<PAGE>
- --------------------------------------------------------------------------------
- --------- CHAIRMAN'S LETTER
February 6, 1997
DEAR FELLOW SHAREHOLDER,
We are pleased to provide you with the 1996 annual report for the BNY
Hamilton Equity Income, Intermediate Government and Intermediate New York
Tax-Exempt Funds. Total assets in these three funds grew to $317 million at the
end of 1996, up 17% from $271 million at the end of 1995.
Healthy growth in the U.S. economy last year proved to be a mixed blessing
for the financial markets. Stocks benefited from the continuing strong growth in
corporate profits, while bonds were held back by concerns that higher economic
activity would rekindle inflationary pressures. Against the backdrop of 2.5%
growth in real GDP and a 2.9% increase in the Consumer Price Index, the S&P 500
as a broad proxy for common stocks and the Lehman Government/Corporate Index as
a broad proxy for taxable bonds provided full year total returns to investors of
23.1% and 2.9%, respectively. All three BNY Hamilton Funds provided shareholders
with very competitive returns relative to other mutual funds having similar
investment objectives.
According to Kevin J. Bannon, Chief Investment Officer of The Bank of New
York, which serves as the investment advisor to the BNY Hamilton Funds, 1997
should see a continuation of moderate economic growth and subdued inflation
along with further gains in corporate profits. With prospects looking better for
both a balanced budget agreement in Washington and a cut in the capital gains
tax rate, the Bank's judgment is that 1997 will be another rewarding year for
investments. The Bank projects interest rates to decline as inflation fears
abate, benefiting bonds directly and helping stocks by boosting P/E ratios. As
discussed below, the Bank is positioning each of the funds to take advantage of
these positive trends while at the same time remaining alert to signs of any
potential negative shifts in either market psychology or the underlying
fundamentals.
BNY HAMILTON EQUITY INCOME FUND
To achieve its investment objectives of long-term capital appreciation and
a current return (after expenses) equal to or better than the S&P 500 Index, the
Equity Income Fund continues to maintain a well diversified portfolio
emphasizing high quality growth stocks as well as higher yielding issues such as
utility shares, REITs and convertible securities. Most of the Fund's holdings
remain in the types of large capitalization issues that investors favored last
year and which the Bank expects to be favored again in 1997. Entering this year,
the key areas of emphasis, according to Robert G. Knott, Jr., portfolio manager
for the Fund, include financial services, technology and consumer products.
Net asset growth for 1996 was approximately 27%, increasing from $170
million to $216 million.
<TABLE>
<CAPTION>
CUMULATIVE AVERAGE ANNUAL
TOTAL RETURN TOTAL RETURN
--------------- ---------------
PERIOD NET ASSET VALUE NET ASSET VALUE
- ------------------------- --------------- ---------------
<S> <C> <C>
1 Year................... 19.58% 19.58%
Inception (8/10/92)...... 73.65% 13.37%
</TABLE>
(CONTINUED)
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
- --------- CHAIRMAN'S LETTER (CONTINUED)
BNY HAMILTON EQUITY INCOME FUND
Hamilton Equity S&P 500
Income Fund Equity Index
8/10/92 10000 10000.00
8/31/92 9910 9798.00
9/30/92 10099 9911.00
10/31/92 10149.2 9946.00
11/30/92 10460.8 10282.00
12/31/92 10586.4 10417.00
1/31/93 10708.2 10493.00
2/28/93 10753.8 10634.00
3/31/93 11160.8 10864.00
4/30/93 11079.2 10597.00
5/31/93 11280.5 10883.00
6/30/93 11383 10918.00
7/31/93 11465.2 10868.00
8/31/93 11773.9 11282.00
9/30/93 11810 11199.00
10/31/93 11830.7 11427.00
11/30/93 11561.4 11319.00
12/31/93 11850.7 11458.00
1/31/94 12259.7 11842.00
2/28/94 12018 11522.00
3/31/94 11473.4 11020.00
4/30/94 11389 11163.00
5/31/94 11558.2 11346.00
6/30/94 11192.4 11065.00
7/31/94 11564.7 11431.00
8/31/94 11841.8 11896.00
9/30/94 11617.4 11609.00
10/31/94 11751.4 11875.00
11/30/94 11386.5 11439.00
12/31/94 11545.2 11606.00
1/31/95 11642.3 11908.00
2/28/95 11985.6 12371.00
3/31/95 12213.1 12737.00
4/30/95 12479.3 13110.00
5/31/95 12770.4 13629.00
6/30/95 13062.4 13949.00
7/31/95 13554.7 14414.00
8/31/95 13502.6 14453.00
9/30/95 13925.6 15060.00
10/31/95 13779.9 15007.00
11/30/95 14295.2 15667.00
12/31/95 14521.7 15957.00
1/31/96 14952.1 16507.00
2/29/96 15220.7 16665.00
3/31/96 15388.8 16825.00
4/30/96 15220.8 17073.00
5/31/96 15813.4 17513.00
6/30/96 15836 17584.00
7/31/96 15282.1 16801.00
8/31/96 15712.3 17157.00
9/30/96 16483.7 18122.00
10/31/96 16529.2 18618.00
11/30/96 17450.6 20031.00
12/31/96 17365.1 19639.00
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
Despite continuing good news on the inflation front, anxiety among
investors about how long this good news could last pushed interest rates higher
and bond prices lower in 1996. In sharp contrast to 1995, when appreciation in
bond prices contributed to double-digit bond returns, total returns last year
fell below the prevailing coupon yield. The investment strategy employed by Mark
A. Hemenetz, portfolio manager for the Fund, continues to seek to increase
current income return consistent with maintaining a strong emphasis on the
preservation of capital. Based on the Bank's positive outlook for the fixed
income market, the Fund's average maturity, which was 4.6 years as of the end of
1996, is moderately longer than its benchmark.
Net asset growth for 1996 was approximately 5%, increasing from $61 million
to $64 million.
<TABLE>
<CAPTION>
CUMULATIVE AVERAGE ANNUAL
TOTAL RETURN TOTAL RETURN
--------------- ---------------
PERIOD NET ASSET VALUE NET ASSET VALUE
- ------------------------- --------------- ---------------
<S> <C> <C>
1 Year................... 3.16% 3.16%
Inception (8/10/92)...... 22.57% 4.74%
</TABLE>
(CONTINUED)
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
- --------- CHAIRMAN'S LETTER (CONTINUED)
BNY HAMILTON INTERMEDIATE GOVERNMENT FUND
Hamilton Lehman
Intermediate Intermediate
Government Fund Government Fund
8/10/92 10000 10000
8/31/92 9984 10102
9/30/92 10132.9 10241
10/31/92 9992 10118
11/30/92 9940.6 10077
12/31/92 10050.6 10207
1/31/93 10223.1 10397
2/28/93 10393.3 10550
3/31/93 10414.3 10589
4/30/93 10486.8 10672
5/31/93 10471.3 10643
6/30/93 10662.2 10797
7/31/93 10678.7 10818
8/31/93 10872.6 10980
9/30/93 10928.8 11024
10/31/93 10964.5 11050
11/30/93 10818.9 10996
12/31/93 10857.2 11041
1/31/94 11009.4 11150
2/28/94 10739.3 10997
3/31/94 10473 10837
4/30/94 10377.7 10766
5/31/94 10359.8 10774
6/30/94 10296.7 10776
7/31/94 10429.9 10918
8/31/94 10452.8 10950
9/30/94 10309.6 10859
10/31/94 10290.6 10861
11/30/94 10247.3 10813
12/31/94 10296 10848
1/31/95 10458.4 11025
2/28/95 10686.2 11237
3/31/95 10748.6 11299
4/30/95 10890.4 11430
5/31/95 11275.2 11753
6/30/95 11337.2 11827
7/31/95 11308.2 11833
8/31/95 11407.7 11930
9/30/95 11495.2 12011
10/31/95 11608.6 12142
11/30/95 11756.2 12290
12/31/95 11881.7 12412
1/31/96 11948 12516
2/29/96 11810.2 12384
3/31/96 11757 12328
4/30/96 11702.4 12292
5/31/96 11672.9 12285
6/30/96 11800.2 12410
7/31/96 11831.2 12448
8/31/96 11825.4 12463
9/30/96 12004.1 12623
10/31/96 12184.4 12831
11/30/96 12338.9 12986
12/31/96 12257 12916
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
Tax-exempt bonds fared well relative to most sectors of the fixed income
market in 1996 as diminishing fears about a 'flat tax' helped offset anxieities
concerning the potential for rising inflation. Nonetheless, modest weakness in
bond prices resulted in total returns falling below the income return, which
marked a notable contrast to the prior year. To meet the Fund's dual objectives
of high triple tax-exempt current income and relative stability of principal,
Colleen M. Frey, portfolio manager for the Fund, continues to emphasize high
quality issues with an average maturity in the 5-6 year range.
Net assets decreased during 1996 by approximately 10%, from $41 million to
$37 million.
<TABLE>
<CAPTION>
CUMULATIVE AVERAGE ANNUAL
TOTAL RETURN TOTAL RETURN
--------------- ---------------
PERIOD NET ASSET VALUE NET ASSET VALUE
- ------------------------- --------------- ---------------
<S> <C> <C>
1 Year................... 3.47% 3.47%
Inception (8/10/92)...... 21.88% 4.60%
</TABLE>
(CONTINUED)
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
- --------- CHAIRMAN'S LETTER (CONTINUED)
BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND
Hamilton N.Y. Lehman 5 Year
Tax-Exempt Fund Muni Bond Index
8/10/92 10000 10000
8/31/92 9927.5 9925
9/30/92 9978 9988
10/31/92 9330.5 9956
11/30/92 10043.7 10076
12/31/92 10018 10147
1/31/93 10233.9 10256
2/28/93 10457.3 10524
3/31/93 10356.2 10405
4/30/93 10428.7 10472
5/31/93 10451.2 10508
6/30/93 10587.8 10650
7/31/93 10549.4 10658
8/31/93 10718.4 10803
9/30/93 10813.8 10880
10/31/93 10826.7 10897
11/30/93 10775.6 10865
12/31/93 10926.3 11014
1/31/94 11034.8 11117
2/28/94 10812.8 10909
3/31/94 10572.3 10666
4/30/94 10607.2 10774
5/31/94 10686.1 10834
6/30/94 10656.7 10809
7/31/94 10766.4 10927
8/31/94 10801.2 10980
9/30/94 10673.1 10897
10/31/94 10556.9 10836
11/30/94 10385.4 10767
12/31/94 10509.7 10862
1/31/95 10667.4 10996
2/28/95 10931.9 11125
3/31/95 11035.3 11302
4/30/95 11082.7 11332
5/31/95 11330.8 11580
6/30/95 11333 11590
7/31/95 11425.6 11752
8/31/95 11529.8 11871
9/30/95 11554.4 11906
10/31/95 11614.3 11956
11/30/95 11707.4 12058
12/31/95 11779.2 12124
1/31/96 11862.9 12268
2/29/96 11853 12227
3/31/96 11753.7 12162
4/30/96 11733.6 12144
5/31/96 11726.3 12129
6/30/96 11775.8 12215
7/31/96 11896.4 12296
8/31/96 11900.9 12322
9/30/96 11974.8 12414
10/31/96 12073.8 12530
11/30/96 12218.9 12704
12/31/96 12188.2 12685
The Lehman Brothers Lehman 5 Year Muni Bond Index is an unmanaged index
generally considered representative of the intermediate state general
obligation municipal 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 alternative 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.
The BNY Hamilton Funds remain committed to helping their shareholders to
achieve their long-term investment goals through all market environments. We
thank you for the confidence which you have placed in us.
(CONTINUED)
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
- --------- CHAIRMAN'S LETTER (CONTINUED)
Looking forward, we are confident that 1997 will be another year of solid
achievement and growth for the BNY Hamilton Funds. We would like to take this
opprotunity to announce a particularly exciting new initiative. We have filed
registration statements with the Securities and Exchange Commission to
establish six new BNY Hamilton Funds which we hope to be able to launch during
the second quarter. These new offerings will provide shareholders with
significantly expanded potential to increase returns and improve
diversification. These new Funds are: Large Cap Growth, Small Cap Growth,
International Equity, Intermediate Tax Exempt, Intermediate Investment Grade,
and for institutional shareholders, Treasury Money Fund.
A registration statement relating to these securities has been filed with
the Securities and Exchange Commission but has not yet become effective. These
securities may not be sold, nor may offers to buy be accepted prior to the time
the registration statement becomes effective. This communication shall not
constitute an offer to sell or the solicitation of an offer to buy, nor shall
there be any sale of these securities in any state in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such state.
Sincerely,
/s/ Edward L. Gardner
Edward L. Gardner
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
Fund, Hamilton Classic Shares. The "Hamilton Classic Shares" were started on
December 4, 1995 for individual investors and allows the Funds to better
service the investment needs of existing and prospective shareholders. The
7-day current yield for the "Hamilton Classic Shares" was 5.16% at December 31,
1996.
An investment in the fund is neither insured nor guaranteed by the U.S.
Government. 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. Past performance is
no guarantee of future results.
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
<TABLE>
<S> <C>
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......... 10
STATEMENT OF OPERATIONS..................... 10
STATEMENTS OF CHANGES IN NET ASSETS......... 11
FINANCIAL HIGHLIGHTS........................ 12
INTERMEDIATE NEW YORK TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS..................... 13
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
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
- --------- BNY HAMILTON EQUITY INCOME FUND
Schedule of Investments
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
- --------------- ---------------
<S> <C> <C>
COMMON STOCKS--74.81%
AIRCRAFT MANUFACTURING--2.61%
53,100 Boeing Co. .................................. $ 5,648,512
---------------
BANKING--6.59%
50,000 Chase Manhattan Corp. ....................... 4,462,500
35,000 CoreStates Financial Corp. .................. 1,815,625
33,000 First Union Corporation...................... 2,442,000
40,000 Mellon Bank Corp............................. 2,840,000
60,000 U.S. Bancorp................................. 2,696,250
---------------
14,256,375
---------------
CHEMICALS--BASIC--3.47%
105,500 Monsanto Co. ................................ 4,101,313
40,000 Potash Corporation of Saskatchewan........... 3,400,000
---------------
7,501,313
---------------
CHEMICALS--PETROLEUM--1.75%
40,000 duPont (E.I.) De Nemours..................... 3,775,000
---------------
COMMUNICATIONS
& PUBLISHING--0.43%
20,000 Harcourt General, Inc. ...................... 922,500
---------------
COMPUTER SERVICES--1.12%
*59,758 Ceridian Corp. .............................. 2,420,199
---------------
COMPUTERS--SOFTWARE
& PERIPHERALS--2.06%
*42,600 Cisco Systems, Inc. ......................... 2,710,425
37,500 Systeme, Anwendungen, Produkte in der
Datenverarbeitung (ADR)...................... 1,742,130
---------------
4,452,555
---------------
CONGLOMERATES--0.96%
21,100 General Electric Co. ........................ 2,086,263
---------------
COSMETICS & TOILETRIES--2.84%
60,000 Avon Products, Inc. ......................... 3,427,500
35,000 Gillette Company............................. 2,721,250
---------------
6,148,750
---------------
ELECTRONICS--1.27%
42,000 Sony Corp. (ADR)............................. 2,756,250
---------------
FINANCIAL SERVICES--0.83%
49,140 First Data Corp. ............................ $ 1,793,610
---------------
FINANCIAL SERVICES--
MORTGAGE COMPANIES--1.12%
65,000 Federal National Mortgage Association........ 2,421,250
---------------
FOOD & BEVERAGES--1.56%
115,000 PepsiCo, Inc. ............................... 3,363,750
---------------
FOOD PROCESSING--1.25%
35,000 CPC International, Inc. ..................... 2,712,500
---------------
GOLD & PRECIOUS METALS--0.93%
71,457 Freeport--McMoran Copper & Gold--A........... 2,009,728
---------------
HEALTH CARE PRODUCTS
& SERVICES--1.17%
62,025 Columbia Healthcare Corp. ................... 2,527,519
---------------
HOUSEHOLD & PERSONAL CARE
PRODUCTS--1.49%
30,000 Procter & Gamble Co. ........................ 3,225,000
---------------
INSURANCE--1.81%
19,050 American International Group, Inc............ 2,062,163
75,000 Equitable Cos., Inc. ........................ 1,846,874
---------------
3,909,037
---------------
MANUFACTURING--CONSUMER
PRODUCTS--1.24%
85,000 Newell Company............................... 2,677,500
---------------
MEDICAL CARE PRODUCTS
& SUPPLIES--1.13%
49,200 Johnson & Johnson............................ 2,447,700
---------------
NATURAL GAS--0.68%
40,000 Questar Corp. ............................... 1,470,000
---------------
OIL & GAS--2.18%
25,000 Cooper Cameron Corp. ........................ 1,912,500
75,000 Williams Cos., Inc. ......................... 2,812,500
---------------
4,725,000
---------------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
1
<PAGE>
- --------------------------------------------------------------------------------
- --------- BNY HAMILTON EQUITY INCOME FUND
Schedule of Investments (Continued)
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
- --------------- ---------------
COMMON STOCKS (CONTINUED)
<S> <C> <C>
OIL--DOMESTIC--1.53%
25,000 Atlantic Richfield Co. ...................... $ 3,312,500
---------------
OIL--INTERNATIONAL--3.82%
45,000 Elf Aquitaine (ADR).......................... 2,036,250
36,200 Exxon Corp. ................................. 3,547,600
22,000 Mobil Corp. ................................. 2,689,500
---------------
8,273,350
---------------
PHARMACEUTICALS--3.43%
55,000 American Home Products Corp. ................ 3,224,375
*31,600 Amgen, Inc. ................................. 1,718,250
30,000 Pfizer, Inc. ................................ 2,486,250
---------------
7,428,875
---------------
PHOTOGRAPHY EQUIPMENT--1.53%
41,200 Eastman Kodak Co. ........................... 3,306,300
---------------
RAILROADS--3.60%
30,000 Burlington Northern Santa Fe Corp. .......... 2,591,250
73,300 Canadian National Railway.................... 2,785,400
40,000 Union Pacific Corp. ......................... 2,405,000
---------------
7,781,650
---------------
REAL ESTATE INVESTMENT
TRUSTS--7.02%
100,000 Avalon Properties, Inc. ..................... 2,875,000
80,000 Cali Realty Corp. ........................... 2,470,000
12,733 Camden Property Trust........................ 364,482
65,000 Carramerica Realty Corp. .................... 1,901,250
55,000 Duke Realty Investment, Inc. ................ 2,117,500
100,000 Federal Realty Investment Trust.............. 2,712,500
85,000 General Growth Properties.................... 2,741,250
---------------
15,181,982
---------------
RESORTS & ENTERTAINMENT--1.34%
41,600 Walt Disney Co. ............................. 2,896,400
---------------
RETAIL--SPECIALTY STORES--1.83%
*50,000 Borders Group, Inc. ......................... $ 1,793,750
52,600 CVS Corporation.............................. 2,176,325
---------------
3,970,075
---------------
SEMICONDUCTORS--2.14%
20,000 Intel Corporation............................ 2,618,750
*48,000 SGL Carbon AG (ADR).......................... 2,010,000
---------------
4,628,750
---------------
TECHNOLOGY INDUSTRIES--1.84%
65,000 Motorola, Inc. .............................. 3,989,375
---------------
TELECOMMUNICATIONS--1.55%
*45,000 Qualcomm Inc. ............................... 1,794,375
*60,000 Worldcom Inc. ............................... 1,563,750
---------------
3,358,125
---------------
TELECOMMUNICATIONS--
NON-U.S.--2.23%
*100,000 Compania Anonima Nacional Telefonos de
Venezuela (ADR).............................. 2,812,500
35,000 Nokia Corp. (ADR)--A......................... 2,016,875
---------------
4,829,375
---------------
UTILITIES--GAS &
ELECTRIC--4.46%
70,000 DQE, Inc. ................................... 2,030,000
85,000 Florida Progress Corp. ...................... 2,741,250
65,000 SCANA Corp................................... 1,738,750
77,150 Texas Utilities Co. ......................... 3,143,863
---------------
9,653,863
---------------
TOTAL COMMON STOCKS
(Cost $121,821,395).......................... 161,860,931
---------------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
- --------- BNY HAMILTON EQUITY INCOME FUND
Schedule of Investments (Continued)
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
- --------------- ---------------
CONVERTIBLE PREFERRED
STOCKS--12.54%
<S> <C> <C>
BUSINESS EQUIPMENT
& SERVICES--1.10%
25,000 Alco Standard Corp., Ser. BB................. $ 2,387,500
---------------
COMPUTER--SOFTWARE &
PERIPHERALS--1.30%
35,000 Microsoft Corp. ............................. 2,804,375
---------------
CONTAINERS--1.61%
67,000 Crown Cork & Seal............................ 3,484,000
---------------
FINANCIAL SERVICES--2.63%
*49,000 SunAmerica Inc. ............................. 2,070,250
37,500 Vanstar Financing Trust(a)................... 1,950,000
32,000 Wendys Financing I........................... 1,664,000
---------------
5,684,250
---------------
INSURANCE--1.18%
25,000 Allstate Corp. (Exchangeable Notes).......... 1,181,250
15,000 Jefferson-Pilot 'NB' (ACES).................. 1,365,000
---------------
2,546,250
---------------
OIL & GAS--1.38%
80,000 Atlantic Richfield Co. ...................... 1,720,000
53,200 Enron Corp. ................................. 1,276,800
---------------
2,996,800
---------------
PHARMACEUTICALS--0.95%
30,000 Salomon 6.50% Amgen Yield
Enhanced Equity Linked Debt
Securities ('YEELDS')........................ 2,055,000
---------------
RETAILING--1.24%
55,000 K mart Financing I........................... 2,681,250
---------------
TELECOMMUNICATIONS--1.15%
55,000 Airtouch Communications Inc.................. 2,488,750
---------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $25,166,547)........................... 27,128,175
---------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- --------------- ---------------
CONVERTIBLE BONDS--8.57%
<S> <C> <C>
COMPUTER SERVICES--0.60%
$ 1,250,000 National Data, 5.00%, 11/01/03............... $ 1,296,875
---------------
ELECTRONICS--1.43%
2,000,000 Altera Corp., 5.75%, 6/15/02(a).............. 3,102,500
---------------
HEALTH CARE
& HOSPITAL MANAGEMENT--1.45%
1,550,000 HEALTHSOUTH Rehabilitation Corp., 5.00%,
4/01/01...................................... 3,138,750
---------------
INDUSTRIAL DEVELOPMENT--1.32%
1,500,000 Alza Corp., 5.00%, 5/01/06................... 1,470,000
1,500,000 Imax Corp., 5.75%, 4/01/01(a)................ 1,395,000
---------------
2,865,000
---------------
MANUFACTURING--2.16%
1,500,000 Central Garden & Pet, 6.00%, 11/15/03(a)..... 1,488,750
1,250,000 Saks Holdings, 5.50%, 9/15/06 1,146,875
2,000,000 U.S. Filter Corp., 4.50%, 12/15/01........... 2,042,500
---------------
4,678,125
---------------
OIL--DOMESTIC--0.72%
1,000,000 Pennzoil, 6.50%, 1/15/03..................... 1,547,500
---------------
REAL ESTATE INVESTMENT
TRUST--0.89%
1,500,000 Liberty Property Trust, 8.00%, 7/01/01....... 1,925,625
---------------
TOTAL CONVERTIBLE BONDS
(Cost $15,685,702)........................... 18,554,375
---------------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
- --------- BNY HAMILTON EQUITY INCOME FUND
Schedule of Investments (Continued)
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- --------------- ---------------
FOREIGN BOND--0.68%
<S> <C> <C>
$ 1,500,000 Republic of Italy, 5.00%, 6/28/01 (Cost
$1,525,000).................................. $ 1,468,125
---------------
REPURCHASE
AGREEMENT--5.07%
10,960,000 Repurchase agreement with Deutsche Bank,
6.95%, due 1/02/96, repurchase price
$10,966,348 (Collateral-- FMAC, 6.24%,
1/15/09; aggregate market value plus accrued
interest $11,288,800) (Cost $10,960,000)..... 10,960,000
---------------
<CAPTION>
STRIKE MARKET
CONTRACTS PRICE VALUE
- --------------- ------ -------
PURCHASED PUT OPTIONS--0.05%
<S> <C> <C> <C>
* 135 S&P 500, expiration 1/18/97 (Cost
$202,905).......................... 730 $ 108,000
-------------
- -------------
TOTAL INVESTMENTS-- 101.72%
(Cost $175,361,549)-- (b).......... 220,079,606
Liabilities in excess of cash,
receivables and other
assets--(1.72%).................... (3,716,268)
-------------
NET ASSETS--100.00% $ 216,363,338
-------------
-------------
</TABLE>
<TABLE>
<S> <C>
* Non-income producing security.
ACES Automatic Common Exchange Securities.
ADR American Depository Receipt.
(a) Illiquid security.
(b) The cost stated also represents the
aggregate cost for Federal income tax
purposes. At December 31, 1996, net
unrealized appreciation was $44,718,057
based on cost for Federal income tax
purposes. This consisted of aggregate
gross unrealized appreciation of
$46,457,434 and aggregate gross
unrealized depreciation of $1,739,377.
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
- --------- BNY HAMILTON EQUITY INCOME FUND
Statement of Assets and Liabilities
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments at market value,
(Identified cost $175,361,549)..... $220,079,606
Cash.................................. 214
Receivables:
Interest........................... 195,273
Dividends.......................... 373,767
Deferred organization costs and other
assets............................. 22,398
------------
TOTAL ASSETS....................... 220,671,258
------------
LIABILITIES:
Payables:
Investments purchased.............. 929,350
Capital stock repurchased.......... 214,552
Dividends.......................... 2,925,262
Services provided by the Bank of
New York and Administrator....... 172,558
Accrued expenses and other
liabilities........................ 66,198
------------
TOTAL LIABILITIES.................. 4,307,920
------------
NET ASSETS:
(applicable to 15,318,851 shares
issued and outstanding; 200 million
shares of $.001 par value
authorized)........................ $216,363,338
------------
Net asset value, offering price and
repurchase price per share
($216,363,338/15,318,851 shares)... $ 14.12
------------
SOURCES OF NET ASSETS:
Capital stock @ par................... $ 15,318
Capital surplus....................... 171,363,718
Undistributed net investment income... 223,704
Accumulated net realized gain on
investments........................ 42,541
Net unrealized appreciation on
investments........................ 44,718,057
------------
NET ASSETS.............................. $216,363,338
------------
------------
</TABLE>
Statement of Operations
FOR THE YEAR
ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of
$39,743)..................................... $ 4,908,117
Interest........................................ 1,437,866
------------
TOTAL INCOME................................. 6,345,983
------------
EXPENSES:
Advisory........................................ 1,211,813
Administration.................................. 403,939
Accounting services............................. 60,000
Custodian....................................... 39,598
Cash management................................. 19,646
Transfer agent.................................. 116,114
Audit........................................... 8,873
Insurance....................................... 6,749
Directors....................................... 17,954
Reports to shareholders......................... 24,845
Registration and filings........................ 19,836
Legal........................................... 9,916
Other........................................... 28,244
------------
TOTAL EXPENSES............................... 1,967,527
------------
NET INVESTMENT INCOME........................ 4,378,456
------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain on investment transactions.... 16,399,231
Net realized loss on written call options....... (665,422)
------------
Net realized gains on investments............... 15,733,809
------------
Increase in unrealized appreciation on
investments during the year.................. 16,180,723
Increase in unrealized appreciation on written
call options during the year................. 192,616
------------
Net unrealized gain on investments during the
year......................................... 16,373,339
------------
Net realized and unrealized gain on
investments.................................. 32,107,148
------------
Net increase in net assets resulting from
operations................................... $36,485,604
------------
------------
</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,
----------------------------
1996 1995
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income...................... $ 4,378,456 $ 4,157,218
Net realized gain on investments........... 15,733,809 6,729,207
Net unrealized gain on investments during
the year................................ 16,373,339 24,728,968
------------ ------------
Net increase in net assets resulting
from operations........................ 36,485,604 35,615,393
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income....... (4,220,255) (4,143,915)
Distributions from capital gains........... (15,772,269) (1,521,251)
------------ ------------
Total dividends and distributions to
shareholders........................... (19,992,524) (5,665,166)
------------ ------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from capital stock sold........... 45,850,655 28,650,069
Proceeds from reinvestment of dividends and
distributions........................... 15,622,755 3,841,802
Cost of capital stock repurchased.......... (31,443,997) (27,731,884)
------------ ------------
Net increase in net assets resulting
from capital stock transactions........ 30,029,413 4,759,987
------------ ------------
INCREASE IN NET ASSETS................ 46,522,493 34,710,214
NET ASSETS:
Beginning of year.......................... 169,840,845 135,130,631
------------ ------------
End of year................................ $216,363,338 $169,840,845
------------ ------------
------------ ------------
CHANGE IN CAPITAL STOCK OUTSTANDING:
Shares sold................................ 3,366,850 2,490,205
Shares issued on reinvestment of dividends
and distributions....................... 1,107,533 312,500
Shares repurchased......................... (2,232,920) (2,352,875)
------------ ------------
Net increase............................ 2,241,463 449,830
Shares outstanding, beginning of year...... 13,077,388 12,627,558
------------ ------------
Shares outstanding, end of year............ 15,318,851 13,077,388
------------ ------------
------------ ------------
</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 31,
1996 1995 1994 1993 1992
--------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value at
beginning of period.... $ 12.99 $ 10.70 $ 11.30 $ 10.43 $ 10.00
--------- --------- --------- --------- ------------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income.... 0.30 0.32 0.31 0.29 0.11
Net realized and
unrealized gain (loss)
on investments......... 2.22 2.41 (0.60) 0.94 0.47
--------- --------- --------- --------- ------------
Total from
investment
operations........ 2.52 2.73 (0.29) 1.23 0.58
--------- --------- --------- --------- ------------
DIVIDENDS AND
DISTRIBUTIONS
Dividends from net
investment income...... (0.29) (0.32) (0.31) (0.28) (0.12)
Distributions from
capital gains.......... (1.10) (0.12) -- (0.08) (0.03)
--------- --------- --------- --------- ------------
Total dividends and
distributions..... (1.39) (0.44) (0.31) (0.36) (0.15)
--------- --------- --------- --------- ------------
Net asset value at end of
period................. $ 14.12 $ 12.99 $ 10.70 $ 11.30 $ 10.43
--------- --------- --------- --------- ------------
--------- --------- --------- --------- ------------
TOTAL RETURN:+........... 19.58% 25.78% (2.58)% 11.94% 5.86%**
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of
period
(000's omitted)........ $216,363 $ 169,841 $ 135,131 $ 112,849 $ 20,440
Ratio to average net
assets of:
Expenses, net of waiver
from The Bank of New
York................ 0.97% 1.00% 1.04% 1.09% 1.10%***
Expenses, prior to
waiver from The Bank
of New York......... 0.97% 1.00% 1.04% 1.12% 2.12%***
Net investment income,
net of waiver from
The Bank of New
York................ 2.17% 2.66% 2.89% 2.82% 3.33%***
Portfolio turnover
rate................... 58% 58% 51% 50% 25%
Average commission rate
paid per share
traded................. $ .0622 $ .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, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
- --------------- ---------------
U.S. GOV'T AGENCIES & OBLIGATIONS--85.55%
UNITED STATES GOVERNMENT AGENCY
SECURITIES--33.10%
<S> <C> <C>
Federal Home Loan Bank,
$ 500,000 5.24%, 7/20/98............................... $ 495,210
4,000,000 5.37%, 11/3/00............................... 3,868,188
750,000 5.93%, 3/7/03................................ 728,583
Federal Home Loan Mortgage Corporation,
500,000 5.76%, 7/13/98............................... 496,542
1,000,000 5.55%, 9/7/00................................ 975,326
250,000 7.60%, 5/12/05............................... 251,188
Federal National Mortgage Association,
500,000 5.35%, 8/12/98............................... 494,815
3,200,000 6.20%, 7/10/03............................... 3,112,403
106,999 8.50%, 2/25/04............................... 106,954
100,000 6.40%, 9/27/05............................... 98,111
2,000,000 8.30%, 6/25/20............................... 2,039,641
803,033 9.00%, 3/1/22................................ 855,656
Tennessee Valley Authority,
1,500,000 6.25%, 8/1/99................................ 1,503,069
1,350,000 6.00%, 11/1/00............................... 1,337,194
5,000,000 6.125%, 7/15/03.............................. 4,862,190
---------------
21,225,070
---------------
UNITED STATES TREASURY BONDS--11.08%
2,535,000 5.875%, 8/15/98.............................. 2,531,831
4,275,000 7.50%, 2/15/05............................... 4,572,916
---------------
7,104,747
---------------
UNITED STATES TREASURY NOTES--40.15%
75,000 6.50%, 5/15/97............................... 75,234
500,000 6.00%, 5/31/98............................... 500,313
3,625,000 6.375%, 1/15/99.............................. 3,658,984
2,000,000 6.75%, 6/30/99............................... 2,035,000
150,000 8.00%, 8/15/99............................... 157,078
1,500,000 6.875%, 8/31/99.............................. 1,530,938
2,025,000 6.875%, 3/31/00.............................. 2,071,196
3,750,000 6.75%, 4/30/00............................... 3,821,486
300,000 7.50%, 5/15/02............................... 317,250
550,000 6.25%, 2/15/03............................... 549,485
5,000,000 5.75%, 8/15/03............................... 4,850,000
$ 375,000 7.875%, 11/15/04............................. $ 409,219
1,800,000 6.50%, 5/15/05............................... 1,813,502
4,100,000 5.875%, 11/15/05............................. 3,955,221
---------------
25,744,906
---------------
UNITED STATES TREASURY STRIPPED
PRINCIPAL--1.22%
1,000,000 0.00%, 2/15/01............................... 778,230
---------------
TOTAL U.S. GOV'T AGENCIES & OBLIGATIONS (Cost
$54,827,430)................................. 54,852,953
---------------
MORTGAGE BACKED SECURITIES--7.10%
Federal Home Loan Mortgage Corporation,
131,732 Pool #218711, 8.00%, 10/1/02................. 135,103
410,942 Pool #251836, 8.50%, 5/1/04.................. 425,481
120,851 Pool #502185, 8.50%, 7/1/05.................. 125,058
30,660 Pool #160062, 9.50%, 10/1/08................. 32,860
35,707 Pool #160065, 9.50%, 11/1/08................. 38,269
35,837 Pool #160066, 9.75%, 11/1/08................. 38,637
406,325 Pool #555045, 8.00%, 5/1/19.................. 417,186
Federal National Mortgage Association,
1,113,169 Pool #195152, 7.00%, 1/1/08.................. 1,118,490
Government National Mortgage Association,
50,221 Pool #6400, 8.00%, 6/15/05................... 51,226
84,655 Pool #7774, 8.00%, 9/15/05................... 86,348
74,947 Pool #7038, 8.00%, 10/15/05.................. 76,445
72,691 Pool #11310, 8.00%, 11/15/05................. 74,145
29,310 Pool #9839, 8.00%, 7/15/06................... 29,897
46,794 Pool #10459, 8.00%, 8/15/06.................. 47,729
162,313 Pool #10419, 8.00%, 9/15/06.................. 165,559
82,024 Pool #12590, 8.00%, 9/15/06.................. 83,664
153,820 Pool #14295, 8.00%, 1/15/07.................. 156,896
149,580 Pool #204365, 9.00%, 3/15/17................. 160,212
781,001 Pool #407323, 8.25%, 4/15/25................. 802,723
484,963 Pool #417331, 7.50%, 3/15/26................. 485,266
---------------
TOTAL MORTGAGE BACKED SECURITIES (Cost
$5,329,888) 4,551,194
---------------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
8
<PAGE>
- --------------------------------------------------------------------------------
- --------- BNY HAMILTON INTERMEDIATE GOVERNMENT FUND
Schedule of Investments (Continued)
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
- --------------- ---------------
COLLATERALIZED MORTGAGE
OBLIGATIONS--5.42%
<S> <C> <C>
Federal Home Loan Mortgage Corporation,
$ 776,638 Series 1317E, 7.00%, 6/15/04................. $ 780,894
500,000 Series 1202E, 7.00%, 7/15/05................. 504,225
500,000 Series 1338G, 6.75%, 1/15/06................. 503,165
Federal National Mortgage Association,
763,332 Series 1993-47A, 6.65%, 3/25/05.............. 764,716
500,000 Series 1992-108G, 7.00%, 8/25/05............. 504,340
233,439 Series 1990-31, 7.00%, 6/25/19............... 234,567
Government National Mortagage Association,
186,395 Series 1995-2D, 8.50%, 11/20/15.............. 186,158
---------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $3,499,060)............................ 3,478,065
---------------
---------------
REPURCHASE AGREEMENT--.99%
$ 633,000 Repurchase agreement with Deutsche Bank,
6.95%, due 1/2/97, repurchase price $633,367
(Collateral--Federal National Mortgage
Association, 6.50%, 2/25/00; aggregate market
value plus accrued interest $651,990) (Cost
$633,000).................................... $ 633,000
---------------
TOTAL INVESTMENTS--
(Cost $64,289,378)--(a) 99.06%............... 63,515,212
Cash, receivables and other assets less
liabilities--0.94%........................... 601,360
---------------
NET ASSETS--100.00%.......................... $ 64,116,572
---------------
</TABLE>
(a) The cost stated also represents the aggregate cost for Federal income tax
purposes. At December 31, 1996, net unrealized depreciation was $774,166
based on cost for Federal income tax purposes. This consisted of aggregate
gross unrealized appreciation of $140,521 and aggregate gross unrealized
depreciation of $914,687.
See notes to financial statements.
- --------------------------------------------------------------------------------
9
<PAGE>
- --------------------------------------------------------------------------------
- --------- BNY HAMILTON INTERMEDIATE GOVERNMENT FUND
Statement of Assets and Liabilities
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments at market value, (Identified cost
$64,289,378)................................. $63,515,212
Cash............................................ 321
Receivables:
Investments sold............................. 16,283
Interest..................................... 1,051,108
Capital stock sold........................... 10,162
Deferred organization costs and other assets.... 13,536
-----------
TOTAL ASSETS................................. 64,606,622
-----------
LIABILITIES:
Payables:
Capital stock repurchased.................... 303,776
Dividends.................................... 94,722
Services provided by The Bank of New York and
Administrator.............................. 54,768
Accrued expenses and other liabilities.......... 36,784
-----------
TOTAL LIABILITIES............................ 490,050
-----------
NET ASSETS:
(applicable to 6,609,815 shares issued and
outstanding; 200 million shares of $.001 par
value authorized)............................ $64,116,572
-----------
-----------
Net asset value, offering price and repurchase
price per share ($64,116,572/6,609,815
shares)...................................... $ 9.70
-----------
-----------
SOURCES OF NET ASSETS:
Capital stock @ par............................. $ 6,610
Capital surplus................................. 67,529,284
Accumulated net realized loss on investments.... (2,645,156)
Net unrealized depreciation on investments...... (774,166)
-----------
NET ASSETS........................................ $64,116,572
-----------
-----------
</TABLE>
Statement of Operations
FOR THE YEAR
ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest........................................ $4,223,225
----------
EXPENSES:
Advisory........................................ 321,787
Administration.................................. 128,631
Accounting services............................. 60,000
Custodian....................................... 17,981
Cash management................................. 8,964
Transfer agent.................................. 45,806
Audit........................................... 3,775
Insurance....................................... 2,599
Directors....................................... 17,954
Reports to shareholders......................... 9,239
Registration and filing......................... 13,854
Legal........................................... 3,616
Other........................................... 20,161
----------
TOTAL EXPENSES............................... 654,367
----------
NET INVESTMENT INCOME........................ 3,568,858
----------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on investment transactions.... (535,071)
Decrease in unrealized appreciation on
investments during the period................ (978,520)
----------
Net realized and unrealized loss on
investments.................................. (1,513,591)
----------
Net increase in net assets resulting from
operations................................... $2,055,267
----------
----------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
10
<PAGE>
- --------------------------------------------------------------------------------
- --------- BNY HAMILTON INTERMEDIATE GOVERNMENT FUND
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1996 1995
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income................. $ 3,568,858 $ 3,406,583
Net realized loss on investments...... (535,071) (704,447)
Increase in unrealized appreciation
(depreciation) on investments
during the year.................... (978,520) 6,144,249
------------ ------------
Net increase in net assets
resulting from operations......... 2,055,267 8,846,385
------------ ------------
DIVIDENDS TO SHAREHOLDERS:
Dividends from net investment
income............................. (3,568,858) (3,406,583)
------------ ------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from capital stock sold...... 22,217,396 10,197,215
Proceeds from reinvestment of
dividends.......................... 2,429,127 2,247,470
Cost of capital stock repurchased..... (19,675,281) (16,553,657)
------------ ------------
Increase (decrease) in net assets
resulting from capital stock
transactions...................... 4,971,242 (4,108,972)
------------ ------------
INCREASE IN NET ASSETS........... 3,457,651 1,330,830
NET ASSETS:
Beginning of year..................... 60,658,921 59,328,091
------------ ------------
End of year........................... $64,116,572 $60,658,921
------------ ------------
------------ ------------
CHANGE IN CAPITAL STOCK OUTSTANDING:
Shares sold........................... 2,285,237 1,074,090
Shares issued on reinvestment of
dividends.......................... 250,971 233,341
Shares repurchased.................... (2,028,495) (1,726,729)
------------ ------------
Net increase (decrease)............ 507,713 (419,298)
Shares outstanding, beginning of
year............................... 6,102,102 6,521,400
------------ ------------
Shares outstanding, end of year....... 6,609,815 6,102,102
------------ ------------
------------ ------------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
11
<PAGE>
- --------------------------------------------------------------------------------
- --------- BNY HAMILTON INTERMEDIATE GOVERNMENT FUND
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE
PERIOD
AUGUST 10,
1992*
YEAR ENDED DECEMBER 31, THROUGH
---------------------------------------------- DECEMBER 31,
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value at
beginning of period.... $ 9.94 $ 9.10 $ 10.12 $ 9.87 $ 10.00
------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income.... 0.54 0.53 0.50 0.51 0.18
Net realized and
unrealized gain (loss)
on investments......... (0.24) 0.84 (1.02) 0.27 (0.13)
------- ---------- ---------- ---------- ----------
Total from
investment
operations........ 0.30 1.37 (0.52) 0.78 0.05
------- ---------- ---------- ---------- ----------
DIVIDENDS AND
DISTRIBUTION
Dividends from net
investment income...... (0.54) (0.53) (0.50) (0.51) (0.18)
Distribution from capital
gains.................. -- -- -- (0.02) --
------- ---------- ---------- ---------- ----------
Total dividends and
distribution...... (0.54) (0.53) (0.50) (0.53) (0.18)
------- ---------- ---------- ---------- ----------
Net asset value at end of
period................. $ 9.70 $ 9.94 $ 9.10 $ 10.12 $ 9.87
------- ---------- ---------- ---------- ----------
------- ---------- ---------- ---------- ----------
TOTAL RETURN:+........... 3.16% 15.40% (5.17)% 8.03% 0.51%**
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of
period (000's
omitted)............... $64,117 $ 60,659 $ 59,328 $ 72,069 $ 25,575
Ratio to average net
assets of:
Expenses, net of waiver
from The Bank of New
York................ 1.02% 1.06% 1.07% 0.86% 0.75%***
Expenses, prior to
waiver from The Bank
of New York......... 1.02% 1.06% 1.10% 1.15% 1.64%***
Net investment income,
net of waiver from
The Bank of New
York................ 5.54% 5.52% 5.30% 5.04% 4.62%***
Portfolio turnover
rate................... 57% 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.
- --------------------------------------------------------------------------------
12
<PAGE>
- --------------------------------------------------------------------------------
- --------- BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND
Schedule of Investments
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
*MOODY'S
PRINCIPAL /S&P INTEREST MATURITY MARKET
AMOUNT RATINGS RATE DATE VALUE
- --------------- ---------- -------- -------- -----------
MUNICIPAL BONDS--97.87%
CERTIFICATES OF
PARTICIPATION--1.36%
<S> <C> <C> <C> <C> <C>
$ 500,000 New York State
Certificate of
Participation............ BAA1/BBB 5.000% 03/01/00 $ 501,270
-----------
EDUCATION--11.12%
235,000 Dutchess County, New York
IDA Civic Facility
Revenue, Bard College.... A/NR 6.000 11/01/99 240,184
250,000 New York State Dormitory
Authority, Columbia
University............... Aaa/AA+ 5.000 07/01/00 256,120
1,000,000 New York State Dormitory
Authority, Cornell
University............... Aa/AA 4.600 07/01/00 1,015,170
1,000,000 New York State Dormitory
Authority, New York
University, MBIA
Insured+................. Aaa/AAA 5.500 07/01/04 1,051,370
1,000,000 New York State Dormitory
Authority, Strong
Hospital (University of
Rochester)............... A1/A+ 5.000 07/01/02 1,017,740
500,000 New York State Dormitory
Authority, University of
Rochester................ A1/A+ 4.700 07/01/00 505,785
-----------
4,086,369
-----------
GENERAL OBLIGATION--8.53%
500,000 Monroe County, New York,
MBIA Insured+............ Aaa/AAA 4.800 06/01/02 508,130
60,000 Monroe County, New York
Series B, Unrefunded
Balance, Callable 6/01/98
@ 102.................... Aa/AA- 7.000 06/01/03 63,458
1,000,000 New York State, General
Obligation............... A/A- 4.600 03/15/01 1,004,870
1,000,000 New York State, General
Obligation............... A/A- 5.125 06/15/04 1,024,550
500,000 New York State Municipal
Bond Bank Agency
(City of Rochester)...... NR/A+ 6.400 03/15/01 532,050
-----------
3,133,058
-----------
HEALTH CARE--1.44%
500,000 New York State Medical
Care Facilities--
Downstate Medical
Center................... NR/AAA 5.700 02/15/04 527,460
-----------
HOUSING--2.77%
500,000 New York State Mortgage
Revenue Agency........... Aa/NR 5.300 04/01/04 509,050
500,000 New York State Mortgage
Revenue Agency--
Homeowner Mtg Series
37-A..................... Aa/NR 5.850 04/01/06 508,445
-----------
1,017,495
-----------
INDUSTRIAL DEVELOPMENT
BONDS--2.77%
1,000,000 Westchester County
Industrial Development
Authority................ Aaa/NR 4.850 07/01/00 1,015,750
-----------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
13
<PAGE>
- --------------------------------------------------------------------------------
- --------- BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND
Schedule of Investments (Continued)
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
*MOODY'S
PRINCIPAL /S&P INTEREST MATURITY MARKET
AMOUNT RATINGS RATE DATE VALUE
- --------------- ---------- -------- -------- -----------
MUNICIPAL BONDS
(CONTINUED)
<S> <C> <C> <C> <C> <C>
PREREFUNDED/ESCROWED/US
GUARANTEED--4.62%
$ 990,000 New York State Housing
Finance Agency ETM State
University
Construction............. Aaa/AAA 6.500% 11/01/06 $ 1,072,150
269,000 Puerto Rico Aqueduct &
Sewer Authority ETM...... Aaa/AAA 4.200 07/01/00 266,784
360,000 Puerto Rico Aqueduct &
Sewer Authority ETM...... Aaa/AAA 4.500 07/01/02 359,791
-----------
1,698,725
-----------
SPECIAL TAX--23.62%
1,000,000 MTA Dedicated Tax, MBIA
Insured+................. Aaa/AAA 6.000 04/01/05 1,085,840
1,000,000 Municipal Assistance Corp
for New York City........ Aa/NR 4.800 07/01/03 1,010,570
2,500,000 Municipal Assistance Corp
for New York City........ Aa/A+ 6.000 07/01/05 2,703,750
300,000 New York State Local
Government Assistance
Corp..................... A/A 6.700 04/01/00 320,415
1,000,000 New York State Local
Government Assistance
Corp..................... A/A 5.300 04/01/00 1,026,600
340,000 New York State Local
Government Assistance
Corp..................... A/A 6.750 04/01/02 374,752
655,000 New York State Local
Government Assistance
Corp..................... A/A 5.000 04/01/02 666,260
1,000,000 New York State Local
Government Assistance
Corp..................... A/NR 4.600 04/01/03 992,440
500,000 New York State Local
Government Assistance
Corp..................... A/A 4.800 04/01/05 495,800
-----------
8,676,427
-----------
STATE
APPROPRIATION--17.64%
420,000 MTA Service Contract..... Baa1/BBB 5.100 07/01/00 423,881
450,000 New York State Dormitory
Authority, State
University............... Baa1/BBB+ 7.100 05/15/98 467,001
400,000 New York State Dormitory
Authority, Upstate
Community Colleges....... Baa1/BBB- 4.500 07/01/00 395,288
900,000 New York State Dormitory
Authority, State
University............... Baa1/BBB+ 5.200 05/15/03 899,559
500,000 New York State Dormitory
Authority, State
University............... Baa1/BBB+ 5.500 05/15/07 499,185
480,000 New York State Medical
Care Facilities--Mental
Health................... Baa1/BBB+ 6.100 08/15/02 503,390
505,000 New York State Medical
Care Facilities--Mental
Health................... Baa1/BBB+ 4.700 08/15/01 498,380
500,000 New York State Medical
Care Facilities--Mental
Health................... Baa1/BBB+ 4.600 08/15/99 500,025
500,000 New York State Thruway
Authority Highway &
Bridge Trust Fund........ Baa1/NR 5.500 04/01/01 510,000
1,000,000 New York State Thruway
Authority Service
Contract................. Baa1/BBB 5.000 04/01/00 1,004,980
750,000 New York State Urban
Development
Corp.--Correctional
Capital Facility--Series
7........................ Baa1/NR 6.000 01/01/07 777,383
-----------
6,479,072
-----------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
14
<PAGE>
- --------------------------------------------------------------------------------
- --------- BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND
Schedule of Investments (Continued)
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
*MOODY'S
PRINCIPAL /S&P INTEREST MATURITY MARKET
AMOUNT RATINGS RATE DATE VALUE
- --------------- ---------- -------- -------- -----------
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS
(CONTINUED)
TRANSPORTATION--13.01%
$ 1,500,000 New York State Thruway
Authority General
Revenue.................. A1/A 5.250% 01/01/01 $ 1,541,865
650,000 Port Authority of New
York & New Jersey........ A1/NR 5.100 08/01/01 668,135
500,000 Port Authority of New
York & New Jersey........ A1/NR 6.100 10/15/02 539,910
1,000,000 Port Authority of New
York & New Jersey........ A1/NR 5.300 08/01/03 1,040,940
1,000,000 Triborough Bridge &
Tunnel Authority General
Purpose.................. A+/NR 4.300 01/01/02 990,340
-----------
4,781,190
-----------
UTILITY--8.33%
300,000 New York State
Environmental Facility
Corp.
PCR State Water.......... Aaa/AAA 6.000 05/15/02 321,438
500,000 New York State
Environmental Facility
Corp.
PCR Water Revol.......... Aa/A- 5.100 06/15/00 512,545
400,000 New York State
Environmental Facility
Corp.
PCR Water Revol.......... Aaa/AAA 6.300 09/15/00 427,528
500,000 New York State Power
Authority................ Aa/AA- 7.500 01/01/02 525,840
250,000 Onondaga County, New York
Water Authority.......... A1/A 6.250 01/15/98 256,690
1,000,000 Suffolk County Water
Authority, New York MBIA
Insured+................. Aaa/AAA 4.800 06/01/00 1,017,600
-----------
3,061,641
-----------
OTHER--2.66%
350,000 New York City, Trust for
Cultural Resources Museum
MOMA--AMBAC Insured+,
Callable 1/01/02 @102.... Aaa/AAA 6.300 01/01/03 384,524
240,000 New York City, Trust for
Cultural Resources Museum
MOMA--AMBAC Insured+..... Aaa/AAA 5.000 01/01/02 245,642
340,000 New York City, Trust for
Cultural Resources Museum
MOMA--AMBAC Insured+..... Aaa/AAA 4.900 01/01/01 346,446
-----------
976,612
-----------
TOTAL MUNICIPAL BONDS
(Cost $35,335,915)....... 35,955,069
-----------
TAX-EXEMPT MONEY MARKET
FUND--0.78%
287,007 Dreyfus New York
Municipal Cash Management
(Cost $287,007).......... NR/NR 3.800%(a) 287,007
-----------
TOTAL INVESTMENTS (Cost
$35,622,922)
(b)--98.65%.............. 36,242,076
Cash, receivables, and
other assets less
liabilities--1.35%....... 494,690
-----------
NET ASSETS--100%......... $36,736,766
-----------
-----------
</TABLE>
<TABLE>
<S> <C>
NR Not rated by Moody's or Standard & Poor's ('S&P').
* Ratings have not been audited by Deloitte & Touche
LLP.
+ Insured or guaranteed by the indicated municipal
bond insurance corporation.
(a) Represents annualized yield at December 31, 1996.
(b) The cost stated also represents the aggregate cost
for Federal income tax purposes. At December 31,
1996, net unrealized appreciation was $619,154
based on cost for Federal income tax purposes.
This consisted of aggregate gross unrealized
appreciation of $636,307 and aggregate gross
unrealized depreciation of $17,153.
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
15
<PAGE>
- --------------------------------------------------------------------------------
- --------- BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND
Statement of Assets and Liabilities
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments at market value,
(Identified cost $35,622,922)...... $36,242,076
Receivables:
Interest........................... 629,304
Deferred organization costs and other
assets............................. 15,236
-----------
TOTAL ASSETS....................... 36,886,616
-----------
LIABILITIES:
Payables:
Due to custodian................... 1,000
Dividends.......................... 84,423
Services provided by The Bank of
New York and Administrator....... 32,722
Accrued expenses and other
liabilities........................ 31,705
-----------
TOTAL LIABILITIES.................. 149,850
-----------
NET ASSETS:
(applicable to 3,570,960 shares issued
and outstanding; 200 million shares
of $.001 par value authorized)..... $36,736,766
-----------
Net asset value, offering price and
repurchase price per share
($36,736,766/3,570,960 shares)..... $ 10.29
-----------
-----------
SOURCES OF NET ASSETS:
Capital stock @ par................... $ 3,571
Capital surplus....................... 36,429,236
Accumulated net realized loss on
investments........................ (315,195)
Net unrealized appreciation on
investments........................ 619,154
-----------
NET ASSETS.............................. $36,736,766
-----------
-----------
</TABLE>
Statement of Operations
FOR THE YEAR
ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.............................. $1,859,030
----------
EXPENSES:
Advisory.............................. 193,202
Administration........................ 77,287
Accounting services................... 60,000
Custodian............................. 10,482
Cash management....................... 10,792
Transfer agent........................ 39,263
Audit................................. 2,570
Insurance............................. 1,797
Directors............................. 17,954
Reports to shareholders............... 3,428
Registration and filing............... 14,547
Legal................................. 2,329
Other................................. 23,622
----------
TOTAL EXPENSES..................... 457,273
Fees waived by The Bank of New York... (109,452)
----------
NET EXPENSES....................... 347,821
----------
NET INVESTMENT INCOME.............. 1,511,209
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS--
Net realized gain on investment
transactions....................... 144,496
Decrease in unrealized appreciation on
investments during the year........ (335,080)
----------
Net realized and unrealized loss on
investments........................ (190,584)
----------
Net increase in net assets resulting
from operations.................... $1,320,625
----------
----------
</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,
----------------------------
1996 1995
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income...................... $ 1,511,209 $ 1,680,844
Net realized gain (loss) on investments.... 144,496 (75,562)
Increase in unrealized appreciation
(depreciation) on investments during the
year.................................... (335,080) 3,351,479
------------ ------------
Net increase in net assets resulting
from operations....................... 1,320,625 4,956,761
------------ ------------
DIVIDENDS TO SHAREHOLDERS:
Dividends from net investment income....... (1,511,209) (1,680,844)
------------ ------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from capital stock sold........... 6,200,028 4,068,695
Proceeds from reinvestment of dividends.... 493,674 604,529
Cost of capital stock repurchased.......... (10,697,287) (10,231,201)
------------ ------------
Decrease in net assets resulting from
capital stock transactions............ (4,003,585) (5,557,977)
------------ ------------
DECREASE IN NET ASSETS................ (4,194,169) (2,282,060)
NET ASSETS:
Beginning of year.......................... 40,930,935 43,212,995
------------ ------------
End of year................................ $36,736,766 $40,930,935
------------ ------------
CHANGE IN CAPITAL STOCK OUTSTANDING:
Shares sold................................ 607,912 410,516
Shares issued on reinvestment of
dividends............................... 48,215 59,793
Shares repurchased......................... (1,044,692) (1,014,728)
------------ ------------
Net decrease............................ (388,565) (544,419)
Shares outstanding, beginning of year...... 3,959,525 4,503,944
------------ ------------
Shares outstanding, end of year............ 3,570,960 3,959,525
------------ ------------
------------ ------------
</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 YEAR ENDED DECEMBER 31, THROUGH
DECEMBER 31, ----------------------------- DECEMBER 31,
1996 1995 1994 1993 1992
------------ ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value at
beginning of period.... $ 10.34 $ 9.59 $ 10.37 $ 9.97 $ 10.00
---------- ------- ------- ------- ----------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income.... 0.40 0.39 0.39 0.38 0.15
Net realized and
unrealized gain (loss)
on investments......... (0.05) 0.75 (0.78) 0.40 (0.03)+
---------- ------- ------- ------- ----------
Total from
investment
operations........ 0.35 1.14 (0.39) 0.78 0.12
---------- ------- ------- ------- ----------
DIVIDENDS
Dividends from net
investment income...... (0.40) (0.39) (0.39) (0.38) (0.15)
---------- ------- ------- ------- ----------
Net asset value at end of
period................. $ 10.29 $ 10.34 $ 9.59 $ 10.37 $ 9.97
---------- ------- ------- ------- ----------
---------- ------- ------- ------- ----------
TOTAL RETURN:++.......... 3.47% 12.08% (3.81)% 7.99% 1.18%**
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of
period (000's
omitted)............... $ 36,737 $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% 0.90% 0.85% 0.68% 0.60%***
Expenses, prior to
waiver from the Bank
of New York and
Administrator....... 1.18% 1.20% 1.20% 1.30% 1.96%***
Net investment income,
net of waiver from
the Bank of New York
and Administrator... 3.91% 3.89% 3.92% 3.74% 3.79%***
Portfolio turnover
rate................... 22% 4% 18% 6% --
</TABLE>
<TABLE>
<S> <C>
* 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.
</TABLE>
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
Corporation on May 1, 1992 and is registered under the Investment Company Act of
1940 as an open-end management investment company. The Company currently
consists of four series: BNY Hamilton Money Fund (not included herein), BNY
Hamilton Equity Income Fund, BNY Hamilton Intermediate Government Fund and BNY
Hamilton Intermediate New York Tax-Exempt Fund (individually, a 'Fund' and
collectively, 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
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 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 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
'Intermediate New York Tax-Exempt Fund')
Securities are valued using prices supplied daily by an independent pricing
service or services that (1) 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 (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, including
investments that are subject to limitations as to their sale (restricted
securities and illiquid securities), are valued at fair value as determined in
good faith by the Fund's Board of Directors for all Funds. In determining fair
value, consideration is given to cost, operating and other financial data.
(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
obligation to repurchase, the Funds have the right to liquidate the collateral
and apply the proceeds in satisfaction of the obligations. Under certain
circumstances, in the event of default or bankruptcy by the other party to the
agreeement, realization and/or retention of the collateral may be subject to
legal proceedings.
- --------------------------------------------------------------------------------
19
<PAGE>
- --------------------------------------------------------------------------------
- --------- NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(C) WRITTEN OPTIONS AND PURCHASED OPTIONS
The Equity Income Fund enters into an option contract for the purpose of
either hedging its exposure to the market fluctuations of the portfolio, or an
individual security position. The nature and risks associated with these
securities 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 losses. In addition, short term capital gains or losses may be realized
on exercised 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
unlimited market risk of favorable changes in the value of the call option's
underlying 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
stipulated 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
transaction, 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
underlying 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 increased 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
declares and pays dividends monthly.
Income and capital gains distributions are determined in accordance with
income tax regulations which may differ from methods used to determine the
corresponding 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 capital gain. Where such differences are permanent in nature, they
are reclassified 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.
- --------------------------------------------------------------------------------
20
<PAGE>
- --------------------------------------------------------------------------------
- --------- NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(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 method.
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.
(G) FINANCIAL STATEMENTS PREPARATION
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses for the
period. Actual results could differ from those estimates.
(H) 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
accrues 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
'Administrator') 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
directors 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
utilizing 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
extent that expenses for that Fund exceeded .90%
- --------------------------------------------------------------------------------
21
<PAGE>
- --------------------------------------------------------------------------------
- --------- NOTES TO FINANCIAL STATEMENTS (CONTINUED)
of average daily net assets. There is currently no reimbursement of expenses
with respect to the Equity Income 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
accrued for such fees in the accompanying financial statements.
4. PORTFOLIO SECURITIES
During the year ended December 31, 1996, the cost of purchases and the
proceeds from sales of securities, other than short-term securities, were as
follows:
<TABLE>
<CAPTION>
EQUITY
INCOME FUND
---------------------------
PURCHASES SALES
------------ ------------
<S> <C> <C>
US Gov't Securities........... $ -- $ --
All Others.................... 127,704,250 110,066,763
<CAPTION>
INTERMEDIATE
GOVERNMENT FUND
---------------------------
PURCHASES SALES
------------ ------------
<S> <C> <C>
US Gov't Securities........... $ 40,543,652 $ 34,369,744
All Others.................... -- 1,444,465
<CAPTION>
INTERMEDIATE
NEW YORK
TAX-EXEMPT FUND
---------------------------
PURCHASES SALES
------------ ------------
<S> <C> <C>
US Gov't Securities........... $ -- $ --
All Others.................... 8,100,230 10,654,553
</TABLE>
5. FEDERAL INCOME TAXES
For federal income tax purposes, the Funds indicated below have capital loss
carryforwards as of December 31, 1996 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
535,000 2004
Intermediate New York
Tax-Exempt Fund............. 241,300 2002
75,600 2003
</TABLE>
6. WRITTEN OPTION ACTIVITY
Transactions in written options during the year ended December 31, 1996 were
as follows:
<TABLE>
<CAPTION>
NUMBER PREMIUMS
OF CONTRACTS RECEIVED
------------ ----------
<S> <C> <C>
EQUITY INCOME FUND:
Options outstanding at
December 31, 1995........... 105 $ 595,540
Options written during the
year ended December 31,
1996........................ 1,767 924,989
Options terminated in closing
purchase transactions....... (1,472) (1,436,215)
Options expired............... (400) (84,314)
------------ ----------
Options outstanding at
December 31, 1996........... 0 $ 0
------------ ----------
------------ ----------
</TABLE>
The cost of cancelling options in closing purchase transactions was $2,173,689
resulting in a net-short term capital loss of ($737,474).
- --------------------------------------------------------------------------------
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, 1996, 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 four 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, 1996 by correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, 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, 1996, 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 7, 1997
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION (UNAUDITED)
For federal income tax purposes 73.41% of the ordinary income dividends paid to
you during the year ended December 31, 1996 for the BNY Hamilton Equity Income
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
income tax.
- --------------------------------------------------------------------------------
23
<PAGE>
- --------------------------------------------------------------------------------
- ---------
DIRECTORS AND OFFICERS
Edward L. Gardner, Director and Chairman of the Board
Peter Herrick, Director
Leif H. Olsen, Director
Stephen Stamas, Director
James E. Quinn, Director
J. David Huber, Chief Executive Officer
William J. Tomko, President
Michael J. Brascetta, Vice President
Mary A. Madick, Vice President
Karen A. Doyle, Vice President
Anthony L. Mercure, Vice President
Martin R. Dean, Assistant Treasurer
George O. Martinez, Secretary
Alaina Metz, Assistant Secretary
Bruce Treff, Assistant Secretary
INVESTMENT ADVISER
The Bank of New York
ADMINISTRATOR AND DISTRIBUTOR
BNY Hamilton Distributors, Inc.
TRANSFER AGENT
BISYS Fund Services, Ohio, Inc.
CUSTODIAN
The Bank of New York
INDEPENDENT ACCOUNTANTS
Deloitte & Touche LLP
LEGAL COUNSEL
Sullivan & Cromwell
- --------------------------------------------------------------------------------
24
<PAGE>
[This page intentionally left blank]
<PAGE>
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
additional 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
OBLIGATIONS 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.
BNY-0047
BNY HAMILTON
FUNDS
ANNUAL REPORT
DECEMBER 31, 1996
o EQUITY INCOME FUND
o INTERMEDIATE GOVERNMENT FUND
o INTERMEDIATE NEW YORK TAX-EXEMPT FUND
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