <S> <C>
REPURCHASE AGREEMENTS WITH DEUTSCHE BANK--9.50%
$90,000,000 6.00%, due 1/2/96,
repurchase price $90,060,000
(Collateral--Federal Home Loan Bank Notes including
Zero Coupon Notes, 0.00%-6.91%, 12/18/96-11/6/00;
Federal Home Loan Mortgage Corporation Bonds,
7.35%-8.115%, 1/31/05-3/22/05; Federal National
Mortgage Association Bonds including Zero Coupon
Notes, 0.00%-6.85%, 10/1/97-8/22/05; aggregate
market value plus accrued interest $91,802,944)
(Cost $90,000,000)................................. $ 90,000,000
------------
REPURCHASE AGREEMENTS WITH GOLDMAN SACHS & CO.--
7.39%
70,000,000 5.95%, due 1/2/96,
repurchase price $70,046,278 (Collateral--World
Bank Zero Coupon Note, 2/29/96; aggregate market
value $71,401,086)
(Cost $70,000,000)................................. 70,000,000
------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------------
<C> <S> <C>
REPURCHASE AGREEMENTS WITH MORGAN STANLEY GROUP,
INC.--
6.33%
$60,000,000 5.90%, due 1/2/96,
repurchase price $60,039,333
(Collateral--United States Treasury Bond, 7.50%,
11/15/16; Federal National Mortgage Association
Bonds, 5.677%-6.50%, 3/25/22-11/1/25; aggregate
market value plus accrued interest $62,089,280)
(Cost $60,000,000)................................ $ 60,000,000
------------
TOTAL REPURCHASE AGREEMENTS
(Cost $390,000,000)............................... 390,000,000
------------
TOTAL INVESTMENTS--
(Cost $948,649,509)(b)--100.14%................... 948,649,509
Liabilities in excess of cash, receivables and
other assets--(0.14%)............................. (1,335,515)
------------
NET ASSETS--100%.................................. $947,313,994
------------
</TABLE>
(a) The rate stated is the rate in effect as of December 31, 1995.
(b) The cost stated also represents the aggregate cost for Federal income tax
purposes.
+ Represents yield at time of purchase for commercial paper holdings, and dis-
counted rate at time of purchase for U.S. Government agency securities.
See notes to financial statements.
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
- ------
Statement of Assets
and
Liabilities
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments at market value, including repurchase agreements of
$390,000,000 (Identified cost $948,649,509)...................... $948,649,509
Interest receivable............................................... 2,283,387
Deferred organization costs and other assets...................... 51,182
------------
TOTAL ASSETS..................................................... 950,984,078
------------
LIABILITIES:
Payables:
Dividends: Hamilton Shares....................................... 2,482,955
Hamilton Premier
Shares............................................................. 642,708
Hamilton Classic
Shares............................................................. 565
Services provided by The Bank of New York and Administrator...... 261,994
Due to custodian................................................. 214,061
Accrued expenses and other liabilities............................ 67,801
------------
TOTAL LIABILITIES................................................ 3,670,084
------------
NET ASSETS:
(applicable to shares issued and outstanding; 9 billion shares of
$.001 par value authorized)...................................... $947,313,994
------------
SOURCES OF NET ASSETS:
Capital stock @ par............................................... $ 947,314
Capital surplus................................................... 946,366,680
------------
NET ASSETS......................................................... $947,313,994
------------
HAMILTON SHARES:
Net asset value, offering price and redemption price per share
($604,052,506/604,052,506 shares)................................ $ 1.00
------------
HAMILTON PREMIER SHARES:
Net asset value, offering price and redemption price per share
($340,163,096/340,163,096 shares)................................ $ 1.00
------------
HAMILTON CLASSIC SHARES:
Net asset value, offering price and redemption price per share
($3,098,392/3,098,392 shares).................................... $ 1.00
------------
</TABLE>
- --------------------------------------------------------------------------------
Statement of Operations
FOR THE YEAR ENDED DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest........................................................... $40,236,274
-----------
EXPENSES:
Advisory........................................................... 677,980
Administration..................................................... 677,980
12b-1 fee--Hamilton Classic Shares................................. 331
Servicing fee--Hamilton Premier Shares............................. 608,722
Servicing fee--Hamilton Classic Shares............................. 331
Accounting services................................................ 60,000
Cash management: Hamilton Shares................................... 8,852
Hamilton Premier Shares.................................... 29,910
Custodian.......................................................... 109,071
Transfer agent: Hamilton Shares.................................... 18,046
Hamilton Premier Shares...................................... 57,393
Audit.............................................................. 26,244
Insurance.......................................................... 36,564
Directors'......................................................... 15,797
Reports to shareholders............................................ 17,602
Registration and filing............................................ 19,602
Legal.............................................................. 25,603
Other.............................................................. 49,345
-----------
TOTAL EXPENSES.................................................... 2,439,373
-----------
NET INVESTMENT INCOME............................................. $37,796,901
-----------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
5
<PAGE>
- --------------------------------------------------------------------------------
- ------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1995 1994
--------------- ---------------
<S> <C> <C>
OPERATIONS:
Net investment income....................... $ 37,796,901 $ 13,920,482
--------------- ---------------
Net increase in net assets resulting from
operations................................ 37,796,901 13,920,482
--------------- ---------------
DIVIDENDS TO SHAREHOLDERS:
Dividends from net investment income:
Hamilton Shares............................ (24,629,959) (12,120,782)
Hamilton Premier Shares...................... (13,159,984) (1,799,700)
Hamilton Classic Shares...................... (6,958) --
--------------- ---------------
(37,796,901) (13,920,482)
--------------- ---------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from capital stock sold: Hamilton
Shares..................................... 2,243,841,012 1,408,507,551
Hamilton Premier Shares...................... 2,810,413,019 616,137,202
Hamilton Classic Shares...................... 3,150,632 --
Proceeds from shares issued on reinvestment
of
dividends: Hamilton Shares................. 3,388,955 1,523,042
Hamilton Premier Shares...................... 7,918,171 1,776,675
Hamilton Classic Shares...................... 6,393 --
Cost of capital stock repurchased: Hamilton
Shares..................................... (1,878,397,366) (1,482,205,834)
Hamilton Premier Shares...................... (2,585,966,924) (510,115,047)
Hamilton Classic Shares...................... (58,633) --
--------------- ---------------
Increase in net assets resulting from
capital stock transactions................ 604,295,259 35,623,589
--------------- ---------------
INCREASE IN NET ASSETS.................. 604,295,259 35,623,589
NET ASSETS:
Beginning of year........................... 343,018,735 307,395,146
--------------- ---------------
End of year................................. $ 947,313,994 $ 343,018,735
--------------- ---------------
CHANGES IN CAPITAL STOCK OUTSTANDING:
Shares sold: Hamilton Shares................ 2,243,841,012 1,408,507,551
Hamilton Premier Shares...................... 2,810,413,019 616,137,202
Hamilton Classic Shares...................... 3,150,632 --
Shares issued on reinvestment of dividends:
Hamilton Shares............................ 3,388,955 1,523,042
Hamilton Premier Shares...................... 7,918,171 1,776,675
Hamilton Classic Shares...................... 6,393 --
Shares repurchased: Hamilton Shares......... (1,878,397,366) (1,482,205,834)
Hamilton Premier Shares...................... (2,585,966,924) (510,115,047)
Hamilton Classic Shares...................... (58,633) --
--------------- ---------------
Net increase............................... 604,295,259 35,623,589
Shares outstanding, beginning of year....... 343,018,735 307,395,146
--------------- ---------------
Shares outstanding, end of year............. 947,313,994 343,018,735
--------------- ---------------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
- ------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HAMILTON
HAMILTON HAMILTON CLASSIC
SHARES PREMIER SHARES SHARES
--------------------------------------- -------------------- -----------
FOR THE FOR THE FOR THE
PERIOD PERIOD PERIOD
AUGUST 7, AUGUST 15, DECEMBER 4,
1992* YEAR 1994* 1995*
YEAR ENDED DECEMBER 31, THROUGH ENDED THROUGH THROUGH
---------------------------- DECEMBER DECEMBER DECEMBER DECEMBER
1995 1994 1993 31, 1992 31, 1995 31, 1994 31, 1995
-------- -------- -------- --------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value at
beginning of period..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- -------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income.... 0.057 0.040 0.030 0.012 0.054 0.017 0.004
-------- -------- -------- -------- -------- -------- -------
DIVIDENDS
Dividends from net
investment income....... (0.057) (0.040) (0.030) (0.012) (0.054) (0.017) (0.004)
-------- -------- -------- -------- -------- -------- -------
Net asset value at end of
period.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- -------
TOTAL RETURN:............ 5.84% 4.02% 3.03% 1.26%** 5.54% 1.69%** 0.40%**
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of
period
(000's omitted)......... $604,053 $235,220 $307,395 $135,852 $340,163 $107,799 $ 3,098
Ratio to average net
assets of:
Expenses, net of waiver
from The Bank of New
York................... 0.26% 0.30% 0.27% 0.20%*** 0.54% 0.61%*** 0.76%***
Expenses, prior to
waiver from The Bank of
New York............... 0.26% 0.32% 0.32% 0.49%*** 0.54% 0.61%*** 0.76%***
Net investment income,
net of waiver from The
Bank of New York....... 5.67% 3.92% 2.97% 3.11%*** 5.40% 4.40%*** 5.18%***
</TABLE>
* Commencement of investment operations for the respective class of shares.
** Not annualized.
*** Annualized.
See notes to financial statements.
- --------------------------------------------------------------------------------
7
<PAGE>
- --------------------------------------------------------------------------------
- ------
Notes to Financial Statements
1. ORGANIZATION AND BUSINESS
The BNY Hamilton Funds, Inc. (the "Company") was organized as a Maryland Cor-
poration on May 1, 1992 and is registered under the Investment Company Act of
1940 as an open-end management investment company. The Company currently con-
sists of four series. The BNY Hamilton Money Fund (the "Fund") commenced in-
vestment operations on August 7, 1992. The Fund consists of three classes of
shares: Hamilton Shares, Hamilton Premier Shares, and Hamilton Classic Shares.
2. SIGNIFICANT ACCOUNTING POLICIES
(A) SECURITY VALUATIONS
Securities are valued at amortized cost which approximates market value. This
method values a security at its cost at the time of purchase and thereafter as-
sumes a constant rate of amortization to maturity of any discount or premium.
(B) REPURCHASE AGREEMENTS
The Fund's custodian, or designated sub-custodians, as the case may be under
tri-party repurchase agreements, takes possession of the collateral pledged for
investments in repurchase agreements. The underlying collateral is valued daily
on a mark-to-market basis to ensure that the value, including accrued interest,
is at least equal to the repurchase price. In the event of default of the obli-
gation to repurchase, the Fund has the right to liquidate the collateral and
apply the proceeds in satisfaction of the obligations. Under certain circum-
stances, in the event of default or bankruptcy by the other party to the agree-
ment, realization and/or retention of the collateral may be subject to legal
proceedings.
(C) FEDERAL INCOME TAXES
The Fund is treated as a separate entity for federal income tax purposes. The
Fund's policy is to comply with the requirements of the Internal Revenue Code
applicable to regulated investment companies and distribute income to
shareholders within the allowable time limits. Therefore, no federal income tax
provision is required.
(D) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income is declared daily and paid monthly.
(E) SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are recorded on the trade date and interest income is
accrued daily. Discounts and premiums on securities purchased are amortized
over the life of the respective securities.
Income, expenses (other than class specific expenses) and realized gains and
losses, if any, are allocated to each class of shares based upon their relative
shares outstanding.
(F) ORGANIZATION COSTS
Costs incurred in connection with the organization and initial registration of
the Fund are being amortized evenly over the period of benefit not to exceed 60
months from the date upon which the Fund commenced investment operations.
3. ADVISORY, ADMINISTRATION AND OTHER TRANSACTIONS WITH AFFILIATES
The Bank of New York acts as the Fund's investment adviser (the "Adviser").
The Adviser manages the investments of the Fund and is re-
- --------------------------------------------------------------------------------
8
<PAGE>
- --------------------------------------------------------------------------------
- ------
Notes to Financial Statements (continued)
sponsible for all purchases and sales of the Fund's portfolio securities. The
Adviser's fee is accrued daily and is payable monthly at the annual rate of
.10% of the average daily net assets of the Fund.
BNY Hamilton Distributors, Inc. acts as the Fund's administrator (the "Admin-
istrator") and will assist generally in supervising the operations of the Fund.
The Administrator has agreed to provide facilities, equipment and personnel to
carry out administrative services for the Fund, including, among other things,
providing the services of persons who may be appointed as officers and direc-
tors of the Fund, monitoring the custodian, fund accounting, transfer agency,
administration, distribution, advisory and legal services that are provided to
the Fund.
The Administrator's fee is accrued daily and is payable monthly at the annual
rate of .10% of the average daily net assets of the Fund.
In addition to acting as Administrator, BNY Hamilton Distributors, Inc. is the
principal underwriter and distributor of shares of the Fund. The Bank of New
York serves as the Fund's custodian and also serves as the fund accounting
agent.
BNY Hamilton Funds, Inc. has adopted a shareholder servicing plan, pursuant to
which Hamilton Premier Shares and Hamilton Classic Shares are sold to certain
institutions that enter into servicing agreements with BNY Hamilton Funds, Inc.
The Bank of New York and the Administrator (the "Shareholder Servicing Agents")
have each entered into Shareholder Service Agreements with respect to Hamilton
Premier Shares and Hamilton Classic Shares of the Fund. The Shareholder Servic-
ing Agents will perform shareholder support services. Pursuant to the Share-
holder Servicing Agreements, the Hamilton Premier Shares and Hamilton Classic
Shares will pay the Shareholder Servicing Agents an annual shareholder servic-
ing fee, accrued daily and payable monthly, of .25% of the Hamilton Premier
Shares' and Hamilton Classic Shares' respective average daily net assets. The
shareholder servicing plan does not cover, and the fees thereunder are not pay-
able to, Shareholder Organizations with respect to Hamilton Shares.
The Fund has adopted a distribution plan ("12b-1 Plan") with respect to Hamil-
ton Classic Shares of the Fund, pursuant to which the Fund will pay BNY Hamil-
ton Distributors, Inc. for expenses incurred during the year in connection with
the distribution of Hamilton Classic Shares. The aggregate amount payable annu-
ally by the Fund as provided in the 12b-1 Plan may not exceed .25% of the Ham-
ilton Classic Shares' average daily net assets.
- --------------------------------------------------------------------------------
9
<PAGE>
- --------------------------------------------------------------------------------
- ------
Report of Independent Accountants
The Shareholders and Board of Directors of
BNY Hamilton Money Fund:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of BNY Hamilton Money Fund as of December 31,
1995, the related statements of operations for the year then ended and of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the three years in the period then ended
and for the period August 7, 1992 (commencement of investment operations)
through December 31, 1992. These financial statements and financial highlights
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial high-
lights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at Decem-
ber 31, 1995 by correspondence with the custodian. An audit also includes as-
sessing the accounting principles used and significant estimates made by man-
agement, as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of BNY
Hamilton Money Fund as of December 31, 1995, the results of its operations, the
changes in its net assets and the financial highlights for the respective
stated periods, in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
New York, New York
February 9, 1996
- --------------------------------------------------------------------------------
10
<PAGE>
- --------------------------------------------------------------------------------
- ------
DIRECTORS AND OFFICERS
Eugene Sullivan, Director and Chairman of the Board
Peter Herrick, Director
Leif H. Olsen, Director
Stephen Stamas, Director
Edward L. Gardner, Director
Richard E. Stierwalt, Chief Executive Officer
William B. Blundin, President
Ann E. Bergin, Vice President
William J. Tomko, Vice President
Martin Dean, Treasurer
George Martinez, Secretary
Karen Doyle, Assistant Treasurer
Robert L. Tuch, Assistant Secretary
Alaina Metz, Assistant Secretary
INVESTMENT ADVISER
The Bank of New York
ADMINISTRATOR AND DISTRIBUTOR
BNY Hamilton Distributors, Inc.
TRANSFER AGENT
BISYS Fund Services, Inc.
CUSTODIAN
The Bank of New York
INDEPENDENT ACCOUNTANTS
Deloitte & Touche LLP
LEGAL COUNSEL
Sullivan & Cromwell
- --------------------------------------------------------------------------------
11
<PAGE>
BNY HAMILTON DISTRIBUTORS, INC. IS THE FUND'S DISTRIBUTOR AND IS UNAFFILIATED
WITH THE BANK OF NEW YORK, THE INVESTMENT ADVISER.
This report is not authorized for distribution to prospective investors unless
accompanied by a current prospectus for the BNY Hamilton Money Fund. Please
read the prospectus carefully before investing or sending money.
BNY HAMILTON FUNDS, INC.
3435 Stelzer Road
Columbus, Ohio 43219-3035
INVESTMENTS IN BNY HAMILTON MONEY FUND ARE NOT DEPOSITS, ARE NEITHER GUARANTEED
BY NOR OBLIGATIONS OF THE BANK OF NEW YORK AND ARE NOT INSURED BY THE FDIC OR
ANY OTHER GOVERNMENTAL AGENCY. INVESTMENTS IN MUTUAL FUNDS INVOLVE RISK, IN-
CLUDING THE POSSIBLE LOSS OF PRINCIPAL.
BNYMM95A
BNY HAMILTON
MONEY FUND
ANNUAL REPORT
DECEMBER 31, 1995
. HAMILTON SHARES
. HAMILTON PREMIER SHARES
. HAMILTON CLASSIC SHARES
[GRAPHIC]
BNY HAMILTON FUNDS
<PAGE>
- --------------------------------------------------------------------------------
- ------
CHAIRMAN'S LETTER
January 17, 1996
DEAR FELLOW SHAREHOLDER:
The BNY Hamilton Funds are pleased to provide you with the annual report for
1995. This report covers the Equity Income Fund, Intermediate Government Fund
and Intermediate New York Tax-Exempt Fund.
Total assets in the three Funds increased by 14% in 1995, from $238 million to
$271 million. During the year the Funds implemented new marketing initiatives
targeting the individual, retirement and institutional markets. In 1996, the
Funds will continue to build the shareholder and asset base by identifying and
serving new potential shareholders and distribution channels.
Last year was very rewarding for investors in both stocks and bonds as the
combination of moderate economic growth, low inflation, declining interest
rates and improving corporate profits provided the perfect backdrop for finan-
cial assets. The Dow Jones Industrial Average rose by more than 1200 points and
long term interest rates dropped by a full 2 percentage points.
The Bank of New York, as investment adviser to the Funds, provides a team of
investment professionals who manage the Funds actively to take advantage of
changing market conditions.
According to Kevin J. Bannon, Chief Investment Officer of The Bank of New
York, "we believe 1996 is likely to be another good year for long term invest-
ors, although returns will not match last year's extraordinary gains." Based on
the Bank's forecast of slower economic activity in 1996, growth in corporate
profits will also be less robust. An expansion in price/earnings ratios will be
the primary impetus for higher stock prices. In the stock market, companies
with predictable growth characteristics and global exposure will be favored. In
the bond market, intermediate term issues offer the most attractive opportunity
on a risk/reward basis.
BNY HAMILTON EQUITY INCOME FUND:
The stock market enjoyed one of its strongest years ever in 1995, as investors
came to accept the fact that moderate growth and low inflation were not mutu-
ally exclusive in the context of an economy operating at high levels of re-
source utilization. In order to meet the Fund's objective of capital apprecia-
tion and income, investments were primarily focused in a strategic mix of divi-
dend paying stocks of growth oriented companies, convertible securities and
cash. In 1996, the Fund's stock selection will be focused on companies that in-
vestors are confident will deliver dependable earnings gains. These companies
are also likely to be accorded higher price/earnings ratios, potentially pro-
viding a double-barreled return. Careful stock selection will continue to be
complemented with an emphasis on higher income producing issues, including
utilities, convertible securities and real estate investment trusts. The Bank's
outlook for the stock market remains constructive for 1996.
Net asset growth for 1995 was approximately 26%, increasing from $135 million
to $170 million.
Cumulative Total Net Asset Value Public Offering Price
Return (includes 4.5% sales charge)
- ------------------------------------------------------------------------------
1 Year 25.78% 20.17%
- ------------------------------------------------------------------------------
Inception (8/10/92) 45.22% 38.70%
- ------------------------------------------------------------------------------
Average Annual Total
Return
- ------------------------------------------------------------------------------
1 Year 25.78% 20.17%
Inception (8/10/92) 11.62% 10.12%
- ------------------------------------------------------------------------------
(CONTINUED)
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
- ------
CHAIRMAN'S LETTER (CONTINUED)
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Bny Hamilton Equity Income Fund
BNY Hamilton BNY Hamilton
Equity Fund Equity Fund
Measurement period Assumes Assumes 4.50%
(Fiscal year Covered) No Load Sales Load S&P 500 Index
- --------------------- ------------ ------------- -------------
<S> <C> <C> <C>
Measurement PT -
7/31/92 $ 10,000 $ 9,551.1 $ 10,000
8/31/92 $ 9,910 $ 9,465.1 $ 9,798
9/30/92 $ 10,099 $ 9,645.7 $ 9,911
10/31/92 $ 10,149.2 $ 9,693.6 $ 9,946
11/30/92 $ 10,460.8 $ 9,991.2 $ 10,282
12/31/92 $ 10,586.4 $ 10,111.1 $ 10,417
1/31/93 $ 10,708.2 $ 10,227.5 $ 10,493
2/28/93 $ 10,753.8 $ 10,271.1 $ 10,634
3/31/93 $ 11,160.8 $ 10,659.8 $ 10,864
4/30/93 $ 11,079.2 $ 10,581.8 $ 10,597
5/31/93 $ 11,280.5 $ 10,774.2 $ 10,883
6/30/93 $ 11,383 $ 10,872 $ 10,918
7/31/93 $ 11,465.2 $ 10,950.5 $ 10,868
8/31/93 $ 11,773.9 $ 11,245.4 $ 11,282
9/30/93 $ 11,810 $ 11,279.9 $ 11,199
10/31/93 $ 11,830.7 $ 11,299.7 $ 11,427
11/30/93 $ 11,561.4 $ 11,042.4 $ 11,319
12/31/93 $ 11,850.7 $ 11,318.7 $ 11,458
1/31/94 $ 12,259.7 $ 11,709.4 $ 11,842
2/28/94 $ 12,018 $ 11,478.6 $ 11,522
3/31/94 $ 11,473.4 $ 10,958.4 $ 11,020
4/30/94 $ 11,389 $ 10,877.8 $ 11,163
5/31/94 $ 11,558.2 $ 11,039.4 $ 11,346
6/30/94 $ 11,192.4 $ 10,690 $ 11,065
7/31/94 $ 11,564.7 $ 11,045.6 $ 11,431
8/31/94 $ 11,841.8 $ 11,310.3 $ 11,896
9/30/94 $ 11,617.4 $ 11,096 $ 11,609
10/31/94 $ 11,751.4 $ 11,223.9 $ 11,875
11/30/94 $ 11,386.5 $ 10,875.4 $ 11,439
12/31/94 $ 11,545.2 $ 11,027 $ 11,606
1/31/95 $ 11,642.3 $ 11,119.8 $ 11,908
2/28/95 $ 11,985.6 $ 11,447.6 $ 12,371
3/31/95 $ 12,213.1 $ 11,664.9 $ 12,737
4/30/95 $ 12,479.3 $ 11,919.2 $ 13,110
5/31/95 $ 12,770.4 $ 12,197.2 $ 13,629
6/30/95 $ 13,062.4 $ 12,476 $ 13,949
7/31/95 $ 13,554.7 $ 12,946.2 $ 14,414
8/31/95 $ 13,502.6 $ 12,896.5 $ 14,453
9/30/95 $ 13,925.6 $ 13,300.5 $ 15,060
10/31/95 $ 13,779.9 $ 13,161.3 $ 15,007
11/30/95 $ 14,295.2 $ 13,653.6 $ 15,667
12/31/95 $ 14,521.7 $ 13,869.9 $ 15,957
</TABLE>
The S&P 500 Index is an unmanaged index of common stocks and cannot be
invested in directly. The Index does not take into account fees and expenses.
Past performance is no guarantee of future results. Investment return and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. For comparative purposes, the
Index's July 31, 1992 value is used as the August 10, 1992 value.
BNY HAMILTON INTERMEDIATE GOVERNMENT FUND:
1995 was a tremendous year for the bond market as the sharp decline in inter-
mediate and longer term interest rates produced strong double digit returns in
most fixed income securities. After one final tightening to head off inflation
pressures in February, the Federal Reserve began easing monetary policy gradu-
ally during the second half of the year in recognition of softening economic
activity. The Bank's outlook for the fixed income market remains positive as
bonds are expected to continue to provide strong single digit returns in an en-
vironment of slow growth and low inflation. Yield curve positioning in the 4-7
year maturity range and utilization of "spread product" such as mortgage-backed
securities will be emphasized in 1996.
Net asset growth for 1995 was approximately 3%, increasing from $59 million to
$61 million.
Cumulative Total Net Asset Value Public Offering Price
Return (including 3% sales charge)
- --------------------------------------------------------------------------------
1 Year 15.40% 11.96%
- --------------------------------------------------------------------------------
Inception (8/10/92) 18.82% 15.24%
- --------------------------------------------------------------------------------
Average Annual Total
Return
- --------------------------------------------------------------------------------
1 Year 15.40% 11.96%
- --------------------------------------------------------------------------------
Inception (8/10/92) 5.21% 4.27%
- --------------------------------------------------------------------------------
(CONTINUED)
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
- ------
CHAIRMAN'S LETTER (CONTINUED)
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
BNY Hamilton Intermediate Government Fund
BNY Hamilton BNY Hamilton
Intermediate Intermediate Lehman Bros.
Government Government Intermediate
Measurement period Fund Without Fund Assumes Government
(Fiscal year Covered) Sales Load 3% Sales Load Index
- --------------------- ------------ ------------- -------------
<S> <C> <C> <C>
Measurement PT -
7/31/92 $ 10,000 $ 9,699.3 $ 10,000
8/31/92 $ 9,984 $ 9,683.8 $ 10,102
9/30/92 $ 10,132.9 $ 9,828.2 $ 10,241
10/31/92 $ 9,992 $ 9,691.5 $ 10,118
11/30/92 $ 9,940.6 $ 9,641.7 $ 10,077
12/31/92 $ 10,050.6 $ 9,748.4 $ 10,207
1/31/93 $ 10,223.1 $ 9,915.7 $ 10,397
2/28/93 $ 10,393.3 $ 10,080.8 $ 10,550
3/31/93 $ 10,414.3 $ 10,101.1 $ 10,589
4/30/93 $ 10,486.8 $ 10,171.5 $ 10,672
5/31/93 $ 10,471.3 $ 10,156.4 $ 10,643
6/30/93 $ 10,662.2 $ 10,341.6 $ 10,797
7/31/93 $ 10,678.7 $ 10,357.6 $ 10,818
8/31/93 $ 10,872.6 $ 10,545.7 $ 10,980
9/30/93 $ 10,928.8 $ 10,600.2 $ 11,024
10/31/93 $ 10,964.5 $ 10,634.8 $ 11,050
11/30/93 $ 10,818.9 $ 10,493.6 $ 10,996
12/31/93 $ 10,857.2 $ 10,530.8 $ 11,041
1/31/94 $ 11,009.4 $ 10,678.4 $ 11,150
2/28/94 $ 10,739.3 $ 10,416.4 $ 10,997
3/31/94 $ 10,473 $ 10,158.1 $ 10,837
4/30/94 $ 10,377.7 $ 10,065.7 $ 10,766
5/31/94 $ 10,359.8 $ 10,048.3 $ 10,774
6/30/94 $ 10,296.7 $ 9,987.1 $ 10,776
7/31/94 $ 10,429.9 $ 10,116.4 $ 10,918
8/31/94 $ 10,452.8 $ 10,138.5 $ 10,950
9/30/94 $ 10,309.6 $ 9,999.7 $ 10,859
10/31/94 $ 10,290.6 $ 9,981.2 $ 10,861
11/30/94 $ 10,247.3 $ 9,939.2 $ 10,813
12/31/94 $ 10,296 $ 9,986.4 $ 10,848
1/31/95 $ 10,458.4 $ 10,144 $ 11,025
2/28/95 $ 10,686.2 $ 10,364.9 $ 11,237
3/31/95 $ 10,748.6 $ 10,425.4 $ 11,299
4/30/95 $ 10,890.4 $ 10,563 $ 11,430
5/31/95 $ 11,275.2 $ 10,936.2 $ 11,753
6/30/95 $ 11,337.2 $ 10,996.3 $ 11,827
7/31/95 $ 11,308.2 $ 10,968.2 $ 11,833
8/31/95 $ 11,407.7 $ 11,064.7 $ 11,930
9/30/95 $ 11,495.2 $ 11,149.6 $ 12,011
10/31/95 $ 11,608.6 $ 11,259.6 $ 12,142
11/30/95 $ 11,756.2 $ 11,402.8 $ 12,290
12/31/95 $ 11,811.7 $ 11,524.4 $ 12,412
</TABLE>
The Lehman Brothers Intermediate Government Index is an unmanaged index
generally considered representative of the U.S. Government intermediate-term
bond market. The Index does not take into account fees and expenses. Past
performance is no guarantee of future results. Investment return and principal
value will fluctuate so that an investor's shares, when redeemed, may be worth
more or less than their original cost. For comparative purposes, the Index's
July 31, 1992 value is used as the August 10, 1992 value.
BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND:
The flat tax debate has been an important influence on the investment activity
in the Fund over the past year. The Bank expected this topic to attract in-
creasing attention in 1995 putting upward pressure on municipal yields compared
with taxable yields. Reflecting these concerns, the investment strategy for the
Fund was adjusted to incorporate a more defensive posture. New purchases were
limited to bonds with maturities no longer than seven years. Existing holdings
of bonds with maturities longer than ten years were also reviewed and changes
were made where deemed appropriate. The average maturity of the Fund on Decem-
ber 31, 1995 was 5 years, down from 6 years 4 months a year ago. The Bank ex-
pects that tax reform will be actively debated in the 1996 Presidential elec-
tion campaign, but does not anticipate the enactment of a flat tax any time
soon. The conservative structure of the portfolio will be maintained pending
some lifting of the flat tax clouds.
Net assets decreased during 1995 by approximately 5%, from $43 million to $41
million.
Cumulative Total Net Asset Value Public Offering Price
Return (includes 3% sales charge)
- --------------------------------------------------------------------------------
1 Year 12.08% 8.68%
- --------------------------------------------------------------------------------
Inception (8/10/92) 17.79% 14.25%
- --------------------------------------------------------------------------------
Average Annual Total
Return
- --------------------------------------------------------------------------------
1 Year 12.08% 8.68%
- --------------------------------------------------------------------------------
Inception (8/10/92) 4.94% 4.00%
- --------------------------------------------------------------------------------
(CONTINUED)
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
- ------
CHAIRMAN'S LETTER (CONTINUED)
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Bny Hamilton Intermediate New York Tax Exempt Fund
BNY Hamilton BNY Hamilton
Intermediate Intermediate
New York Tax New York Tax
Exempt Fund Exempt Fund Lehman Bros.
Measurement period Without Assumes 5 Year State
(Fiscal year Covered) Sales Load 3% Sales Load G.O Index
- --------------------- ------------ ------------- -------------
<S> <C> <C> <C>
Measurement PT -
7/31/92 $ 10,000 $ 9,699.3 $ 9,699.3
8/31/92 $ 9,927.5 $ 9,629 $ 9,925.2
9/30/92 $ 9,978 $ 9,678 $ 9,988.5
10/31/92 $ 9930.6 $ 9,631.9 $ 9,954.1
11/30/92 $ 10,043.7 $ 9,741.7 $ 10,072.1
12/31/92 $ 10,118 $ 9,813.8 $ 10,145.5
1/31/93 $ 10,223.9 $ 9,926.2 $ 10,256.4
2/28/93 $ 10,457.3 $ 10,142.8 $ 10,521.5
3/31/93 $ 10,356.2 $ 10,044.8 $ 10,405.6
4/30/93 $ 10,428.7 $ 10,115.2 $ 10,467.8
5/31/93 $ 10,451.2 $ 10,137 $ 10,504.8
6/30/93 $ 10,587.8 $ 10,269.5 $ 10,644.9
7/31/93 $ 10,549.4 $ 10,232.2 $ 10,646.1
8/31/93 $ 10,718.4 $ 10,396.1 $ 10,793.2
9/30/93 $ 10,813.8 $ 10,488.7 $ 10,875.7
10/31/93 $ 10,826.7 $ 10,501.2 $ 10,888.5
11/30/93 $ 10.775.6 $ 10,451.7 $ 10,862.2
12/31/93 $ 10,926.3 $ 10,597.8 $ 11,012.7
1/31/94 $ 11,034.8 $ 10,703 $ 11,117.8
2/28/94 $ 10,812.8 $ 10,487.7 $ 10,898.4
3/31/94 $ 10,572.3 $ 10,254.4 $ 10,654.5
4/30/94 $ 10,607.2 $ 10,288.2 $ 10,760.6
5/31/94 $ 10,686.1 $ 10,364.8 $ 10,823.4
6/30/94 $ 10,656.7 $ 10,336.3 $ 10,795.5
7/31/94 $ 10,766.4 $ 10,442.7 $ 10,907.6
8/31/94 $ 10,801.2 $ 10,476.4 $ 10,960.4
9/30/94 $ 10,673.1 $ 10,352.2 $ 10,879.1
10/31/94 $ 10,556.9 $ 10,239.5 $ 10,818.7
11/30/94 $ 10,385.4 $ 10,073.1 $ 10,736.6
12/31/94 $ 10,509.7 $ 10,193.7 $ 10,834.1
1/31/95 $ 10,667.4 $ 10,346.7 $ 10,948.4
2/28/95 $ 10,931.9 $ 10,603.2 $ 11,111.4
3/31/95 $ 11,035.3 $ 10,703.5 $ 11,297.7
4/30/95 $ 11,082.7 $ 10,749.5 $ 11,326.3
5/31/95 $ 11,330.8 $ 10,990.1 $ 11,571.7
6/30/95 $ 11,333 $ 10,992.2 $ 11,587.5
7/31/95 $ 11,425.6 $ 11,082.1 $ 11,749.8
8/31/95 $ 11,529.8 $ 11,183.1 $ 11,853.4
9/30/95 $ 11,554.4 $ 11,207 $ 11,891.4
10/31/95 $ 11,614.3 $ 11,265.1 $ 11,939.9
11/30/95 $ 11,707.4 $ 11,355.4 $ 12,044.5
12/31/95 $ 11,779.2 $ 11,425 $ 12,113.3
</TABLE>
The Lehman Brothers 5-Year State G.O. Index is an unmanaged index generally
considered representative of the intermediate state general obligation munici-
pal bond market. The Index does not take into account fees and expenses. Past
performance is no guarantee of future results. Investment return and principal
value will fluctuate so that an investor's shares, when redeemed, may be worth
more or less than their original cost. Some investors may be subject to the al-
ternative minimum tax and/or state and local taxes. For comparative purposes,
the Index's July 31, 1992 value is used as the August 10, 1992 value.
I would like to welcome all new BNY Hamilton Fund shareholders and thank all
our existing shareholders for your investment in the Funds. The BNY Hamilton
Funds are committed to providing investment products to assist its shareholders
in meeting their long-term financial goals through changing market environ-
ments.
Sincerely,
/s/ Eugene J. Sullivan
Eugene Sullivan
Chairman of the Board
BNY Hamilton Funds, Inc.
MONEY FUND AVAILABLE TO INDIVIDUAL INVESTORS:
The Funds are pleased to announce the availability of the BNY Hamilton Money
Fund, Hamilton Classic Shares. The "Hamilton Classic Shares" were started on
December 4, 1995 for individual investors and allows the Funds to better serv-
ice the investment needs of existing and prospective shareholders. The 7-day
current yield for the "Hamilton Classic Shares" was 4.99% at December 31,
1995. The BNY Hamilton Money Fund maintains a "AAAm" rating by Standard and
Poor's. According to Standard and Poor's, this rating is historical and based
upon the Fund's credit quality, market price exposure and management. The rat-
ing signifies that the Fund's safety is excellent and that it has a superior
capacity to maintain its $1.00 net asset value per share.
An investment in the fund is neither insured nor guaranteed by the U.S. Gov-
ernment. Yields will fluctuate, and there can be no assurance that the fund
will be able to maintain a stable NAV of $1.00 per share.
For more complete information about the BNY Hamilton Money Fund Classic
Shares including charges and expenses, call 1-800-426-9363 for a prospectus.
Read it carefully before you invest or send money.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
- ------
TABLE OF CONTENTS
EQUITY INCOME FUND
SCHEDULE OF INVESTMENTS...................... Page 1
STATEMENT OF ASSETS AND LIABILITIES.......... 5
STATEMENT OF OPERATIONS...................... 5
STATEMENTS OF CHANGES IN NET ASSETS.......... 6
FINANCIAL HIGHLIGHTS......................... 7
INTERMEDIATE GOVERNMENT FUND
SCHEDULE OF INVESTMENTS...................... 8
STATEMENT OF ASSETS AND LIABILITIES.......... 9
STATEMENT OF OPERATIONS...................... 9
STATEMENTS OF CHANGES IN NET ASSETS.......... 10
FINANCIAL HIGHLIGHTS......................... 11
INTERMEDIATE NEW YORK TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS...................... 12
STATEMENT OF ASSETS AND LIABILITIES.......... 16
STATEMENT OF OPERATIONS...................... 16
STATEMENTS OF CHANGES IN NET ASSETS.......... 17
FINANCIAL HIGHLIGHTS......................... 18
NOTES TO FINANCIAL STATEMENTS.................. 19
REPORT OF INDEPENDENT ACCOUNTANTS.............. 23
FEDERAL INCOME TAX INFORMATION................. 23
DIRECTORS AND OFFICERS......................... 24
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
- ------
BNY HAMILTON EQUITY INCOME FUND
Schedule of Investments
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES MARKET VALUE
--------- ------------
<C> <S> <C>
COMMON STOCKS--70.56%
AIRCRAFT MANUFACTURING--2.40%
52,000 Boeing Co............................................. $ 4,075,500
------------
BANKING--2.10%
20,000 Chase Manhattan Corp.................................. 1,212,500
70,000 U.S. Bancorp.......................................... 2,353,750
------------
3,566,250
------------
BEVERAGES--2.24%
25,000 Coca Cola Co.......................................... 1,856,250
35,000 Pepsico Inc........................................... 1,955,625
------------
3,811,875
------------
BUSINESS EQUIPMENT
& SERVICES--2.02%
25,000 Xerox Corp............................................ 3,425,000
------------
CHEMICALS--PETROLEUM--1.44%
35,000 du Pont (EI) de Nemours............................... 2,445,625
------------
COMMUNICATIONS &
ENTERTAINMENT--1.22%
55,000 Time Warner Inc....................................... 2,083,125
------------
COMMUNICATIONS
& PUBLISHING--1.36%
55,000 Harcourt General, Inc................................. 2,303,125
------------
COMPUTERS--MICRO--1.13%
*40,000 Compaq Computer....................................... 1,920,000
------------
COMPUTERS--SOFTWARE & PERIPHERALS--1.59%
*20,000 Cisco Systems......................................... 1,492,500
*40,000 Informix Corp......................................... 1,200,000
------------
2,692,500
------------
CONGLOMERATES--2.31%
20,000 General Electric...................................... 1,440,000
50,000 Tenneco Inc........................................... 2,481,250
------------
3,921,250
------------
COSMETICS & TOILETRIES--1.33%
30,000 Avon Products, Inc.................................... 2,261,250
------------
ELECTRICAL EQUIPMENT--1.26%
130,000 Westinghouse Electric Corp............................ 2,145,000
------------
ELECTRONICS--0.99%
20,000 Hewlett Packard....................................... 1,675,000
------------
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
--------- ------------
<C> <S> <C>
FINANCIAL SERVICES--1.37%
60,000 Invesco PLC (ADR)..................................... $ 2,325,000
------------
FINANCIAL SERVICES--MORTGAGE COMPANIES--1.61%
22,000 Federal National Mortgage Association................. 2,730,750
------------
FOOD & BEVERAGES--1.73%
65,000 McDonald's Corp....................................... 2,933,125
------------
FOOD PROCESSING--2.82%
35,000 CPC International Inc................................. 2,401,875
17,000 Unilever NV........................................... 2,392,750
------------
4,794,625
------------
HEALTH & PERSONAL CARE
PRODUCTS--1.71%
30,000 American Home Products................................ 2,910,000
------------
HEALTH CARE PRODUCTS &
SERVICES--2.31%
38,750 Columbia Healthcare................................... 1,966,563
30,000 United Healthcare Corp................................ 1,965,000
------------
3,931,563
------------
HOUSEHOLD & PERSONAL CARE PRODUCTS--1.47%
30,000 Procter & Gamble Company.............................. 2,490,000
------------
INSURANCE--0.98%
18,000 American International Group, Inc..................... 1,665,000
------------
MACHINERY & EQUIPMENT--0.61%
20,000 Stanley Works......................................... 1,030,000
------------
NATURAL GAS--1.18%
60,000 Questar Corp.......................................... 2,010,000
------------
OIL & GAS--1.55%
60,000 Williams Cos. ........................................ 2,632,500
------------
OIL--DOMESTIC--1.83%
28,000 Atlantic Richfield Co................................. 3,101,000
------------
OIL--INTERNATIONAL--5.41%
15,000 British Petroleum Company (ADR)....................... 1,531,875
45,000 Elf Aquitaine (ADR)................................... 1,653,750
47,000 Exxon Corp............................................ 3,765,875
20,000 Mobil Corp............................................ 2,240,000
------------
9,191,500
------------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
1
<PAGE>
- --------------------------------------------------------------------------------
- ------
BNY HAMILTON EQUITY INCOME FUND
Schedule of Investments (Continued)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES MARKET VALUE
--------- ------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
PHARMACEUTICALS--2.88%
23,000 Johnson & Johnson..................................... $ 1,969,375
30,000 Warner Lambert ....................................... 2,913,750
------------
4,883,125
------------
RAILROADS--3.79%
37,233 Burlington Northern Santa Fe Corp. ................... 2,904,174
*53,300 Canadian National Railway............................. 799,500
60,000 CSX Corp.............................................. 2,737,500
------------
6,441,174
------------
REAL ESTATE INVESTMENT
TRUSTS--4.32%
85,000 Avalon Properties..................................... 1,827,500
80,833 Camden Property Trust................................. 1,929,887
80,000 Federal Realty Investment Trust....................... 1,820,000
85,000 General Growth Properties............................. 1,763,750
------------
7,341,137
------------
RESORTS & ENTERTAINMENT--2.26%
61,000 Carnival Cruise Lines, Class A........................ 1,486,875
40,000 Walt Disney Co........................................ 2,360,000
------------
3,846,875
------------
RETAIL--SPECIALTY STORES--1.74%
34,666 Home Depot, Inc....................................... 1,659,635
*58,100 Office Max............................................ 1,299,988
------------
2,959,623
------------
TECHNOLOGY INDUSTRIES--1.21%
36,000 Motorola, Inc......................................... 2,052,000
------------
TELECOMMUNICATIONS--
NON-U.S.--1.23%
50,000 Telefonica de Espana (ADR)............................ 2,093,750
------------
TOYS--0.91%
50,000 Mattel Inc. .......................................... 1,537,500
------------
<CAPTION>
NUMBER OF
SHARES MARKET VALUE
--------- ------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
UTILITIES--ELECTRIC--6.25%
60,000 DQE Inc. ............................................. $ 1,845,000
75,000 Florida Progress Corp. ............................... 2,653,125
40,000 Portland General...................................... 1,165,000
65,000 SCANA Corp. .......................................... 1,860,625
75,000 Texas Utilities Co. .................................. 3,084,375
------------
10,608,125
------------
TOTAL COMMON STOCKS
(Cost $98,126,645).................................... 119,833,872
------------
CONVERTIBLE PREFERRED
STOCKS--14.62%
BANKING--0.65%
15,000 Jefferson-Pilot "NB" (ACES)........................... 1,096,875
------------
BUSINESS EQUIPMENT & SERVICES--1.60%
10,000 Alco Standard Corp., Series AA........................ 1,015,000
20,000 Alco Standard Corp., Series BB........................ 1,710,000
------------
2,725,000
------------
COMMUNICATIONS EQUIPMENT
& SYSTEMS--0.95%
30,000 LCI International, Inc................................ 1,605,000
------------
COMPUTER SERVICES--2.82%
27,163 Ceridian Corp......................................... 2,512,577
31,100 General Motors, Class E,
Series C.............................................. 2,278,075
------------
4,790,652
------------
COMPUTERS--SOFTWARE & PERIPHERALS--0.36%
7,500 Houghton Mifflin...................................... 607,500
------------
FINANCIAL SERVICES--1.47%
45,000 American Express (DECS)............................... 2,497,500
------------
GOLD & PRECIOUS METALS--1.19%
70,000 Freeport--McMoran Copper & Gold....................... 2,012,500
------------
INDUSTRIAL GOODS &
EQUIPMENT--1.18%
35,000 Sonoco Products, Series A............................. 1,999,375
------------
INSURANCE--0.60%
25,000 Allstate Corp. ....................................... 1,025,000
------------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
- ------
BNY HAMILTON EQUITY INCOME FUND
Schedule of Investments (Continued)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES MARKET VALUE
--------- ------------
<C> <S> <C>
CONVERTIBLE PREFERRED STOCKS (CONTINUED)
OIL & GAS--1.67%
80,000 Atlantic Richfield Co. ......................... $ 1,880,000
40,000 Enron Corp. .................................... 960,000
------------
2,840,000
------------
PHARMACEUTICALS--1.54%
11,000 Lehman 6.5% Amgen Yield Enhanced Equity Linked
Debt Securities ("YEELDS")...................... 671,000
30,000 Salomon 6.5% Amgen Yield Enhanced Equity Linked
Debt Securities ("YEELDS")...................... 1,948,125
------------
2,619,125
------------
STEEL--0.59%
30,000 AK Steel........................................ 1,005,000
------------
TOTAL CONVERTIBLE
PREFERRED STOCKS
(Cost $19,700,503).............................. 24,823,527
------------
<CAPTION>
PRINCIPAL
AMOUNT
---------
<C> <S> <C>
CONVERTIBLE BONDS--8.22%
BUSINESS SERVICES--0.88%
$1,250,000 Olsten, 4.875%, 5/15/03......................... 1,493,750
------------
COMMUNICATIONS &
ENTERTAINMENT--1.34%
1,700,000 Comcast, 3.375%, 9/09/05........................ 1,595,875
663,750 Time Warner, 8.75%, 1/10/15..................... 687,811
------------
2,283,686
------------
HEALTH CARE & HOSPITAL MANAGEMENT--1.18%
1,250,000 HEALTHSOUTH Rehabilitation Corp.,
5.00%, 4/01/01.................................. 2,009,375
------------
INDUSTRIAL GOODS &
EQUIPMENT--0.30%
500,000 LaFarge Corp, 7.00%, 7/01/13 509,375
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------- -----------
<C> <S> <C>
CONVERTIBLE BONDS (CONTINUED)
OIL--DOMESTIC--0.75%
$ 1,000,000 Pennzoil, 6.50%, 1/15/03........................ $ 1,265,000
-----------
REAL ESTATE INVESTMENT
TRUSTS--0.91%
1,500,000 Liberty Property Trust, 8.00%, 7/01/01.......... 1,546,875
-----------
RESORTS & ENTERTAINMENT--0.50%
600,000 Carnival Cruise Lines Inc., 4.50%, 7/01/97...... 850,500
-----------
RETAIL--SPECIALTY STORES--0.69%
1,000,000 Baby Superstore, 4.875%, 10/01/00............... 1,171,250
-----------
SEMICONDUCTORS--0.49%
900,000 VLSI Technology Inc., 8.25%, 10/01/05........... 830,250
-----------
TEXTILES--0.59%
1,000,000 Unifi Inc., 6.00%, 3/15/02...................... 1,007,500
-----------
UTILITIES--GAS--0.59%
1,000,000 Noble Affiliates Inc., 4.25%, 11/01/03.......... 1,002,500
-----------
TOTAL CONVERTIBLE BONDS
(Cost $12,461,247).............................. 13,970,061
-----------
REPURCHASE
AGREEMENT--6.31%
10,712,000 Repurchase agreement with Deutsche Bank, 6.00%,
due 1/02/96, repurchase price $10,719,141
(Collateral--Various U.S. Governmental Agency
Debt Instruments, 0.00%-6.96%, 3/30/98-11/01/05;
aggregate market value plus accrued interest
$10,927,167)
(Cost $10,712,000).............................. 10,712,000
-----------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
- ------
BNY HAMILTON EQUITY INCOME FUND
Schedule of Investments (Continued)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRIKE MARKET
CONTRACTS PRICE VALUE
--------- ------ ------------
<C> <S> <C> <C>
PURCHASED PUT
OPTIONS--0.16%
* 90 Motorola, Inc. expiration 1/20/96............ 70 $ 115,875
* 90 Motorola, Inc. expiration 1/20/96............ 75 165,375
* 105 S&P 500, expiration 1/20/96 ................. 540 1,312
------------
TOTAL PURCHASED PUT OPTIONS (Cost $84,293)... 282,562
------------
TOTAL INVESTMENTS BEFORE OUTSTANDING WRITTEN
CALL OPTIONS (Cost $141,084,688)--(a) 99.87%. 169,622,022
------------
OUTSTANDING WRITTEN
CALL OPTIONS--(0.46)%
* 105 S&P 500,
expiration 1/20/96 (Premium Received
$595,540).................................... (788,156)
------------
TOTAL INVESTMENTS NET OF OUTSTANDING WRITTEN
CALL OPTIONS (Cost $140,489,148) 99.41%...... 168,833,866
Cash, receivables, and other assets less
liabilities--0.59%........................... 1,006,979
------------
NET ASSETS--100.00% $169,840,845
------------
</TABLE>
* Non-income producing security.
ACES Automatic Common Exchange Securities.
ADR American Depository Receipt.
DECS Debt Exchangeable for Common Stock.
(a) The cost stated also represents the aggregate cost for Federal income tax
purposes. At December 31, 1995, net unrealized appreciation was $28,537,334
based on cost for Federal income tax purposes. This consisted of aggregate
gross unrealized appreciation of $29,110,435 and aggregate gross unrealized
depreciation of $573,101.
See notes to financial statements.
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
- ------
BNY HAMILTON EQUITY INCOME FUND
Statement of Assets and Liabilities
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments at market value, (Identified cost $141,084,688)...... $169,622,022
Receivables:
Investments sold................................................ 4,043,951
Interest........................................................ 241,709
Dividends....................................................... 439,149
Capital stock sold.............................................. 134,283
Deferred organization costs and other assets..................... 34,083
------------
TOTAL ASSETS.................................................... 174,515,197
------------
LIABILITIES:
Payables:
Due to custodian................................................ 443,987
Investments purchased........................................... 2,816,582
Capital stock repurchased....................................... 10,595
Dividends....................................................... 433,456
Services provided by The Bank of New York and Administrator..... 130,678
Outstanding call options written (premiums received $595,540).... 788,156
Accrued expenses and other liabilities........................... 50,898
------------
TOTAL LIABILITIES............................................... 4,674,352
------------
NET ASSETS:
(applicable to 13,077,388 shares issued and outstanding; 200
million shares of $.001 par value authorized)................... $169,840,845
------------
Net asset value, offering price and repurchase price per share
($169,840,845/13,077,388 shares) $ 12.99
------------
Maximum public offering price per share ($12.99/.955)............ $ 13.60
------------
SOURCES OF NET ASSETS:
Capital stock @ par.............................................. $ 13,077
Capital surplus.................................................. 141,336,546
Undistributed net investment income.............................. 65,503
Accumulated net realized gain on investments..................... 81,001
Net unrealized appreciation on investments....................... 28,344,718
------------
NET ASSETS........................................................ $169,840,845
------------
</TABLE>
- --------------------------------------------------------------------------------
Statement of Operations
FOR THE YEAR ENDED DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $37,401).......... $ 3,939,692
Interest......................................................... 1,782,826
-----------
TOTAL INCOME.................................................... 5,722,518
-----------
EXPENSES:
Advisory ........................................................ 936,192
Administration................................................... 312,064
Accounting services.............................................. 60,000
Custodian........................................................ 44,187
Cash management.................................................. 12,214
Transfer agent................................................... 68,048
Audit............................................................ 13,253
Insurance........................................................ 12,158
Directors ....................................................... 15,797
Reports to shareholders.......................................... 17,242
Registration and filings......................................... 21,066
Legal............................................................ 19,880
Other............................................................ 33,199
-----------
TOTAL EXPENSES.................................................. 1,565,300
-----------
NET INVESTMENT INCOME........................................... 4,157,218
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--
Net realized gain on investment transactions..................... 7,628,369
Net realized loss on written call options........................ (899,162)
-----------
Net realized gain on investments................................. 6,729,207
-----------
Increase in unrealized appreciation on investments during the
year............................................................ 24,785,096
Decrease in unrealized appreciation on written call options...... (56,128)
-----------
Net unrealized gain on investments during the year............... 24,728,968
-----------
Net realized and unrealized gain on investments.................. 31,458,175
-----------
Net increase in net assets resulting from operations............. $35,615,393
-----------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
5
<PAGE>
- --------------------------------------------------------------------------------
BNY HAMILTON EQUITY INCOME FUND
- ------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1995 1994
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income............................. $ 4,157,218 $ 3,803,163
Net realized gain (loss) on investments........... 6,729,207 (5,126,955)
Net unrealized gain (loss) on investments during
the year......................................... 24,728,968 (2,206,579)
------------ ------------
Net increase (decrease) in net assets resulting
from operations................................. 35,615,393 (3,530,371)
------------ ------------
DIVIDENDS AND DISTRIBUTION TO SHAREHOLDERS:
Dividends from net investment income.............. (4,143,915) (3,767,657)
Distribution from capital gains................... (1,521,251) --
------------ ------------
Total dividends and distribution to shareholders. (5,665,166) (3,767,657)
------------ ------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from capital stock sold.................. 28,650,069 51,788,650
Proceeds from reinvestment of dividends and
distribution..................................... 3,841,802 2,380,531
Cost of capital stock repurchased................. (27,731,884) (24,589,231)
------------ ------------
Net increase in net assets resulting from capital
stock transactions.............................. 4,759,987 29,579,950
------------ ------------
INCREASE IN NET ASSETS.......................... 34,710,214 22,281,922
NET ASSETS:
Beginning of year................................. 135,130,631 112,848,709
------------ ------------
End of year....................................... $169,840,845 $135,130,631
------------ ------------
CHANGE IN CAPITAL STOCK OUTSTANDING:
Shares sold....................................... 2,490,205 4,656,303
Shares issued on reinvestment of dividends and
distribution..................................... 312,500 218,778
Shares repurchased................................ (2,352,875) (2,235,781)
------------ ------------
Net increase..................................... 449,830 2,639,300
Shares outstanding, beginning of year............. 12,627,558 9,988,258
------------ ------------
Shares outstanding, end of year................... 13,077,388 12,627,558
------------ ------------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
BNY HAMILTON EQUITY INCOME FUND
- ------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE
PERIOD
AUGUST 10,
1992*
YEAR ENDED DECEMBER 31, THROUGH
----------------------------- DECEMBER
1995 1994 1993 31, 1992
-------- -------- -------- ----------
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value at beginning of
period........................... $ 10.70 $ 11.30 $ 10.43 $ 10.00
-------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income............. 0.32 0.31 0.29 0.11
Net realized and unrealized gain
(loss) on investments............ 2.41 (0.60) 0.94 0.47
-------- -------- -------- -------
Total from investment operations. 2.73 (0.29) 1.23 0.58
-------- -------- -------- -------
DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment
income........................... (0.32) (0.31) (0.28) (0.12)
Distributions from capital gains.. (0.12) -- (0.08) (0.03)
-------- -------- -------- -------
Total dividends and
distributions................... (0.44) (0.31) (0.36) (0.15)
-------- -------- -------- -------
Net asset value at end of period.. $ 12.99 $ 10.70 $ 11.30 $ 10.43
-------- -------- -------- -------
TOTAL RETURN+..................... 25.78% (2.58)% 11.94% 5.86%**
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period
(000's omitted).................. $169,841 $135,131 $112,849 $20,440
Ratio to average net assets of:
Expenses, net of waiver from The
Bank of New York................ 1.00% 1.04% 1.09% 1.10%***
Expenses, prior to waiver from
The Bank of New York............ 1.00% 1.04% 1.12% 2.12%***
Net investment income, net of
waiver from The Bank of New
York............................ 2.66% 2.89% 2.82% 3.33%***
Portfolio turnover rate........... 58% 51% 50% 25%
Average commission rate paid per
share traded..................... $ .0557
</TABLE>
* Commencement of investment operations.
** Not annualized.
*** Annualized.
+ Total return does not consider the effect of the sales load.
See notes to financial statements.
- --------------------------------------------------------------------------------
7
<PAGE>
- --------------------------------------------------------------------------------
- ------
BNY HAMILTON INTERMEDIATE GOVERNMENT FUND
Schedule of Investments
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------- -----------
<C> <S> <C>
U.S. GOV'T AGENCIES & OBLIGATIONS--80.38%
UNITED STATES GOVERNMENT AGENCY SECURITIES--45.50%
Federal Home Loan Bank,
$1,000,000 5.75%, 3/10/97....................................... $ 1,005,472
500,000 5.25%, 7/16/97....................................... 496,743
4,000,000 5.37%, 11/3/00....................................... 3,951,180
Federal Home Loan Mortgage Corporation,
500,000 5.80%, 7/7/98........................................ 503,782
500,000 5.76%, 7/13/98....................................... 499,103
3,100,000 6.33%, 2/16/00....................................... 3,102,210
500,000 7.84%, 4/26/00....................................... 504,371
1,000,000 5.55%, 9/7/00........................................ 988,580
3,300,000 6.61%, 3/4/03........................................ 3,354,123
Federal National Mortgage Association,
500,000 5.35%, 8/12/98....................................... 497,448
3,100,000 6.20%, 7/10/03....................................... 3,074,282
Tennessee Valley Authority,
1,500,000 6.25%, 8/1/99........................................ 1,524,602
1,000,000 6.00%, 11/1/00....................................... 1,014,507
5,000,000 6.125%, 7/15/03...................................... 5,019,285
2,000,000 6.375%, 6/15/05...................................... 2,062,124
-----------
27,597,812
-----------
UNITED STATES TREASURY
BONDS--6.35%
3,500,000 7.625%, 2/15/07...................................... 3,851,089
-----------
UNITED STATES TREASURY
NOTES--27.28%
1,600,000 5.625%, 1/31/98...................................... 1,613,000
1,600,000 5.875%, 8/15/98...................................... 1,625,000
2,500,000 6.375%, 1/15/99...................................... 2,577,340
2,000,000 6.75%, 6/30/99....................................... 2,090,622
1,000,000 6.375%, 7/15/99...................................... 1,033,436
1,500,000 6.875%, 8/31/99...................................... 1,575,937
1,000,000 6.375%, 1/15/00...................................... 1,037,186
2,750,000 6.75%, 4/30/00....................................... 2,894,375
2,000,000 6.375%, 8/15/02...................................... 2,101,250
-----------
16,548,146
-----------
UNITED STATES TREASURY--
STRIPPED PRINCIPAL--1.25%
1,000,000 0.00%, 2/15/01....................................... 760,869
-----------
TOTAL U.S. GOV'T AGENCIES & OBLIGATIONS
(Cost $48,610,687) 48,757,916
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------- -----------
<C> <S> <C>
MORTGAGE BACKED
SECURITIES--8.44%
Federal National Mortgage Association,
$1,346,499 Pool # 195152, 7.00%, 1/1/08......................... $ 1,371,489
1,018,513 Pool # 124118, 9.00%, 3/1/22......................... 1,077,596
Government National Mortgage Association,
183,760 Pool # 204365, 9.00%, 3/15/17........................ 195,635
436,883 Pool # 780047, 9.00%, 12/15/17....................... 465,113
947,478 Pool # 354859, 9.00%, 7/15/24........................ 1,003,438
963,116 Pool # 407323, 8.25%, 4/15/25........................ 1,006,757
-----------
TOTAL MORTGAGE BACKED SECURITIES (Cost $5,077,910)... 5,120,028
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS--9.27%
Federal Home Loan Mortgage Corporation,
1,436,516 Series 1317E, 7.00%, 6/15/04......................... 1,449,142
500,000 Series 1202E, 7.00%, 7/15/05......................... 511,184
500,000 Series 1467D, 6.70%, 8/15/05......................... 508,149
Federal National Mortgage Association,
2,000,000 Series 1991--137, 8.30%, 6/25/20 2,062,118
Government National Mortgage Association,
1,067,000 Series 1995-2 D, 8.50%, 11/20/15 1,094,848
-----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $5,610,225).................................... 5,625,441
-----------
ASSET BACKED SECURITIES--0.11%
64,333 General Motors Acceptance Corporation, Grantor Trust
1992-E, Class A,
4.75%, 8/15/97 (Cost $64,303)........................ 64,094
-----------
REPURCHASE AGREEMENT--0.25%
153,000 Repurchase agreement with Deutsche Bank, 6.00%, due
1/2/96, repurchase price $153,102 (Collateral--
Federal Home Loan Bank Note, 6.29%, 10/20/99;
aggregate market value plus accrued interest
$158,238)
(Cost $153,000)...................................... 153,000
-----------
TOTAL INVESTMENTS--
(Cost $59,516,125)--(a) 98.45%....................... 59,720,479
Cash, receivables and other assets less liabilities--
1.55%................................................ 938,442
-----------
NET ASSETS--100.00%.................................. $60,658,921
-----------
</TABLE>
(a) The cost stated also represents the aggregate cost for Federal income tax
purposes. At December 31, 1995, net unrealized appreciation was $204,354
based on cost for Federal income tax purposes. This consisted of aggregate
gross unrealized appreciation of $557,150 and aggregate gross unrealized
depreciation of $352,796.
See notes to financial statements.
- --------------------------------------------------------------------------------
8
<PAGE>
- --------------------------------------------------------------------------------
BNY HAMILTON INTERMEDIATE GOVERNMENT FUND
- ------
Statement of Assets and Liabilities
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments at market value,
(Identified cost $59,516,125)................................... $59,720,479
Receivables:
Investments sold................................................ 205,991
Interest........................................................ 1,118,718
Capital stock sold.............................................. 14,238
Deferred organization costs and other assets..................... 29,224
-----------
TOTAL ASSETS.................................................... 61,088,650
-----------
LIABILITIES:
Payables:
Due to custodian................................................ 210,375
Capital stock repurchased....................................... 33,650
Dividends....................................................... 92,074
Services provided by The Bank of New York and Administrator..... 49,263
Accrued expenses and other liabilities........................... 44,367
-----------
TOTAL LIABILITIES............................................... 429,729
-----------
NET ASSETS:
(applicable to 6,102,102 shares issued and outstanding; 200
million shares of $.001 par value authorized)................... $60,658,921
-----------
Net asset value, offering price and repurchase price per share
($60,658,921/6,102,102 shares).................................. $ 9.94
-----------
Maximum public offering price per share ($9.94/.97).............. $ 10.25
-----------
SOURCES OF NET ASSETS:
Capital stock @ par.............................................. $ 6,102
Capital surplus.................................................. 62,558,550
Accumulated net realized loss on investments..................... (2,110,085)
Net unrealized appreciation on investments....................... 204,354
-----------
NET ASSETS........................................................ $60,658,921
-----------
</TABLE>
- --------------------------------------------------------------------------------
Statement of Operations
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.......................................................... $4,059,514
----------
EXPENSES:
Advisory.......................................................... 308,254
Administration.................................................... 123,302
Accounting services............................................... 60,000
Custodian......................................................... 27,959
Cash management................................................... 9,504
Transfer agent.................................................... 26,812
Audit............................................................. 11,720
Insurance......................................................... 5,761
Directors......................................................... 15,797
Reports to shareholders........................................... 8,007
Registration and filing........................................... 14,526
Legal............................................................. 17,581
Other............................................................. 23,708
----------
TOTAL EXPENSES................................................... 652,931
----------
NET INVESTMENT INCOME............................................ 3,406,583
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--
Net realized loss on investment transactions...................... (704,447)
Increase in unrealized appreciation on investments during the
year............................................................. 6,144,249
----------
Net realized and unrealized gain on investments................... 5,439,802
----------
Net increase in net assets resulting from operations.............. $8,846,385
----------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
9
<PAGE>
- --------------------------------------------------------------------------------
BNY HAMILTON INTERMEDIATE GOVERNMENT FUND
- ------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1995 1994
----------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income............................... $ 3,406,583 $ 3,586,566
Net realized loss on investments.................... (704,447) (1,410,871)
Increase in unrealized appreciation (depreciation)
on investments during the year..................... 6,144,249 (6,070,522)
----------- -----------
Net increase (decrease) in net assets resulting
from operations................................... 8,846,385 (3,894,827)
----------- -----------
DIVIDENDS TO SHAREHOLDERS:
Dividends from net investment income................ (3,406,583) (3,586,566)
----------- -----------
CAPITAL STOCK TRANSACTIONS:
Proceeds from capital stock sold.................... 10,197,215 16,386,289
Proceeds from reinvestment of dividends............. 2,247,470 2,258,630
Cost of capital stock repurchased................... (16,553,657) (23,904,747)
----------- -----------
Decrease in net assets resulting from capital stock
transactions...................................... (4,108,972) (5,259,828)
----------- -----------
INCREASE (DECREASE) IN NET ASSETS................ 1,330,830 (12,741,221)
NET ASSETS:
Beginning of year................................... 59,328,091 72,069,312
----------- -----------
End of year......................................... $60,658,921 $59,328,091
----------- -----------
CHANGE IN CAPITAL STOCK OUTSTANDING:
Shares sold......................................... 1,074,090 1,684,218
Shares issued on reinvestment of dividends.......... 233,341 238,683
Shares repurchased.................................. (1,726,729) (2,521,236)
----------- -----------
Net decrease....................................... (419,298) (598,335)
Shares outstanding, beginning of year............... 6,521,400 7,119,735
----------- -----------
Shares outstanding, end of year..................... 6,102,102 6,521,400
----------- -----------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
10
<PAGE>
- --------------------------------------------------------------------------------
- ------
BNY HAMILTON INTERMEDIATE GOVERNMENT FUND
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE
PERIOD
AUGUST 10,
1992*
YEAR ENDED DECEMBER 31, THROUGH
-------------------------- DECEMBER
1995 1994 1993 31, 1992
------- ------- ------- ----------
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value at beginning of
period............................ $ 9.10 $ 10.12 $ 9.87 $ 10.00
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income.............. 0.53 0.50 0.51 0.18
Net realized and unrealized gain
(loss) on investments............. 0.84 (1.02) 0.27 (0.13)
------- ------- ------- -------
Total from investment operations.. 1.37 (0.52) 0.78 0.05
------- ------- ------- -------
DIVIDENDS AND DISTRIBUTION
Dividends from net investment
income............................ (0.53) (0.50) (0.51) (0.18)
Distribution from capital gains.... -- -- (0.02) --
------- ------- ------- -------
Total dividends and distribution.. (0.53) (0.50) (0.53) (0.18)
------- ------- ------- -------
Net asset value at end of period... $ 9.94 $ 9.10 $ 10.12 $ 9.87
------- ------- ------- -------
TOTAL RETURN+...................... 15.40% (5.17)% 8.03% 0.51%**
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's
omitted).......................... $60,659 $59,328 $72,069 $25,575
Ratio to average net assets of:
Expenses, net of waiver from The
Bank of New York................. 1.06% 1.07% 0.86% 0.75%***
Expenses, prior to waiver from The
Bank of New York................. 1.06% 1.10% 1.15% 1.64%***
Net investment income, net of
waiver from The Bank of New York. 5.52% 5.30% 5.04% 4.62%***
Portfolio turnover rate............ 48% 49% 67% 63%
</TABLE>
* Commencement of investment operations.
** Not annualized.
*** Annualized.
+ Total return does not consider the effect of the sales load.
See notes to financial statements.
- --------------------------------------------------------------------------------
11
<PAGE>
- --------------------------------------------------------------------------------
- ------
BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND
Schedule of Investments
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
*MOODY'S
PRINCIPAL /S&P INTEREST MATURITY MARKET
AMOUNT RATINGS RATE DATE VALUE
--------- -------- -------- -------- -----------
<C> <S> <C> <C> <C> <C>
MUNICIPAL BONDS--96.60%
EDUCATION--10.07%
$ 235,000 Dutchess County, New York
IDA Civic Facility
Revenue, Bard College..... A/NR 6.000% 11/01/99 $ 245,516
250,000 New York State Dormitory
Authority,
Columbia University....... Aaa/AA+ 5.000 07/01/00 258,755
1,000,000 New York State Dormitory
Authority,
Cornell University........ Aa/AA 4.600 07/01/00 1,020,790
1,000,000 New York State Dormitory
Authority, New York
University, MBIA Insured+. Aaa/AAA 5.500 07/01/04 1,064,210
1,000,000 New York State Dormitory
Authority, Strong Hospital
(University of Rochester). A1/A+ 5.000 07/01/02 1,025,090
500,000 New York State Dormitory
Authority,
University of Rochester... A1/A+ 4.700 07/01/00 508,725
-----------
4,123,086
-----------
GENERAL OBLIGATION--11.25%
500,000 Monroe County, New York,
MBIA Insured+............. Aaa/AAA 4.800 06/01/02 514,450
60,000 Monroe County, New York
Series B, Unrefunded
Balance, Callable 6/01/98. A1/AA- 7.000 06/01/03 64,653
1,000,000 New York State, General
Obligation................ A/A- 4.600 03/15/01 1,009,160
1,000,000 New York State, General
Obligation................ A/A- 5.125 06/15/04 1,030,070
500,000 New York State Municipal
Bond Bank Agency
(City of Rochester)....... NR/A+ 5.750 03/15/96 502,070
500,000 New York State Municipal
Bond Bank Agency
(City of Rochester)....... NR/A+ 6.400 03/15/01 541,000
950,000 Town of New Castle, New
York
(Westchester County) ..... Aa/NR 4.000 06/01/00 943,132
-----------
4,604,535
-----------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
12
<PAGE>
- --------------------------------------------------------------------------------
- ------
BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND
Schedule of Investments (Continued)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
*MOODY'S
PRINCIPAL /S&P INTEREST MATURITY MARKET
AMOUNT RATINGS RATE DATE VALUE
--------- -------- -------- -------- ----------
<C> <S> <C> <C> <C> <C>
MUNICIPAL BONDS (CONTINUED)
HEALTH CARE--4.53%
$ 500,000 New York State Medical Care
Facilities--
Downstate Medical Center.... NR/AAA 5.700% 02/15/04 $ 537,690
305,000 New York State Medical Care
Facilities--
Millard Fillmore Hospital
FHA......................... Aa/AA 5.600 02/15/02 316,983
1,000,000 New York State Medical Care
Facilities--
Mount Sinai Hospital FHA.... NR/AAA 4.500 02/15/96 1,001,060
----------
1,855,733
----------
HOUSING--1.24%
500,000 New York State Mortgage
Revenue Agency.............. Aa/NR 5.300 04/01/04 508,855
----------
INDUSTRIAL DEVELOPMENT BONDS--3.73%
500,000 Puerto Rico Industrial
Medical Environmental PCR,
Intel Corp., Put Option
9/01/98..................... A2/A 4.000 09/01/13 501,110
1,000,000 Westchester County
Industrial Development
Authority................... Aaa/AAA 4.850 07/01/00 1,024,780
----------
1,525,890
----------
PREREFUNDED/ESCROWED/US GUARANTEED--
4.56%
990,000 New York State Housing
Finance Agency ETM State
University Construction..... Aaa/AAA 6.500 11/01/06 1,097,266
351,000 Puerto Rico Aqueduct & Sewer
Authority ETM............... Aaa/AAA 4.200 07/01/00 349,719
415,000 Puerto Rico Aqueduct & Sewer
Authority ETM............... Aaa/AAA 4.500 07/01/02 420,914
----------
1,867,899
----------
SPECIAL TAX--14.79%
1,000,000 Municipal Assistance Corp.
Series 67................... Aa/AA- 7.200 07/01/99 1,098,900
1,000,000 New York State Local
Government Assistance Corp.. A/A 6.400 04/01/97 1,030,640
300,000 New York State Local
Government Assistance Corp.. A/A 6.700 04/01/00 327,948
1,000,000 New York State Local
Government Assistance Corp.. A/A 5.300 04/01/00 1,039,230
340,000 New York State Local
Government Assistance Corp.. A/A 6.750 04/01/02 376,397
655,000 New York State Local
Government Assistance Corp.. A/A 5.000 04/01/02 672,279
500,000 New York State Local
Government Assistance Corp.. A/A 4.800 04/01/05 499,595
1,000,000 New York State Thruway
Authority Highway & Bridge
Trust Fund.................. A/A- 4.750 04/01/98 1,008,230
----------
6,053,219
----------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
13
<PAGE>
- --------------------------------------------------------------------------------
- ------
BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND
Schedule of Investments (Continued)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
*MOODY'S
PRINCIPAL /S&P INTEREST MATURITY MARKET
AMOUNT RATINGS RATE DATE VALUE
--------- --------- -------- -------- -----------
<C> <S> <C> <C> <C> <C>
MUNICIPAL BONDS (CONTINUED)
STATE APPROPRIATION--15.78%
$ 420,000 Metropolitan Transportation Authority................ Baa1/BBB+ 5.100% 07/01/00 $ 428,459
450,000 New York State Dormitory Authority, State University. Baa1/BBB+ 7.100 05/15/98 477,275
900,000 New York State Dormitory Authority, State University. Baal/BBB+ 5.200 05/15/03 899,946
500,000 New York State Dormitory Authority, State University. Baal/BBB+ 5.500 05/15/07 503,330
1,400,000 New York State Dormitory Authority, Upstate Community
Colleges............................................. Baa1/BBB- 4.500 07/01/00 1,377,600
500,000 New York State Medical Care Facilities--Mental
Health............................................... Baa1/BBB+ 4.600 08/15/99 498,490
275,000 New York State Medical Care Facilities--Mental
Health............................................... Baa1/BBB+ 4.700 02/15/01 269,409
505,000 New York State Medical Care Facilities--Mental
Health............................................... Baa1/BBB+ 4.700 08/15/01 493,097
480,000 New York State Medical Care Facilities--Mental
Health............................................... Baa1/BBB+ 6.100 08/15/02 504,749
1,000,000 New York State Thruway Authority Service Contract.... Baa1/BBB 5.000 04/01/00 1,007,540
-----------
6,459,895
-----------
TRANSPORTATION--18.24%
625,000 New York State Thruway Authority General Revenue..... A1/A 5.125 01/01/00 643,556
1,500,000 New York State Thruway Authority General Revenue..... A1/A 5.250 01/01/01 1,552,635
1,000,000 Niagara Falls Bridge Commission Toll Revenue, FGIC
Insured+............................................. Aaa/AAA 5.000 10/01/06 1,012,250
650,000 Port Authority of New York & New Jersey.............. A1/AA- 5.100 08/01/01 673,933
500,000 Port Authority of New York & New Jersey.............. A1/AA- 6.100 10/15/02 548,185
1,000,000 Port Authority of New York & New Jersey.............. A1/AA- 5.300 08/01/03 1,048,290
500,000 Triborough Bridge & Tunnel Authority General Purpose. Aa/A+ 6.600 01/01/96 500,080
500,000 Triborough Bridge & Tunnel Authority General Purpose. Aa/A+ 4.100 01/01/01 494,430
1,000,000 Triborough Bridge & Tunnel Authority General Purpose. Aa/A+ 4.300 01/01/02 993,730
-----------
7,467,089
-----------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
14
<PAGE>
- --------------------------------------------------------------------------------
- ------
BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND
Schedule of Investments (Continued)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
*MOODY'S
PRINCIPAL /S&P INTEREST MATURITY MARKET
AMOUNT RATINGS RATE DATE VALUE
--------- -------- -------- -------- -----------
<C> <S> <C> <C> <C> <C>
MUNICIPAL BONDS (CONTINUED)
UTILITY--10.00%
$ 300,000 Great Neck North Water
Authority, New York..... A1/A- 6.900% 01/01/00 $ 329,229
250,000 New York State
Environment Facs. Corp.
State Water............. Aaa/AAA 6.000 05/15/02 271,730
500,000 New York State Envir.
Fac. Corp. PCR Water
Revol................... Aa/A- 5.100 06/15/00 518,740
400,000 New York State Envir.
Fac. Corp. PCR Water
Revol................... Aaa/AAA 6.300 09/15/00 435,356
500,000 New York State Power
Authority............... Aa/AA 7.500 01/01/02 540,115
250,000 Onondaga County, New
York Water Authority.... A1/A 6.250 01/15/98 260,515
700,000 Suffolk County Water
Authority, New York MBIA
Insured+................ Aaa/AAA 4.800 06/01/97 709,968
1,000,000 Suffolk County Water
Authority, New York MBIA
Insured+................ Aaa/AAA 4.800 06/01/00 1,025,170
-----------
4,090,823
-----------
OTHER--2.41%
340,000 New York City, Trust For
Cultural Resources
Museum MOMA--AMBAC
Insured+................ Aaa/AAA 4.900 01/01/01 349,251
240,000 New York City, Trust For
Cultural Resources
Museum MOMA--AMBAC
Insured+................ Aaa/AAA 5.000 01/01/02 247,783
350,000 New York City, Trust For
Cultural Resources
Museum MOMA--AMBAC
Insured+................ Aaa/AAA 6.300 01/01/03 387,940
-----------
984,974
-----------
TOTAL MUNICIPAL BONDS
(Cost $38,587,654)...... 39,541,998
-----------
SHORT-TERM NOTES--1.22%
500,000 Mamaroneck, New York
School District TAN
(Cost $500,215)......... NR/NR 4.000 02/06/96 500,105
-----------
TAX-EXEMPT MONEY MARKET FUND--
0.80%
325,099 Dreyfus New York
Municipal Cash
Management
(Cost $325,099)......... NR/NR 4.300(a) 325,099
-----------
TOTAL INVESTMENTS (Cost
$39,412,968)(b)--98.62%. 40,367,202
Cash, receivables, and
other assets less
liabilities--1.38%...... 563,733
-----------
NET ASSETS--100.00%..... $40,930,935
-----------
</TABLE>
NR Not rated by Moody's or Standard & Poor's ("S&P").
TAN Tax Anticipation Note.
* Ratings are not audited by Deloitte & Touche LLP.
+ Insured or guaranteed by the indicated municipal bond insurance
corporation.
(a) Represents annualized yield at December 31, 1995.
(b) The cost stated also represents the aggregate cost for Federal
income tax purposes. At December 31, 1995, net unrealized
appreciation was $954,234 based on cost for Federal income tax
purposes. This consisted of aggregate gross unrealized
appreciation of $970,501 and aggregate gross unrealized
depreciation of $16,267.
See notes to financial statements.
- --------------------------------------------------------------------------------
15
<PAGE>
- --------------------------------------------------------------------------------
BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND
- ------
Statement of Assets and Liabilities
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments at market value,
(Identified cost $39,412,968)................................... $40,367,202
Receivables:
Investments sold................................................ 394
Interest........................................................ 693,977
Capital stock sold.............................................. 97
Deferred organization costs and other assets..................... 30,469
-----------
TOTAL ASSETS.................................................... 41,092,139
-----------
LIABILITIES:
Payables:
Capital stock repurchased....................................... 115
Dividends....................................................... 85,045
Services provided by The Bank of New York and Administrator..... 23,170
Accrued expenses and other liabilities........................... 52,874
-----------
TOTAL LIABILITIES............................................... 161,204
-----------
NET ASSETS:
(applicable to 3,959,525 shares issued and outstanding; 200
million shares of $.001 par value authorized)................... $40,930,935
-----------
Net asset value, offering price and repurchase price per share
($40,930,935/3,959,525 shares).................................. $ 10.34
-----------
Maximum public offering price per share ($10.34/.97)............. $ 10.66
-----------
SOURCES OF NET ASSETS:
Capital stock @ par.............................................. $ 3,959
Capital surplus.................................................. 40,432,433
Accumulated net realized loss on investments..................... (459,691)
Net unrealized appreciation on investments....................... 954,234
-----------
NET ASSETS........................................................ $40,930,935
-----------
</TABLE>
- --------------------------------------------------------------------------------
Statement of Operations
FOR THE YEAR ENDED DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.......................................................... $2,069,668
----------
EXPENSES:
Advisory.......................................................... 216,014
Administration.................................................... 86,406
Accounting services............................................... 60,000
Custodian......................................................... 16,252
Cash management................................................... 11,449
Transfer agent.................................................... 29,041
Audit............................................................. 11,415
Insurance......................................................... 4,545
Directors......................................................... 15,797
Reports to shareholders........................................... 6,026
Registration and filing........................................... 14,994
Legal............................................................. 17,123
Other............................................................. 28,122
----------
TOTAL EXPENSES................................................... 517,184
Fees waived by The Bank of New York and Administrator............. (128,360)
----------
NET EXPENSES..................................................... 388,824
----------
NET INVESTMENT INCOME............................................ 1,680,844
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--
Net realized loss on investment transactions...................... (75,562)
Increase in unrealized appreciation on investments during the
year............................................................. 3,351,479
----------
Net realized and unrealized gain on investments................... 3,275,917
----------
Net increase in net assets resulting from operations.............. $4,956,761
----------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
16
<PAGE>
- --------------------------------------------------------------------------------
- ------
BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1995 1994
----------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income............................... $ 1,680,844 $ 2,053,601
Net realized loss on investments.................... (75,562) (375,628)
Increase in unrealized appreciation (depreciation)
on investments during the year..................... 3,351,479 (3,814,746)
----------- -----------
Net increase (decrease) in net assets resulting
from operations................................... 4,956,761 (2,136,773)
----------- -----------
DIVIDENDS TO SHAREHOLDERS:
Dividends from net investment income................ (1,680,844) (2,053,601)
----------- -----------
CAPITAL STOCK TRANSACTIONS:
Proceeds from capital stock sold.................... 4,068,695 11,933,747
Proceeds from reinvestment of dividends............. 604,529 689,660
Cost of capital stock repurchased................... (10,231,201) (21,090,712)
----------- -----------
Decrease in net assets resulting from capital stock
transactions...................................... (5,557,977) (8,467,305)
----------- -----------
DECREASE IN NET ASSETS........................... (2,282,060) (12,657,679)
NET ASSETS:
Beginning of year................................... 43,212,995 55,870,674
----------- -----------
End of year......................................... $40,930,935 $43,212,995
----------- -----------
CHANGE IN CAPITAL STOCK OUTSTANDING:
Shares sold......................................... 410,516 1,184,457
Shares issued on reinvestment of dividends.......... 59,793 69,568
Shares repurchased.................................. (1,014,728) (2,136,537)
----------- -----------
Net decrease....................................... (544,419) (882,512)
Shares outstanding, beginning of year............... 4,503,944 5,386,456
----------- -----------
Shares outstanding, end of year..................... 3,959,525 4,503,944
----------- -----------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
17
<PAGE>
- --------------------------------------------------------------------------------
- ------
BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE
PERIOD
AUGUST 10,
1992*
YEAR ENDED DECEMBER 31, THROUGH
--------------------------- DECEMBER
1995 1994 1993 31, 1992
---- ---- --------- ----------
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value at beginning of
period........................ $ 9.59 $ 10.37 $ 9.97 $ 10.00
--------- --------- --------- -------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income.......... 0.39 0.39 0.38 0.15
Net realized and unrealized
gain (loss) on investments.... 0.75 (0.78) 0.40 (0.03)+
--------- --------- --------- -------
Total from investment
operations................... 1.14 (0.39) 0.78 0.12
--------- --------- --------- -------
DIVIDENDS
Dividends from net investment
income........................ (0.39) (0.39) (0.38) (0.15)
--------- --------- --------- -------
Net asset value at end of
period........................ $ 10.34 $ 9.59 $ 10.37 $ 9.97
--------- --------- --------- -------
TOTAL RETURN++................. 12.08% (3.81)% 7.99% 1.18%**
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period
(000's omitted)............... $40,931 $43,213 $55,871 $19,717
Ratio to average net assets of:
Expenses, net of waiver from
The Bank of New York and
Administrator................ 0.90% 0.85% 0.68% 0.60%***
Expenses, prior to waiver from
The Bank of New York and
Administrator................ 1.20% 1.20% 1.30% 1.96%***
Net investment income, net of
waiver from The Bank
of New York and
Administrator................ 3.89% 3.92% 3.74% 3.79%***
Portfolio turnover rate........ 4% 18% 6% --
</TABLE>
* Commencement of investment operations.
** Not annualized.
*** Annualized.
+ The amount shown is not in accordance with the change in the aggregate gains
and losses of the portfolio securities during the period August 10, 1992
through December 31, 1992 due to the timing of sales and repurchases of
shares of the Fund.
++Total return does not consider the effect of the sales load.
See notes to financial statements.
- --------------------------------------------------------------------------------
18
<PAGE>
- --------------------------------------------------------------------------------
- ------
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND BUSINESS
The BNY Hamilton Funds, Inc. (the "Company") was organized as a Maryland Cor-
poration on May 1, 1992 and is registered under the Investment Company Act of
1940 as an open-end management investment company. The Company currently con-
sists of four series: BNY Hamilton Money Fund (not included herein), BNY Hamil-
ton Equity Income Fund, BNY Hamilton Intermediate Government Fund and BNY Ham-
ilton Intermediate New York Tax-Exempt Fund (individually, a "Fund" and collec-
tively, the "Funds").
2. SIGNIFICANT ACCOUNTING POLICIES
(A) SECURITY VALUATIONS
BNY Hamilton Equity Income Fund (the "Equity Income Fund")
Securities listed on a domestic securities exchange, including options on
stock indexes, are valued based on the last sale price as of the close of regu-
lar trading hours on the New York Stock Exchange or, in the absence of recorded
sales, at the average of readily available closing bid and asked prices on such
exchange. Securities listed on a foreign exchange are valued at the last quoted
sale price available before the time when net assets are valued. Unlisted secu-
rities traded only on the over the counter market are valued at the average of
the quoted bid and asked prices in the over-the-counter market.
The market value of a written call option or a purchased put option is the
last reported sale price on the principal exchange on which such option is
traded or, if no sales are reported, the average between the last reported bid
and asked prices.
BNY Hamilton Intermediate Government Fund (the "Intermediate Government
Fund") and BNY Hamilton Intermediate New York Tax-Exempt Fund (the "Inter-
mediate New York Tax-Exempt Fund")
Securities are valued using prices supplied daily by an independent pricing
service or services that (l) are based on the last sale price on a national se-
curities exchange, or in the absence of recorded sales, at the readily avail-
able closing bid price on such exchange or at the quoted bid price in the over-
the-counter market, if such exchange or market constitutes the broadest and
most representative market for the security, and (2) in other cases, take into
account various factors affecting market value, including yields and prices of
comparable securities, indications as to value from dealers and general market
conditions.
Portfolio securities with a remaining maturity of 60 days or less are valued
using the amortized cost method for all Funds.
Securities for which market quotations are not readily available are valued at
fair value in accordance with procedures established by and under the general
supervision and responsibility of the Board of Directors for all Funds.
(B) REPURCHASE AGREEMENTS
The Funds' custodian or designated sub-custodians, as the case may be under
tri-party repurchase agreements, takes possession of the collateral pledged for
investments in repurchase agreements. The underlying collateral is valued daily
on a mark-to-market basis to ensure that the value, including accrued interest,
is at least equal to the repurchase price. In the event of default of the obli-
gation to repurchase, the Funds have the right to liquidate the collateral and
apply the proceeds in satisfaction of the obligations. Under certain circum-
stances, in the event of default or bankruptcy by the other party to the agree-
ment, realization and/or retention of the collateral may be subject to legal
proceedings.
(C) WRITTEN OPTIONS AND PURCHASED OPTIONS
The Equity Income Fund enters into an option contract for the purpose of ei-
ther hedging its exposure to the market fluctuations of the portfolio, or
- --------------------------------------------------------------------------------
19
<PAGE>
- --------------------------------------------------------------------------------
- ------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
an individual security position. The nature and risks associated with these se-
curities are explained further in the Prospectus and Statement of Additional
Information.
When the Equity Income Fund writes a call option, it will receive a premium.
Premiums received are recorded as liabilities and adjusted to current market
value daily. When a put option is purchased, the Equity Income Fund will pay a
premium. Premiums paid for put options are included as investments and are also
adjusted to their current market value daily.
If a written call expires, the premium received by the Equity Income Fund will
be treated as a short term capital gain. Likewise, premiums paid for purchased
put options that expire unexercised will be treated as short term capital loss-
es. In addition, short term capital gains or losses may be realized on exer-
cised written calls or purchased puts depending on the premiums received or
paid and the strike price of the underlying securities.
As a writer of call options, the Equity Income Fund may not have control over
the exercising of such options. As a result, the Equity Income Fund bears un-
limited market risk of favorable changes in the value of the call option's un-
derlying securities. The Equity Income Fund also bears unlimited market risk in
the value of the written call option itself.
If an option which the Equity Income Fund has purchased expires on its stipu-
lated expiration date, the Equity Income Fund realizes a loss in the amount of
the cost of the option. If the Equity Income Fund enters into a closing trans-
action, it realizes a gain or loss, depending on whether the proceeds from the
sale are greater or less than the cost of the option. If the Equity Income Fund
exercises a put option, it realizes a gain or loss from the sale of the under-
lying security and the proceeds from such sale will be decreased by the premium
originally paid. If the Equity Income Fund exercises a call option, the cost of
the security which the Equity Income Fund purchases upon exercise will be in-
creased by the premium originally paid.
(D) FEDERAL INCOME TAXES
Each Fund is treated as a separate entity for federal income tax purposes. The
Funds' policy is to comply with the requirements of the Internal Revenue Code
applicable to regulated investment companies and distribute all of the taxable
and tax exempt income to the shareholders within the allowable time limits.
Therefore, no federal income tax provision is required.
(E) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
The Intermediate Government Fund and the Intermediate New York Tax-Exempt Fund
declare dividends daily and pay dividends monthly. The Equity Income Fund de-
clares and pays dividends monthly.
Income and capital gains distributions are determined in accordance with in-
come tax regulations which may differ from methods used to determine the corre-
sponding income and capital gain amounts in accordance with generally accepted
accounting principles. These differences are primarily caused by differences in
the timing of the recognition of certain components of income, expense, or cap-
ital gain. Where such differences are permanent in nature, they are reclassi-
fied in the Sources of Net Assets based upon their ultimate characterization
for Federal income tax purposes. Any such reclassifications will have no effect
on net assets, results of operations, or net asset value of each Fund.
(F) SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are recorded on the trade date. Realized gains and
losses on security transactions are determined using the identified cost meth-
od. Dividend income is recognized on the ex-dividend date and interest income
is accrued daily. Discounts on securities purchased for all Funds except for
the Intermediate New York Tax-Exempt Fund and premiums on securities purchased
for the Intermediate New York Tax-Exempt Fund are amortized.
- --------------------------------------------------------------------------------
20
<PAGE>
- --------------------------------------------------------------------------------
- ------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(G) ORGANIZATION COSTS
Costs incurred in connection with the organization and initial registration of
the Funds are being amortized evenly over the period of benefit not to exceed
60 months from the date upon which each of the Funds commenced investment
operations.
3. ADVISORY, ADMINISTRATION AND OTHER TRANSACTIONS WITH AFFILIATES
The Bank of New York acts as the Funds' investment adviser (the "Adviser").
The Adviser manages the investments of the Funds and is responsible for all
purchases and sales of the Funds' portfolio securities. The Adviser's fee ac-
crues daily and is payable monthly at the following annual rates:
<TABLE>
<CAPTION>
% OF AVERAGE
DAILY NET ASSETS
----------------
<S> <C>
Equity Income Fund............................................. .60%
Intermediate Government Fund .50%
Intermediate New York Tax-Exempt Fund.......................... .50%
</TABLE>
BNY Hamilton Distributors, Inc. acts as the Funds' administrator (the "Admin-
istrator") and will assist generally in supervising the operations of the
Funds.
The Administrator has agreed to provide facilities, equipment and personnel to
carry out administrative services for the Funds, including, among other things,
providing the services of persons who may be appointed as officers and direc-
tors of the Funds, monitoring the custodian, fund accounting, transfer agency,
administration, distribution, advisory and legal services that are provided to
the Funds.
The Administrator's fee is accrued daily and is payable monthly computed util-
izing the following annual rates:
<TABLE>
<CAPTION>
% OF AVERAGE
DAILY NET ASSETS
----------------
<S> <C>
Equity Income Fund............................................. .20%
Intermediate Government Fund .20%
Intermediate New York Tax-Exempt Fund.......................... .20%
</TABLE>
In addition to acting as Administrator, BNY Hamilton Distributors, Inc. is the
principal underwriter and distributor of shares of the Funds.
The Bank of New York serves as the Funds' custodian and also serves as the
fund accounting agent.
The Bank of New York and the Administrator have voluntarily agreed to
assume/waive expenses for the Intermediate New York Tax-Exempt Fund to the ex-
tent that expenses for that Fund exceeded .90% of average daily net assets.
There is currently no reimbursement of expenses with respect to the Equity In-
come Fund and the Intermediate Government Fund.
The Company has adopted a distribution plan (The "12b-1 Plans") with respect
to each Fund. Under the 12b-1 Plans, the Funds will pay the Distributor for
distribution expenses incurred in connection with sales of shares of the Funds.
Payments for distribution expenses may not exceed .25% of each Fund's average
daily net assets. The Funds have not implemented the 12b-1 Plans since their
commencement of investment operations, and therefore no amounts have been ac-
crued for such fees in the accompanying financial statements.
4. PORTFOLIO SECURITIES
During the year ended December 31, 1995, the cost of purchases and the pro-
ceeds from sales of securities, other than short-term securities, were as fol-
lows:
<TABLE>
<CAPTION>
EQUITY
INCOME FUND
-----------------------
PURCHASES SALES
----------- -----------
<S> <C> <C>
US Gov't Securities..................................... $ -- $ --
All Others.............................................. 87,087,927 81,212,081
<CAPTION>
INTERMEDIATE
GOVERNMENT FUND
-----------------------
PURCHASES SALES
----------- -----------
<S> <C> <C>
US Gov't Securities..................................... $27,548,620 $28,713,238
All Others.............................................. -- 87,251
</TABLE>
- --------------------------------------------------------------------------------
21
<PAGE>
- --------------------------------------------------------------------------------
- ------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
INTERMEDIATE
NEW YORK
TAX-EXEMPT FUND
--------------------
PURCHASES SALES
--------- ----------
<S> <C> <C>
US Gov't Securities........................................ $ -- $ --
All Others................................................. 1,740,993 8,601,443
</TABLE>
5. FEDERAL INCOME TAXES
For federal income tax purposes, the Funds indicated below have capital loss
carryforwards as of December 31, 1995 which are available to offset future
capital gains, if any. Accordingly, no capital gains distribution is expected
to be paid to shareholders until net gains have been realized in excess of such
amounts.
<TABLE>
<CAPTION>
CAPITAL LOSS
CARRYFORWARD EXPIRATION
------------ ----------
<S> <C> <C>
Intermediate Government Fund........................... $1,358,600 2002
681,600 2003
Intermediate New York Tax-Exempt Fund.................. 2,900 2000
5,600 2001
377,300 2002
91,500 2003
</TABLE>
6. WRITTEN OPTION ACTIVITY
Transactions in written options during the year ended December 31, 1995 were
as follows:
<TABLE>
<CAPTION>
AMOUNT OF NUMBER OF
PREMIUMS OPTIONS
------------ ---------
<S> <C> <C>
EQUITY INCOME FUND:
Options outstanding at
December 31, 1994...... $ 167,007 475
Options written during
the year ended December
31, 1995............... 2,131,248 2,565
Options terminated in
closing purchase
transactions........... (1,702,715) (2,935)
Options exercised....... -- --
------------ -------
Options outstanding at
December 31, 1995...... $ 595,540 105
------------ -------
</TABLE>
The cost of cancelling options in closing purchase transactions was $2,178,466,
resulting in a net-short term capital loss of $475,751.
- --------------------------------------------------------------------------------
22
<PAGE>
- --------------------------------------------------------------------------------
- ------
REPORT OF INDEPENDENT ACCOUNTANTS
The Shareholders and Board of Directors of
BNY Hamilton Funds, Inc. (BNY Hamilton Equity Income Fund, BNY Hamilton
Intermediate Government Fund, and BNY Hamilton Intermediate New York
Tax-Exempt Fund):
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of BNY Hamilton Funds, Inc. (BNY
Hamilton Equity Income Fund, BNY Hamilton Intermediate Government Fund, and BNY
Hamilton Intermediate New York Tax-Exempt Fund) as of December 31, 1995, the
related statements of operations for the year then ended and of changes in net
assets for each of the two years in the period then ended, and the financial
highlights for each of the three years in the period then ended and for the
period August 10, 1992 (commencement of investment operations) to December 31,
1992. These financial statements and financial highlights are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at
December 31, 1995 by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of BNY
Hamilton Funds, Inc. (BNY Hamilton Equity Income Fund, BNY Hamilton
Intermediate Government Fund, and BNY Hamilton Intermediate New York Tax-Exempt
Fund) as of December 31, 1995, the results of their operations, the changes in
their net assets and the financial highlights for the respective stated
periods, in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
New York, New York
February 9, 1996
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION (UNAUDITED)
For federal income tax purposes, 65.53% of the ordinary income dividends paid
to you during the year ended December 31, 1995 for the BNY Hamilton Equity In-
come Fund qualify for the corporate dividend deduction under section 243 of the
Internal Revenue Code.
Dividends paid to shareholders of the BNY Hamilton Intermediate New York Tax-
Exempt Fund are 100% exempt from federal, New York State and New York City in-
come tax.
- --------------------------------------------------------------------------------
23
<PAGE>
- --------------------------------------------------------------------------------
- ------
DIRECTORS AND OFFICERS
Eugene Sullivan, Director and Chairman of the Board
Peter Herrick, Director
Leif H. Olsen, Director
Stephen Stamas, Director
Edward L. Gardner, Director
Richard E. Stierwalt, Chief Executive Officer
William B. Blundin, President
Ann E. Bergin, Vice President
William J. Tomko, Vice President
Martin Dean, Treasurer
George Martinez, Secretary
Karen Doyle, Assistant Treasurer
Robert L. Tuch, Assistant Secretary
Alaina Metz, Assistant Secretary
INVESTMENT ADVISER
The Bank of New York
ADMINISTRATOR AND DISTRIBUTOR
BNY Hamilton Distributors, Inc.
TRANSFER AGENT
BISYS Fund Services, Inc.
CUSTODIAN
The Bank of New York
INDEPENDENT ACCOUNTANTS
Deloitte & Touche LLP
LEGAL COUNSEL
Sullivan & Cromwell
- --------------------------------------------------------------------------------
24
<PAGE>
BNY HAMILTON FUNDS
ANNUAL REPORT DECEMBER 31, 1995
. EQUITY INCOME FUND
. INTERMEDIATE GOVERNMENT FUND
. INTERMEDIATE NEW YORK TAX-EXEMPTFUND
(ART)
BNY HAMILTON DISTRIBUTORS, INC. IS THE FUNDS' DISTRIBUTOR AND IS UNAFFILIATED
WITH THE BANK OF NEW YORK, THE INVESTMENT ADVISER.
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus for the Equity Income Fund,
Intermediate Government Fund, or Intermediate New York Tax-Exempt Fund. For ad-
ditional prospectuses, which contain more complete information, including
charges and expenses, call 1-800-426-9363. Please read the prospectus carefully
before investing or sending money.
BNY HAMILTON FUNDS, INC.
3435 Stelzer Road
Columbus, Ohio, 43219-3035
INVESTMENTS IN THE FUNDS ARE NOT DEPOSITS, ARE NEITHER GUARANTEED BY NOR OBLI-
GATIONS OF THE BANK OF NEW YORK AND ARE NOT INSURED BY THE FDIC OR ANY OTHER
GOVERNMENTAL AGENCY. INVESTMENTS IN MUTUAL FUNDS INVOLVE RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
BNYEB95A
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements:
The Financial Statements filed as part of this Registration Statement are
as follows:
Audited Financial Statements of BNY Hamilton Money Fund as of December 31,
1995
- Schedule of Investments
- Statement of Assets and Liabilities
- Statement of Operations
- Statements of Changes in Net Assets
- Financial Highlights
- Notes to Financial Statements
- Report of Independent Auditors
Audited Financial Statements of BNY Hamilton Intermediate Government Fund
as of December 31, 1995
- Schedule of Investments
- Statement of Assets and Liabilities
- Statement of Operations
- Statements of Changes in Net Assets
- Financial Highlights
- Notes to Financial Statements
- Report of Independent Auditors
Audited Financial Statements of BNY Hamilton Intermediate New York Tax-
Exempt Fund as of December 31, 1995
- Schedule of Investments
- Statement of Assets and Liabilities
- Statement of Operations
- Statements of Changes in Net Assets
- Financial Highlights
- Notes to Financial Statements
- Report of Independent Auditors
<PAGE>
Audited Financial Statements of BNY Hamilton Equity Income Fund as of
December 31, 1995
- Schedule of Investments
- Statement of Assets and Liabilities
- Statement of Operations
- Statements of Changes in Net Assets
- Financial Highlights
- Notes to Financial Statements
- Report of Independent Auditors
(b) Exhibits:
Description
-----------
Exhibit
Number
- ------
(1) (a) Articles of Incorporation of Registrant.*
(b) Articles of Amendment, dated June 29, 1992.*
(c) Articles of Supplementary, dated June 29, 1994.*
(d) Articles of Supplementary, dated August 15, 1995.*
(2) Bylaws of Registrant.*
(3) Not Applicable.
(4) (a) Form of Specimen stock certificate of common stock of BNY Hamilton
Money Fund.*
(b) Form of Specimen stock certificate of common stock of BNY Hamilton
Intermediate Government Fund.*
(c) Form of specimen stock certificate of common stock of BNY Hamilton
Intermediate New York Tax-Exempt Fund.*
(d) Form of specimen stock certificate of common stock of BNY Hamilton
Equity Income Fund.*
(5) (a) Investment Advisory Agreement between BNY Hamilton Money Fund and
The Bank of New York.*
(b) Investment Advisory Agreement between BNY Hamilton Intermediate
Government Fund and The Bank of New York.*
(c) Investment Advisory Agreement between BNY Hamilton Intermediate New
York Tax-Exempt Fund and The Bank of New York.*
(d) Investment Advisory Agreement between BNY Hamilton Equity Income Fund
and The Bank of New York.*
(6) Distribution Agreements between Registrant and BNY Hamilton
Distributors, Inc.*
(7) Not Applicable.
(8) (a) Custody Agreement between Registrant and The Bank of New York.*
(b) Cash Management and Related Services Agreement between each series of
Registrant and The Bank of New York.*
<PAGE>
(9) (a) Administration Agreement between Registrant and BNY Hamilton
Distributors, Inc.*
(b) Fund Accounting Services Agreement between Registrant and The Bank of
New York.*
(c) Form of Transfer Agency Agreement between Registrant and BISYS Fund
Services, Inc.
(d) Form of Shareholder Servicing Agreement.*
(e) Form of Sub-Administration Agreement between BNY Hamilton Distributors,
Inc. and The Bank of New York.*
(f) Shareholder Servicing Plan of BNY Hamilton Money Fund (Hamilton Premier
Shares).*
(g) No longer applicable.
(h) Shareholder Servicing Plan of BNY Hamilton Money Fund (Hamilton Classic
Shares).*
(i) Rule 18f-3 Plan of BNY Hamilton Money Fund.
(10) Opinion of Sullivan & Cromwell.*
(11) Consent of Deloitte & Touche LLP.
(12) Not Applicable.
(13) Form of Seed Capital Agreement between Registrant and BNY Hamilton
Distributors, Inc.*
(14) Not Applicable.
(15) (a) Rule 12b-1 Plan of BNY Hamilton Intermediate Government Fund.*
(b) Rule 12b-1 Plan of BNY Hamilton Intermediate New York Tax-Exempt Fund.*
(c) Rule 12b-1 Plan of BNY Hamilton Equity Income Fund.*
(d) Rule 12b-1 Plan of BNY Hamilton Money Fund - Hamilton Classic Shares.*
(16) Schedule for computation of performance quotations.
(17) Financial Data Schedules.
-------------------
* Previously filed.
Item 25. Persons Controlled by or under Common Control with Registrant.
No person is controlled by or under common control with the
Registrant.
Item 26. Number of Record Holders of Securities as of February 29, 1996.
<TABLE>
<CAPTION>
Number
Title of Class of record holders
-------------- -----------------
<S> <C>
BNY Hamilton Intermediate New York Tax-Exempt Fund 776
BNY Hamilton Intermediate Government Fund 852
BNY Hamilton Equity Income Fund 2,657
BNY Hamilton Money Fund - Hamilton Shares 43
BNY Hamilton Money Fund - Hamilton Premier Shares 1,007
BNY Hamilton Money Fund - Hamilton Classic Shares 186
</TABLE>
Item 27. Indemnification.
<PAGE>
Reference is made to Article VI of Registrant's Bylaws and the Distribution
Agreement each filed as exhibits hereto.
Registrant, its Directors and officers, the other investment companies
administered by the Administrator, and persons affiliated with them are insured
against certain expenses in connection with the defense of actions, suits, or
proceedings, and certain liabilities that might be imposed as a result of such
actions, suits or proceedings.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to Directors, officers and controlling persons of the
Registrant and the principal underwriter pursuant to the foregoing provisions or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a Director, officer, or controlling
person of the Registrant and the principal underwriter in connection with the
successful defense of any action, suit or proceeding) is asserted against the
Registrant by such Director, officers or controlling person or principal
underwriter in connection with the shares being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser.
The Registrant's investment adviser, The Bank of New York, is a New York trust
company. The Bank of New York conducts a general banking and trust business. The
Bank of New York is not affiliated with BNY Hamilton Distributors, Inc.
To the knowledge of the Registrant, none of the directors or officers of The
Bank of New York, except those set forth below, is engaged in any other
business, profession, vocation or employment of a substantial nature. Set forth
below are the names and principal businesses of each director of The Bank of New
York who is engaged in another business, profession, vocation or employment of a
substantial nature:
<TABLE>
<CAPTION>
Name Title/Company
- ---- -------------
<C> <S>
Richard Barth.................Chairman, President and Chief Executive Officer of
Ciba-Geigy Corporation (diversified chemical
products)
William R. Chaney.............Chairman and Chief Executive Officer of Tiffany &
Co., (international designers, manufacturers and
distributors of jewelry and fine goods)
Ralph E. Gomory...............President of Alfred P. Sloan Foundation, Inc.
(private foundation)
John C. Malone................President and Chief Executive Officer of Tele-
Communications, Inc., (cable television multiple
system operator)
Donald L. Miller..............Chief Executive Officer and Publisher of Our World
News, LLC
</TABLE>
<PAGE>
<TABLE>
<C> <S>
Martha T. Muse................Chairman of the Tinker Foundation
Incorporated (private foundation)
Catherine A. Rein.............Executive Vice President of Metropolitan Life
Insurance Company (insurance and financial
services)
</TABLE>
Item 29. Principal Underwriter.
(a) BNY Hamilton Distributors, Inc., which is located at 125 West 55th Street,
New York, New York 10019, will act as exclusive distributor for the Registrant.
The distributor is registered with the Securities and Exchange Commission as a
broker-dealer and is a member of the National Association of Securities
Dealers.
(b)The information required by this Item 29 with respect to each director,
officer or partner of the Distributor is incorporated by reference to Schedule
A of Form BD filed by the Distributor pursuant to the Securities Exchange Act
of 1934.
(c) Not Applicable.
Item 30. Location of Accounts and Records.
All accounts, books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the Rules thereunder will be
maintained at the offices of BISYS Fund Services, Inc., 3435 Stelzer Road,
Columbus, Ohio 43219-3035.
Item 31. Management Services.
Not Applicable.
Item 32. Undertakings.
The Registrant undertakes that, if requested to do so by 10% of its outstanding
shares, the Registrant will promptly call a meeting of shareholders for the
purpose of voting on the removal of a director or directors and Registrant will
assist with shareholder communications as required by Section 16(c) of the
Investment Company Act of 1940.
The Registrant hereby also undertakes that so long as the information required
by Item 5A of Form N-1A is contained in the latest annual report to shareholders
and not in the prospectuses of each Fund (other than BNY Hamilton Money Fund),
the Registrant will furnish each person to whom a prospectus is delivered with a
copy of the Registrant's latest annual report to shareholders, upon request and
without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the registrant certifies that it meets all of the
requirements for effectiveness of this registration statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereto duly authorized
in the City of New York, and the State of New York on the 22nd day of April,
1996.
BNY HAMILTON FUNDS, INC.
By /s/ William B. Blundin
----------------------------
William B. Blundin
President
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities
indicated on the 22nd day of April, 1996.
<TABLE>
<CAPTION>
Name Title
---- -----
<S> <C>
/s/ Eugene J. Sullivan Director and Chairman of the Board of
_________________________ Directors
(Eugene J. Sullivan)
/s/ Edward L. Gardner Director
________________________
(Edward L. Gardner)
/s/ Peter Herrick Director
________________________
(Peter Herrick)
/s/ Leif H. Olsen Director
________________________
(Leif H. Olsen)
/s/ Stephen Stamas Director
________________________
(Stephen Stamas)
/s/ Richard E. Stierwalt Chief Executive Officer
________________________ (principal executive officer)
(Richard E. Stierwalt)
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number
- ------
Description Page
----------- ----
<S> <C>
(1) (a) Articles of Incorporation of Registrant.*
(b) Articles of Amendment, dated June 29, 1992.*
(c) Articles of Supplementary, dated June 29, 1994.*
(d) Articles of Supplementary, dated August 15, 1995.*
(2) Bylaws of Registrant.*
(3) Not Applicable.
(4) (a) Form of specimen stock certificate of common stock of BNY Hamilton
Money Fund.*
(b) Form of specimen stock certificate of common stock of BNY Hamilton
Intermediate Government Fund.*
(c) Form of specimen stock certificate of common stock of BNY Hamilton
Intermediate New York Tax-Exempt Fund.*
(d) Form of specimen stock certificate of common stock of BNY Hamilton
Equity Income Fund.*
(5) (a) Investment Advisory Agreement between BNY Hamilton Money Fund and
The Bank of New York.*
(b) Investment Advisory Agreement between BNY Hamilton Intermediate
Government Fund and The Bank of New York.*
(c) Investment Advisory Agreement between BNY Hamilton Intermediate New
York Tax-Exempt Fund and The Bank of New York.*
(d) Investment Advisory Agreement between BNY Hamilton Equity Income Fund
and The Bank of New York.*
(6) Distribution Agreements between Registrant and BNY Hamilton
Distributors, Inc.*
(7) Not Applicable.
(8) (a) Custody Agreement between Registrant and The Bank of New York.*
(b) Cash Management and Related Services Agreement between each series of
Registrant and The Bank of New York.*
(9) (a) Administration Agreement between Registrant and BNY Hamilton
Distributors, Inc.*
(b) Fund Accounting Services Agreement between Registrant and The Bank of
New York.*
(c) Form of Transfer Agency Agreement between Registrant and BISYS Fund
Services, Inc.
(d) Form of Shareholder Servicing Agreement.*
(e) Form of Sub-Administration Agreement between BNY Hamilton Distributors,
Inc. and The Bank of New York.*
(f) Shareholder Servicing Plan of BNY Hamilton Money Fund (Hamilton Premier
Shares).*
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number
- ------
Description Page
----------- ----
<S> <C>
(g) No longer applicable.
(h) Shareholder Servicing Plan of BNY Hamilton Money Fund (Hamilton Classic
Shares).*
(i) Rule 18F-3 Plan of BNY Hamilton Money Fund.
(10) Opinion of Sullivan & Cromwell.*
(11) Consent of Deloitte & Touche LLP.
(12) Not Applicable.
(13) Form of Seed Capital Agreement between Registrant and BNY Hamilton
Distributors, Inc.*
(14) Not Applicable.
(15) (a) Rule 12b-1 Plan of BNY Hamilton Intermediate Government Fund.*
(b) Rule 12b-1 Plan of BNY Hamilton Intermediate New York Tax-Exempt Fund.*
(c) Rule 12b-1 Plan of BNY Hamilton Equity Income Fund.*
(d) Rule 12b-1 Plan of BNY Hamilton Money Fund - Hamilton Classic Shares.*
(16) Schedule for computation of performance quotations.
(17) Financial Data Schedules.
</TABLE>
__________________
* Previously filed.
<PAGE>
EXHIBIT 99.9(c)
(9)(c) Form of Transfer Agency Agreement between Registrant and BISYS Fund
Services, Inc.
<PAGE>
TRANSFER AGENCY AGREEMENT
-------------------------
AGREEMENT made this 4th day of December, 1995, between BNY HAMILTON
FUNDS, INC. (the "Company"), a Maryland corporation having its principal place
of business at 3435 Stelzer Road, Columbus, Ohio 43219, and BISYS FUND SERVICES
OHIO, INC. ("BISYS"), an Ohio corporation having its principal place of
business at 3435 Stelzer Road, Columbus, Ohio 43219.
WHEREAS, the Company desires that BISYS perform certain services for
those series of the Company set forth in Schedule A attached hereto, as such
Schedule may be amended from time to time (individually referred to herein as a
"Fund" and collectively as the "Funds"); and
WHEREAS, BISYS is willing to perform such services on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. Services.
--------
BISYS shall perform for the Company the transfer agent services set
forth in Schedule B hereto.
BISYS also agrees to perform for the Company such special services
incidental to the performance of the services enumerated herein as agreed to by
the parties from time to time. BISYS shall perform such additional services as
are provided on an amendment to Schedule B hereof, in consideration of such fees
as the parties hereto may agree.
BISYS may, in its discretion, appoint in writing other parties
qualified to perform transfer agency services reasonably acceptable to the
Company (individually, a "Sub-transfer Agent") to carry out some or all of its
responsibilities under this Agreement with respect to a Fund; provided, however,
that the Sub-transfer Agent shall be the agent of BISYS and not the agent of the
Company or such Fund, and that BISYS shall be fully responsible for the acts of
such Sub-transfer Agent and shall not be relieved of any of its responsibilities
hereunder by the appointment of such Sub-transfer Agent.
2. Fees.
----
The Company shall pay BISYS for the services to be provided by BISYS
under this Agreement in accordance with, and in the manner set forth in,
Schedule C hereto. BISYS may increase the fees it charges pursuant to the fee
schedule; provided, however, that BISYS may not increase such fees until the
expiration of the Initial Term of this Agreement (as defined below); unless the
Company otherwise agrees to such change in writing. Fees for any additional
services
<PAGE>
to be provided by BISYS pursuant to an amendment to Schedule B hereto shall be
subject to mutual agreement at the time such amendment to Schedule B is
proposed.
3. Reimbursement of Expenses.
-------------------------
In addition to paying BISYS the fees described in Section 2 hereof, the
Company agrees to reimburse BISYS for BISYS' out-of-pocket expenses in providing
services hereunder, including without limitation, the following:
(a) All freight and other delivery and bonding charges incurred by BISYS
in delivering materials to and from the Company and in delivering
all materials to shareholders;
(b) All direct telephone, telephone transmission and telecopy or other
electronic transmission expenses incurred by BISYS in communication
with the Company, the Company's investment adviser or custodian,
dealers, shareholders or others as required for BISYS to perform the
services to be provided hereunder;
(c) Costs of postage, couriers, stock computer paper, statements,
labels, envelopes, checks, reports, letters, tax forms, proxies,
notices or other form of printed material which shall be required by
BISYS for the performance of the services to be provided hereunder;
(d) The cost of microfilm or microfiche of records or other materials;
and
(e) Any expenses BISYS shall incur at the written direction of an
officer of the Company thereunto duly authorized.
4. Effective Date.
--------------
This Agreement shall become effective as of the date first written
above (the "Effective Date").
5. Term.
-----
This Agreement shall continue in effect with respect to a Fund, unless
earlier terminated by either party hereto as provided hereunder, until December
3, 1996. Thereafter, it shall be renewed automatically for successive one-year
terms unless written notice not to renew is given by the non-renewing party to
the other party at least 60 days prior to the expiration of the then-current
term; provided, however, that after such termination, for so long as BISYS, with
the written consent of the Company, in fact continues to perform any one or more
of the services contemplated by this Agreement or any Schedule or exhibit
hereto, the provisions of this Agreement, including
2
<PAGE>
without limitation the provisions dealing with indemnification, shall continue
in full force and effect. Fees and out-of-pocket expenses incurred by BISYS but
unpaid by the Company upon such termination shall be immediately due and
payable upon and notwithstanding such termination. BISYS shall be entitled to
collect from the Company, in addition to the fees and disbursements provided by
Sections 2 and 3 hereof, the amount of all of BISYS' cash disbursements and a
reasonable fee (which fee shall be not less than one hundred and two percent
(102%) of the sum of the actual costs incurred by BISYS in performing such
service) for services in connection with BISYS' activities in effecting such
termination, including without limitation, the delivery to the Company and/or
its distributor or investment adviser and/or other parties, of the Company's
property, records, instruments and documents, or any copies thereof. Subsequent
to such termination, BISYS, for a reasonable fee, will provide the Company with
reasonable access to any Company documents or records remaining in its
possession.
6. Uncontrollable Events.
---------------------
BISYS assumes no responsibility hereunder, and shall not be liable
for any damage, loss of data, delay or any other loss whatsoever caused by
events beyond its reasonable control.
7. Legal Advice.
------------
BISYS shall notify the Company at any time BISYS believes that it
is in need of the advice of counsel (other than counsel in the regular employ of
BISYS or any affiliated companies) with regard to BISYS' responsibilities and
duties pursuant to this Agreement; and after so notifying the Company, BISYS, at
its discretion, shall be entitled to seek, receive and act upon advice of legal
counsel of its choosing, such advice to be at the expense of the Company or
Funds unless relating to a matter involving BISYS' willful misfeasance, bad
faith, gross negligence or reckless disregard with respect to BISYS'
responsibilities and duties hereunder and BISYS shall in no event be liable to
the Company or any Fund or any shareholder or beneficial owner of the Company
for any action reasonably taken pursuant to such advice.
8. Instructions.
-------------
Whenever BISYS is requested or authorized to take action hereunder
pursuant to instructions from a shareholder, or a properly authorized agent of a
shareholder ("shareholder's agent"), concerning an account in a Fund, BISYS
shall be entitled to rely upon any certificate, letter or other instrument or
communication, believed by BISYS to be genuine and to have been properly made,
signed or authorized by an officer or other authorized agent of the Company or
by the shareholder or shareholder's agent, as the case may be, and shall be
entitled to receive as conclusive proof of any fact or matter required to be
ascertained by it hereunder a certificate signed by an officer of the Company or
any other person authorized by the Company's Board of Directors or by the
shareholder or shareholder's agent, as the case may be.
3
<PAGE>
As to the services to be provided hereunder, BISYS may rely
conclusively upon the terms of the Prospectuses and Statement of Additional
Information of the Company relating to the Funds to the extent that such
services are described therein unless BISYS receives written instructions to the
contrary in a timely manner from the Company.
9. Standard of Care: Reliance on Records and Instructions;
-------------------------------------------------------
Indemnification.
---------------
BISYS shall use its best efforts to ensure the accuracy of all
services performed under this Agreement, but shall not be liable to the Company
for any action taken or omitted by BISYS in the absence of bad faith, willful
misfeasance, gross negligence or from reckless disregard by it of its
obligations and duties. The Company agrees to indemnify and hold harmless
BISYS, its employees, agents, directors, officers and nominees from and against
any and all claims, demands, actions and suits, whether groundless or otherwise,
and from and against any and all judgments, liabilities, losses, damages, costs,
charges, counsel fees and other expenses of every nature and character arising
out of or in any way relating to BISYS' actions taken or nonactions with respect
to the performance of services under this Agreement or based, if applicable,
upon reasonable reliance on information, records, instructions or requests given
or made to BISYS by the Company, the investment adviser and on any records
provided by any fund accountant or custodian thereof; provided that this
indemnification shall not apply to actions or omissions of BISYS in cases of
its own bad faith, willful misfeasance, gross negligence or from reckless
disregard by it of its obligations and duties; and further provided that prior
to confessing any claim against it which may be the subject of this
indemnification, BISYS shall give the Company written notice of and reasonable
opportunity to defend against said claim in its own name or in the name of
BISYS.
10. Record Retention and Confidentiality.
------------------------------------
BISYS shall keep and maintain on behalf of the Company all books and
records which the Company or BISYS is, or may be, required to keep and maintain
pursuant to any applicable statutes, rules and regulations, including without
limitation Rules 31a-1 and 31a-2 under the Investment Company Act of 1940, as
amended (the " 1940 Act"), relating to the maintenance of books and records in
connection with the services to be provided hereunder. BISYS further agrees that
all such books and records shall be the property of the Company and to make such
books and records available for inspection by the Company or by the Securities
and Exchange Commission (the "Commission") at reasonable times and
otherwise to keep confidential all books and records and other information
relative to the Company and its shareholders, except when requested to divulge
such information by duly-constituted authorities or court process, or requested
by a shareholder or shareholder's agent with respect to information concerning
an account as to which such shareholder has either a legal or beneficial
interest or when requested by the Company, the shareholder, or shareholder's
agent, or the dealer of record as to such account.
4
<PAGE>
11. Reports.
-------
BISYS will furnish to the Company and to its properly-authorized
auditors, investment advisers, examiners, distributors, dealers, underwriters,
salesmen, insurance companies and others designated by the Company in writing,
such reports at such times as are prescribed in Schedule D attached hereto, or
as subsequently agreed upon by the parties pursuant to an amendment to Schedule
D. The Company agrees to examine each such report or copy promptly and will
report or cause to be reported any errors or discrepancies therein not later
than three business days from the receipt thereof. In the event that errors or
discrepancies, except such errors and discrepancies as may not reasonably be
expected to be discovered by the recipient within three days after conducting a
diligent examination, are not so reported within the aforesaid period of time,
a report will for all purposes be accepted by and be binding upon the Company
and any other recipient, and BISYS shall have no liability for errors or
discrepancies therein and shall have no further responsibility with respect to
such report except to perform reasonable corrections of such errors and
discrepancies within a reasonable time after requested to do so by the Company.
12. Rights of Ownership.
-------------------
All computer programs and procedures developed to perform services
required to be provided by BISYS under this Agreement are the property of BISYS.
All records and other data except such computer programs and procedures are the
exclusive property of the Company and all such other records and data will be
furnished to the Company in appropriate form as soon as practicable after
termination of this Agreement for any reason.
13. Return of Records.
-----------------
BISYS may at its option at any time, and shall promptly upon the
Company's demand, turn over to the Company and cease to retain BISYS' files,
records and documents created and maintained by BISYS pursuant to this
Agreement which are no longer needed by BISYS in the performance of its services
or for its legal protection. If not so turned over to the Company, such
documents and records will be retained by BISYS for six years from the year of
creation. At the end of such six-year period, such records and documents will be
turned over to the Company unless the Company authorizes in writing the
destruction of such records and documents.
14. Bank Accounts.
---------------
The Company and the Funds shall establish and maintain such bank
accounts with such bank or banks as are selected by the Company, as are
necessary in order that BISYS may perform the services required to be performed
hereunder. To the extent that the performance of such services shall require
BISYS directly to disburse amounts for payment of dividends, redemption proceeds
or other purposes, the Company and Funds shall provide such bank or banks with
all instructions and authorizations necessary for BISYS to effect such
disbursements.
5
<PAGE>
15. Representations of the Company.
------------------------------
The Company certifies to BISYS that: (a) as of the close of business on
the Effective Date, each Fund which is in existence as of the Effective Date has
authorized unlimited shares, and (b) by virtue of its Certificate of
Incorporation, shares of each Fund which are redeemed by the Company may be sold
by the Company from its treasury, and (c) this Agreement has been duly
authorized by the Company and, when executed and delivered by the Company, will
constitute a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws or general application
affecting the rights and remedies of creditors and secured parties.
16. Representations of BISYS.
--------------------------
BISYS represents and warrants that: (a) BISYS has been in, and shall
continue to be in, substantial compliance with all provisions of law, including
Section 17A(c) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), required in connection with the performance of its duties under this
Agreement; and (b) the various procedures and systems which BISYS has
implemented with regard to safekeeping from loss or damage attributable to fire,
theft or any other cause of the blank checks, records, and other data of the
Company and BISYS' records, data, equipment, facilities and other property used
in the performance of its obligations hereunder are adequate and that it will
make such changes therein from time to time as are required for the secure
performance of its obligations hereunder.
17. Insurance.
---------
BISYS shall notify the Company should its insurance coverage with
respect to professional liability or errors and omissions coverage be canceled
or reduced. Such notification shall include the date of change and the reasons
therefor. BISYS shall notify the Company of any material claims against it with
respect to services performed under this Agreement, whether or not they may be
covered by insurance, and shall notify the Company from time to time as may be
appropriate of the total outstanding claims made by BISYS under its insurance
coverage.
18. Information to be Furnished by the Company and Funds.
----------------------------------------------------
The Company has furnished to BISYS the following:
(a) Copies of the Certificate of Incorporation of the Company and of
any amendments thereto, certified by the proper official of the
state in which such Certificate has been filed.
(b) Copies of the following documents:
1. The Company's By-Laws and any amendments thereto;
6
<PAGE>
2. Certified copies of resolutions of the Board of Directors
covering the following matters:
A. Approval of this Agreement and authorization of a specified
officer of the Company to execute and deliver this Agreement
and authorization for specified officers of the Company to
instruct BISYS hereunder; and
B. Authorization of BISYS to act as Transfer Agent for the
Company on behalf of the Funds.
(c) A list of all officers of the Company, together with specimen
signatures of those officers, who are authorized to instruct BISYS in
all matters.
(d) Two copies of the following (if such documents are employed by the
Company):
1. Prospectuses and Statement of Additional Information;
2. Distribution Agreement; and
3. All other forms commonly used by the Company or its Distributor
with regard to their relationships and transactions with
shareholders of the Funds.
(e) A certificate as to shares of beneficial interest of the Company
authorized, issued, and outstanding as of the Effective Date of BISYS'
appointment as Transfer Agent (or as of the date on which BISYS'
services are commenced, whichever is the later date) and as to receipt
of full consideration by the Company for all shares outstanding, such
statement to be certified by the Treasurer of the Company.
19. Information Furnished by BISYS.
-------------------------------
BISYS has furnished to the Company the following:
(a) BISYS' Articles of Incorporation.
(b) BISYS' Bylaws and any amendments thereto.
(c) Certified copies of actions of BISYS covering the following
matters:
7
<PAGE>
1. Approval of this Agreement, and authorization of a specified
officer of BISYS to execute and deliver this Agreement;
2. Authorization of BISYS to act as Transfer Agent for the
Company.
(d) A copy of the most recent independent accountants' report relating
to internal accounting control systems as filed with the Commission
pursuant to Rule 17Ad-l3 under the Exchange Act.
20. Amendments to Documents.
-----------------------
The Company shall furnish BISYS written copies of any amendments to,
or changes in, any of the items referred to in Section 18 hereof forthwith upon
such amendments or changes becoming effective. In addition, the Company agrees
that no amendments will be made to the Prospectuses or Statement of Additional
Information of the Company which might have the effect of changing the
procedures employed by BISYS in providing the services agreed to hereunder or
which amendment might affect the duties of BISYS hereunder unless the Company
first obtains BISYS' approval of such amendments or changes.
21. Reliance on Amendments.
----------------------
BISYS may rely on any amendments to or changes in any of the
documents and other items to be provided by the Company pursuant to Sections 18
and 20 of this Agreement and the Company hereby indemnifies and holds harmless
BISYS from and against any and all claims, demands, actions, suits, judgments,
liabilities, losses, damages, costs, charges, counsel fees and other expenses of
every nature and character which may result from actions or omissions on the
part of BISYS in reasonable reliance upon such amendments and/or changes.
Although BISYS is authorized to rely on the above-mentioned amendments to and
changes in the documents and other items to be provided pursuant to Sections 18
and 20 hereof, BISYS shall be under no duty to comply with or take any action as
a result of any of such amendments or changes unless the Company first obtains
BISYS' written consent to and approval of such amendments or changes.
22. Compliance with Law.
--------------------
Except for the obligations of BISYS set forth in Section 10 hereof,
the Company assumes full responsibility for the preparation, contents, and
distribution of each prospectus of the Company as to compliance with all
applicable requirements of the Securities Act of 1933, as amended (the
"1933 Act"), the 1940 Act, and any other laws, rules and regulations of
governmental authorities having jurisdiction. BISYS shall have no obligation to
take cognizance of any laws relating to the sale of the Company's shares. The
Company represents and warrants that no shares of the Company will be offered to
the public until the Company's registration statement under the 1933 Act and the
1940 Act has been declared or becomes effective.
8
<PAGE>
23. Notices.
--------
Any notice provided hereunder shall be sufficiently given when sent by
registered or certified mail to the party required to be served with
such notice at the following address: 3435 Stelzer Road, Columbus, Ohio
43219, or at such other address as such party may from time to time
specify in writing to the other party pursuant to this Section.
24. Headings.
---------
Paragraph headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
25. Assignment.
----------
This Agreement and the rights and duties hereunder shall not be
assignable by either of the parties hereto except by the specific written
consent of the other party. This Section 25 shall not limit or in any way affect
BISYS' right to appoint a Sub-transfer Agent pursuant to Section I hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed all as of the day and year first above written.
BNY HAMILTON FUNDS, INC.
By: /s/ Ann E. Bergin
---------------------------
Ann E. Bergin
Vice President
BISYS FUND SERVICES OHIO, INC.
By: /s/ Steve Mintos
---------------------------
Steve Mintos
Executive Vice President
of Operations
BISYS Fund Services, Inc.
9
<PAGE>
Dated: December 4, 1995
--------
SCHEDULE A
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
BNY HAMILTON FUNDS, INC.
AND
BISYS FUND SERVICES OHIO, INC.
NAME OF FUND
- ------------------------------
BNY Hamilton Money Fund
BNY Hamilton Equity Income Fund
BNY Hamilton Intermediate Government Fund
BNY Hamilton Intermediate New York Tax-Exempt Fund
BNY HAMILTON FUNDS, INC.
By: /s/ Ann E. Bergin
-----------------------
Ann E. Bergin
Vice President
BISYS HAMILTON SERVICES OHIO, INC.
BY: /s/ Steve Mintos
-----------------------
Steve Mintos
Executive Vice President of Operations
BYSIS Fund Services, Inc.
A-1
<PAGE>
SCHEDULE B
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
BNY HAMILTON FUNDS, INC.
AND
BISYS FUND SERVICES OHIO, INC.
TRANSFER AGENCY SERVICES
------------------------
1. Shareholder Transactions
------------------------
a Process shareholder purchase and redemption orders.
b. Set up account information, including address, dividend option,
taxpayer identification numbers and wire instructions.
c. Issue confirmations in compliance with Rule 10 under the
Securities Exchange Act of 1934, as amended.
d. Issue periodic statements for shareholders.
e. Process transfers and exchanges.
f. Process dividend payments, including the purchase of new shares,
through dividend reimbursement.
2. Shareholder Information Services
--------------------------------
a. Make information available to shareholder servicing unit and
other remote access units regarding trade date, share price,
current holdings, yields, and dividend information.
b. Produce detailed history of transactions through duplicate or
special order statements upon request.
c. Provide mailing labels for distribution of financial reports,
prospectuses, proxy statements or marketing material to current
shareholders.
B-1
<PAGE>
3. Compliance Reporting
--------------------
a. Provide reports to the Securities and Exchange Commission, the
National Association of Securities Dealers and the States in
which the Fund is registered.
b. Prepare and distribute appropriate Internal Revenue Service forms
for corresponding Fund and shareholder income and capital gains.
c. Issue tax withholding reports to the Internal Revenue Service.
4. Dealer/Load Processing (if applicable)
--------------------------------------
a. Provide reports for tracking rights of accumulation and purchases
made under a Letter of Intent.
b. Account for separation of shareholder investments from
transaction sale charges for purchase of Fund shares.
c. Calculate fees due under 12b-1 plans for distribution and
marketing expenses.
d. Track sales and commission statistics by dealer and provide for
payment of commissions on direct shareholder purchases in a load
Fund.
5. Shareholder Account Maintenance
-------------------------------
a. Maintain all shareholder records for each account in the Company.
b. Issue customer statements on scheduled cycle, providing duplicate
second and third party copies if required.
c. Record shareholder account information changes.
d. Maintain account documentation files for each shareholder.
B-2
<PAGE>
SCHEDULE C
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
BNY HAMILTON FUNDS, INC.
AND
BISYS FUND SERVICES OHIO, INC.
TRANSFER AGENT FEES
-------------------
<TABLE>
<CAPTION>
Annual Per Fund Fee:
- --------------------
<S> <C>
BNY Hamilton Money Fund (Retail) $10,000.00
BNY Hamilton Money Fund (Institutional) $15,000.00
BNY Hamilton Equity Income Fund $10,000.00
BNY Hamilton Intermediate Government Fund $10,000.00
BNY Hamilton Intermediate New York Tax-Exempt Fund $10,000.00
Annual Per Account Fee:
- -----------------------
BNY Hamilton Money Fund (Retail) $ 20.00
BNY Hamilton Money Fund (Institution) $ -0-
BNY Hamilton Equity Income Fund $ 16.00
BNY Hamilton Intermediate Government Fund $ 18.00
BNY Hamilton Intermediate New York Tax-Exempt Fund $ 18.00
</TABLE>
Multiple Classes of Shares:
- ---------------------------
Classes of shares which have different net asset values or pay different daily
dividends will be treated as separate classes, and the fee schedule above,
including the appropriate minimums, will be charged for each separate class.
Additional Services:
- --------------------
Additional services such as IRA processing, development of interface
capabilities, servicing of 403(b) and 408(c) accounts, management of cash sweeps
between DDAs and mutual fund accounts and coordination of the printing and
distribution of prospectuses, annual reports and semi-annual reports are subject
to additional fees which will be quoted upon request. Programming costs or
database management fees for special reports or specialized processing will be
quoted upon request.
Out-of-pocket Expenses:
- -----------------------
BISYS shall be entitled to be reimbursed for all reasonable out-of-pocket
expenses including, but not limited to, the expenses set forth in Section 3 of
the Transfer Agency Agreement to which this Schedule C is attached.
C-1
<PAGE>
SCHEDULE D
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
BNY HAMILTON FUNDS, INC.
AND
BISYS FUND SERVICES OHIO, INC.
REPORTS
-------
1. Daily Shareholder Activity Journal
2. Daily Fund Activity Summary Report
a. Beginning Balance
b. Dealer Transactions
c. Shareholder Transactions
d. Reinvested Dividends
e. Exchanges
f. Adjustments
g. Ending Balance
3. Daily Wire and Check Registers
4. Monthly Dealer Processing Reports
5. Monthly Dividend Reports
6. Sales Data Reports for Blue Sky Registration
7. Annual report by independent public accountants concerning
BISYS' shareholder system and internal accounting control
systems to be filed with the Securities and Exchange Commission
pursuant to Rule 17Ad-13 of the Securities Exchange Act of 1934,
as amended.
D-1
<PAGE>
EXHIBIT 99.9(i)
(9)(i) Rule 18f-3 Plan of BNY Hamilton Money Fund.
<PAGE>
THE BNY HAMILTON MONEY FUND
RULE 18f-3 MULTIPLE CLASS PLAN
WHEREAS, The BNY Hamilton Money Fund (the "Fund") is a series of The
BNY Hamilton Funds, Inc., an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Fund offers multiple classes of shares pursuant to an
order of the Commission (the "Order") and the Board has now determined that it
is in the best interests of the Fund to offer such classes and maintain the
arrangements therefor under Rule 18f-3 under the 1940 Act;
WHEREAS, Rule 18f-3 requires that the Directors of the Fund adopt a
written plan setting forth (1) the specific arrangement for shareholder services
and the distribution of securities for each class, (2) the allocation of
expenses for each class and (3) any related conversion features or exchange
privileges; and
WHEREAS, the Directors of the Fund, including a majority of the
Independent Directors, as defined in Section 5 below, have determined that the
following plan (the "Plan"), adopted pursuant to Rule 18f-3 under the 1940 Act,
is in the best interests of each class individually and the Fund as a whole and
that the Fund will realize the benefits of offering and maintaining a multiple-
class system under the Plan outweigh the benefits thereof under the Order.
NOW, THEREFORE, the Fund hereby adopts the Plan, in accordance with
Rule 18f-3 under the 1940 Act on the following terms and conditions:
1. Features of the Classes.
-----------------------
The Fund issues its shares of beneficial interest in three classes: "Hamilton
Shares", "Hamilton Premier Shares" and "Hamilton Classic Shares". Shares of each
class of the Fund shall represent an equal pro rata interest in such Fund and,
generally, shall have identical voting, dividend, liquidation, and other rights,
preferences, powers, restrictions, limitations, qualifications and terms and
conditions, except that: (a) each class shall have a different designation; (b)
each class shall bear any Class Expenses, as defined in Section 3 below; (c)
each class shall have exclusive voting rights on any matter submitted to
shareholders that relates solely to its distribution arrangement; and (d) each
class shall have separate voting rights on any matter submitted to shareholders
in which the interests of one class differ from the interests of any other
class. In addition, Hamilton Shares, Hamilton Premier Shares, and Hamilton
Classic Shares shall have the features described in Sections 2, 3, and 4 below.
2. Shareholder Servicing Plans and Distribution Plans.
----------------------------------------------------
(a) Hamilton Shares. Hamilton Shares of the Fund will not pay a fee for
----------------
shareholder services or distribution services (each as defined in paragraph (c)
below).
<PAGE>
(b) Hamilton Premier Shares and Hamilton Classic Shares. Hamilton
---------------------------------------------------
Premier Shares and Hamilton Classic Shares of the Fund shall pay a fee for
shareholder services in such amount as is disclosed in the Fund's prospectus or
prospectus supplement. Such fee shall be paid to certain institutions
("Shareholder Organizations") that provide shareholder services to their
customers who are beneficial owners of Hamilton Premier Shares or Hamilton
Classic Shares.
(c) Shareholder Services and Distribution Services.
-----------------------------------------------
(i) As used herein, the term "shareholder services" shall include (A)
aggregating and processing purchase, exchange and redemption requests from
customers and placing net purchase, exchange and redemption orders with the
distributor; (B) providing customers with a service that invests the assets of
their accounts in Hamilton Premier Shares or Hamilton Classic Shares pursuant to
specific or pre-authorized instructions; (C) processing dividend payments from
the Fund on behalf of customers; (D) providing information periodically to
customers regarding their position in Hamilton Premier Shares or Hamilton
Classic Shares; (E) arranging for bank wires; (F) responding to customer
inquiries regarding services performed by the Shareholder Organizations; (G)
providing subaccounting with respect to shares beneficially owned by customers
or providing the information to an investment company necessary for such
subaccounting; (H) if required by law, forwarding shareholder communications
from the investment company (such as proxies, shareholder reports, annual and
semi-annual financial statements and dividend, distribution and tax notices) to
customers; and (I) providing other similar administrative services.
(ii) As used herein, the term "distribution services" shall include
services rendered by the Fund's distributor, broker-dealers and other financial
institutions in connection with the distribution of Hamilton Classic Shares
and/or the provision of support services to Hamilton Classic Shares
shareholders. Such services may include, but are not limited to, fees paid to
broker-dealers, printing costs, advertising costs, telemarketing costs, costs of
distributing materials borne by the distributor in connection with sales or
selling efforts on behalf of the Hamilton Classic Shares, and costs associated
with implementing and operating the 12b-1 plan.
3. Allocation of Income and Expenses.
----------------------------------
(a) Daily Dividend Funds. The Fund declares distributions of net
--------------------
investment income daily and maintains the same net asset value per share in each
class. The Fund will allocate gross income, realized and unrealized capital
gains and losses and expenses (other than Class Expenses, as defined below) to
each class on the basis of relative net assets (settled shares). "Relative net
assets (settled shares)", for this purpose, are net assets valued in accordance
with generally accepted accounting principles but excluding the value of
subscriptions receivable, in relation to the net assets of the Fund. Expenses to
be so allocated also include expenses of the Fund that are not attributable to a
particular class of the Fund ("Fund Expenses"). Fund Expenses include, but are
not limited to, certain registration fees, advisory fees, custodial fees and
other expenses relating to the management of the Fund's assets.
2
<PAGE>
(b) Class Expenses. Expenses attributable to a particular class
---------------
("Class Expenses") shall be limited to: (i) payments made pursuant to a Rule
12b-1 plan ("12b-1 Plan Fee"); (ii) shareholder servicing expenses; (iii)
transfer agent fees attributable to a specific class; (iv) printing and postage
expenses related to preparing and distributing materials such as shareholder
reports, prospectuses and proxies to current shareholders of a specific class;
(v) Blue Sky registration fees incurred by a class; (vi) fees and expenses of
the administrator that are identified and approved by the Fund's board as being
attributable to a specific class of shares; (vii) the expense of administrative
personnel and services to support the shareholders of a specific class; (viii)
litigation or other legal expenses relating solely to one class; and (ix)
Directors' fees incurred as a result of issues relating to one class.
Therefore, expenses of the Fund shall be apportioned to each class of
shares depending on the nature of the expense item. Fund Expenses will be
allocated among the classes of shares based on their relative net asset values
in relation to the net asset value of the Fund. Approved Class Expenses shall be
allocated to the particular class to which they are attributable. In addition,
certain expenses may be allocated differently if their method of imposition
changes. Thus, if a Class Expense can no longer be attributed to a class, it
shall be charged to the Fund for allocation among classes, as determined by the
Board of Directors. Any additional Class Expenses not specifically identified
above which are subsequently identified and determined to be properly allocated
to one class of shares shall not be so allocated until approved by the Board of
Directors of the Fund in light of the requirements of the 1940 Act and the Code.
4. Exchange Privileges.
--------------------
Subject to the restrictions and conditions set forth in the Fund's
prospectus, shareholders may exchange shares between the Fund and any member of
the BNY Hamilton Family of Funds, provided that the amount to be exchanged meets
the applicable minimum value and investment requirements and the exchange is
made in states where it is legally authorized.
5. Quarterly and Annual Reports.
-----------------------------
The Directors shall receive quarterly and annual statements concerning
all allocated Class Expenses and distribution and servicing expenditures
complying with paragraph (b) (3) (ii) of Rule 12b-1, as it may be amended from
time to time. In the statements, only expenditures properly attributable to the
sale or servicing of a particular class of shares will be used to justify any
distribution or servicing fee or other expenses charged to that class.
Expenditures not related to the sale or servicing of a particular class shall
not be presented to the Directors to justify any fee attributable to that class.
The statements, including the allocations upon which they are based, shall be
subject to the review and approval of those Directors of the Fund who are not
"interested persons" of the Fund (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan (the
"Independent Directors") in the exercise of their fiduciary duties.
3
<PAGE>
6. Accounting Methodology.
----------------------
The following procedures shall be implemented in order to meet the
objective of properly allocating income and expenses among the Funds:
(a) On a daily basis, the fund accountant shall calculate the 12b-1
Plan Fee to be charged to the Hamilton Classic Shares by calculating the average
daily net asset value of such shares outstanding and applying the applicable fee
rate of the respective class to the result of that calculation.
(b) The fund accountant will allocate all other designated Class
Expenses, if any, to the respective classes.
(c) The fund accountant shall allocate income and Fund Expenses among
the respective classes of shares based on the net asset value of each class in
relation to the net asset value of the Fund for Fund Expenses. These
calculations shall be based on the relative value of settled shares for the
Fund.
(d) The fund accountant shall then complete a worksheet developed for
purposes of complying with Section 6 of this Plan, using the allocated income
and expense calculations from paragraph (c) above and the additional fees
calculated from paragraphs (a) and (b) above.
(e) The fund accountant shall develop and use appropriate internal
control procedures to assure the accuracy of its calculations and the
appropriate allocation of income and expenses in accordance with this Plan.
(f) The methodology and procedures for calculating the net asset value
and dividends/distributions of the various Classes of the Fund and the proper
allocation of income and expenses among such Classes has been reviewed by the
Fund's independent auditors (the "Independent Auditors"), who have advised the
Fund in a report that such methodology and procedures are adequate to ensure
that such calculations and allocations will be made in an appropriate manner,
subject to the conditions and limitations in that report. On an ongoing basis,
the Independent Auditors will monitor the manner in which the calculations and
allocations are being made. Such monitoring will be consistent with that
required under generally accepted auditing standards as appropriate to enable
the Independent Accountants to render an unqualified report on the financial
statements and, if requested, to sign the Fund's Federal income tax return as
preparer.
(g) The Independent Auditors, in initial reports pursuant to Statement
of Auditing Standards No. 70 of the American Institute of Certified Public
Accountants, have advised that the Fund has adequate facilities in place to
ensure implementation of the methodology and procedures for calculating the net
asset value and dividends/distributions among the various Classes and the proper
allocation of income and expenses among such Classes. The continuing adequacy of
such facilities will be reviewed on an ongoing basis as required by
4
<PAGE>
generally accepted auditing standards or otherwise as required to enable the
Independent Accountants to render an unqualified report on the financial
statements. The appropriate officers of the Fund are authorized to take
immediate corrective action to remedy any deficiencies identified by the fund
accountant or the Independent Accountants. It shall not be necessary in the
future that reports under the Statement of Auditing Standards No. 70 be prepared
unless and until the Board of Directors determines otherwise.
7. Waiver or Reimbursement of Expenses.
-----------------------------------
Expenses may be waived or reimbursed by the administrator, the adviser
or other service provider to the Fund without the prior approval of the Fund's
Board of Directors.
8. Effectiveness of Plan.
----------------------
This Plan shall not take effect until it has been approved by votes of
a majority of both (a) the Directors of the Fund and (b) the Independent
Directors.
9. Material Modifications.
----------------------
This Plan may not be amended to modify materially its terms unless
such amendment is approved in the manner provided for initial approval in
Section 8 herein.
5
<PAGE>
EXHIBIT 99.11
(11) Consent of Deloitte & Touche LLP.
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in Post-Effective Amendment No. 8 to Registration
Statement No. 33-47703 of BNY Hamilton Funds, Inc. of our reports dated
February 9, 1996, appearing in the Statement of Additional Information, which
is a part of such Registration Statement, and to the references to us under
the headings "Financial Highlights" in the Prospectuses, which are also a part
of such Registration Statement, and "Fund, Shareholder and Other Services" in
the Statement of Additional Information.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
New York, New York
April 24, 1996
<PAGE>
EXHIBIT 99.16
(16) SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
<PAGE>
Z070
HAMILTON MONEY MARKET
<TABLE>
<CAPTION>
INST SERVICE RETAIL INST SERVICE RETAIL INST SERVICE RETAIL
7 DAY 7 DAY 7 DAY EFFECTIVE 7 EFFECTIVE 7 EFFECTIVE 7 30 DAY 30 DAY 30 DAY
DATE YIELD YIELD YIELD 7 DAY YIELD 7 DAY YIELD 7 DAY YIELD YIELD YIELD YIELD
---- ----- ----- ------ ----------- ----------- ----------- ------ ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/30/95 5.62% 5.35% 5.78% 5.50% 5.59% 5.32%
12/01/95 5.60% 5.33% 0.00% 5.76% 5.47% 0.00% 5.59% 5.32% 0.00%
12/02/95 5.58% 5.31% 0.00% 5.74% 5.45% 0.00% 5.59% 5.32% 0.00%
12/03/95 5.56% 5.29% 0.00% 5.72% 5.43% 0.00% 5.59% 5.32% 0.00%
12/04/95 5.55% 5.28% 0.72% 5.71% 5.42% 0.72% 5.59% 5.32% 0.17%
12/05/95 5.56% 5.29% 1.45% 5.72% 5.43% 1.46% 5.59% 5.32% 0.34%
12/06/95 5.57% 5.30% 2.18% 5.73% 5.44% 2.20% 5.59% 5.32% 0.51%
12/07/95 5.56% 5.29% 2.90% 5.72% 5.43% 2.94% 5.59% 5.32% 0.68%
12/08/95 5.56% 5.29% 3.63% 5.72% 5.43% 3.70% 5.59% 5.32% 0.85%
12/09/95 5.56% 5.29% 4.35% 5.72% 5.43% 4.45% 5.59% 5.32% 1.01%
12/10/95 5.55% 5.29% 5.07% 5.71% 5.43% 5.20% 5.59% 5.32% 1.18%
12/11/95 5.56% 5.29% 5.07% 5.72% 5.43% 5.20% 5.59% 5.32% 1.35%
12/12/95 5.56% 5.29% 5.06% 5.72% 5.43% 5.19% 5.59% 5.32% 1.52%
12/13/95 5.55% 5.28% 5.05% 5.71% 5.42% 5.18% 5.59% 5.32% 1.69%
12/14/95 5.54% 5.27% 5.05% 5.70% 5.41% 5.18% 5.59% 5.32% 1.86%
12/15/95 5.55% 5.28% 5.06% 5.71% 5.42% 5.19% 5.58% 5.31% 2.03%
12/16/95 5.56% 5.29% 5.07% 5.72% 5.43% 5.20% 5.58% 5.32% 2.20%
12/17/95 5.57% 5.30% 5.08% 5.73% 5.44% 5.21% 5.58% 5.31% 2.37%
12/18/95 5.57% 5.30% 5.08% 5.73% 5.44% 5.21% 5.58% 5.31% 2.54%
12/19/95 5.57% 5.30% 5.08% 5.73% 5.44% 5.21% 5.58% 5.31% 2.70%
12/20/95 5.57% 5.30% 5.08% 5.73% 5.44% 5.21% 5.58% 5.31% 2.87%
12/21/95 5.56% 5.29% 5.07% 5.72% 5.43% 5.20% 5.57% 5.30% 3.04%
12/22/95 5.54% 5.27% 5.05% 5.70% 5.41% 5.18% 5.57% 5.30% 3.20%
12/23/95 5.52% 5.26% 5.03% 5.68% 5.40% 5.16% 5.56% 5.30% 3.37%
12/24/95 5.50% 5.24% 5.01% 5.65% 5.38% 5.14% 5.56% 5.29% 3.54%
12/25/95 5.50% 5.23% 5.00% 5.65% 5.37% 5.13% 5.55% 5.28% 3.70%
12/26/95 5.49% 5.22% 4.99% 5.64% 5.36% 5.12% 5.54% 5.28% 3.87%
12/27/95 5.48% 5.21% 4.98% 5.63% 5.35% 5.11% 5.54% 5.27% 4.03%
12/28/95 5.47% 5.20% 4.97% 5.62% 5.34% 5.10% 5.54% 5.27% 4.20%
12/29/95 5.49% 5.22% 4.99% 5.64% 5.36% 5.12% 5.54% 5.27% 4.37%
12/30/95 5.51% 5.24% 5.01% 5.66% 5.38% 5.14% 5.54% 5.27% 4.54%
12/31/95 5.53% 5.26% 5.04% 5.69% 5.40% 5.17% 5.54% 5.27% 4.71%
</TABLE>
<PAGE>
BNY HAMILTON INTERMEDIATE GOVERNMENT FUND
Input Range and Calculation of Change in Value
(DOES NOT CONSIDER EFFECT OF THE SALES LOAD)
<TABLE>
<CAPTION>
Dividend Dividend Total Extended Change For/(From)
Date NAV Regular Cap Gain Shares Shares Value 1 Month 3 Months 12 Months
---- --- ------- -------- -------- ------ -------- ------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/10/92 10.00 100.0000 1,000.00 - - - - - - - - -
08/31/92 9.96 0.023962 0.240577 100.2406 998.40 -0.16% - - - - - -
09/30/92 10.07 0.038543 0.383674 100.6243 1,013.29 1.49% - - - - - -
10/31/92 9.89 0.039980 0.406770 101.0310 999.20 -1.39% -0.08% - - -
11/30/92 9.80 0.039200 0.404124 101.4351 994.06 -0.51% -0.43% - - -
12/31/92 9.87 0.038400 0.394641 101.8297 1,005.06 1.11% -0.81% - - -
01/31/93 10.00 0.039377 0.400975 102.2307 1,022.31 1.72% 2.31% - - -
02/28/93 10.13 0.036542 0.368779 102.5995 1,039.33 1.66% 4.55% - - -
03/31/93 10.11 0.040406 0.410050 103.0096 1,041.43 0.20% 3.62% - - -
04/30/93 10.14 0.040439 0.410809 103.4204 1,048.68 0.70% 2.58% - - -
05/31/93 10.08 0.044942 0.461106 103.8815 1,047.13 -0.15% 0.75% - - -
06/30/93 10.22 0.043774 0.444944 104.3264 1,066.22 1.82% 2.38% - - -
07/31/93 10.19 0.045819 0.469103 104.7955 1,067.87 0.15% 1.83% 6.79%
08/31/93 10.33 0.045060 0.457126 105.2526 1,087.26 1.82% 3.83% 8.90%
09/30/93 10.34 0.043409 0.441868 105.6945 1,092.88 0.52% 2.50% 7.85%
10/31/93 10.33 0.043776 0.447911 106.1424 1,096.45 0.33% 2.68% 9.73%
11/30/93 10.15 0.042840 0.447994 106.5904 1,081.89 -1.33% -0.49% 8.84%
12/31/93 10.12 0.042917 0.023000 0.694285 107.2847 1,085.72 0.35% -0.66% 8.03%
01/31/94 10.22 0.041857 0.439390 107.7241 1,100.94 1.40% 0.41% 7.69%
02/28/94 9.93 0.039303 0.426369 108.1505 1,073.93 -2.45% -0.74% 3.33%
03/31/94 9.64 0.043760 0.490946 108.6414 1,047.30 -2.48% -3.54% 0.56%
04/30/94 9.51 0.042297 0.483197 109.1246 1,037.77 -0.91% -5.74% -1.04%
05/31/94 9.45 0.043570 0.503128 109.6277 1,035.98 -0.17% -3.53% -1.06%
06/30/94 9.35 0.042415 0.497311 110.1250 1,029.67 -0.61% -1.68% -3.43%
07/31/94 9.43 0.041005 0.478863 110.6039 1,042.99 1.29% 0.50% -2.33%
08/31/94 9.41 0.040674 0.478077 111.0820 1,045.28 0.22% 0.90% -3.86%
09/30/94 9.24 0.041107 0.494183 111.5762 1,030.96 -1.37% 0.13% -5.67%
10/31/94 9.18 0.042907 0.521503 112.0977 1,029.06 -0.18% -1.34% -6.15%
11/30/94 9.10 0.041370 0.509613 112.6073 1,024.73 -0.42% -1.97% -5.28%
12/31/94 9.10 0.043245 0.535132 113.1424 1,029.60 0.48% -0.13% -5.17%
01/31/95 9.20 0.043580 0.535951 113.6784 1,045.84 1.58% 1.63% -5.00%
02/28/95 9.36 0.040390 0.490542 114.1689 1,068.62 2.18% 4.28% -0.49%
03/31/95 9.37 0.044622 0.543697 114.7126 1,074.86 0.58% 4.40% 2.63%
04/30/95 9.45 0.043662 0.530009 115.2426 1,089.04 1.32% 4.13% 4.94%
05/31/95 9.74 0.043864 0.518994 115.7616 1,127.52 3.53% 5.51% 8.84%
06/30/95 9.75 0.043571 0.517318 116.2789 1,133.72 0.55% 5.48% 10.11%
07/31/95 9.68 0.045053 0.541188 116.8201 1,130.82 -0.26% 3.84% 8.42%
08/31/95 9.72 0.045151 0.542649 117.3627 1,140.77 0.88% 1.18% 9.14%
09/30/95 9.75 0.044625 0.537160 117.8999 1,149.52 0.77% 1.39% 11.50%
10/31/95 9.80 0.046131 0.554984 118.4549 1,160.86 0.99% 2.66% 12.81%
11/30/95 9.88 0.044648 0.535301 118.9902 1,175.62 1.27% 3.05% 14.72%
12/31/95 9.94 0.045420 0.543716 119.5339 1,188.17 1.07% 3.36% 15.40%
<CAPTION>
Year Trailing Trailing 3 Yr Total Since Avg. Annual
Date to Date 3 Years Avg.Ann.Rtn. Inception Return
---- ------- -------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
08/10/92 - - - - - - - - - - - - - - - - - - -
08/31/92 - - - - - - - - - - - -0.16% - - - -
09/30/92 - - - - - - - - - - - 1.33% - - - -
10/31/92 - - - - - - - - - - - -0.08% - - - -
11/30/92 - - - - - - - - - - - -0.59% - - - -
12/31/92 - - - - - - - - - - - 0.51% - - - -
01/31/93 - - - - - - - - - - - 2.23% 4.71%
02/28/93 - - - - - - - - - - - 3.93% 7.18%
03/31/93 - - - - - - - - - - - 4.14% 6.54%
04/30/93 4.34% - - - - - - - - 4.87% 6.79%
05/31/93 4.19% - - - - - - - - 4.71% 5.86%
06/30/93 6.09% - - - - - - - - 6.62% 7.47%
07/31/93 6.25% - - - - - - - - 6.79% 6.96%
08/31/93 8.18% - - - - - - - - 8.73% 8.21%
09/30/93 8.74% - - - - - - - - 9.29% 8.08%
10/31/93 9.09% - - - - - - - - 9.65% 7.79%
11/30/93 7.64% - - - - - - - - 8.19% 6.19%
12/31/93 8.03% - - - - - - - - 8.57% 6.07%
01/31/94 1.40% - - - - - - - - 10.09% 6.72%
02/28/94 -1.09% - - - - - - - - 7.39% 4.69%
03/31/94 -3.54% - - - - - - - - 4.73% 2.86%
04/30/94 -4.42% - - - - - - - - 3.78% 2.17%
05/31/94 -4.58% - - - - - - - - 3.60% 1.97%
06/30/94 -5.16% - - - - - - - - 2.97% 1.56%
07/31/94 -3.94% - - - - - - - - 4.30% 2.15%
08/31/94 -3.72% - - - - - - - - 4.53% 2.17%
09/30/94 -5.04% - - - - - - - - 3.10% 1.43%
10/31/94 -5.22% - - - - - - - - 2.91% 1.29%
11/30/94 -5.62% - - - - - - - - 2.47% 1.06%
12/31/94 -5.17% - - - - - - - - 2.96% 1.23%
01/31/95 1.58% - - - - - - - - 4.58% 1.82%
02/28/95 3.79% - - - - - - - - 6.86% 2.63%
03/31/95 4.40% - - - - - - - - 7.49% 2.77%
04/30/95 5.77% - - - - - - - - 8.90% 3.18%
05/31/95 9.51% - - - - - - - - 12.75% 4.37%
06/30/95 10.11% - - - - - - - - 13.37% 4.44%
07/31/95 9.83% - - - - - - - - 13.08% 4.22%
08/31/95 10.80% 14.26% 4.54% 14.08% 4.40%
09/30/95 11.65% 13.44% 4.29% 14.95% 4.53%
10/31/95 12.75% 16.18% 5.12% 16.09% 4.73%
11/30/95 14.18% 18.26% 5.75% 17.56% 5.01%
12/31/95 15.40% 18.22% 5.73% 18.82% 5.21%
</TABLE>
<PAGE>
BNY HAMILTON INTERMEDIATE
GOVERNMENT FUND
Input Range and Calculation of Change in Value
(12 MONTHS INCLUDING SALES LOAD)
<TABLE>
<CAPTION>
Dividend Dividend Total Extended Trailing
Date NAV Regular Cap Gain Shares Shares Value 12 Months
---- --- ------- -------- -------- ------ -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
12/31/94 9.10 0.043245 0.535132 113.1424 1,029.60 -7.99%
01/31/95 9.20 0.043580 0.535951 105.4852 970.46 -7.89%
02/28/95 9.36 0.040390 0.455187 105.9404 991.60 -3.51%
03/31/95 9.37 0.044622 0.504511 106.4449 997.39 -0.47%
04/30/95 9.45 0.043662 0.491809 106.9367 1,010.55 1.84%
05/31/95 9.74 0.043864 0.481588 107.4183 1,046.25 5.60%
06/30/95 9.75 0.043571 0.480033 107.8933 1,052.01 6.79%
07/31/95 9.68 0.045053 0.502183 108.4005 1,049.32 5.19%
08/31/95 9.72 0.045151 0.503538 108.9040 1,058.51 5.87%
09/30/95 9.75 0.044625 0.498445 109.4024 1,066.71 8.11%
10/31/95 9.80 0.046131 0.514984 109.9174 1,077.19 9.47%
11/30/95 9.88 0.044648 0.496720 110.4141 1,090.89 11.30%
12/31/95 9.94 0.045420 0.504528 110.9186 1,102.34 11.96%
</TABLE>
<PAGE>
BNY HAMILTON INTERMEDIATE
GOVERNMENT FUND
Input Range and Calculation of Change in Value
(TRAILING and CUMULATIVE 3 YEARS ASSUMING 3.00 % SALES LOAD
SINCE INCEPTION)
<TABLE>
<CAPTION>
Dividend Dividend Total Extended Trailing 3 Yr Trailing 3 Yr
Date NAV Regular Cap Gain Shares Shares Value Cum. Rtn. Avg.Ann.Rtn.
---- --- ------- -------- -------- ------ -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/92 9.87 0.038400 0.382775 98.7680 974.84 - - - - - - - -
01/31/93 10.00 0.039377 0.388919 96.9932 969.93 - - - - - - - -
02/28/93 10.13 0.036542 0.349886 97.3431 986.09 - - - - - - - -
03/31/93 10.11 0.040406 0.389042 97.7321 988.07 - - - - - - - -
04/30/93 10.14 0.040439 0.389762 98.1219 994.96 - - - - - - - -
05/31/93 10.08 0.044942 0.437483 98.5594 993.48 - - - - - - - -
06/30/93 10.22 0.043774 0.422148 98.9815 1,011.59 - - - - - - - -
07/31/93 10.19 0.045819 0.445070 99.4266 1,013.16 - - - - - - - -
08/31/93 10.33 0.045060 0.433707 99.8603 1,031.56 - - - - - - - -
09/30/93 10.34 0.043409 0.419230 100.2795 1,036.89 - - - - - - - -
10/31/93 10.33 0.043776 0.424963 100.7045 1,040.28 - - - - - - - -
11/30/93 10.15 0.042840 0.425042 101.1295 1,026.46 - - - - - - - -
12/31/93 10.12 0.042917 0.023000 0.658715 101.7882 1,030.10 - - - - - - - -
01/31/94 10.22 0.041857 0.416879 102.2051 1,044.54 - - - - - - - -
02/28/94 9.93 0.039303 0.404525 102.6096 1,018.91 - - - - - - - -
03/31/94 9.64 0.043760 0.465793 103.0754 993.65 - - - - - - - -
04/30/94 9.51 0.042297 0.458442 103.5338 984.61 - - - - - - - -
05/31/94 9.45 0.043570 0.477351 104.0112 982.91 - - - - - - - -
06/30/94 9.35 0.042415 0.471833 104.4830 976.92 - - - - - - - -
07/31/94 9.43 0.041005 0.454329 104.9373 989.56 - - - - - - - -
08/31/94 9.41 0.040674 0.453583 105.3909 991.73 - - - - - - - -
09/30/94 9.24 0.041107 0.468864 105.8598 978.14 - - - - - - - -
10/31/94 9.18 0.042907 0.494785 106.3546 976.34 - - - - - - - -
11/30/94 9.10 0.041370 0.483504 106.8381 972.23 - - - - - - - -
12/31/94 9.10 0.043245 0.507716 107.3458 976.85 - - - - - - - -
01/31/95 9.20 0.043580 0.508492 107.8543 992.26 - - - - - - - -
02/28/95 9.36 0.040390 0.465410 108.3197 1,013.87 - - - - - - - -
03/31/95 9.37 0.044622 0.515842 108.8355 1,019.79 - - - - - - - -
04/30/95 9.45 0.043662 0.502855 109.3384 1,033.25 - - - - - - - -
05/31/95 9.74 0.043864 0.492404 109.8308 1,069.75 - - - - - - - -
06/30/95 9.75 0.043571 0.490814 110.3216 1,075.64 - - - - - - - -
07/31/95 9.68 0.045053 0.513462 110.8351 1,072.88 - - - - - - - -
08/31/95 9.72 0.045151 0.514847 111.3499 1,082.32 10.81% 3.24%
09/30/95 9.75 0.044625 0.509640 111.8595 1,090.63 10.06% 3.50%
10/31/95 9.80 0.046131 0.526550 112.3861 1,101.38 12.65% 3.84%
11/30/95 9.88 0.044648 0.507876 112.8940 1,115.39 14.75% 4.28%
12/31/95 9.94 0.045420 0.515860 113.4099 1,127.29 14.62% 4.65%
</TABLE>
<PAGE>
BNY HAMILTON INTERMEDIATE
GOVERNMENT FUND
Input Range and Calculation of Change in Value
(ASSUMES 3.00 % SALES LOAD SINCE INCEPTION)
<TABLE>
<CAPTION>
Dividend Dividend Total Extended Avg. Annual
Date NAV Regular Cap Gain Shares Shares Value Inception Return
---- --- ------- -------- -------- ------ -------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
08/10/92 10.00 96.9932 969.93 - - - - - - - -
08/31/92 9.96 0.023962 0.233344 97.2266 968.38 -3.16% - - - -
09/30/92 10.07 0.038543 0.372138 97.5987 982.82 -1.72% - - - -
10/31/92 9.89 0.039980 0.394540 97.9932 969.15 -3.09% - - - -
11/30/92 9.80 0.039200 0.391973 98.3852 964.17 -3.58% - - - -
12/31/92 9.87 0.038400 0.382775 98.7680 974.84 -2.52% - - - -
01/31/93 10.00 0.039377 0.388919 99.1569 991.57 -0.84% -1.75%
02/28/93 10.13 0.036542 0.357691 99.5146 1,008.08 0.81% 1.46%
03/31/93 10.11 0.040406 0.397721 99.9123 1,010.11 1.01% 1.58%
04/30/93 10.14 0.040439 0.398457 100.3108 1,017.15 1.72% 2.38%
05/31/93 10.08 0.044942 0.447242 100.7580 1,015.64 1.56% 1.94%
06/30/93 10.22 0.043774 0.431565 101.1896 1,034.16 3.42% 3.84%
07/31/93 10.19 0.045819 0.454999 101.6446 1,035.76 3.58% 3.67%
08/31/93 10.33 0.045060 0.443382 102.0880 1,054.57 5.46% 5.14%
09/30/93 10.34 0.043409 0.428582 102.5166 1,060.02 6.00% 5.23%
10/31/93 10.33 0.043776 0.434444 102.9510 1,063.48 6.35% 5.14%
11/30/93 10.15 0.042840 0.434524 103.3855 1,049.36 4.94% 3.75%
12/31/93 10.12 0.042917 0.023000 0.673409 104.0589 1,053.08 5.31% 3.78%
01/31/94 10.22 0.041857 0.426178 104.4851 1,067.84 6.78% 4.54%
02/28/94 9.93 0.039303 0.413550 104.8987 1,041.64 4.16% 2.66%
03/31/94 9.64 0.043760 0.476184 105.3749 1,015.81 1.58% 0.96%
04/30/94 9.51 0.042297 0.468669 105.8436 1,006.57 0.66% 0.38%
05/31/94 9.45 0.043570 0.488001 106.3316 1,004.83 0.48% 0.27%
06/30/94 9.35 0.042415 0.482359 106.8140 998.71 -0.13% -0.07%
07/31/94 9.43 0.041005 0.464465 107.2785 1,011.64 1.16% 0.59%
08/31/94 9.41 0.040674 0.463703 107.7422 1,013.85 1.39% 0.67%
09/30/94 9.24 0.041107 0.479325 108.2215 999.97 -0.00% 0.00%
10/31/94 9.18 0.042907 0.505824 108.7273 998.12 -0.19% -0.08%
11/30/94 9.10 0.041370 0.494291 109.2216 993.92 -0.61% -0.26%
12/31/94 9.10 0.043245 0.519043 109.7406 998.64 -0.14% -0.06%
01/31/95 9.20 0.043580 0.519836 110.2604 1,014.40 1.44% 0.58%
02/28/95 9.36 0.040390 0.475792 110.7362 1,036.49 3.65% 1.41%
03/31/95 9.37 0.044622 0.527350 111.2636 1,042.54 4.25% 1.59%
04/30/95 9.45 0.043662 0.514073 111.7777 1,056.30 5.63% 2.03%
05/31/95 9.74 0.043864 0.503390 112.2811 1,093.62 9.36% 3.24%
06/30/95 9.75 0.043571 0.501764 112.7829 1,099.63 9.96% 3.34%
07/31/95 9.68 0.045053 0.524917 113.3078 1,096.82 9.68% 3.15%
08/31/95 9.72 0.045151 0.526333 113.8341 1,106.47 10.65% 3.36%
09/30/95 9.75 0.044625 0.521010 114.3551 1,114.96 11.50% 3.52%
10/31/95 9.80 0.046131 0.538297 114.8934 1,125.96 12.60% 3.74%
11/30/95 9.88 0.044648 0.519207 115.4126 1,140.28 14.03% 4.05%
12/31/95 9.94 0.045420 0.527368 115.9400 1,152.44 15.24% 4.27%
</TABLE>
<PAGE>
BNY HAMILTON INTERMEDIATE
NEW YORK TAX-EXEMPT FUND
Input Range and Calculation of Change in Value
(12 MONTHS INCLUDING SALES LOAD)
<TABLE>
<CAPTION>
Dividend Dividend Total Extended Trailing
Date NAV Regular Cap Gain Shares Shares Value 12 Months
---- --- ------- -------- -------- ------ -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
12/31/94 9.59 0.033864 0.385682 109.6075 1,051.14 -6.69%
01/31/95 9.70 0.033880 0.382835 100.0000 970.00 -6.20%
02/28/95 9.91 0.030492 0.307689 100.3077 994.05 -1.97%
03/31/95 9.97 0.033754 0.339597 100.6473 1,003.45 1.22%
04/30/95 9.98 0.032787 0.330654 100.9780 1,007.76 1.32%
05/31/95 10.17 0.033439 0.332016 101.3100 1,030.32 2.84%
06/30/95 10.14 0.031943 0.319146 101.6291 1,030.52 3.12%
07/31/95 10.19 0.032864 0.327768 101.9569 1,038.94 2.93%
08/31/95 10.25 0.032917 0.327426 102.2843 1,048.41 3.53%
09/30/95 10.24 0.031855 0.318190 102.6025 1,050.65 5.05%
10/31/95 10.26 0.033137 0.331378 102.9339 1,056.10 6.73%
11/30/95 10.31 0.032197 0.321451 103.2554 1,064.56 9.39%
12/31/95 10.34 0.033237 0.331905 103.5873 1,071.09 8.68%
</TABLE>
<PAGE>
BNY HAMILTON INTERMEDIATE
NEW YORK TAX-EXEMPT FUND
Input Range and Calculation of Change in Value
(TRAILING and CUMULATIVE 3 YEARS ASSUMES 3.00 % SALES LOAD
SINCE INCEPTION)
<TABLE>
<CAPTION>
Dividend Dividend Total Extended Trailing 3 Yr Trailing 3 Yr
Date NAV Regular Cap Gain Shares Shares Value Cum. Rtn. Avg.Ann.Rtn.
---- --- ------- -------- -------- ------ -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/92 9.97 0.033500 0.329637 98.4334 981.38 - - - - - - - -
01/31/93 10.05 0.034150 0.334478 96.5300 970.08 - - - - - - - -
02/28/93 10.24 0.029352 0.276694 96.8067 991.30 - - - - - - - -
03/31/93 10.11 0.031011 0.296939 97.1036 981.72 - - - - - - - -
04/30/93 10.15 0.030865 0.295281 97.3989 988.60 - - - - - - - -
05/31/93 10.14 0.031873 0.306150 97.7051 990.73 - - - - - - - -
06/30/93 10.24 0.032522 0.310308 98.0154 1,003.68 - - - - - - - -
07/31/93 10.17 0.032888 0.316968 98.3324 1,000.04 - - - - - - - -
08/31/93 10.30 0.032908 0.314168 98.6466 1,016.06 - - - - - - - -
09/30/93 10.36 0.031663 0.301492 98.9481 1,025.10 - - - - - - - -
10/31/93 10.34 0.032364 0.309710 99.2578 1,026.33 - - - - - - - -
11/30/93 10.26 0.031233 0.302156 99.5600 1,021.49 - - - - - - - -
12/31/93 10.37 0.033473 0.321365 99.8814 1,035.77 - - - - - - - -
01/31/94 10.44 0.032969 0.315421 100.1968 1,046.05 - - - - - - - -
02/28/94 10.20 0.029926 0.293966 100.4908 1,025.01 - - - - - - - -
03/31/94 9.94 0.033120 0.334833 100.8256 1,002.21 - - - - - - - -
04/30/94 9.94 0.032815 0.332856 101.1585 1,005.32 - - - - - - - -
05/31/94 9.98 0.033968 0.344304 101.5028 1,013.00 - - - - - - - -
06/30/94 9.92 0.032575 0.333312 101.8361 1,010.21 - - - - - - - -
07/31/94 9.99 0.032101 0.327231 102.1633 1,020.61 - - - - - - - -
08/31/94 9.99 0.032275 0.330062 102.4934 1,023.91 - - - - - - - -
09/30/94 9.84 0.031537 0.328489 102.8219 1,011.71 - - - - - - - -
10/31/94 9.70 0.032883 0.348566 103.1705 1,000.25 - - - - - - - -
11/30/94 9.51 0.032393 0.351420 103.5219 984.49 - - - - - - - -
12/31/94 9.59 0.033864 0.365554 103.8875 996.28 - - - - - - - -
01/31/95 9.70 0.033880 0.362857 104.2504 1,011.23 - - - - - - - -
02/28/95 9.91 0.030492 0.320767 104.5712 1,036.30 - - - - - - - -
03/31/95 9.97 0.033754 0.354032 104.9252 1,046.10 - - - - - - - -
04/30/95 9.98 0.032787 0.344708 105.2699 1,050.59 - - - - - - - -
05/31/95 10.17 0.033439 0.346128 105.6160 1,074.11 - - - - - - - -
06/30/95 10.14 0.031943 0.332711 105.9487 1,074.32 - - - - - - - -
07/31/95 10.19 0.032864 0.341700 106.2904 1,083.10 - - - - - - - -
08/31/95 10.25 0.032917 0.341343 106.6317 1,092.97 12.62% 4.04%
09/30/95 10.24 0.031855 0.331714 106.9634 1,095.31 12.30% 3.94%
10/31/95 10.26 0.033137 0.345463 107.3089 1,100.99 13.50% 4.31%
11/30/95 10.31 0.032197 0.335114 107.6440 1,109.81 13.04% 4.17%
12/31/95 10.34 0.033237 0.346012 107.9900 1,116.62 12.91% 4.13%
</TABLE>
<PAGE>
BNY HAMILTON INTERMEDIATE
NEW YORK TAX-EXEMPT FUND
Input Range and Calculation of Change in Value
(ASSUMES 3.00 % SALES LOAD SINCE INCEPTION)
<TABLE>
<CAPTION>
Dividend Dividend Total Extended Avg Annual
Date NAV Regular Cap Gain Shares Shares Value Inception Return
---- --- ------- -------- -------- ------ -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
08/10/92 10.00 96.9932 969.93 - - - - - - - -
08/31/92 9.91 0.017481 0.171090 97.1643 962.90 -3.71% - - - -
09/30/92 9.93 0.030440 0.297848 97.4621 967.80 -3.22% - - - -
10/31/92 9.85 0.032700 0.323555 97.7857 963.19 -3.68% - - - -
11/30/92 9.93 0.032300 0.318074 98.1038 974.17 -2.58% - - - -
12/31/92 9.97 0.033500 0.329637 98.4334 981.38 -1.86% - - - -
01/31/93 10.05 0.034150 0.334478 98.7679 992.62 -0.74% -1.53%
02/28/93 10.24 0.029352 0.283109 99.0510 1,014.28 1.43% 2.58%
03/31/93 10.11 0.031011 0.303823 99.3548 1,004.48 0.45% 0.70%
04/30/93 10.15 0.030865 0.302127 99.6569 1,011.52 1.15% 1.60%
05/31/93 10.14 0.031873 0.313247 99.9701 1,013.70 1.37% 1.70%
06/30/93 10.24 0.032522 0.317502 100.2876 1,026.95 2.70% 3.03%
07/31/93 10.17 0.032888 0.324316 100.6119 1,023.22 2.32% 2.38%
08/31/93 10.30 0.032908 0.321451 100.9334 1,039.61 3.96% 3.73%
09/30/93 10.36 0.031663 0.308481 101.2419 1,048.87 4.89% 4.26%
10/31/93 10.34 0.032364 0.316889 101.5588 1,050.12 5.01% 4.06%
11/30/93 10.26 0.031233 0.309160 101.8680 1,045.17 4.52% 3.43%
12/31/93 10.37 0.033473 0.328815 102.1968 1,059.78 5.98% 4.25%
01/31/94 10.44 0.032969 0.322733 102.5195 1,070.30 7.03% 4.70%
02/28/94 10.20 0.029926 0.300781 102.8203 1,048.77 4.88% 3.11%
03/31/94 9.94 0.033120 0.342595 103.1629 1,025.44 2.54% 1.54%
04/30/94 9.94 0.032815 0.340572 103.5035 1,028.82 2.88% 1.66%
05/31/94 9.98 0.033968 0.352285 103.8558 1,036.48 3.65% 2.00%
06/30/94 9.92 0.032575 0.341039 104.1968 1,033.63 3.36% 1.77%
07/31/94 9.99 0.032101 0.334817 104.5316 1,044.27 4.43% 2.22%
08/31/94 9.99 0.032275 0.337713 104.8693 1,047.64 4.76% 2.28%
09/30/94 9.84 0.031537 0.336104 105.2054 1,035.22 3.52% 1.63%
10/31/94 9.70 0.032883 0.356646 105.5620 1,023.95 2.40% 1.07%
11/30/94 9.51 0.032393 0.359566 105.9216 1,007.31 0.73% 0.32%
12/31/94 9.59 0.033864 0.374028 106.2956 1,019.37 1.94% 0.80%
01/31/95 9.70 0.033880 0.371268 106.6669 1,034.67 3.47% 1.38%
02/28/95 9.91 0.030492 0.328203 106.9951 1,060.32 6.03% 2.32%
03/31/95 9.97 0.033754 0.362238 107.3573 1,070.35 7.04% 2.61%
04/30/95 9.98 0.032787 0.352698 107.7100 1,074.95 7.50% 2.69%
05/31/95 10.17 0.033439 0.354151 108.0642 1,099.01 9.90% 3.42%
06/30/95 10.14 0.031943 0.340424 108.4046 1,099.22 9.92% 3.33%
07/31/95 10.19 0.032864 0.349620 108.7542 1,108.21 10.82% 3.51%
08/31/95 10.25 0.032917 0.349255 109.1035 1,118.31 11.83% 3.72%
09/30/95 10.24 0.031855 0.339404 109.4429 1,120.70 12.07% 3.69%
10/31/95 10.26 0.033137 0.353471 109.7964 1,126.51 12.65% 3.76%
11/30/95 10.31 0.032197 0.342882 110.1393 1,135.54 13.55% 3.92%
12/31/95 10.34 0.033237 0.354033 110.4933 1,142.50 14.25% 4.00%
</TABLE>
<PAGE>
BNY HAMILTON INTERMEDIATE N.Y. TAX-EXEMPT FUND
Input Range and Calculation of Change in Value
(DOES NOT CONSIDER EFFECT OF THE SALES LOAD)
<TABLE>
<CAPTION>
Dividend Dividend Total Extended Change For/(From) Year
Date NAV Regular Cap Gain Shares Shares Value 1 Month 3 Months 12 Months to Date
---- --- ------- -------- -------- ------ -------- --------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/10/92 10.00 100.0000 1,000.00 - - - - - - - - - - - -
08/31/92 9.91 0.017481 0.176393 100.1764 992.75 -0.73% - - - - - - - - -
09/30/92 9.93 0.030440 0.307082 100.4835 997.80 0.51% - - - - - - - - -
10/31/92 9.85 0.032700 0.333585 100.8171 993.05 -0.48% -0.70% - - - - - -
11/30/92 9.93 0.032300 0.327935 101.1450 1,004.37 1.14% 1.17% - - - - - -
12/31/92 9.97 0.033500 0.339855 101.4849 1,011.80 0.74% 1.40% - - - - - -
01/31/93 10.05 0.034150 0.344847 101.8297 1,023.39 1.15% 3.06% - - - - - -
02/28/93 10.24 0.029352 0.291885 102.1216 1,045.73 2.18% 4.12% - - - - - -
03/31/93 10.11 0.031011 0.313242 102.4348 1,035.62 -0.97% 2.35% - - - - - -
04/30/93 10.15 0.030865 0.311493 102.7463 1,042.87 0.70% 1.90% - - - 3.07%
05/31/93 10.14 0.031873 0.322958 103.0693 1,045.12 0.22% -0.06% - - - 3.29%
06/30/93 10.24 0.032522 0.327345 103.3966 1,058.78 1.31% 2.24% - - - 4.64%
07/31/93 10.17 0.032888 0.334370 103.7310 1,054.94 -0.36% 1.16% 5.49% 4.26%
08/31/93 10.30 0.032908 0.331416 104.0624 1,071.84 1.60% 2.56% 7.97% 5.93%
09/30/93 10.36 0.031663 0.318045 104.3804 1,081.38 0.89% 2.13% 8.38% 6.88%
10/31/93 10.34 0.032364 0.326713 104.7071 1,082.67 0.12% 2.63% 9.02% 7.00%
11/30/93 10.26 0.031233 0.318744 105.0258 1,077.56 -0.47% 0.53% 7.29% 6.50%
12/31/93 10.37 0.033473 0.339008 105.3648 1,092.63 1.40% 1.04% 7.99% 7.99%
01/31/94 10.44 0.032969 0.332737 105.6975 1,103.48 0.99% 1.92% 7.83% 0.99%
02/28/94 10.20 0.029926 0.310105 106.0076 1,081.28 -2.01% 0.35% 3.40% -1.04%
03/31/94 9.94 0.033120 0.353215 106.3608 1,057.23 -2.22% -3.24% 2.09% -3.24%
04/30/94 9.94 0.032815 0.351130 106.7119 1,060.72 0.33% -3.88% 1.71% -2.92%
05/31/94 9.98 0.033968 0.363205 107.0751 1,068.61 0.74% -1.17% 2.25% -2.20%
06/30/94 9.92 0.032575 0.351610 107.4267 1,065.67 -0.28% 0.80% 0.65% -2.47%
07/31/94 9.99 0.032101 0.345196 107.7719 1,076.64 1.03% 1.50% 2.06% -1.46%
08/31/94 9.99 0.032275 0.348182 108.1201 1,080.12 0.32% 1.08% 0.77% -1.14%
09/30/94 9.84 0.031537 0.346523 108.4666 1,067.31 -1.19% 0.15% -1.30% -2.32%
10/31/94 9.70 0.032883 0.367702 108.8343 1,055.69 -1.09% -1.95% -2.49% -3.38%
11/30/94 9.51 0.032393 0.370712 109.2050 1,038.54 -1.62% -3.85% -3.62% -4.95%
12/31/94 9.59 0.033864 0.385622 109.5906 1,050.97 1.20% -1.53% -3.81% -3.81%
01/31/95 9.70 0.033880 0.382776 109.9734 1,066.74 1.50% 1.05% -3.33% 1.50%
02/28/95 9.91 0.030492 0.338376 110.3118 1,093.19 2.48% 5.26% 1.10% 4.02%
03/31/95 9.97 0.033754 0.373467 110.6853 1,103.53 0.95% 5.00% 4.38% 5.00%
04/30/95 9.98 0.032787 0.363631 111.0489 1,108.27 0.43% 3.89% 4.48% 5.45%
05/31/95 10.17 0.033439 0.365129 111.4140 1,133.08 2.24% 3.65% 6.03% 7.81%
06/30/95 10.14 0.031943 0.350976 111.7650 1,133.30 0.02% 2.70% 6.35% 7.83%
07/31/95 10.19 0.032864 0.360458 112.1255 1,142.56 0.82% 3.09% 6.12% 8.71%
08/31/95 10.25 0.032917 0.360081 112.4856 1,152.98 0.91% 1.76% 6.75% 9.71%
09/30/95 10.24 0.031855 0.349925 112.8355 1,155.44 0.21% 1.95% 8.26% 9.94%
10/31/95 10.26 0.033137 0.364428 113.1999 1,161.43 0.52% 1.65% 10.02% 10.51%
11/30/95 10.31 0.032197 0.353511 113.5534 1,170.74 0.80% 1.54% 12.73% 11.40%
12/31/95 10.34 0.033237 0.365007 113.9184 1,177.92 0.61% 1.95% 12.08% 12.08%
<CAPTION>
Trailing Trailing 3 Yr Total Since Avg.Ann.Rtn.
Date 3 Years Avg.Ann.Rtn. Inception Since Inc.
---- -------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
08/10/92 - - - - - - - - - - - - - - - -
08/31/92 - - - - - - - - -0.73% - - - -
09/30/92 - - - - - - - - -0.22% - - - -
10/31/92 - - - - - - - - -0.70% - - - -
11/30/92 - - - - - - - - 0.44% - - - -
12/31/92 - - - - - - - - 1.18% - - - -
01/31/93 - - - - - - - - 2.34% 4.94%
02/28/93 - - - - - - - - 4.57% 8.37%
03/31/93 - - - - - - - - 3.56% 5.61%
04/30/93 - - - - - - - - 4.29% 5.98%
05/31/93 - - - - - - - - 4.51% 5.61%
06/30/93 - - - - - - - - 5.88% 6.62%
07/31/93 - - - - - - - - 5.49% 5.64%
08/31/93 - - - - - - - - 7.18% 6.76%
09/30/93 - - - - - - - - 8.14% 7.09%
10/31/93 - - - - - - - - 8.27% 6.69%
11/30/93 - - - - - - - - 7.76% 5.87%
12/31/93 - - - - - - - - 9.26% 6.56%
01/31/94 - - - - - - - - 10.35% 6.88%
02/28/94 - - - - - - - - 8.13% 5.15%
03/31/94 - - - - - - - - 5.72% 3.45%
04/30/94 - - - - - - - - 6.07% 3.48%
05/31/94 - - - - - - - - 6.86% 3.74%
06/30/94 - - - - - - - - 6.57% 3.42%
07/31/94 - - - - - - - - 7.66% 3.81%
08/31/94 - - - - - - - - 8.01% 3.81%
09/30/94 - - - - - - - - 6.73% 3.09%
10/31/94 - - - - - - - - 5.57% 2.46%
11/30/94 - - - - - - - - 3.85% 1.65%
12/31/94 - - - - - - - - 5.10% 2.10%
01/31/95 - - - - - - - - 6.67% 2.64%
02/28/95 - - - - - - - - 9.32% 3.55%
03/31/95 - - - - - - - - 10.35% 3.80%
04/30/95 - - - - - - - - 10.83% 3.85%
05/31/95 - - - - - - - - 13.31% 4.55%
06/30/95 - - - - - - - - 13.33% 4.42%
07/31/95 - - - - - - - - 14.26% 4.58%
08/31/95 16.14% 5.11% 15.30% 4.76%
09/30/95 15.80% 5.01% 15.54% 4.71%
10/31/95 16.96% 5.35% 16.14% 4.75%
11/30/95 16.56% 5.24% 17.07% 4.88%
12/31/95 16.42% 5.19% 17.79% 4.94%
</TABLE>
<PAGE>
BNY HAMILTON EQUITY INCOME FUND
Input Range and Calculation of Change in Value
(12 MONTHS INCLUDING 4.50% SALES LOAD)
<TABLE>
<CAPTION>
Dividend Dividend Total Extended Trailing
Date NAV Regular Cap Gain Shares Shares Value 12 Months
---- --- ------- -------- -------- ------ -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
12/31/94 10.70 0.0275 0.276601 107.8994 1,154.52
01/31/95 10.77 0.0200 0.200370 88.6525 954.79
02/28/95 11.06 0.0275 0.220429 88.8729 982.93
03/31/95 11.24 0.0300 0.237205 89.1101 1,001.60
04/30/95 11.47 0.0150 0.116535 89.2266 1,023.43
05/31/95 11.70 0.0375 0.285983 89.5126 1,047.30
06/30/95 11.94 0.0275 0.206164 89.7188 1,071.24 11.41%
07/31/95 12.37 0.0200 0.145059 89.8639 1,111.62 11.95%
08/31/95 12.29 0.0325 0.237638 90.1015 1,107.35 8.91%
09/30/95 12.66 0.0150 0.106755 90.2083 1,142.04 14.48%
10/31/95 12.50 0.0275 0.198458 90.4068 1,130.09 11.95%
11/30/95 12.94 0.0275 0.192132 90.5989 1,172.35 19.88%
12/31/95 12.99 0.0375 0.1175 1.081049 91.6799 1,190.92 20.17%
</TABLE>
<PAGE>
BNY HAMILTON
EQUITY INCOME FUND
Input Range and Calculation of Change in Value
(TRAILING and CUMULATIVE 3 YEARS ASSUMES 4.50 % SALES LOAD
SINCE INCEPTION)
<TABLE>
<CAPTION>
Dividend Dividend Total Extended Trailing 3 Yr Trailing 3 Yr
Date NAV Regular Cap Gain Shares Shares Value Cum. Rtn. Avg.Ann.Rtn.
---- --- ------- -------- -------- ------ -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/92 10.43 0.0700 0.0350 0.961520 96.4725 1,006.21 - - - - - - - -
01/31/93 10.55 0.000000 90.4977 954.75 - - - - - - - -
02/28/93 10.57 0.0250 0.214044 90.7117 958.82 - - - - - - - -
03/31/93 10.94 0.0300 0.248752 90.9605 995.11 - - - - - - - -
04/30/93 10.84 0.0200 0.167824 91.1283 987.83 - - - - - - - -
05/31/93 11.01 0.0270 0.223475 91.3518 1,005.78 - - - - - - - -
06/30/93 11.08 0.0300 0.247342 91.5991 1,014.92 - - - - - - - -
07/31/93 11.14 0.0200 0.164451 91.7636 1,022.25 - - - - - - - -
08/31/93 11.41 0.0300 0.241272 92.0049 1,049.78 - - - - - - - -
09/30/93 11.42 0.0250 0.201412 92.2063 1,053.00 - - - - - - - -
10/31/93 11.42 0.0200 0.161482 92.3678 1,054.84 - - - - - - - -
11/30/93 11.13 0.0300 0.248970 92.6168 1,030.82 - - - - - - - -
12/31/93 11.30 0.0275 0.0810 0.889285 93.5061 1,056.62 - - - - - - - -
01/31/94 11.67 0.0200 0.160250 93.6664 1,093.09 - - - - - - - -
02/28/94 11.42 0.0200 0.164039 93.8304 1,071.54 - - - - - - - -
03/31/94 10.87 0.0325 0.280542 94.1109 1,022.99 - - - - - - - -
04/30/94 10.77 0.0200 0.174765 94.2857 1,015.46 - - - - - - - -
05/31/94 10.90 0.0300 0.259502 94.5452 1,030.54 - - - - - - - -
06/30/94 10.52 0.0350 0.314552 94.8598 997.93 - - - - - - - -
07/31/94 10.85 0.0200 0.174857 95.0347 1,031.13 - - - - - - - -
08/31/94 11.08 0.0300 0.257314 95.2920 1,055.84 - - - - - - - -
09/30/94 10.84 0.0300 0.263723 95.5557 1,035.82 - - - - - - - -
10/31/94 10.95 0.0150 0.130898 95.6866 1,047.77 - - - - - - - -
11/30/94 10.58 0.0300 0.271323 95.9579 1,015.23 - - - - - - - -
12/31/94 10.70 0.0275 0.246621 96.2045 1,029.39 - - - - - - - -
01/31/95 10.77 0.0200 0.178653 96.3832 1,038.05 - - - - - - - -
02/28/95 11.06 0.0275 0.239651 96.6229 1,068.65 - - - - - - - -
03/31/95 11.24 0.0300 0.257890 96.8808 1,088.94 - - - - - - - -
04/30/95 11.47 0.0150 0.126697 97.0075 1,112.68 - - - - - - - -
05/31/95 11.70 0.0375 0.310921 97.3184 1,138.63 - - - - - - - -
06/30/95 11.94 0.0275 0.224142 97.5425 1,164.66 - - - - - - - -
07/31/95 12.37 0.0200 0.157708 97.7002 1,208.55 - - - - - - - -
08/31/95 12.29 0.0325 0.258361 97.9586 1,203.91 30.08% 9.15%
09/30/95 12.66 0.0150 0.116065 98.0747 1,241.63 31.73% 9.61%
10/31/95 12.50 0.0275 0.215764 98.2905 1,228.63 29.61% 9.02%
11/30/95 12.94 0.0275 0.208886 98.4994 1,274.58 30.51% 9.27%
12/31/95 12.99 0.0375 0.1175 1.175320 99.6747 1,294.77 31.02% 9.41%
</TABLE>
<PAGE>
BNY HAMILTON EQUITY INCOME FUND
Input Range and Calculation of Change in Value
(ASSUMES 4.50 % SALES LOAD SINCE INCEPTION)
<TABLE>
<CAPTION>
Dividend Dividend Total Extended Avg Annual
Date NAV Regular Cap Gain Shares Shares Value Inception Return
---- --- ------- -------- -------- ------ -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
08/10/92 10.00 95.5110 955.11 - - - - - - - -
08/31/92 9.91 0.000000 95.5110 946.51 -5.35% - - - -
09/30/92 10.05 0.0490 0.465675 95.9767 964.57 -3.54% - - - -
10/31/92 10.10 0.000000 95.9767 969.36 -3.06% - - - -
11/30/92 10.41 0.000000 95.9767 999.12 -0.09% - - - -
12/31/92 10.43 0.0700 0.0350 0.966208 96.9429 1,011.11 1.11% - - - -
01/31/93 10.55 0.000000 96.9429 1,022.75 2.28% 4.80%
02/28/93 10.57 0.0250 0.229288 97.1722 1,027.11 2.71% 4.93%
03/31/93 10.94 0.0300 0.266469 97.4387 1,065.98 6.60% 10.48%
04/30/93 10.84 0.0200 0.179776 97.6185 1,058.18 5.82% 8.13%
05/31/93 11.01 0.0270 0.239391 97.8579 1,077.42 7.74% 9.67%
06/30/93 11.08 0.0300 0.264958 98.1229 1,087.20 8.72% 9.84%
07/31/93 11.14 0.0200 0.176163 98.2991 1,095.05 9.51% 9.76%
08/31/93 11.41 0.0300 0.258455 98.5576 1,124.54 12.45% 11.71%
09/30/93 11.42 0.0250 0.215757 98.7734 1,127.99 12.80% 11.12%
10/31/93 11.42 0.0200 0.172983 98.9464 1,129.97 13.00% 10.47%
11/30/93 11.13 0.0300 0.266702 99.2131 1,104.24 10.42% 7.87%
12/31/93 11.30 0.0275 0.0810 0.952621 100.1657 1,131.87 13.19% 9.29%
01/31/94 11.67 0.0200 0.171664 100.3374 1,170.94 17.09% 11.26%
02/28/94 11.42 0.0200 0.175722 100.5131 1,147.86 14.79% 9.27%
03/31/94 10.87 0.0325 0.300522 100.8136 1,095.84 9.58% 5.74%
04/30/94 10.77 0.0200 0.187212 101.0008 1,087.78 8.78% 5.00%
05/31/94 10.90 0.0300 0.277984 101.2788 1,103.94 10.39% 5.62%
06/30/94 10.52 0.0350 0.336954 101.6158 1,069.00 6.90% 3.59%
07/31/94 10.85 0.0200 0.187310 101.8031 1,104.56 10.46% 5.16%
08/31/94 11.08 0.0300 0.275640 102.0787 1,131.03 13.10% 6.16%
09/30/94 10.84 0.0300 0.282506 102.3612 1,109.60 10.96% 4.97%
10/31/94 10.95 0.0150 0.140221 102.5014 1,122.39 12.24% 5.32%
11/30/94 10.58 0.0300 0.290647 102.7920 1,087.54 8.75% 3.70%
12/31/94 10.70 0.0275 0.264185 103.0562 1,102.70 10.27% 4.17%
01/31/95 10.77 0.0200 0.191376 103.2476 1,111.98 11.20% 4.37%
02/28/95 11.06 0.0275 0.256719 103.5043 1,144.76 14.48% 5.43%
03/31/95 11.24 0.0300 0.276257 103.7806 1,166.49 16.65% 6.00%
04/30/95 11.47 0.0150 0.135720 103.9163 1,191.92 19.19% 6.66%
05/31/95 11.70 0.0375 0.333065 104.2494 1,219.72 21.97% 7.33%
06/30/95 11.94 0.0275 0.240105 104.4895 1,247.60 24.76% 7.95%
07/31/95 12.37 0.0200 0.168940 104.6584 1,294.62 29.46% 9.07%
08/31/95 12.29 0.0325 0.276761 104.9352 1,289.65 28.97% 8.67%
09/30/95 12.66 0.0150 0.124331 105.0595 1,330.05 33.01% 9.50%
10/31/95 12.50 0.0275 0.231131 105.2906 1,316.13 31.61% 8.88%
11/30/95 12.94 0.0275 0.223763 105.5144 1,365.36 36.54% 9.87%
12/31/95 12.99 0.0375 0.1175 1.259025 106.7734 1,386.99 38.70% 10.12%
</TABLE>
<PAGE>
BNY HAMILTON EQUITY INCOME FUND
Input Range and Calculation of Change in Value
(DOES NOT CONSIDER EFFECT OF THE SALES LOAD)
<TABLE>
<CAPTION>
Dividend Dividend Total Extended Change For/(From) Year
Date NAV Regular Cap Gain Shares Shares Value 1 Month 3 Months 12 Months to Date
---- --- -------- -------- -------- ------ -------- ------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/10/92 10.00 100.0000 1,000.00 - - - - - - - - - - - -
08/31/92 9.91 0.000000 100.0000 991.00 -0.90% - - - - - - - - -
09/30/92 10.05 0.0490 0.487562 100.4876 1,009.90 1.91% - - - - - - - - -
10/31/92 10.10 0.000000 100.4876 1,014.92 0.50% 1.49% - - - - - -
11/30/92 10.41 0.000000 100.4876 1,046.08 3.07% 5.56% - - - - - -
12/31/92 10.43 0.0700 0.0350 1.011620 101.4992 1,058.64 1.20% 4.83% - - - - - -
01/31/93 10.55 0.000000 101.4992 1,070.82 1.15% 5.51% - - - - - -
02/28/93 10.57 0.0250 0.240064 101.7393 1,075.38 0.43% 2.80% - - - - - -
03/31/93 10.94 0.0300 0.278993 102.0183 1,116.08 3.78% 5.43% - - - - - -
04/30/93 10.84 0.0200 0.188226 102.2065 1,107.92 -0.73% 3.46% - - - 4.66%
05/31/93 11.01 0.0270 0.250643 102.4571 1,128.05 1.82% 4.90% - - - 6.56%
06/30/93 11.08 0.0300 0.277411 102.7345 1,138.30 0.91% 1.99% - - - 7.52%
07/31/93 11.14 0.0200 0.184443 102.9189 1,146.52 0.72% 3.48% 14.65% 8.30%
08/31/93 11.41 0.0300 0.270602 103.1895 1,177.39 2.69% 4.37% 18.81% 11.22%
09/30/93 11.42 0.0250 0.225896 103.4154 1,181.00 0.31% 3.75% 16.94% 11.56%
10/31/93 11.42 0.0200 0.181113 103.5965 1,183.07 0.18% 3.19% 16.57% 11.75%
11/30/93 11.13 0.0300 0.279236 103.8757 1,156.14 -2.28% -1.80% 10.52% 9.21%
12/31/93 11.30 0.0275 0.0810 0.997391 104.8731 1,185.07 2.50% 0.34% 11.94% 11.94%
01/31/94 11.67 0.0200 0.179731 105.0528 1,225.97 3.45% 3.63% 14.49% 3.45%
02/28/94 11.42 0.0200 0.183980 105.2368 1,201.80 -1.97% 3.95% 11.76% 1.41%
03/31/94 10.87 0.0325 0.314645 105.5514 1,147.34 -4.53% -3.18% 2.80% -3.18%
04/30/94 10.77 0.0200 0.196010 105.7474 1,138.90 -0.74% -7.10% 2.80% -3.90%
05/31/94 10.90 0.0300 0.291048 106.0384 1,155.82 1.49% -3.83% 2.46% -2.47%
06/30/94 10.52 0.0350 0.352789 106.3912 1,119.24 -3.16% -2.45% -1.67% -5.55%
07/31/94 10.85 0.0200 0.196113 106.5873 1,156.47 3.33% 1.54% 0.87% -2.41%
08/31/94 11.08 0.0300 0.288594 106.8759 1,184.18 2.40% 2.45% 0.58% -0.08%
09/30/94 10.84 0.0300 0.295782 107.1717 1,161.74 -1.89% 3.80% -1.63% -1.97%
10/31/94 10.95 0.0150 0.146811 107.3185 1,175.14 1.15% 1.61% -0.67% -0.84%
11/30/94 10.58 0.0300 0.304306 107.6228 1,138.65 -3.11% -3.84% -1.51% -3.92%
12/31/94 10.70 0.0275 0.276601 107.8994 1,154.52 1.39% -0.62% -2.58% -2.58%
01/31/95 10.77 0.0200 0.200370 108.0998 1,164.23 0.84% -0.93% -5.04% 0.84%
02/28/95 11.06 0.0275 0.268783 108.3686 1,198.56 2.95% 5.26% -0.27% 3.81%
03/31/95 11.24 0.0300 0.289240 108.6578 1,221.31 1.90% 5.79% 6.45% 5.79%
04/30/95 11.47 0.0150 0.142098 108.7999 1,247.93 2.18% 7.19% 9.57% 8.09%
05/31/95 11.70 0.0375 0.348718 109.1486 1,277.04 2.33% 6.55% 10.49% 10.61%
06/30/95 11.94 0.0275 0.251389 109.4000 1,306.24 2.29% 6.95% 16.71% 13.14%
07/31/95 12.37 0.0200 0.176880 109.5769 1,355.47 3.77% 8.62% 17.21% 17.41%
08/31/95 12.29 0.0325 0.289768 109.8667 1,350.26 -0.38% 5.73% 14.02% 16.95%
09/30/95 12.66 0.0150 0.130174 109.9969 1,392.56 3.13% 6.61% 19.87% 20.62%
10/31/95 12.50 0.0275 0.241993 110.2389 1,377.99 -1.05% 1.66% 17.26% 19.36%
11/30/95 12.94 0.0275 0.234279 110.4732 1,429.52 3.74% 5.87% 25.55% 23.82%
12/31/95 12.99 0.0375 0.1175 1.318194 111.7914 1,452.17 1.58% 4.28% 25.78% 25.78%
<CAPTION>
Trailing Trailing 3 Yr Total Since Avg.Ann.Rtn.
Date 3 Years Avg.Ann.Rtn. Inception Since Inc.
---- -------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
08/10/92 - - - - - - - - - - - - - - - -
08/31/92 - - - - - - - - -0.90% - - - -
09/30/92 - - - - - - - - 0.99% - - - -
10/31/92 - - - - - - - - 1.49% - - - -
11/30/92 - - - - - - - - 4.61% - - - -
12/31/92 - - - - - - - - 5.86% - - - -
01/31/93 - - - - - - - - 7.08% 15.34%
02/28/93 - - - - - - - - 7.54% 13.96%
03/31/93 - - - - - - - - 11.61% 18.69%
04/30/93 - - - - - - - - 10.79% 15.22%
05/31/93 - - - - - - - - 12.81% 16.08%
06/30/93 - - - - - - - - 13.83% 15.66%
07/31/93 - - - - - - - - 14.65% 15.05%
08/31/93 - - - - - - - - 17.74% 16.65%
09/30/93 - - - - - - - - 18.10% 15.68%
10/31/93 - - - - - - - - 18.31% 14.68%
11/30/93 - - - - - - - - 15.61% 11.72%
12/31/93 - - - - - - - - 18.51% 12.95%
01/31/94 - - - - - - - - 22.60% 14.76%
02/28/94 - - - - - - - - 20.18% 12.54%
03/31/94 - - - - - - - - 14.73% 8.74%
04/30/94 - - - - - - - - 13.89% 7.84%
05/31/94 - - - - - - - - 15.58% 8.34%
06/30/94 - - - - - - - - 11.92% 6.14%
07/31/94 - - - - - - - - 15.65% 7.64%
08/31/94 - - - - - - - - 18.42% 8.55%
09/30/94 - - - - - - - - 16.17% 7.25%
10/31/94 - - - - - - - - 17.51% 7.51%
11/30/94 - - - - - - - - 13.87% 5.78%
12/31/94 - - - - - - - - 15.45% 6.18%
01/31/95 - - - - - - - - 16.42% 6.32%
02/28/95 - - - - - - - - 19.86% 7.34%
03/31/95 - - - - - - - - 22.13% 7.86%
04/30/95 - - - - - - - - 24.79% 8.47%
05/31/95 - - - - - - - - 27.70% 9.10%
06/30/95 - - - - - - - - 30.62% 9.68%
07/31/95 - - - - - - - - 35.55% 10.76%
08/31/95 36.25% 10.85% 35.03% 10.31%
09/30/95 37.89% 11.29% 39.26% 11.11%
10/31/95 35.77% 10.72% 37.80% 10.44%
11/30/95 36.65% 10.96% 42.95% 11.40%
12/31/95 37.17% 11.10% 45.22% 11.62%
</TABLE>
<PAGE>
BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND
SEC YIELD SUMMARY REPORT
11/30/95 TO 12/29/95
YIELD CALCULATION
YIELD = 2 [ (A-B) 6 ] -1
+ 1
------
[ (CD) ]
A = Dividend and Interest Income
B = Expenses
C = Average Daily Number of Shares (30 days)
D = NAV Price per share on last day of period (NAV)
A. INCOME TOTAL 150,995.04
INTEREST 150,995.04
DIVIDENDS 0.00
B. NET EXPENSES:
GROSS EXPENSES 38,027.12
REIMBURSEMENT 7,821.02 30,206.10
---------
C. AVERAGE SHARES 3,960,450.9544
D. MAXIMUM OFFERING PRICE 10.66
CURRENT YIELD 3.46 %
BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND
SEC YIELD SUMMARY REPORT - WITHOUT REIMBURSEMENT
11/30/95 TO 12/29/95
A. INCOME TOTAL 150,995.04
INTEREST 150,995.04
DIVIDENDS 0.00
B. GROSS EXPENSES 38,027.12
C. AVERAGE SHARES 3,960,450.9544
D. MAXIMUM OFFERING PRICE 10.66
CURRENT YIELD 3.23 %
<PAGE>
BNY HAMILTON INTERMEDIATE GOVERNMENT FUND
SEC YIELD SUMMARY REPORT
11/30/95 TO 12/29/95
YIELD CALCULATION
YIELD = 2 [ (A-B) 6 ]
+ 1 - 1
--------
[ (CD) ]
A = Dividend and Interest Income
B = Expenses
C = Average Daily Number of Shares (30 days)
D = POP per share on last day of period
A. INCOME TOTAL 313,244.48
INTEREST 313,244.48
DIVIDENDS 0.00
B. EXPENSES 49,881.51
C. AVERAGE SHARES 6,152,188.2722
D. MAXIMUM OFFERING PRICE 10.25
CURRENT YIELD 5.06
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
BNY HAMILTON MONEY FUND HAMILTON SHARES
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> BNY HAMILTON MONEY FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 948649509
<INVESTMENTS-AT-VALUE> 948649509
<RECEIVABLES> 2283387
<ASSETS-OTHER> 51182
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 950984078
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3670084
<TOTAL-LIABILITIES> 3670084
<SENIOR-EQUITY> 947314
<PAID-IN-CAPITAL-COMMON> 946366680
<SHARES-COMMON-STOCK> 604052506
<SHARES-COMMON-PRIOR> 235219905
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 947313994
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 40236274
<OTHER-INCOME> 0
<EXPENSES-NET> 2439373
<NET-INVESTMENT-INCOME> 37796901
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 37796901
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 24629959
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2243841012
<NUMBER-OF-SHARES-REDEEMED> 1878397366
<SHARES-REINVESTED> 3388955
<NET-CHANGE-IN-ASSETS> 604295259
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 677980
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2439373
<AVERAGE-NET-ASSETS> 434446931
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .057
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .057
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .26
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
BNY HAMILTON MONEY FUND PREMIER SHARES
</LEGEND>
<SERIES>
<NUMBER> 2
<NAME> BNY HAMILTON MONEY FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 948649509
<INVESTMENTS-AT-VALUE> 948649509
<RECEIVABLES> 2283387
<ASSETS-OTHER> 51182
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 950984078
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3670084
<TOTAL-LIABILITIES> 3670084
<SENIOR-EQUITY> 947314
<PAID-IN-CAPITAL-COMMON> 946366680
<SHARES-COMMON-STOCK> 340163096
<SHARES-COMMON-PRIOR> 107798830
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 947313994
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 40236274
<OTHER-INCOME> 0
<EXPENSES-NET> 2439373
<NET-INVESTMENT-INCOME> 37796901
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 37796901
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 13159984
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2810413019
<NUMBER-OF-SHARES-REDEEMED> 2585966924
<SHARES-REINVESTED> 7918171
<NET-CHANGE-IN-ASSETS> 604295259
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 677980
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2439373
<AVERAGE-NET-ASSETS> 243592218
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .054
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .054
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .54
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
BNY HAMILTON MONEY FUND CLASSIC SHARES
</LEGEND>
<SERIES>
<NUMBER> 3
<NAME> BNY HAMILTON MONEY FUND
<S> <C>
<PERIOD-TYPE> 1-MO
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 948649509
<INVESTMENTS-AT-VALUE> 948649509
<RECEIVABLES> 2283387
<ASSETS-OTHER> 51182
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 950984078
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3670084
<TOTAL-LIABILITIES> 3670084
<SENIOR-EQUITY> 947314
<PAID-IN-CAPITAL-COMMON> 946366680
<SHARES-COMMON-STOCK> 3098392
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 947313994
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 40236274
<OTHER-INCOME> 0
<EXPENSES-NET> 2439373
<NET-INVESTMENT-INCOME> 37796901
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 37796901
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6958
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3150632
<NUMBER-OF-SHARES-REDEEMED> 58633
<SHARES-REINVESTED> 6393
<NET-CHANGE-IN-ASSETS> 604295259
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 677980
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2439373
<AVERAGE-NET-ASSETS> 1724840
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .004
<PER-SHARE-GAIN-APPREC> 0
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