<PAGE>
As filed with the Securities and Exchange Commission on January 24, 1997
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. 9 |X|
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
AMENDMENT NO. 12
(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 New York, New York 10004
Service)
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):
|_| 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)
|X| 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,
1996, will be filed with the Commission on or about February 26, 1997.
Total Number of Pages __________
Exhibit Number on Page __________
<PAGE>
- --------------------------------------------------------------------------------
CROSS-REFERENCE SHEET
(As required by Rule 495)
<TABLE>
<CAPTION>
N-1A
Item No. Location
- -------- --------
PART A Prospectus
- ------ ----------
<S> <C> <C>
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; Additional Information
Information
Item 4. General Description of Cover Page; Summary of Classes and Services
Registrant 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 Fund Management of the Funds; Fund and Other
Shareholder Services - General; Additional
Information; Fee Table
Item 6. Capital Stock and Other Summary of Shareholder Services; Fund and Other
Securities Shareholder Services; Purchase of Shares;
Dividends and Distributions; Net Asset Value;
Organization; Taxes; Additional Information
Item 7. Purchase of Securities Being Shareholder Services - Hamilton Shares;
Offered Shareholder Services - Hamilton Premier Shares;
Shareholder Services - Hamilton Classic Shares
- BNY Hamilton Money Fund; Fund and Other
Shareholder Services - General; Purchase of
Shares; Exchange of Shares; Dividends and
Distributions; Net Asset Value
Item 8. Redemption or Repurchase Shareholder Services - BNY 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 Proceedings Not Applicable
PART B Statement of Additional Information
- ------ -----------------------------------
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and Additional Information
History
Item 13. Investment Objective and Investment Objectives and Policies; Investment
Policies Restrictions
Item 14. Management of the Fund Directors and Officers
Item 15. Control Persons and Principal Description of Shares
Holders of Securities
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
N-1A
Item No. Location
- -------- --------
<S> <C> <C>
Item 16. Investment Advisory and Other Directors and Officers; Investment Adviser;
Services 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 and Net Asset Value; Purchase of Shares; Redemption
Pricing of Securities Being of Shares; Dividends and Distributions;
Offered Exchange of Shares
Item 20. Tax Status Dividends and Distributions; Taxes
Item 21. Underwriters Administrator; Distributor
Item 22. Calculation of Performance Performance Data
Data
Item 23. Financial Statements Financial Statements
</TABLE>
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>
================================================================================
BNY HAMILTON MONEY MARKET FUNDS
125 West 55th Street
New York, New York 10019
For information call 1-800-426-9363 (1-800-4BNY-FND)
================================================================================
BNY Hamilton Funds, Inc. is a family of no-load mutual funds for which there are
no sales charges, exchange fees or redemption fees. This Prospectus describes
two (2) money market funds (individually, a "Fund" and collectively, the
"Funds") offered by the BNY Hamilton Family of Funds.
================================================================================
<TABLE>
<CAPTION>
Fund Objective For Investors Seeking
- ---- --------- ---------------------
<S> <C> <C>
BNY Hamilton Money To earn as high a level Daily dividends,
Fund of current income as is liquidity, and relatively
consistent with low risk
preservation of capital
and maintenance of
liquidity by investing
principally in high
quality money market
instruments
- -------------------------------------------------------------------------------
BNY Hamilton To earn as high a level Daily dividends,
Treasury Money Fund of current income as is liquidity, and relatively
consistent with low risk
preservation of capital
and maintenance of
liquidity by investing
solely in short-term
obligations of the United
States Treasury and
repurchase agreements
fully collateralized by
obligations of the United
States Treasury
</TABLE>
================================================================================
Investments in either Fund are not bank deposits or obligations of or guaranteed
or insured by The Bank of New York, and the shares in either 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 both Funds seek to maintain a stable net asset value of $1.00
per share, there can be no assurance that either Fund will be able to do so.
This Prospectus sets forth concisely the information that a prospective investor
should know about the Funds before investing and should be retained for future
reference. Additional information about the Funds or 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 March 31, 1997. 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, New York 10019, Attention:
BNY Hamilton Funds, Inc. 1-800-4BNY-FND (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 March 31, 1997
<PAGE>
SUMMARY OF CLASSES AND SERVICES AVAILABLE
FOR BNY HAMILTON MONEY MARKET FUNDS(1)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT FOR INVESTORS SEEKING(2) SERVICES PROVIDED
---------- ------------------------ -----------------
<S> <C> <C>
Hamilton Shares Daily dividends and * Wire order processing
(Institutional liquidity * Detailed statements sent to
investors only) you directly each month
* Confirmation statements
mailed to you after each
transaction
- --------------------------------------------------------------------------------
Daily dividends and * Wire order processing
Hamilton Premier Shares liquidity through a * Detailed statements sent to
(Institutional sweep facility you directly each month
investors only) * 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 * Wire order processing
(Individual and liquidity as an * Detailed statements sent to
institutional alternative investment you directly each month
investors -- BNY * Confirmation statements
Hamilton Money Fund mailed to you after each
only) 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
</TABLE>
- --------------------------------------------------------------------------------
(1) Hamilton Shares and Hamilton Premier Shares are available in both BNY
Hamilton Money Fund and BNY Hamilton Treasury Money Fund.
(2) Investors are cautioned that investments in the Funds offered hereby are
not FDIC insured.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Fee Table ................................................................ 4
Financial Highlights ..................................................... 6
Investment Objectives and Policies ....................................... 8
Description of Securities ................................................ 8
Additional Investment Information and
Risk Considerations ...................................................... 10
Investment Restrictions .................................................. 12
Management of the Funds .................................................. 13
Fund and Other Shareholder Services - General .......................... 14
Shareholder Services - Hamilton Shares -
BNY Hamilton Money Fund and
BNY Hamilton Treasury Money Fund .................. 17
Shareholder Services - Hamilton Premier Shares -
BNY Hamilton Money Fund and
BNY Hamilton Treasury Money Fund .................. 18
Shareholder Services - Hamilton Classic Shares -
BNY Hamilton Money Fund ........................... 18
Purchase of Shares ....................................................... 22
Redemption of Shares ..................................................... 24
Exchange of Shares ....................................................... 25
Dividends and Distributions .............................................. 26
Net Asset Value .......................................................... 26
Organization ............................................................. 27
Taxes .................................................................... 28
Additional Information ................................................... 29
</TABLE>
3
<PAGE>
================================================================================
FEE TABLE
BNY Hamilton Money Fund consists of three classes of shares: Hamilton
Shares, Hamilton Premier Shares, and Hamilton Classic Shares. BNY Hamilton
Treasury Money Fund consists of two classes of shares: Hamilton Shares and
Hamilton Premier Shares.
The following table illustrates that investors in the Funds will incur no
shareholder transaction expenses; their investments will be subject only to the
annual operating expenses set forth below.
<TABLE>
<CAPTION>
BNY Hamilton
Treasury Money
BNY Hamilton Money Fund Fund
----------------------- --------------
Hamilton Hamilton Hamilton
Hamilton Premier Classic Hamilton Premier
Shares Shares Shares Shares Shares
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES:
Sales Load Imposed on Purchases None None None None None
Sales Load Imposed on
Reinvested Dividends....... None None None None None
Deferred Sales Load.......... None None None None None
Redemption Fees.............. None None None None None
Exchange Fees................ None None None None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average
daily net assets)
Management Fees.............. .20% .20% .20% .20% .20%
12b-1 Fees................... .00% .00% .25% .00% .00%
Shareholder Servicing Fees... .00% .25% .25% .00% .25%
Other Expenses............... .07% .08%* .08%* .10% .10%
---- ----- ----- ---- ----
Total Fund Operating Expenses .27% .53% .78% .30% .55%
</TABLE>
4
<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>
BNY Hamilton
Treasury Money
BNY Hamilton Money Fund Fund
----------------------- --------------
Hamilton Hamilton Hamilton
Hamilton Premier Classic Hamilton Premier
Shares Shares Shares Shares Shares
<S> <C> <C> <C> <C> <C>
1 year..................... $ 3 $ 5 $ 8 $ 3 $ 6
3 years.................... $ 9 $17 $25 $10 $18
5 years.................... $15 $30 $43 N/A N/A
10 years.................... $34 $67 $97 N/A N/A
</TABLE>
This table is designed to assist investors in understanding the various direct
and indirect costs that an investor would bear. The Adviser (as defined in
"Management of the Funds") has agreed to limit expenses of BNY Hamilton Treasury
Money Fund to .30% and .55% of average daily net assets of its Hamilton Shares
and Premier Shares, respectively. Had expenses not been limited, Other Expenses
would have been .16% and .16% for the Hamilton Shares and Hamilton Premier
Shares of BNY Hamilton Treasury Money Fund, respectively, and Total Fund
Operating Expenses would have been .36% and .61% for the Hamilton Shares and
Hamilton Premier Shares of BNY Hamilton Treasury Money Fund, respectively.
Expenses are not limited by the Adviser with respect to BNY Hamilton Money Fund.
Management reserves the right to implement or discontinue expense limitations at
any time. See "Fund and Other Shareholder Services General - Fee Waivers".
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 the "Shareholder
Services" sections, "Purchase of Shares", and "Redemption of Shares".
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. Expenses paid as shown above
reflect estimates made by the Funds as of the date of this prospectus.
5
<PAGE>
================================================================================
FINANCIAL HIGHLIGHTS
The following selected data for an outstanding share of BNY Hamilton Money Fund,
except for the six months ended June 30, 1996, 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. No shares
for either class of BNY Hamilton Treasury Money Fund were outstanding for the
periods noted below.
<TABLE>
<CAPTION>
Hamilton Shares
---------------------------------------------------------------------
For The
Period
August 7,
Six Months 1992*
Ended Year Ended December 31, Through
June 30, -------------------------------- December 31,
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <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
-------- -------- -------- -------- --------
Income from investment operations
Net investment income 0.026 0.057 0.040 0.030 0.012
-------- -------- -------- -------- --------
Dividends
Dividends from net investment
income (0.026) (0.057) (0.040) (0.030) (0.012)
-------- -------- -------- -------- --------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
TOTAL RETURN: 2.60%** 5.84% 4.02% 3.03% 1.26%**
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period
(000's omitted) $723,761 $604,053 $235,220 $307,395 $135,852
Ratio to average net assets of:
Expenses, net of waiver from The
Bank of New York 0.27%*** 0.26% 0.30% 0.27% 0.20%***
Expenses, prior to waiver from
The Bank of New York 0.27%*** 0.26% 0.32% 0.32% 0.49%***
Net investment income, net of
waiver from The Bank of New York 5.17%*** 5.67% 3.92% 2.97% 3.11%***
</TABLE>
* Commencement of investment operations for the respective class of shares.
** Not annualized.
*** Annualized.
6
<PAGE>
<TABLE>
<CAPTION>
Hamilton Premier Shares Hamilton Classic Shares
----------------------- -----------------------
For The For The
Period Period
August 7, August 7,
Six Months 1992* Six Months 1992*
Ended Year Ended Through Ended Through
June 30, December 31, December 31, June 30, December 31,
1996 1995 1994 1996 1995
---- ---- ---- ---- ----
<S> <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
-------- -------- -------- ------- -------
Income from investment
operations
Net investment income 0.024 0.054 0.017 0.023 0.004
-------- -------- -------- ------- -------
Dividends
Dividends from net investment
income (0.024) (0.054) (0.017) (0.023) (0.004)
-------- -------- -------- ------- -------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======= =======
TOTAL RETURN: 2.46%** 5.54% 1.69%** 2.34%** 0.40%**
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period
(000's omitted) $374,751 $340,163 $107,799 $13,929 $ 3,098
Ratio to average net assets of:
Expenses 0.53%*** 0.54% 0.61% 0.78%*** 0.76%***
Net investment income 4.90%*** 5.40% 4.40% 4.65%*** 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 BNY Hamilton
Money 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.
7
<PAGE>
================================================================================
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of each of the Funds is described below, together with
the policies each Fund will employ in its efforts to achieve its objective.
There can be no assurance that either Fund will attain its investment objective.
Introduction. The Funds are open-end management investment companies (commonly
known as mutual funds) registered under the Investment Company Act of 1940 (the
"1940 Act"). Each Fund is considered a separate pool of assets with its own
distinctive investment objective and policies, as described below.
BNY Hamilton Money Fund (the "Money Fund"). The Money 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.
BNY Hamilton Treasury Money Fund (the "Treasury Money Fund"). The Treasury Money
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 solely in short-term obligations of the United States Treasury and
repurchase agreements fully collateralized by obligations of the United States
Treasury.
Each Fund will maintain a dollar-weighted average portfolio maturity of not more
than 90 days and will only purchase securities having a remaining maturity of
397 days or less.
Because each Fund only invests in high quality money market securities (limited,
in the case of the Treasury Money Fund, to U.S. Government Securities), see
"Additional Investment Information and Risk Considerations", the Funds may not
be able to achieve as high a level of current income under all market conditions
as would be possible if they 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.
================================================================================
DESCRIPTION OF SECURITIES
United States Government Obligations. The Treasury Money Fund will, and the
Money Fund may, invest in obligations issued or guaranteed by the United States
Government or, in the case of the Money Fund, by its agencies or
instrumentalities. 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. Obligations issued or guaranteed by federal agencies or
instrumentalities are not always backed by the "full faith and credit" of the
United States. The Money Fund may invest in obligations that are not backed by
the full faith and credit of the United States and, in the case of such
investments, the Money Fund must look principally to the agency issuing or
guaranteeing the obligations for legitimate repayment. Securities in which the
Money Fund may
8
<PAGE>
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. A 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 Money
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 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 Money 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 these commitments will be undertaken
or met in the future.
Commercial Paper. The Money Fund may invest in high quality commercial paper
issued by domestic issuers. The Money Fund may also 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. Each 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 each Fund's investment adviser and
fully collateralized by (i) United States Government (and, in the case of the
Money Fund, United States agency or instrumentality) obligations or (ii) in the
case of the Money Fund, other securities rated in the highest rating category by
one or more Nationally Recognized Statistical Rating Organizations ("NRSROs") at
the time of purchase.
9
<PAGE>
See "Quality Information" for a further description of certain NRSROs. Also see
"Additional Investment Information and Risk Considerations - Repurchase
Agreements" for a discussion of further risks associated with repurchase
agreements.
Corporate Bonds and Notes. The Money Fund may invest in high quality corporate
bonds and notes issued by United States corporations. The Money 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.
Foreign Government Obligations. The Money 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 Money Fund's fundamental concentration policy, it 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 Money 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 1940 Act) at the time of acquisition by the Money Fund.
The term "First Tier Securities" generally includes securities rated by the
requisite 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 issuers, or (b) one NRSRO, if only one NRSRO has
issued such a rating at the time that the Money Fund acquires the security.
Currently, there are six NRSROs: Standard & Poor's Ratings Group, Moody's
Investors Service, Inc., 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 and Moody's Investors Service are described in
the Appendix to the Statement of Additional Information. The Money 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.
================================================================================
ADDITIONAL INVESTMENT INFORMATION AND RISK CONSIDERATIONS
When-Issued and Delayed Delivery Securities. The Money 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 Money
Fund until settlement. The Money 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 Money Fund is relying on the
other party to consummate the transaction; if the other party fails to do so,
the Money Fund may be disadvantaged. It is the current policy of the Money Fund
not to enter into when-issued
10
<PAGE>
commitments exceeding in the aggregate 15% of the market value of its total
assets less liabilities other than the obligations created by these commitments.
Repurchase Agreements. Both Funds may enter into repurchase agreements with
brokers, dealers or banks that meet the credit guidelines established by the
Directors. In a repurchase agreement, a Fund buys a security from a seller that
has agreed to repurchase it at 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 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".
Reverse Repurchase Agreements. The Money Fund is permitted to enter into reverse
repurchase agreements. In a reverse repurchase agreement, the Money Fund sells a
security and agrees to repurchase it at a mutually agreed upon date and at a
price reflecting the interest rate effective for the term of the agreement. It
may also be viewed as the borrowing of money by the Money Fund. The Money Fund
will not invest the proceeds of a reverse repurchase agreement for a period
which exceeds the duration of the reverse repurchase agreement. The Money 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 Money 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
Money 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 Money 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, the Money 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 Money Fund's
obligation to repurchase the securities.
Foreign Investment Risk. The Money Fund may invest in certain foreign
securities, as described in "Description of Securities". Investments in
obligations of foreign issuers, foreign sovereign governments, and in foreign
branches of domestic banks involves 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 generally subject to uniform accounting,
auditing and financial standards and requirements
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comparable to those applicable to domestic institutions. There may be 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 Money 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 might 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 Money Fund's investment adviser takes these foreign
investment risks into consideration when making investment decisions.
Variable and Floating Rate Instruments. While the Funds will generally only
invest in securities that mature within 397 days of the date of purchase, the
Money Fund 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.
================================================================================
INVESTMENT RESTRICTIONS
As the Funds are diversified series of a registered investment company, 75% of
the value of a Fund's assets must be limited such that: (a) it does not consist
of securities of any one issuer with a value greater than 5% of the value of
the total assets of such Fund, except obligations of the United States
Government and its agencies and instrumentalities, and (b) the particular Fund
may not own more than 10% of the outstanding voting securities of any one
issuer. Both Funds are subject to additional requirements governing money market
funds that use the amortized cost method to value assets. These requirements
generally prohibit the Funds from investing more than 5% of their respective
total assets in the securities of any single issuer, except obligations of the
United States Government and its agencies and instrumentalities.
Each 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 relevant Fund's outstanding shares. Neither Fund may: (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 time of borrowing) and except in connection with
permitted reverse repurchase agreements; or mortgage, pledge, or hypothecate any
assets except in connection with any borrowing in amounts up to 20% of the value
of the Fund's net assets at the time of borrowing; (iv) purchase securities
while borrowing (including reverse repurchase
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agreements) exceed 5% of its total assets; or (v) invest more than 25% of its
assets in any one industry, except that each 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 Money
Fund may not: (i) purchase any short-term debt securities unless such securities
are rated as described in "Description of Securities -- 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. Restriction (iii) is also applicable to the
Treasury Money Fund.
For a more detailed discussion of the above investment restrictions, including a
description of applicability to each Fund, 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 upon matters of general policy and review the
actions of the investment adviser, administrator, distributor and other service
providers to each Fund. The Statement of Additional Information contains the
name and general business experience of each Director.
Investment Adviser. The Bank of New York serves as each 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 $51 billion in assets at September 30, 1996. It is the
leading retail bank in the greater New York suburban area, having 376 branches
at September 30, 1996. As of September 30, 1996, the Adviser provided
administrative or advisory services to approximately $54 billion in assets.
The Adviser will manage the investments of each Fund and will be 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 .10% of average daily
net assets of each Fund.
Administrator. BNY Hamilton Distributors, Inc. ("BNY Hamilton Distributors")
serves as administrator (the "Administrator") to, and will assist generally
in supervising the operations of, each 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.
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The Administration Agreement requires the Administrator to provide facilities,
equipment and personnel to carry out administrative services for each Fund,
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 (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 procedural
requirements (as the Funds are series of a Maryland corporation; see
"Organization"). The Administrator also assists in updating and printing the
Funds' 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
objectives and restrictions of each Fund and monitoring the custodian, fund
accounting, transfer agency, administration, distribution, advisory and legal
services that are provided to each 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 provides certain administrative functions for the
Administrator. The Bank of New York is not an affiliated person of BNY Hamilton
Distributors.
Each Fund pays administration fees that are accrued daily and payable monthly at
the rate of .10% of average daily net assets of such Fund.
Distributor. In addition to acting as Administrator, BNY Hamilton Distributors
will be the exclusive underwriter and distributor of shares of each Fund (the
"Distributor").
The Distributor will make a continuous offering of each 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 Funds (after such items have been prepared,
printed 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.
================================================================================
FUND AND OTHER SHAREHOLDER SERVICES - GENERAL
Custodian and Fund Accounting Agent. The Bank of New York, 90 Washington Street,
New York, New York 10286, serves as each Fund's custodian. Each Fund 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, receives and
disburses funds in connection with purchases and redemptions of the Fund's
shares.
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The Bank of New York also serves as the fund accounting agent for each Fund with
responsibility for calculating the net asset value per share for each class
thereof and for maintaining the books and records of each such class.
Transfer Agent. BISYS Fund Services, Inc. is the transfer agent for each class
of shares of each Fund. BISYS Fund Services, Inc. is a wholly-owned subsidiary
of The BISYS Group, Inc. ("BISYS"). BISYS owns BNY Hamilton Distributors, Inc.,
the Funds' Administrator and Distributor. The transfer agent maintains the
account records of shareholders of each Fund and administers the distribution
of any dividends or distributions declared by the Funds.
Distribution Plan. 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 pay the Distributor up to .25% per annum of the average daily
net assets of such class. 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 above-noted shares.
The Hamilton Classic Shares of the Money Fund also bears the costs associated
with implementing and operating its 12b-1 Plan (such as costs of printing and
mailing service agreements). The items for which payments may be made under the
12b-1 Plan may constitute expenses of distributing the above-noted shares as the
Securities and Exchange Commission construes such term under Rule 12b-1 of the
1940 Act.
If, in any month, expenses reimbursable under the 12b-1 Plan exceeds .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 any interest,
carrying or other finance charges on any distribution or other expense incurred
and not paid, nor will any unreimbursed expense be carried forward past the
fiscal year in which it is incurred.
Shareholder Servicing Plan. BNY Hamilton Funds, Inc. has adopted Shareholder
Servicing Plans (the "Plans") pursuant to which Hamilton Premier Shares of the
Money Fund and the Treasury Money Fund and Hamilton Classic Shares of the Money
Fund 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 of the Money Fund, 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
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Classic Shares will bear all fees payable to Shareholder Organizations 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 of either Fund.
The services to be provided by each Shareholder Organization 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 other
investment accounts in Hamilton Premier Shares or Hamilton Classic Shares
automatically, pursuant to specific preauthorized instructions; processing
dividend payments 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 Funds to Customers; and other similar services as agreed to with the
Funds.
The Funds will accrue, as expenses, fees payable made pursuant to each Plan
daily. The Shareholder Servicing Agreements require each Shareholder
Organization to waive a portion of any payment such organization is entitled to
receive pursuant to either Plan to the extent necessary to assure that the Plan
payments required to be charged to the Fund's 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 Funds 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 a Fund and any other compensation
payable by their Customers in connection with the investment of their assets in
a 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 a 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 of either Fund.
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
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<PAGE>
permitted by the Funds to remain shareholders of a Fund and alternative means
for continuing the servicing of such shareholders would be sought. In such
event, changes in the operation of a Fund might occur and a shareholder serviced
by such bank might no longer be able to avail itself of automatic investment or
other services then being provided by the 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 Funds obtain 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 Funds' service contractors bear all expenses in connection with
the performance of their services and each Fund (and each class thereof) 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 (or class
thereof), while retaining the ability to be reimbursed by such Fund for such
amount 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 requested to be paid
to, 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.
================================================================================
SHAREHOLDER SERVICES - HAMILTON SHARES - BNY HAMILTON MONEY FUND AND BNY
HAMILTON TREASURY MONEY FUND
Purchase orders for Hamilton Shares of the Funds must be transmitted to the
transfer agent by telephone c/o the Distributor (1-800-363-7925) or by terminal
access.
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 customer accounts. The Funds expect 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 for
purchases at the beginning of this section. While each 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 accordingly 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.
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================================================================================
SHAREHOLDER SERVICES - HAMILTON PREMIER SHARES - BNY HAMILTON MONEY FUND
AND BNY HAMILTON TREASURY MONEY FUND
Hamilton Premier Shares of either Fund may be purchased by clients of The Bank
of New York and other financial institutions (which may include banks) and their
affiliates that have entered into Shareholder Servicing Agreements with BNY
Hamilton Funds, Inc., on behalf of the Funds. 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 a Fund. The Funds expect 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 for the
Money Fund, and on the same day excess balances are swept for the Treasury Money
Fund. 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
each 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.
================================================================================
SHAREHOLDER SERVICES - HAMILTON CLASSIC SHARES - BNY HAMILTON MONEY FUND
Hamilton Classic Shares of the Money Fund may be purchased directly from the
Distributor, without any charge by the Money Fund. The minimum initial
investment is $2,000 and the minimum subsequent investment is $100.
An investor desiring to purchase 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, P. O. Box 163310, Columbus, Ohio 43216-3310. 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 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
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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 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 and drawn on
U.S. banks. 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 of the Money Fund
automatically entitles an investor to purchase 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 account designated in one of these documents and the investor's 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 transfer agent. The Money 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
of the Money Fund 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 also read the IRA Disclosure Statement and the Bank Custodial Agreement
for further details as to eligibility, service fees and tax implications.
Investors may also purchase an IRA made available by BNY Hamilton Funds, Inc.
for any of the Equity Income Funds, the Fixed Income Funds, or BNY Hamilton
Intermediate Tax-Exempt Fund. Investors are urged to read the prospectuses for
those funds before investing or sending money.
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Automatic Investment Program. The Money 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
withdrawals, shares are purchased by transferring funds from an investor's
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 requirement 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, P. O. Box 163310, Columbus, Ohio 43216-3310 and notification
will be effective seven days following receipt. The Money 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 of the Money Fund
(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 or her participation by notifying the appropriate
federal agency. Further, the Money 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 of the Money Fund 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 the BNY Hamilton Funds, P. O. Box 163310, Columbus, Ohio
43216-3310. Redemption orders are effected upon receipt by the transfer
agent at its office.
Redemption requests must be signed by each shareholder, 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
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record, and (iii) an 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 of
the Money Fund 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. Telephone privileges will be suspended for a period of
ten days following a change of address. 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 Money 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 of the Money Fund
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
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 Money 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, shares may also be redeemed by delivering the
redemption request in person to the transfer agent or by
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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 may request on the Account Application that the
Money Fund provide redemption checks ("Checks") drawn on the 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. 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 cannot 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 Money 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 Money Fund may be requested to redeem shares for which it has not yet
received good payment. In such circumstances, the Money Fund may delay the
forwarding of proceeds for up to 15 days or more until payment has been
collected for the purchase of such shares. This procedure does not apply to
situations where the Money 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 Money 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 Money 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, 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.
22
<PAGE>
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 Funds do 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 a Fund only on a day on which both
the New York Stock Exchange and the custodian are open for business (a "Business
Day"). As used herein, a "Business Day" is a day on which the New York Stock
Exchange and the custodian are open for trading and any other day (other than a
day on which no shares of a Fund are tendered for redemption and no order to
purchase shares is received) during which there is sufficient trading in the
Fund's portfolio securities that the Fund's net asset value per share might be
materially affected.
Purchase orders received by the transfer agent before 4:30 p.m. Eastern time on
a Business Day for either Fund will be executed as of the times noted for the
respective Fund, if payment is received by the times noted for the respective
Fund. Orders received after the times noted for the respective Fund, and orders
for which payment has not been received by the times noted for the respective
Fund, will not be accepted. A Fund may in its discretion reject any order for
shares. Payment for orders which are not received or paid for in a timely manner
or are not accepted by a 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. Purchases made by check are not permitted to be
redeemed until payment of the purchase has been collected, which may take up to
ten business days after purchase. The Funds reserve 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 any 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 any 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
23
<PAGE>
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 a 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 Funds will not issue certificates representing ownership of
shares. All shares purchased will be confirmed and credited to investors'
accounts on the books maintained by the Adviser or its agents for each class of
the relevant Fund.
================================================================================
REDEMPTION OF SHARES
Redemption orders are effected at the net asset value per share next determined
after receipt of the order by the transfer agent. Payment for redeemed shares
for which a redemption order is received by the transfer agent prior to 4:30
p.m. Eastern time for either Fund on a Business Day is normally made in federal
funds wired to the redeeming shareholder on the same Business Day. Payment for
redeemed shares for which a redemption order is received after the time stated
above on a Business Day is normally made in federal funds wired to the redeeming
shareholder on the next Business Day following redemption. In order to allow The
Bank of New York to most effectively manage each 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 Funds reserve 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 a 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 Funds, the Distributor, the transfer agent or the Funds' 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 Funds and their 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
Funds or their 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.
24
<PAGE>
With respect to Hamilton Shares and Hamilton Premier Shares, the Funds 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 Funds reserve 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
Funds 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.
================================================================================
EXCHANGE OF SHARES
An investor may exchange shares between the Funds described in this prospectus
and any other fund in the BNY Hamilton Family of Funds described in the relevant
prospectuses for the Equity Funds, the Fixed Income Funds or the Tax-Exempt
Funds.
Shareholders of either Fund must request and obtain a current copy of the
relevant prospectus before exchanging their investment in the Money Fund or the
Treasury Money 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 relevant 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, shares of the specific Fund being exchanged 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
Equity Funds, the Fixed Income Funds and the Tax-Exempt Funds). Shares will be
exchanged on the basis of relative net asset value per share.
An investment in the Money Fund or Treasury Money 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.
25
<PAGE>
The relevant prospectuses for the other portfolios 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 exchange shares by
telephone by calling the transfer agent at 1-800-952-6276. Telephone privileges
will be suspended for a period of ten days following a change of address. See
"Shareholder Services - Hamilton Classic Shares - TeleTrade Redemptions" for a
description of the Money Fund's policy regarding responsibility for telephone
instructions. 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 other prospectuses.
================================================================================
DIVIDENDS AND DISTRIBUTIONS
The net investment income for each class of each 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.
The net investment income of each class of each 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 each 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 a 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 each 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 for
those general services described under "Fund and Other Shareholder Services
General -Shareholder Servicing Plan". In addition, Hamilton Classic Shares of
the Money Fund bear 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).
If you elect to receive distributions in cash and checks (1) are returned and
marked as "undeliverable" or (2) remain uncashed for six months, your cash
election will be changed
26
<PAGE>
automatically and your future dividend and capital gains distributions will be
reinvested in the respective Fund at the per share net asset value determined as
of the date of payment of the distribution. In addition, any undeliverable
checks or checks that remain uncashed for six months will be canceled and will
be reinvested in the respective Fund at the per share net asset value determined
as of the date of cancellation.
The Funds do not expect to realize long-term capital gains or losses. However,
should a Fund do so, any net realized gains will be distributed at least
annually.
================================================================================
NET ASSET VALUE
Net asset value per share for each class of shares of each Fund will be
determined by subtracting from the value of the relevant Fund's total assets
attributable to that class the amount of such Fund's liabilities attributable to
shares of that class, dividing the remainder by the number of 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. Each Fund will
value its 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.
Each Fund computes the net asset value of each class of shares once daily on
Monday through Friday, except that the net asset value need not be computed on a
day in which no orders to purchase or redeem shares of a particular class have
been received or on the holidays listed under "Net Asset Value" in the Statement
of Additional Information. Each Fund will compute net asset value of its
respective classes at 4:30 P.M. Eastern time.
================================================================================
ORGANIZATION
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 shares of
common stock, par value $.001 per share, which have been allocated as follows:
<TABLE>
<CAPTION>
Number of
Name of Fund and Classes Thereof Shares Authorized
- ---------------------------------------------------------- ------------------
<S> <C>
BNY Hamilton Money Fund - Hamilton Shares 3,000,000,000
BNY Hamilton Money Fund - Hamilton Premier Shares 3,000,000,000
BNY Hamilton Money Fund - Hamilton Classic Shares 3,000,000,000
BNY Hamilton Treasury Money Fund - Hamilton Shares 2,000,000,000
BNY Hamilton Treasury Money Fund - Hamilton Premier Shares 2,000,000,000
</TABLE>
27
<PAGE>
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 the Fund's shares have no preemptive or
conversion rights. All shareholders will vote together as a single class on
matters affecting the relevant Fund generally, including matters relating to the
relevant 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 of
either Fund and Hamilton Classic Shares of the Money Fund will vote separately
on matters pertaining to their respective shareholder servicing arrangements and
holders of Hamilton Classic Shares of the Money Fund 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. 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 permitted by
the Articles of Incorporation or Bylaws of BNY Hamilton Funds, Inc. 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.
================================================================================
TAXES
The following discussion of federal tax consequences is based on the United
States 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 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
will be mailed to shareholders shortly after the end of the taxable year.
Each Fund intends to qualify as a regulated investment company under Subchapter
M of the Tax 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 it
28
<PAGE>
distributes annually 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 generally be taxable to
shareholders of a Fund as ordinary income, whether such distributions are taken
in cash or reinvested in additional shares. Each of the Funds expects that a
portion of such distributions will be eligible for the dividends-received
deduction.
Distributions of net long-term capital gains in excess of net short-term capital
losses, if any, will be taxable to shareholders of a 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 gains distributions 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, 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.
================================================================================
ADDITIONAL INFORMATION
The Funds 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
inquires should be addressed to the specific Fund as follows:
BNY Hamilton Funds
P. O. Box 163310
Columbus, OH 43216-3310
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. 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
in both Funds 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
29
<PAGE>
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 Financial Data, 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 each 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 1-800-4BNY-FND (1-800-426-9363).
30
<PAGE>
================================================================================
BNY HAMILTON EQUITY FUNDS
125 West 55th Street
New York, New York 10019
For information call 1-800-426-9363 (1-800-4BNY-FND)
================================================================================
BNY Hamilton Funds, Inc. is a family of no-load mutual funds for which there are
no sales charges or exchange or redemption fees. This Prospectus describes four
(4) equity funds (individually, a "Fund" and collectively, the "Funds") offered
by the BNY Hamilton Family of Funds.
================================================================================
<TABLE>
<CAPTION>
Fund Objective For Investors Seeking
- ---- --------- ---------------------
<S> <C> <C>
BNY Hamilton Equity To provide long-term Capital appreciation,
Income Fund capital appreciation higher than market
greater than the average income with
appreciation of, and relatively low volatility
yield greater than the
yield of, the Standard &
Poor's 500 Index; equal
emphasis is placed on
attaining income and
capital appreciation
- --------------------------------------------------------------------------------
BNY Hamilton Large Cap To provide long-term Long-term growth with
Growth Fund capital appreciation by current income being a
investing primarily in secondary objective
common stock and
securities convertible to
common stock; current
income is a secondary
consideration
- --------------------------------------------------------------------------------
BNY Hamilton Small Cap To provide long-term Long-term growth;
Growth Fund capital appreciation by moderate to high risk
investing primarily in
equity securities of
small to medium size
domestic and foreign
corporations
- --------------------------------------------------------------------------------
BNY Hamilton To provide long-term Higher than market
International Equity capital appreciation by average long-term growth;
Fund investing primarily in high risk
equity securities of
non-U.S. issuers
================================================================================
</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 Funds before investing and should be retained for future
reference. Additional information about the Funds or other members of 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 March 31, 1997. 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, New York 10019, Attention:
BNY Hamilton Funds, Inc. 1-800-4BNY-FND (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 March 31, 1997
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
Fee Table................................................................ 3
Financial Highlights..................................................... 5
Investment Objectives and Policies....................................... 6
Description of Securities................................................ 7
Additional Investment Information and
Risk Considerations...................................................... 8
Investment Restrictions.................................................. 16
Management of the Funds.................................................. 17
Summary of Shareholder Services.......................................... 19
Fund and Other Shareholder Services...................................... 19
Purchase of Shares....................................................... 21
Redemption of Shares..................................................... 26
Exchange of Shares....................................................... 27
Dividends and Distributions.............................................. 28
Net Asset Value.......................................................... 29
Organization............................................................. 29
Taxes.................................................................... 30
Additional Information................................................... 31
Appendix A............................................................... 32
Appendix B............................................................... 33
</TABLE>
2
<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
EQUITY LARGE CAP
INCOME FUND GROWTH FUND
----------- -----------
INSTITUTIONAL INVESTOR INSTITUTIONAL INVESTOR
SHARES SHARES SHARES SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Sales Load Imposed On Purchases ............ None None None None
Sales Load Imposed on Reinvested ........... None None None None
Dividends
Deferred Sales Load ........................ None None None None
Redemption Fees ............................ None None None None
Exchange Fees .............................. None None None None
ANNUAL FUND OPERATING EXPENSES AFTER
EXPENSE WAIVERS/REIMBURSEMENTS:
(as a percentage of average daily net
assets)
Management Fees ............................ .80% .80% .80% .80%
12b-1 Fees after expense
waivers/reimbursements ................... .00% .25% .00% .25%
Other Expenses ............................. .15% .15% .02% .02%
---- ---- ---- ----
Total Fund Operating Expenses After
Expense Waivers/Reimbursements ........... .95% 1.20% .82% 1.07%
---- ---- ---- ----
<CAPTION>
BNY HAMILTON BNY HAMILTON
SMALL CAP INTERNATIONAL
GROWTH FUND EQUITY FUND
----------- -----------
INSTITUTIONAL INVESTOR INSTITUTIONAL INVESTOR
SHARES SHARES SHARES SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Sales Load Imposed On Purchases ............ None None None None
Sales Load Imposed on Reinvested Dividends None None None None
Deferred Sales Load ........................ None None None None
Redemption Fees ............................ None None None None
Exchange Fees .............................. None None None None
ANNUAL FUND OPERATING EXPENSES AFTER
EXPENSE WAIVERS/REIMBURSEMENTS:
(as a percentage of average daily net
assets)
Management Fees ............................ .95% .95% 1.05% 1.05%
12b-1 Fees after expense
waivers/reimbursements ................... .00% .25% .00% .25%
Other Expenses ............................. .02% .02% .22% .22%
---- ---- ---- ----
Total Fund Operating Expenses After
Expense Waivers/Reimbursements ........... .97% 1.22% 1.27% 1.52%
---- ---- ---- ----
</TABLE>
3
<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
- Institutional Shares............. $10 $30 $53 $117
- Investor Shares.................. $12 $38 $66 $146
BNY Hamilton Large Cap Growth Fund
- Institutional Shares............. $ 8 $26 N/A N/A
- Investor Shares.................. $11 $34 N/A N/A
BNY Hamilton Small Cap Growth Fund
- Institutional Shares............. $10 $31 N/A N/A
- Investor Shares.................. $13 $39 N/A N/A
BNY Hamilton International Equity Fund
- Institutional Shares............. $13 $41 N/A N/A
- Investor Shares.................. $16 $48 N/A N/A
</TABLE>
This table is designed to assist investors in understanding the various direct
and indirect costs that an investor would bear. The Adviser (as defined in
"Management of the Funds") has agreed to limit expenses of BNY Hamilton Large
Cap Growth Fund to .82% and 1.07% of its average daily net assets of its
Institutional Shares and Investor Shares, respectively. Were expenses not so
limited, Other Expenses would be .12% for both classes of shares, and Total
Fund Operating Expenses would be .92% and 1.17% for the Institutional Shares
and Investor Shares, respectively.
The Adviser has agreed to limit expenses of BNY Hamilton Small Cap Growth Fund
to .97% and 1.22% if its average daily net assets of its Institutional Shares
and Investor Shares, respectively. Were expenses not so limited, Other Expenses
would be .20% for both classes of shares, and Total Fund Operating Expenses
would be 1.15% and 1.40% for the Institutional Shares and Investor Shares,
respectively.
The Adviser has agreed to limit expenses of BNY Hamilton International Equity
Fund to 1.27% and 1.52% of its average daily net assets of its Institutional
Shares and Investor Shares, respectively. Were expenses not so limited, Other
Expenses would be .42% for both classes of shares, and Total Fund Operating
Expenses would be 1.47% and 1.72% for the Institutional Shares and Investor
Shares, respectively.
Expenses are not limited by the Adviser for BNY Hamilton Equity Income Fund.
Management reserves the right to implement or discontinue expense limitations at
any time. See "Fund and Other Shareholder Services - Fee Waivers".
4
<PAGE>
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 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. Expenses paid as shown above
reflect estimates made by the Funds as of the date of this prospectus.
================================================================================
FINANCIAL HIGHLIGHTS
The following selected data for an outstanding Investor share of BNY Hamilton
Equity Income Fund, except for the six months ended June 30, 1996, 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. No shares of the other Funds
were outstanding during the periods noted below. In addition, no Institutional
Shares of BNY Hamilton Equity Income Fund were outstanding during the periods
noted below.
<TABLE>
<CAPTION>
BNY HAMILTON EQUITY INCOME FUND
---------------------------------------------------------------
FOR THE
PERIOD
AUGUST 7,
1992*
SIX MONTHS THROUGH
ENDED YEAR ENDED DECEMBER 31, DECEMBER 31,
JUNE 30, ----------------------------------
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 0.15 0.32 0.31 0.29 0.11
Net realized and unrealized gain
(loss) on investments 1.02 2.41 (0.60) 0.94 0.47
-------- -------- -------- -------- -------
Total from investment 1.17 2.73 (0.29) 1.23 0.58
-------- -------- -------- -------- -------
operations
Dividends and distributions
Dividends from net investment
income (0.15) (0.32) (0.31) (0.28) (0.12)
-------- -------- -------- -------- -------
Distributions from capital gains -- (0.12) -- (0.08) (0.03)
-------- -------- -------- -------- -------
Total dividends and (0.15) (0.44) (0.31) (0.36) (0.15)
-------- -------- -------- -------- -------
distributions
Net asset value at end of period $ 14.01 $ 12.99 $ 10.70 $ 11.30 $ 10.43
======== ======== ======== ======== =======
TOTAL RETURN: 9.05%** 25.78% (2.58)% 11.94% 5.86%**
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period
(000's omitted) $205,204 $169,841 $135,131 $112,849 $20,440
</TABLE>
5
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Ratio to average net assets of:
Expenses, net of waiver from The
Bank of New York 0.95%*** 1.00% 1.04% 1.09% 1.10%***
Expenses, prior to waiver from
The Bank of New York 0.95%*** 1.00% 1.04% 1.12% 2.12%***
Net investment income, net of
waiver from the Bank of New 2.27%*** 2.66% 2.89% 2.82% 3.33%***
York
Portfolio turnover rate 20% 58% 51% 50% 25%
Average commission rate paid per
share traded $ .0597 $ .0557
</TABLE>
* Commencement of investment operations.
** Not annualized.
*** Annualized.
================================================================================
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of each of the Funds is described below, together with
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.
Introduction. The Funds are open-end management investment companies (commonly
known as mutual funds) registered under the Investment Company Act of 1940 (the
"1940 Act"). Each of the Funds will be considered a separate pool of assets with
its own distinctive investment objectives and policies, as described below.
BNY Hamilton Equity Income Fund (the "Equity Income Fund"). The Equity Income
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 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-related securities (such as preferred stock or corporate debt that is
convertible to common stocks) that pay dividends or interest.
6
<PAGE>
BNY Hamilton Large Cap Growth Fund (the "Large Cap Growth Fund"). The Large Cap
Growth Fund's investment objective is to provide long-term capital appreciation
by investing primarily in common stocks and securities convertible into common
stocks of domestic and foreign corporations. While income will be a secondary
objective, during times of adverse market and/or economic conditions the Large
Cap Growth Fund may invest in securities with a high enough yield to offer
possible resistance to downward market and/or economic pressure. In selecting
securities for the Large Cap Growth Fund, a focus will be given to securities of
corporations perceived to have a relatively high potential for growth of
earnings and/or revenues. In normal circumstances the Large Cap Growth Fund will
invest at least 65% of the value of its total assets in such equity securities.
BNY Hamilton Small Cap Growth Fund (the "Small Cap Growth Fund"). The Small Cap
Growth Fund's investment objective is to achieve long-term capital appreciation
by investing primarily in equity securities of small to medium size domestic and
foreign corporations. In selecting securities for the Small Cap Growth Fund a
focus will be given to securities of corporations perceived as having potential
for rapid growth in earnings or revenues due to expanded operations, new
products, new technologies, new channels of distribution, revitalized
management, general industry condition or other similar advantageous
circumstances. Current income will not be a consideration. The Fund currently
considers small to medium size corporations to be those with market
capitalization of $1.5 billion or less. In normal circumstances the Small Cap
Growth Fund will invest at least 65% of the value of its total assets in such
equity securities.
BNY Hamilton International Equity Fund (the "International Equity Fund"). The
International Equity Fund's investment objective is to achieve long-term capital
appreciation through investing primarily in equity securities of large
capitalized issuers throughout the world, not including the United States. In
normal circumstances, the International Equity Fund may invest in securities
principally traded in countries outside the United States. Additionally, the
International Equity Fund may at any time include American Depository Receipts,
which are United States securities representing foreign securities that are
deposited with foreign custodians or foreign branches of U.S. commercial banks;
they trade in U.S. dollars on listed exchanges and over-the-counter markets. At
any given time the International Equity Fund may invest up to 50% of its assets
in securities principally traded in any one country, although it will
ordinarily invest at least 65% of its net assets in at least three (3)
countries.
================================================================================
DESCRIPTION OF SECURITIES
Equity Securities. Each of the Funds may invest in common stocks, which includes
the common stock of any class or series of domestic or foreign corporations
(foreign corporations only in the case of the International Equity Fund) 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.
7
<PAGE>
Convertible Securities. The Funds 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
holders' claim on assets and earnings are generally subordinate to the claims of
other creditors, and 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 Funds do not have
any rating criteria applicable to their investments in any securities,
convertible or otherwise.
Foreign Equity Investments. The International Equity Fund will, and the Equity
Income Fund, the Large Cap Growth Fund and the Small Cap Growth Fund may, invest
in the securities of foreign issuers. The Equity Income Fund, the Large Cap
Growth Fund and the Small Cap Growth Fund do not expect more than 15% of their
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 Funds expect to only 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 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 Funds may enter into forward commitments for the purchase
or sale of foreign currencies to close out or offset existing foreign securities
positions or to hedge the underlying currency exposure related to foreign
investments, but the Funds will not enter into such commitments for speculative
purposes. In addition, to the extent that a 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 --
Foreign Investment Risk".
================================================================================
ADDITIONAL INVESTMENT INFORMATION AND RISK CONSIDERATIONS
8
<PAGE>
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".
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 other than 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 at 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 a Fund to the seller. A Fund
always receives, as collateral, securities with a market value at least equal to
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 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 at 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
9
<PAGE>
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 cash, U.S. Government
securities or other liquid high-grade debt securities in an amount at least
equal to its purchase obligations under its 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 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 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.
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. 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 Funds' Adviser will
monitor the liquidity of such restricted securities under the supervision of,
and pursuant to guidelines established by, the Directors. In establishing these
guidelines, the Directors will 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".
10
<PAGE>
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 Funds 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 or through private transactions directly with a
broker-dealer. A 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. 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.
Stock Index Futures. A 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 a 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.
A 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 a Fund,
11
<PAGE>
the purchasing Fund will deposit an amount of cash, cash equivalents or U.S.
Government securities equal to the market value of the futures contracts in a
segregated account with the Fund's custodian to collateralize the position and
thereby insure that the use of such futures is unleveraged.
A 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, a Fund may hedge a portion of its portfolio by
purchasing stock index futures, or options on these futures. This affords a
hedge against a 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.
None of the Funds will sell stock index futures unless the amount resulting from
the multiplication of the then current level of the indexes upon which a
particular Fund's 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, a 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 a 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.
A Fund's successful use of stock index futures contracts 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 a Fund's portfolio diverges from the composition of the relevant index. In
addition, if a 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 be a loss on the futures contracts. In addition, the ability of a Fund
to close out a futures position or an option on futures depends on a liquid
secondary market. There is no assurance that liquid secondary markets will exist
for any particular futures contract or option on a futures contract at any
particular time. The risk of loss to a Fund is theoretically unlimited when a
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. A 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. A Fund may purchase put options only on equity securities
held in its portfolio and write call options and put options on stocks only if
they are covered, as described below, and such call options must remain covered
so long as the relevant Fund is obligated as a writer. Option transactions can
be executed either on a national exchange or through a private
12
<PAGE>
transaction with a broker-dealer (an "over-the-counter" transaction). The Funds
do 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 a Fund are
considered to be illiquid securities as they may be difficult to convert into
cash during volatile market conditions.
A Fund may, from time to time, write call options on its portfolio securities. A
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, a
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 a 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 initial amount paid to a
Fund by the purchaser of the option is the "premium". A 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 a Fund is able to
effect a "closing purchase transaction" through the purchase of an equivalent
option. There can be no assurance that a closing purchase transaction can be
effected at any particular time or at all. A 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, a Fund is required to comply with the rules of
The Options Clearing Corporation and the various exchanges with respect to
collateral requirements. A 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 a Fund for writing the option.
The Funds may also purchase put options so long as they are listed on an
exchange. If a Fund purchases a put option, it has the option to sell the
subject 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 a Fund is holding
a stock that the investment adviser 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, a 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 a Fund exercises the put, less
transaction costs, will be the amount by which a 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 a
Fund paid for the put,
13
<PAGE>
plus transaction costs. If the price of the underlying security increases, the
profit a 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.
Each Fund may write put options on a fully covered basis on a stock the fund
intends to purchase. If a Fund writes a put option, the purchaser of the option
has the right to sell (and the Fund has the obligation to buy) the underlying
security at the exercise price throughout the term of the option. The initial
amount paid to a Fund by the purchaser of the option is the "premium". A Fund's
obligation to purchase the underlying security against payment of the exercise
price will terminate either upon expiration of the option or earlier if a Fund
is able to effect a "closing purchase transaction" through the purchase of an
equivalent option. There can be no assurance that a closing purchase transaction
can be effected at any particular time or at all. In all cases where a put
option is written, a Fund will segregate or put into escrow with its custodian,
or pledge to a broker as collateral any combination of "qualified securities"
(which consists of cash, U.S. 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 exercise price of the put option multiplied by the number
of options contracts written times the option multiplier.
Each Fund may purchase a call option in a stock it intends to purchase at some
point in the future. The purchase of a call option is viewed as an alternative
to the purchase of the actual stock. The number of option contracts purchased
multiplied by the exercise price times the option multiplier will not be any
greater than the number of shares that would have been purchased had the
underlying security been purchased. If a Fund purchases a call option, it has
the right but not the obligation to purchase (and the seller has the obligation
to sell) the underlying security at the exercise price throughout the term of
the option. The initial amount paid by a Fund to the seller of the call option
is known as the "premium". If during the period of the option the market price
of the underlying security remains at or below the exercise price, the call
option will expire worthless, representing a loss of the price a Fund paid for
the call, plus transaction costs. If the underlying security decreases and is
below the exercise price, the Fund will be able to purchase the security at the
lower market price. The profit or loss a Fund may realize on the eventual sale
of a security purchased by means of the exercise of a call option will be
reduced by the premium paid for the call option.
Stock Index Options. Except as described below, a 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
a Fund writes a call option on a broadly-based stock market index, it will
segregate or put into escrow with its custodian, or pledge to a broker as
collateral for the option, any combination of "qualified securities" (which
consists of cash, U.S. 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 a 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
14
<PAGE>
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, a 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 a 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 a 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 a 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 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. Purchase and sales 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 or if the transaction was an
over-the-counter transaction, the original broker-dealer. Although the Funds
will generally buy and sell 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 a Fund as a
covered call or put 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 or purchases the underlying
security upon exercise.
Risks of Options on Indexes. A Fund's purchase and sale of options on indexes
will be subject to risks described above under "Risks of Transactions in Stock
Options". In addition, the distinctive characteristic of options on indexes
create certain risks that are not present with stock options.
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 a Fund will realize a
gain or loss on the purchase or sale of an option on an index depends 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 a Fund of options on indexes would be
subject to the investment adviser's ability to correctly predict 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.
15
<PAGE>
Index prices may be distorted if trading of certain stocks included in the index
is interrupted. Trading in the index options also may be interrupted in certain
circumstances, such as if trading were halted in a substantial number of stocks
included in the index. If this occurred, a 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 Fund. It is the Funds' policy to
purchase or write options only on indexes 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 indexes.
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 on 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 Funds 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.
For further information about the Funds' hedging activities, see "Investment
Objectives and Policies - Hedging Activities" in the Statement of Additional
Information.
Foreign Investment Risk. The International Equity Fund will, and the Equity
Income Fund, the Large Cap Growth Fund, and the Small Cap Growth Fund may invest
in certain foreign securities. Investment in obligations of foreign issuers and
in foreign branches of domestic banks involves 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 a
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.
16
<PAGE>
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"). Since the Funds
have no pre-established minimum quality standards, a portion of the securities,
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 Investor Services or BB or lower by Standard & Poor's
Corporation) and unrated securities, which a 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 Funds 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.
================================================================================
INVESTMENT RESTRICTIONS
As a diversified series of a registered investment company, 75% of the value of
a Fund's assets must be limited such that (a) it does not consist of securities
of any one issuer with a value greater than 5% of the value of the total assets
of such Fund, except obligations of the United States Government and its
agencies and instrumentalities, and (b) it does not represent more than 10% of
the outstanding voting securities of any one issuer.
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.
Each of the Funds 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 specific 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
specific 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.
For a more detailed discussion of the above investment restrictions, including a
description of applicability to each Fund, see "Investment Restrictions and
Additional Information" in the Statement of Additional Information.
================================================================================
MANAGEMENT OF THE FUNDS
17
<PAGE>
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, NY 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 $51 billion in assets at September 30, 1996. It is
the leading retail bank in the greater New York suburban area, having 376
branches at September 30, 1996. As of September 30, 1996, the Adviser provided
administrative or advisory services to approximately $54 billion in assets.
Robert G. Knott, Jr., Vice President, has been responsible for the day-to-day
portfolio management of the Equity Income Fund since its inception. Mr. Knott
has been employed by the Adviser for the past 29 years. Currently, he is a Group
Head of the Adviser's Personal Asset Management Division.
Charles C. Goodfellow, Vice President, is responsible for the day-to-day
portfolio management of the Large Cap Growth Fund. Mr. Goodfellow has been
managing common trust funds offered to the Adviser's institutional clients for
the past eight years.
John C. Lui, Vice President, is responsible for the day-to-day portfolio
management of the Small Cap Growth Fund. Mr. Lui has been employed by the
Adviser for the past two years as an institutional equity manager, and is
responsible for managing various investments in equity securities on behalf
of the Adviser's institutional clients. From 1993 to 1995, Mr. Lui was
employed by Barclays Global Asset Management, where he managed global equity
and bond portfolios. For 13 years prior to 1993, Mr. Lui was employed by the
Adviser as a Group Head of its International Personal Asset Management
division. He was responsible for managing the assets of foreign high net worth
individuals, institutional investors, and Far Eastern clients in the United
States securities markets.
The International Equity Fund will be sub-advised by Indosuez Asset Management
(the "Sub-adviser"), a subsidiary of Banque Indosuez.
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%, .60%, .75% and
.85% of average daily net assets for Equity Income Fund, Large Cap Growth Fund,
Small Cap Growth Fund and International Equity Fund, respectively. The Adviser
and Sub-adviser will divide evenly the Advisor's fee for the International
Equity Fund, with each of the Adviser and Sub-adviser receiving .425% of the
average daily net assets of the International Equity Fund.
Administrator. BNY Hamilton Distributors, Inc. ("BNY Hamilton Distributors")
serves as the Funds' administrator (the "Administrator") and assists generally
in supervising the operations of each 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.
18
<PAGE>
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 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 drafting and printing
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 objective 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 for each Fund.
Distributor. In addition to acting as the Administrator, BNY Hamilton
Distributors will be the exclusive underwriter and distributor of shares of each
Fund (the "Distributor"); its offices are located at 125 West 55 Street, New
York, New York 10019.
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., whose other subsidiaries provide distribution and administration
services for other mutual fund groups.
================================================================================
SUMMARY OF SHAREHOLDER SERVICES
A telephone representative will be happy to answer any questions you may have
concerning any of the Funds.
19
<PAGE>
<TABLE>
<CAPTION>
Telephone For Information Regarding
- --------- -------------------------
<S> <C>
1-800-4BNY-FND o Any of the Funds' investment objectives
(1-800-426-9363) and policies
8 a.m. to 9 p.m., Eastern time o Opening an account
1-800-952-6276 o Current account balances
8 a.m. to 9 p.m., Eastern time o Shareholder address/telephone changes
</TABLE>
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 to keep shareholders current regarding the status of their
accounts. To assist each Fund will provide the following statements and reports
to its shareholders:
<TABLE>
<S> <C>
Confirmation Statements After every transaction that affects a
shareholder's account balance or account
registration.
Account Statements Monthly, showing any activity during the
month, any income credited during the
month and the current value of each
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.
</TABLE>
================================================================================
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.
20
<PAGE>
The Bank of New York also serves as the fund accounting agent for each Fund with
responsibility for calculating the net asset value of, and maintaining the books
and records of, each class of shares for both Funds.
Transfer Agent. BISYS Fund Services, Inc. ("BISYS"), P.O. Box 163310,
Columbus, Ohio, 43216-3310, 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 the Investor Shares of each Fund
(collectively, the "12b-1 Plans").
Under the 12b-1 Plans, the subject Fund may reimburse the Distributor for
expenses incurred 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 each Fund) and in implementing and operating the 12b-1 Plans. To date, the
Directors have not adopted 12b-1 Plans with respect to the Institutional Class
of each Fund.
Under the 12b-1 Plans, reimbursements for distribution expenses may not exceed
.25% (annualized) of average daily net assets of the relevant Fund class,
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 BNY
Hamilton Funds, Inc., it is presently contemplated that the Distributor will not
be reimbursed for any of its overhead expenses by a Fund class under its
respective 12b-1 Plan.
The 12b-1 Plans provide 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 class
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' first 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
21
<PAGE>
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 class
of shares for each Fund.
================================================================================
PURCHASE OF SHARES
To purchase Institutional Shares in any Fund, contact your Bank of New York
representative for details.
The following table summarizes the types of investment accounts available to
purchasers of Investor Shares of each of the Funds along with their respective
minimum investment requirements. Unless otherwise noted, all types of investment
accounts shown in the table are applicable to Investor Shares of each Fund.
<TABLE>
<CAPTION>
MINIMUM INVESTMENT REQUIRED
--------------------------------
Additional
Type of Investment Initial Investment Investment
- ------------------ ------------------ ----------
<S> <C> <C>
Regular Account $2,000 $100
- --------------------------------------------------------------------------------
Regular Account with Automatic Investment $ 500 $100
Program
- --------------------------------------------------------------------------------
Regular Accounts for employees and $ 500 $ 40
retirees of The Bank of New York and its
affiliates, and employees of each of the
Administrator, the Distributor and their
affiliates (1)
- --------------------------------------------------------------------------------
Individual Retirement Account $ 250 $ 40
("IRA")
- --------------------------------------------------------------------------------
</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.
Institutional and Investor Shares of any of the Funds may be purchased without
sales commission at the net asset value per share next determined after the
purchase order and federal funds are received by the specific Fund. See "Net
Asset Value".
The Distributor, from time to time, at its expense, will also provide additional
compensation to dealers in connection with sales of Investor 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 quality
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.
22
<PAGE>
Initial Investments. Orders for purchase of a Fund's Investor Shares received by
4:00 P.M. (Eastern time) on any Business Day and transmitted to the Fund's
transfer agent by 4:00 P.M. (Eastern time) will be based on the next determined
net asset value. (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 Investor 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.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
METHOD OF
PURCHASE FOR INITIAL INVESTMENTS
- --------------------------------------------------------------------------------
<S> <C>
By o Complete and sign a New Account Application and mail
Check it, together with a check payable to the specific Fund,
to: BNY Hamilton Funds, P. O. Box 163310, Columbus,
Ohio 43216-3310.
o Purchases made by check are not permitted to be
redeemed until payment of the purchase has been
collected, which may take up to ten (10) Business Days
after purchase.
o Purchases by check must be payable in United States
dollars and drawn on United States banks. The Funds
will not accept third-party checks.
- --------------------------------------------------------------------------------
</TABLE>
23
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
By o An investor desiring to purchase shares by wire should
Federal call the Transfer Agent at 1-800-952-6276 and place a
Funds purchase order.
Wire
o 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 appropriate address shown in "By Check" above.
o 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 o Follow the same procedure outlined under "By Federal
Bank Wire Funds Wire" above. Your bank may charge a service fee
for wiring funds.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
By o In certain circumstances, employees and retirees of The
Direct Bank of New York and its affiliates may purchase Fund
Deposit shares by having payments automatically deposited into
their specific Fund account.
o Call 1-800-4BNY-FND (1-800-426-9363) for details.
- --------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
METHOD OF
PURCHASE FOR ADDITIONAL INVESTMENTS
- --------------------------------------------------------------------------------
<S> <C>
- --------------------------------------------------------------------------------
By o Make check payable to the specific Fund and send to:
Check BNY Hamilton Funds, Inc., P.O. Box 806, Newark, New
Jersey 07101-0806. If possible, please include the
tear-off payment stub that accompanies a Fund's
confirmation statement.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
By o Have your bank wire federal funds according to the
Federal instructions on the previous page, except the wire
Funds should state that it is an additional investment.
Wire
o Please include your account number.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
By
Automatic o You may arrange, through the Automatic Investment
Investment Program, for systematic purchases of Fund shares
Program (minimum of $100) by direct debit from your account at
any domestic financial institution that is an Automated
Clearing House member.
o To elect this feature, please complete Section 7 on the
new account application.
o 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 o The procedure is identical to "By Federal Funds Wire"
Bank Wire above.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
By o Call 1-800-4BNY-FND (1-800-426-9363) for details.
Direct
Deposit o Additional purchases will be processed in accordance
with your instructions.
- --------------------------------------------------------------------------------
</TABLE>
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 directly debiting 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 Investor 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.
25
<PAGE>
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. 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 the Automatic Investment Program or change the amount of purchase
at any time by mailing written notification to:
BNY Hamilton Funds
P. O. Box 163310
Columbus, OH 43216-3310
Notification will be effective seven 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.
Other Purchase Information. Investors may purchase Investor Shares of any Equity
Fund, Fixed Income Fund, or BNY Hamilton Intermediate Tax-Exempt Fund or
Hamilton Classic Shares of BNY Hamilton Money Fund offered by BNY Hamilton
Funds, Inc., or a combination of those 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. Investors are also advised to consult with their own legal counsel or
tax adviser regarding these investments.
In the interest of economy and convenience and because of its operating
procedures, a Fund will not issue certificates representing ownership of either
class 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 Fund offered by BNY Hamilton Funds, Inc.
26
<PAGE>
Investors may also invest in any Fund offered by BNY Hamilton Funds, Inc. by
purchasing shares through registered broker-dealers, which are required to
effect the transaction at the net asset value 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.
================================================================================
REDEMPTION OF SHARES
To redeem Institutional Shares in any Fund, contact your Bank of New York
representative for details.
Investors may withdraw all or any portion of the Investor 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 Investor Shares at the next determined
net asset value per share. A Fund's net asset value per Investor Share will be
determined on each Business Day at 4:00 p.m. (Eastern time). 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.
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
By o Send your request to: BNY Hamilton Funds, P. O. Box
Mail 163310, Columbus, Ohio 43216-3310. (Be sure to include
the name of the specific Fund and your account number.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
By o This option must have previously been elected. Call the
Telephone (1) 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 o Your account must have a value of $10,000 or more.
Withdrawal
o 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.
o Further information about establishing a Systematic
Withdrawal Plan may be obtained by calling
1-800-426-9363.
- --------------------------------------------------------------------------------
</TABLE>
27
<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.
Each Fund will redeem its Investor Shares at the net asset value next determined
after the request is received in good order. "Good order" means that the request
to redeem Investor 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 Investor 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
Investor Shares redeemed under these procedures within one Business Day of
receipt of the request, but in no event will payment be made more than seven
days after receipt of a redemption request in good order. Notwithstanding the
foregoing, a Fund will not make payments to investors redeeming Investor 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. At
various times, a Fund may be requested to redeem Investor Shares for which it
has not yet received good payment. In such circumstances, the Fund may delay
the forwarding of proceeds for up to 15 days or more until payment has been
collected for the purchase of such Investor Shares. 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, P. O. Box 163310,
Columbus, Ohio 43216-3310. 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.
28
<PAGE>
================================================================================
EXCHANGE OF SHARES
Shareholders purchasing shares directly from the Funds may exchange those shares
at the current net asset per share at the current net asset per share for other
BNY Hamilton Funds which have a similar class of shares, in accordance with the
terms of the current prospectus of the Fund being acquired, 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 all shares available to retail investors for each Fund in BNY
Hamilton Funds, Inc.). Shares will be exchanged on the basis of relative net
asset value per share.
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 prospectuses
for the other Funds in BNY Hamilton Funds, Inc.
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
The Equity Income Fund and Large Cap Growth Fund will declare dividends from net
investment income for each class of their respective shares monthly and will be
paid monthly within five (5) Business Days after the end of the month. The Small
Cap Growth Fund and International Equity Fund will declare dividends from net
investment income, if any, and pay dividends for each class of their respective
shares once annually. Dividends and distributions will be payable to
shareholders of record at the time of declaration. The Directors may revise a
Fund's dividend policy without action by the shareholders.
Each of the Funds will distribute substantially all of any taxable net long-term
gains realized on investments to shareholders at least annually in accordance
with requirements under the Tax Code, as amended, and other applicable statutory
and regulatory requirements.
29
<PAGE>
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.
If you elect to receive distributions in cash and the distribution checks (1)
are returned and marked as "undeliverable" or (2) remain uncashed for six
months, your cash election will be changed automatically and your future
dividend and capital gains distributions will be reinvested in the respective
Fund at the per share net asset value determined as of the date of payment of
the distribution. In addition, any undeliverable checks or checks that remain
uncashed for six months will be canceled and will be reinvested in the
respective Fund at the per share net asset value determined as of the date of
cancellation.
================================================================================
NET ASSET VALUE
Net asset value per share for each class of shares in each Fund will be
determined by subtracting from the value of the specific classes' 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 class of shares in 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 of each class of its shares at
4:00 P.M., Eastern time.
================================================================================
ORGANIZATION
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 shares of
common stock, par value $.001 per share, which have been allocated as follows:
<TABLE>
<CAPTION>
Number of Shares of
Fund Common Stock Authorized
- ---------------------------------------------------- -----------------------
30
<PAGE>
<S> <C>
BNY Hamilton Equity Income Fund
Institutional Shares........................... 200,000,000
Investor Shares................................ 200,000,000
BNY Hamilton Large Cap Growth Fund
Institutional Shares........................... 200,000,000
Investor Shares................................ 200,000,000
BNY Hamilton Small Cap Growth Fund
Institutional Shares........................... 200,000,000
Investor Shares................................ 200,000,000
BNY Hamilton International Equity Fund
Institutional Shares........................... 200,000,000
Investor Shares................................ 200,000,000
</TABLE>
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 Funds' shares have any preemptive or
conversion rights. All shareholders will vote together as a single class on
matters affecting the relevant Fund generally, including matters relating to the
relevant 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,
holders of Investor 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 Funds do 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.
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.
31
<PAGE>
================================================================================
TAXES
The following discussion of federal tax consequences is based on United States
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 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 will be mailed
to shareholders shortly after the end of the taxable year.
Each Fund intends to qualify as a "regulated investment company" under
Subchapter M of the Tax 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 it distributes annually 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 generally be taxable to
shareholders of a Fund as ordinary income, whether such distributions are taken
in cash or reinvested in additional shares. Each of the Funds expects that a
portion of such distributions will be eligible for the dividends-received
deduction.
Distributions of 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 how long the shareholders have held shares and regardless of
whether taken in cash or reinvested in additional shares. Long-term capital
gains distributions are not eligible for the dividends-received deduction.
Each Fund may be subject to foreign income taxes withheld at source. The
International Equity Fund, but not the other Funds, intends to elect to "pass
through" such foreign income taxes to shareholders for foreign tax credit
purposes.
Unless a shareholder includes its identification number (social security number
for individuals) on the Account Application and certifies that it 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.
32
<PAGE>
================================================================================
ADDITIONAL INFORMATION
The Funds will send to their 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 the Funds should be sent to BNY Hamilton Funds, P. O. Box
163310, Columbus, Ohio 43216-3310.
A Fund may make historical performance information available and may advertise
total return as 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 1-800-4BNY-FND (1-800-426-9363).
33
<PAGE>
Appendix A
The following chart shows the comparison of the predecessor of BNY
Hamilton Large Cap Growth Fund and a comparable index.
BNY Hamilton
Large Cap S & P 500
Growth Fund Index
------------ -----
Average annual total return after one 22.84% 23.07%
year
Average annual total return after five 12.67% 15.19%
years
Average annual total return after ten 13.13% 15.29%
years
(The above information appears in the printed prospectus in bar chart
form.)
The performance results presented above are those of Bank of New York
CTF Equity Fund, a private trust fund advised by The Bank of New York.
These are not performance results of any class of BNY Hamilton Large Cap
Growth Fund, and should not be interpreted as indicative of the future
performance of the Large Cap Growth Fund.
As of December 31, 1996, the Bank of New York CTF Equity Fund had
aggregate net assets of approximately $250 million. The Bank of New York
CTF Equity Fund's investment objective, policies and strategies are
substantially similar to those of the Large Cap Growth Fund, although,
unlike the Large Cap Growth Fund, the Bank of New York CTF Equity Fund
is not subject to certain investment limitations, diversification
requirements and other restrictions imposed by law upon mutual funds,
which, if applicable to the Bank of New York CTF Equity Fund, may have
adversely affected performance.
The Bank of New York CTF Equity Fund's performance results reflect
reinvestment of dividends. In addtion, because the Bank of New York CTF
Equity Fund is not subject to advisory or administrative expenses
usually associated with mutual funds, the performance results have been
adjusted to reflect the deduction of the aggregate advisory,
administrative and other expenses described in this prospectus as being
applicable to Investor Shares of BNY Hamilton Large Cap Growth Fund.
Performance shown conforms to the standards established by the
Association for Investment Management and Research.
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.
<PAGE>
Performance for the Equity Income Fund can be found in its Annual Report
to Shareholders, available from the Fund's Distributor upon request and
without charge.
<PAGE>
Appendix B
The following chart shows the comparison of the predecessor of BNY Hamilton
Small Cap Growth Fund and a comparable index.
BNY HAMILTON
SMALL CAP RUSSELL 2000
GROWTH FUND INDEX
----------- ------
Average annual total return after one 30.21% 16.49%
year
Average annual total return after five 14.54% 15.62%
years
(The above information appears in the printed prospectus in bar chart form.)
The performance results presented above are those of Bank of New York CIF
Emerging Growth Fund, a private trust fund advised by The Bank of New York.
These are not performance results of any class of BNY Hamilton Small Cap Growth
Fund, and should not be interpreted as indicative of the future performance of
BNY Hamilton Small Cap Growth Fund.
The Bank of New York CIF Emerging Growth Fund's investment objective, policies
and strategies are substantially similar to those of BNY Hamilton Small Cap
Growth Fund, although, unlike BNY Hamilton Small Cap Growth Fund, the Bank of
New York CIF Emerging Growth Fund is not subject to certain investment
limitations, diversification requirements and other restrictions imposed by law
upon mutual funds, which, if applicable to the Bank of New York CIF Emerging
Growth Fund, may have adversely affected performance.
The Bank of New York CIF Emerging Growth Fund's performance results reflect
reinvestment of dividends. In addition, because the Bank of New York CIF
Emerging Growth Fund is not subject to advisory or administrative expenses
usually associated with mutual funds, the performance results have been adjusted
to reflect the deduction of the aggregate advisory, administrative and other
expenses described in this prospectus as being applicable to Investor Shares of
BNY Hamilton Small Cap Growth Fund. Performance shown conforms to the standards
established by the Association for Investment Management and Research.
The Russell 2000 Index is an unmanaged index of common stocks, and cannot be
invested in directly. The Index does not take into account fees and expenses.
Performance for the Equity Income Fund can be found in its Annual Report to
Shareholders, available from the Fund's Distributor upon request and without
charge.
<PAGE>
================================================================================
BNY HAMILTON FIXED INCOME FUNDS
125 West 55th Street
New York, New York 10019
For information call 1-800-426-9363 (1-800-4BNY-FND)
================================================================================
BNY Hamilton Funds, Inc. is a family of no-load mutual funds for which there are
no sales charges or exchange or redemption fees. This Prospectus describes two
(2) fixed income Funds (individually, a "Fund" and collectively, the "Funds")
offered by the BNY Hamilton Family of Funds.
================================================================================
<TABLE>
<CAPTION>
Fund Objective For Investors Seeking
- ---- --------- ---------------------
<S> <C> <C>
BNY Hamilton Intermediate To earn as high a level of current Current income from U.S. Government
Government Fund income as is consistent with securities, minimal credit risk and
preservation of capital, moderate relatively stable share price
stability in net asset value and
minimal credit risk
- --------------------------------------------------------------------------------------------------------------------
BNY Hamilton Intermediate To earn as high a level of current Current income from debt obligations
Investment Grade Fund income as is consistent with of domestic corporations, foreign
preservation of capital, moderate corporations and foreign governments
stability in net asset value and as well as U.S. government securities,
maintenance of liquidity higher level of risk and relatively
stable share price
</TABLE>
================================================================================
Investments in either Fund are not bank deposits or obligations of or guaranteed
or insured by The Bank of New York, and the shares in either 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. Investments in either Fund involve investment risks, including possible
loss of principal.
This Prospectus sets forth concisely the information that a prospective investor
should know about the Funds noted in the chart above before investing and should
be retained for future reference. Additional information about the Funds or
other members of 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 March 31, 1997. 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. 1-800-4BNY-FND
(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 March 31, 1997
<PAGE>
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
----
<S> <C>
Fee Table.................................................................... 3
Financial Highlights......................................................... 5
Investment Objectives and Policies........................................... 6
Description of Securities.................................................... 7
Additional Investment Information and
Risk Considerations.......................................................... 8
Investment Restrictions...................................................... 15
Management of the Funds...................................................... 15
Summary of Shareholder Services.............................................. 18
Fund and Other Shareholder Services.......................................... 18
Purchase of Shares........................................................... 21
Redemption of Shares......................................................... 25
Exchange of Shares........................................................... 27
Dividends and Distributions.................................................. 28
Net Asset Value.............................................................. 29
Organization................................................................. 29
Taxes........................................................................ 30
Additional Information....................................................... 31
Appendix A................................................................... 32
</TABLE>
2
<PAGE>
- ---------
FEE TABLE
- ---------
The following table illustrates the expenses an investor in either Fund 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
INTERMEDIATE INTERMEDIATE INVESTMENT
GOVERNMENT FUND GRADE FUND
--------------- ----------
INSTITUTIONAL INVESTOR INSTITUTIONAL INVESTOR
SHARES SHARES SHARES SHARES
------ ------ ------ ------
SHAREHOLDER TRANSACTION EXPENSES:
<S> <C> <C> <C> <C>
Sales Load Imposed On Purchases........................ None None None None
Sales Load Imposed on Reinvested Dividends............. None None None None
Deferred Sales Load.................................... None None None None
Redemption Fees........................................ None None None None
Exchange Fees.......................................... None None None None
ANNUAL FUND OPERATING EXPENSES AFTER EXPENSE
WAIVERS/REIMBURSEMENTS:
(as a percentage of average daily net assets)
Management Fees........................................ .70% .70% .70% .70%
12b-1 Fees after expense waivers/reimbursements........
.00% .25% .00% .25%
Other Expenses......................................... .20% .20% .20% .20%
---- ----- ---- -----
Total Fund Operating Expenses After Expense
Waivers/Reimbursements.............................. .90% 1.15% .90% 1.15%
</TABLE>
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>
BNY HAMILTON BNY HAMILTON
INTERMEDIATE INTERMEDIATE INVESTMENT
GOVERNMENT FUND GRADE FUND
--------------- ----------
INSTITUTIONAL INVESTOR INSTITUTIONAL INVESTOR
SHARES SHARES SHARES SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
1 year.................................. $ 9 $ 12 $ 9 $12
3 years................................. $29 $ 37 $29 $37
5 years................................. N/A $ 64 N/A N/A
10 years.................................. N/A $140 N/A N/A
</TABLE>
This table is designed to assist investors in understanding the various direct
and indirect costs that an investor would bear. The Adviser as defined in
"Management of the Funds") has agreed to limit expenses of each Fund to .90% and
1.15% of its average daily net assets of each Fund's
3
<PAGE>
Institutional Shares and Investor Shares, respectively. Were expenses not
so limited, Other Expenses would be .30% for each class of shares in
each Fund, and Total Fund Operating Expenses would be 1.00% and 1.25% for
the Institutional Shares and Investor Shares, of each Fund, respectively.
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 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. Expenses paid as shown above
reflect estimates made by the Funds as of the date of this prospectus.
4
<PAGE>
================================================================================
FINANCIAL HIGHLIGHTS
The following selected data for an outstanding Investor share of BNY Hamilton
Intermediate Government Fund, except for the six months ended June 30, 1996, 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 BNY
Hamilton Intermediate Government Fund is contained in the Fund's annual report
to shareholders, which may be obtained from the Fund upon request and without
charge. No shares of either class of BNY Hamilton Intermediate Investment Grade
Fund were outstanding for the periods noted below. In addition, no Institutional
Shares of BNY Hamilton Intermediate Government Fund were outstanding during
the periods noted below.
<TABLE>
<CAPTION>
BNY HAMILTON INTERMEDIATE GOVERNMENT FUND
---------------------------------------------------------------------------
FOR THE
PERIOD
AUGUST 7,
SIX MONTHS 1992*
ENDED THROUGH
JUNE 30, YEAR ENDED 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 $ 9.94 $9.10 $10.12 $9.87 $10.00
-------- ----- ------ ----- ------
Income from investment operations
Net investment income 0.27 0.53 0.50 0.51 0.18
---- ---- ---- ----
Net realized and unrealized gain (loss) 0.13
----
on investments (0.34) 0.84 (1.02) 0.27
------ ---- ------ ----
Total from investment operations (0.07) 1.37 (0.52) 0.78 0.05
------ ---- ------ ---- ----
Dividends and distribution
Dividends from net investment income
(0.027) (0.53) (0.50) (0.51) (0.18)
------- ------ ------ ------ ------
Distribution from capital gains --- --- --- (0.02) ---
-------- -------- -------- ------ --------
Total dividends and distribution (0.027) (0.53) (0.50) (0.53) (0.18)
------- ------ ------ ------ ------
Net asset value at end of period $ 9.60 $ 9.94 $ 9.10 $ 10.12 $ 9.87
======= ======= ======= ======== =======
TOTAL RETURN: (0.69)%** 15.40% (5.17)% 8.03% 0.51%**
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period
(000's omitted) $65,643 $60,659 $59,328 $72,069 $25,575
Ratio to average net assets of:
Expenses, net of waiver from The Bank
of New York 1.00%*** 1.06% 1.07% 0.86% 0.75%***
Expenses, prior to waiver from The Bank
of New York 1.00%*** 1.06% 1.10% 1.15% 1.64%***
Net investment income, net of waiver
from The Bank of New York 5.58%*** 5.52% 5.30% 5.04% 4.62%***
Portfolio turnover rate 28% 48% 49% 67% 63%
</TABLE>
* Commencement of investment operations.
** Not annualized.
5
<PAGE>
*** Annualized.
================================================================================
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of each Fund 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 either Fund will attain its respective
investment objective.
Introduction. The Funds are open-end management investment companies (commonly
known as mutual funds) registered under the Investment Company Act of 1940 (the
"1940 Act"). Each of the Funds will be considered a separate pool of assets with
its own distinctive investment objectives and policies, as described below.
BNY Hamilton Intermediate Government Fund (the "Intermediate Government Fund").
The Intermediate Government Fund's investment objective is to earn as high a
level of current income as is consistent with preservation of capital, 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 it 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 payments on these
obligations, they do not guarantee the market value of such obligations.
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 that three nor
more than ten years.
BNY Hamilton Intermediate Investment Grade Fund (the "Intermediate Investment
Grade Fund"). The Intermediate Investment Grade Fund's investment objective is
to provide as high a level of current income as is consistent with preservation
of capital, and moderate stability in net asset value by investing in securities
rated investment grade. The average maturity of the fund will range between
three and ten years. The maximum average maturity of any individual security at
the time of purchase will be 15 years. The Intermediate Investment Grade 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.
Under normal circumstances, the Intermediate Government Fund will invest at
least 65% of the value of its total assets in such types of Government
securities.
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In addition, the Intermediate Investment Grade Fund will invest in U.S. dollar
denominated debt obligations of domestic corporations, foreign corporations and
foreign governments.
Both Funds may purchase or sell financial futures contracts and options in an
effort to reduce portfolio volatility, moderate market risk and minimize
fluctuations in net asset value. For a discussion of these investments, see
"Hedging" in "Additional Investment Information and Risk Considerations".
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DESCRIPTION OF SECURITIES
Mortgage-Backed Securities and Asset-Backed Securities. The Funds may invest in
mortgage backed securities, including collateralized mortgage obligations
("CMOs") and stripped mortgage back 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 repayment 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 a Fund's position in these securities and
requiring a Fund to reinvest the prepayments at interest rates prevailing at the
time of reinvestment.
Stripped mortgage-back 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-back 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 security's
yield to maturity. If the underlying mortgage assets experience greater than
anticipated prepayments of principal, a Fund may fail to
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recoup fully its initial investment in these securities even if the securities
are rated AAA by Standard & Poor's Ratings Group ("S&P") or Aaa by Moody's
Investors Services ("Moody's").
The Funds 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 receivables. The asset-backed securities in
which a Fund may invest are subject to a 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.
================================================================================
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 in "Description of
Securities". Unless otherwise noted, the following paragraphs are applicable to
both Funds.
When-Issued and Delayed Delivery Securities. 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 is accrued until settlement. A Fund
will maintain with the 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 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 other than the
obligations created by these commitments.
Repurchase Agreements. Each Fund 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
at 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 a Fund to the seller. A Fund always receives, as
collateral, securities with a market value at least equal to purchase price plus
accrued interest and this value
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<PAGE>
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, a
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 Fund is permitted to enter into reverse
repurchase agreements. In a reverse repurchase agreement, a Fund sells a
security and agrees to repurchase it at 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 cash, U.S. Government securities or other liquid high-grade debt
securities in an amount at least equal to its purchase obligations under its
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 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 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.
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Privately Placed and Certain Unregistered Securities. Each Fund may acquire, in
privately negotiated transactions, restricted securities which 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. Each Fund 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 these guidelines,
the Directors will 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 below 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 Funds 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 to 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 no 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.
Financial Futures Contracts and Options on Futures, Debt Securities and Indexes
of Debt Securities. The Funds may (a) sell futures contracts on debt securities
and indices of debt
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<PAGE>
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.
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.
Financial futures contracts obligate the seller to deliver a specific type of
security, at a specified time for a specified price. 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.
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 a 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 position. A Fund may have to sell securities to meet
daily maintenance margin requirements. The risk of loss to a Fund is
theoretically unlimited when an uncovered futures contract is sold because there
is an obligation to make delivery unless the contract closed out, regardless of
fluctuations in the price of the underlying security.
The Funds 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 a Fund's portfolio or which a Fund
intends to purchase. In accordance with current Commodity Futures Trading
Commission ("CFTC") regulations, neither 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, a Fund will not enter
into any financial futures contract or purchase related options (as
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<PAGE>
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 a 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 a
Fund, it will segregate with its 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.
A Fund may purchase call options and write (sell) put options on debt securities
to close out open option positions, purchase put options to protect its holding
from a decline in market value, and write call options. The 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 these options. A 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 a
Fund purchases a put option or call option, the maximum risk of loss to it 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 Fund will invest more than 5% of its
net assets in premiums on put options.
The Funds may also utilize futures contracts on bond indices or related put and
call options on these index contracts. The Funds' 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 municipal bond indices.
The hedging activities of the Funds are subject to several additional
restrictions. A Fund's ability 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 a Fund uses 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 a
Fund's portfolio, the investment adviser will attempt to create a very closely
correlated hedge.
The Funds 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 Funds 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
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<PAGE>
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 a 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 a
Fund writes a put option on a futures contract, it 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, a 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.
A Fund will be required to deposit initial and variation margin with respect to
put and call options on futures contracts written by it pursuant to the Fund's
futures commissions merchants' requirements, which are similar to those
applicable to interest rate futures contracts described above.
Risks of Futures Transactions. Each Fund's successful use of futures contracts
and options thereon depends upon the ability of its 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 a Fund's potential for capital gains. For
example, if a 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, it will lose 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 a 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. A
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 a 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 of
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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 a Fund is
theoretically unlimited if no investment in securities is made as a result of
the market conditions noted above. Although a 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 a Fund's financial futures and options transactions and
premium costs for purchasing options may tend to reduce its yield.
For further information about a Fund's hedging activities, see "Investment
Objectives and Policies--Hedging Activities" in the Statement of Additional
Information.
Foreign Investment Risk. The Intermediate Investment Grade Fund will invest in
certain foreign securities. Investments in obligations of foreign issuers and in
foreign branches of domestic banks involves 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. Interest paid by foreign issuers may
be subject to withholding and other foreign taxes that may decrease the net
return of foreign investments as compared to interest paid to the Intermediate
Investment Grade 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.
Interest Rate Risk. 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.
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================================================================================
INVESTMENT RESTRICTIONS
As a diversified series of a registered investment company, 75% of the total
assets of each Fund is subject to the following limitations: (a) a Fund may not
invest more than 5% of the value 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) a Fund may not own more than 10% of the
outstanding voting securities of any one issuer.
Each Fund also operates under certain investment restrictions that, together
with its 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.
A 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 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 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 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 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.
For a more detailed discussion of the above investment restrictions, see
"Investment Restrictions" and "Additional Information" in the Statement of
Additional Information.
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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, NY
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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 $51
billion in assets at September 30, 1996. It is the leading retail bank in the
greater New York suburban area, having 376 branches at September 30, 1996. As
of September 30, 1996, the Adviser provided administrative or advisory services
to approximately $54 billion in assets.
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.
Christopher M. Capone, Vice President, is responsible for the day-to-day
portfolio management for the Intermediate Investment Grade Fund. Mr. Capone has
been responsible for managing various fixed income investments for the Adviser
for the past nine years.
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 .50% of average daily
net assets for each Fund.
Administrator. BNY Hamilton Distributors, Inc. ("BNY Hamilton Distributors")
serves as the Funds' administrator (the "Administrator") and assists generally
in supervising the operations of each 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 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 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 drafting and printing
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 objective 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.
16
<PAGE>
Each Fund pays annual administration fees, accrued daily and payable monthly, of
.20% of average daily net assets for each Fund.
Distributor. In addition to acting as the Administrator, BNY Hamilton
Distributors will be the exclusive underwriter and distributor of shares of each
Fund (the "Distributor"); its offices are located at 125 West 55 Street, New
York, New York 10019.
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., whose other subsidiaries provide distribution and adminstration
services for other mutual fund groups.
================================================================================
SUMMARY OF SHAREHOLDER SERVICES
A Fund's telephone representative will be happy to answer any questions you may
have.
<TABLE>
<CAPTION>
Telephone For Information Regarding
- --------- -------------------------
<S> <C>
1-800-4BNY-FND o Any of the Funds' investment objectives
(1-800-426-9363) and policies
8 a.m. to 9 p.m., Eastern time o Opening an account
1-800-952-6276 o Current account balances
8 a.m. to 9 p.m., Eastern time o Shareholder address/telephone changes
</TABLE>
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 do 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:
<TABLE>
<S> <C>
Confirmation Statements After every transaction that affects your
account balance or your account
registration.
17
<PAGE>
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.
</TABLE>
================================================================================
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 Funds' 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, and maintaining the books
and records of, each class of shares for both Funds.
Transfer Agent. BISYS Fund Services, Inc. ("BISYS"), P.O. Box 163310,
Columbus, Ohio, 43216-3310, 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 class of each Fund (collectively, the
"12b-1 Plans").
Under the 12b-1 Plans, the subject Fund may reimburse the Distributor for
expenses incurred 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 each Fund) and in implementing and operating the 12b-1 Plans. To date, the
Directors have only implemented the 12b-1 Plans with respect to the Investor
Class of each Fund.
Under the 12b-1 Plans, reimbursements for distribution expenses may not exceed
.25% (annualized) of the average daily net assets of the relevant Fund,
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
18
<PAGE>
1940 Act. Except for expenses related to telemarketing operations established
for BNY Hamilton Funds, Inc., it is presently contemplated that the Distributor
will not be reimbursed for any of its overhead expenses by a Fund class under
its respective 12b-1 Plan.
The 12b-1 Plans provide 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 class
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' first 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 class of shares for each Fund.
================================================================================
PURCHASE OF SHARES
To purchase Institutional Shares in any Fund, contact your Bank of New York
representative for details.
The following table summarizes the types of investments available in each of the
Funds along with their respective minimum investment requirements. Unless
otherwise noted, all types of investments shown in the table are applicable to
Investor Shares of each Fund.
<TABLE>
<CAPTION>
MINIMUM INVESTMENT REQUIRED
----------------------------------------------------
Type of Investment Initial Investment Additional Investment
- ------------------ ------------------ ---------------------
<S> <C> <C>
Regular Account $2,000 $100
- -------------------------------------------------------------------------------------------------------------
Regular Account with Automatic Investment Program $ 500 $100
- -------------------------------------------------------------------------------------------------------------
Regular Accounts for employees and retirees of The $ 500 $ 40
Bank of New York and its affiliates, and employees
of each of the Administrator, the Distributor and
their affiliates (1)
- -------------------------------------------------------------------------------------------------------------
19
<PAGE>
Individual Retirement Account $ 250 $ 40
("IRA")
- -------------------------------------------------------------------------------------------------------------
</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.
Institutional and Investor Shares of any of the Funds may be purchased without
sales commission at the net asset value per share next determined after the
purchase order and federal funds are received by the specific Fund.
See "Net Asset Value".
The Distributor, from time to time, at its expense, will also provide additional
compensation to dealers in connection with sales of Investor 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 quality
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 purchase of a Fund's Investor Shares received by
4:00 P.M. (Eastern time) on any Business Day and transmitted to the Fund's
transfer agent by 4:00 P.M. (Eastern time) will be based on the next determined
net asset value. (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 Investor 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.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
METHOD OF
PURCHASE FOR INITIAL INVESTMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<S> <C>
By o Complete and sign a New Account Application and mail it,
Check together with a check payable to the specific Fund, to: BNY
Hamilton Funds, P. O. Box 163310, Columbus, Ohio 43216-3310.
o Purchases made by check are not permitted to be redeemed
until payment of the purchase has been collected, which may
take up to ten (10) Business Days after purchase.
- --------------------------------------------------------------------------------
20
<PAGE>
- --------------------------------------------------------------------------------
o 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 o An investor desiring to purchase shares by wire should call
Federal the Transfer Agent at 1-800-952-6276 and place a purchase
Funds order.
Wire
o 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
appropriate address shown in "By Check" above.
o 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 o Follow the same procedure outlined under "By Federal Funds
Bank Wire Wire" above. Your bank may charge a service fee
for wiring funds.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
By o In certain circumstances, employees and retirees of The Bank
Direct of New York and its affiliates may purchase Fund shares by
Deposit having payments automatically deposited into their specific
Fund account.
o Call 1-800-4BNY-FND (1-800-426-9363) for details.
- --------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
METHOD OF
PURCHASE FOR ADDITIONAL INVESTMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<S> <C>
By o Make check payable to the specific Fund and send to: BNY
Check Hamilton Funds, Inc., P.O. Box 806, Newark, New Jersey
07101-0806. If possible, please include the tear-off payment
stub that accompanies a Fund's confirmation statement.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
By o Have your bank wire federal funds according to the
Federal instructions on the previous page, except the wire should
Funds state that it is an additional investment.
Wire
o Please include your account number.
- --------------------------------------------------------------------------------
22
<PAGE>
- --------------------------------------------------------------------------------
By o You may arrange, through the Automatic Investment Program,
Automatic for purchases of Fund shares (minimum of $100) by direct
Investment debit Investment from your account at any domestic financial
Program institution that is an Automated Clearing House member.
o To elect this feature, please complete Section 7 on the new
account application.
o 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 o The procedure is identical to "By Federal Funds Wire" above.
Bank Wire
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
By o Call 1-800-4BNY-FND (1-800-426-9363) for details.
Direct
Deposit o Additional purchases will be processed in accordance with
your instructions.
- --------------------------------------------------------------------------------
</TABLE>
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 directly debiting 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 Investor 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. 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.
23
<PAGE>
You may cancel this privilege or change the amount of purchase at any time by
mailing written notification to:
BNY Hamilton Funds
P. O. Box 163310
Columbus, OH 43216-3310
Notification will be effective seven 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.
Other Purchase Information. Investors may purchase Investor Shares of any Equity
Fund, Fixed Income Fund, or BNY Hamilton Intermediate Tax-Exempt Fund or
Hamilton Classic Shares of BNY Hamilton Money Fund offered by BNY Hamilton
Funds, Inc., or a combination of those 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. Investors are also advised to consult with their own legal counsel or
tax adviser regarding these investments.
In the interest of economy and convenience and because of its operating
procedures, a Fund will not issue certificates representing ownership of either
class 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 Fund offered by BNY Hamilton Funds, Inc.
Investors may also invest in any Fund offered by BNY Hamilton Funds, Inc. by
purchasing shares through registered broker-dealers, which are required to
effect the transaction at the net asset value 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.
24
<PAGE>
================================================================================
REDEMPTION OF SHARES
To redeem Institutional Shares in any Fund, contact your Bank of New York
representative for details.
Investors may withdraw all or any portion of the Investor Shares in their
account at any time by redeeming such shares. Investors should be aware that,
unlike a savings account, a redemption of shares of 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 Investor Shares at the next determined
net asset value per share. A Fund's net asset value per Investor Share will be
determined on each Business Day at 4:00 p.m. (Eastern time). 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.
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
By o Send your request to: BNY Hamilton Funds, P. O. Box 163310,
Mail Columbus, Ohio 43216-3310. (Be sure to include the name of
the specific Fund and your account number.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
By o This option must have previously been elected. Call the
Telephone(1) 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 o Your account must have a value of $10,000 or more.
Systematic
Withdrawal o 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.
o Further information about establishing a Systematic
Withdrawal Plan may be obtained by calling 1-800-4BNY-FND
(1-800-426-9363).
- --------------------------------------------------------------------------------
By o Redemption checks may be made payable to the order of any
Draft person in the amount of $500 or more.
o 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.
o Shares for which certificates have been issued may not be
redeemed by redemption check.
- --------------------------------------------------------------------------------
</TABLE>
25
<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.
Each Fund will redeem its Investor Shares at the net asset value next determined
after the request is received in good order. "Good order" means that the request
to redeem Investor 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 Investor 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
Investor Shares redeemed under these procedures within one Business Day of
receipt of the request, but in no event will payment be made more than seven
days after receipt of a redemption request in good order. Notwithstanding the
foregoing, a Fund will not make payments to investors redeeming Investor 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. At
various times, the Funds may be requested to redeem Investor Shares for which it
has not yet received good payment. In such circumstances, the Funds may delay
the forwarding of proceeds for up to 15 days or more until payment has been
collected for the purchase of such Investor Shares. 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 A 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, P. O. Box 163310,
Columbus, Ohio 43216-3310. 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.
26
<PAGE>
================================================================================
EXCHANGE OF SHARES
Shareholders purchasing shares directly from the Funds may exchange those shares
at the current net asset per share for other BNY Hamilton Funds which have a
similar class of shares, in accordance with the terms of the current prospectus
of the Fund being acquired, 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 all shares
available to retail investors for each Fund in BNY Hamilton Funds, Inc.). Shares
will be exchanged on the basis of relative net asset value per share.
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 prospectuses
for the other Funds in BNY Hamilton Funds, Inc.
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
The net investment income for each class of each 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. The Directors may revise a Fund's dividend
policy without action by the shareholders.
The net investment income of each class of a 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 a Fund will begin earning dividends on the next Business
Day after the date of the investment. See "Purchase of Shares" and "Redemption
of Shares".
27
<PAGE>
Each of the Funds will distribute substantially all of any taxable net long-term
gains realized on investments to shareholders at least annually in accordance
with requirements under the Internal Revenue Code of 1986, as amended (the "Tax
Code"), 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.
If you elect to receive distributions in cash and checks (1) are returned and
marked as "undeliverable" or (2) remain uncashed for six months, your cash
election will be changed automatically and your future dividend and capital
gains distributions will be reinvested in the respective Fund at the per share
net asset value determined as of the date of payment of the distribution. In
addition, any undeliverable checks or checks that remain uncashed for six months
will be canceled and will be reinvested in the respective Fund at the per share
net asset value determined as of the date of cancellation.
================================================================================
NET ASSET VALUE
Net asset value per share for each class of shares of each Fund will be
determined by subtracting from the value of a Fund's total assets attributable
to that class of shares the amount of its liabilities attributable to shares of
that class, and 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. See "Net Asset
Value" in the Statement of Additional Information for more information on
valuation of portfolio securities for each Fund.
Each Fund computes the net asset value of each class of its respective shares
once daily on Monday through Friday, except that net asset value of a particular
class will not be computed on any 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. Each Fund computes net
asset value of each class of its shares as of the close of regular trading of
the New York Stock Exchange (normally 4:00 P.M., Eastern time).
================================================================================
ORGANIZATION
28
<PAGE>
BNY Hamilton Funds, Inc. is an open-end management investment company that was
organized as a Maryland corporation on May 1, 1992. 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>
Intermediate Government Fund
Institutional Shares......................... 200,000,000
Investor Shares.............................. 200,000,000
Intermediate Investment Grade Fund
Institutional Shares......................... 200,000,000
Investor Shares.............................. 200,000,000
</TABLE>
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 of 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 Funds' shares have any preemptive or
conversion rights. All shareholders of a Fund 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 of each Fund, will
vote separately on any matters relating only to that class, as appropriate. For
example, to the extent shareholder votes are necessary, holders of Investor
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 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, the Articles of Incorporation or Bylaws of BNY Hamilton Funds,
Inc. 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 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.
================================================================================
29
<PAGE>
TAXES
The following discussion of federal tax consequences is based on United States
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 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 will be mailed
to shareholders shortly after the end of the taxable year.
Each Fund intends to qualify as a "regulated investment company" under
Subchapter M of the Tax 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 it distributes annually 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 a
Fund as ordinary income, whether such distributions are taken in cash or
reinvested in additional shares. Such distributions will not be eligible for the
dividends-received deduction.
Distributions of 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 how long the shareholders have held shares and regardless of
whether taken in cash or reinvested in additional shares. Long-term capital
gains distributions are not 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, 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.
================================================================================
ADDITIONAL INFORMATION
The Funds will send to their 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
30
<PAGE>
cash. Written inquiries about the Funds should be sent to BNY Hamilton Funds, P.
O. Box 163310, Columbus, Ohio 43216-3310.
A Fund may make historical performance information available and may advertise
total return and 30-day 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 1-800-4BNY-FND (1-800-426-9363).
31
Appendix A
The following chart shows the comparison of the predecessor of BNY Hamilton
Intermediate Investment Grade Fund and a comparable index.
BNY HAMILTON LEHMAN INTERMEDIATE
INTERMEDIATE INVESTMENT GOVERNMENT
GRADE FUND CORPORATE INDEX
---------- ---------------
Average annual total return after 1.81% 4.05%
one year
Average annual total return after 5.98% 6.52%
five years
Average annual total return after 6.88% 7.91%
ten years
(The above information appears in the printed prospectus in bar chart form.)
The performance results presented above are those of Bank of New York CTF
Intermediate Income Fund, a private trust fund advised by The Bank of New York.
These are not performance results of any class of BNY Hamilton Intermediate
Investment Grade Fund, and should not be interpreted as indicative of the future
performance of the Intermediate Investment Grade Fund.
The Bank of New York CTF Intermediate Income Fund's investment objective,
policies and strategies are substantially similar to those of the Intermediate
Investment Grade Fund, although, unlike the Intermediate Investment Grade Fund,
the Bank of New York CTF Intermediate Income Fund is not subject to certain
investment limitations, diversification requirements and other restrictions
imposed by law upon mutual funds, which, if applicable to the Bank of New York
CTF Intermediate Income Fund, may have adversely affected performance.
The Bank of New York CTF Intermediate Income Fund's performance results reflect
reinvestment of dividends. In addition, because the Bank of New York CTF
Intermediate Income Fund is not subject to advisory or administrative expenses
usually associated with mutual funds, the performance results have been adjusted
to reflect the deduction of the aggregate advisory, administrative and other
expenses described in this prospectus as being applicable to Investor Shares of
BNY Hamilton Intermediate Investment Grade Fund. Performance shown
conforms to the standards established by the Association for Investment
Management and Research.
The Lehman Brothers Intermediate Government Corporate Index is an unmanaged
index generally considered representative of the intermediate-term bond market.
The Index does not take into account fees and expenses.
Performance for the Intermediate Government Fund can be found in its Annual
Report to Shareholders, available from the Fund's Distributor upon request and
without charge.
<PAGE>
================================================================================
BNY HAMILTON TAX-EXEMPT FUNDS
125 West 55th Street
New York, New York 10019
For information call 1-800-426-9363 (1-800-4BNY-FND)
================================================================================
BNY Hamilton Funds, Inc. is a family of no-load mutual funds for which there are
no sales charges or exchange or redemption fees. This Prospectus describes two
(2) tax-exempt funds (individually, a "Fund" and collectively, the "Funds")
offered by the BNY Hamilton Family of Funds.
================================================================================
<TABLE>
<CAPTION>
Fund Objective For Investors Seeking
- ---- --------- ---------------------
<S> <C> <C>
BNY Hamilton To provide income that is exempt from Triple tax-free income, moderate
Intermediate New York federal, New York State and New York risk and relative stability of principal
Tax-Exempt Fund State and New York City income taxes
while maintaining relative stability
of principal
- -------------------------------------------------------------------------------------------------------------------
BNY Hamilton Intermediate To provide income that is exempt from Tax-free income, moderate risk and
Tax-Exempt Fund federal income taxes while maintaining relative stability of principal
relative stability of principal
</TABLE>
================================================================================
Investments in either Fund are not bank deposits or obligations of or guaranteed
or insured by The Bank of New York, and the shares in either 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. Investments in either Fund involve investment risks, including possible
loss of principal.
This Prospectus sets forth concisely the information that a prospective investor
should know about the Funds noted in the chart above before investing and should
be retained for future reference. Additional information about the Funds or
other members of 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 March 31, 1997. 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. 1-800-4BNY-FND
(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 March 31, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Fee Table.................................................................. 3
Financial Highlights....................................................... 5
Investment Objectives and Policies......................................... 6
Description of Securities.................................................. 7
Additional Investment Information and
Risk Considerations........................................................ 9
Investment Restrictions.................................................... 17
Management of the Funds.................................................... 18
Summary of Shareholder Services............................................ 20
Fund and Other Shareholder Services........................................ 21
Purchase of Shares......................................................... 22
Redemption of Shares....................................................... 27
Exchange of Shares......................................................... 29
Dividends and Distributions................................................ 29
Net Asset Value............................................................ 30
Organization............................................................... 31
Taxes...................................................................... 32
Additional Information..................................................... 33
Appendix A................................................................. 35
Appendix B................................................................. 37
</TABLE>
2
<PAGE>
- ---------
FEE TABLE
- ---------
The following table illustrates the expenses an investor in either Fund 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
NEW YORK INTERMEDIATE
TAX-EXEMPT FUND TAX-EXEMPT FUND
--------------- ---------------
INSTITUTIONAL INVESTOR INSTITUTIONAL INVESTOR
SHARES SHARES SHARES SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Sales Load Imposed On Purchases....................... None None None None
Sales Load Imposed on Reinvested Dividends............ None None None None
Deferred Sales Load................................... None None None None
Redemption Fees....................................... None None None None
Exchange Fees......................................... None None None None
ANNUAL FUND OPERATING EXPENSES AFTER EXPENSE
WAIVERS/REIMBURSEMENTS:
(as a percentage of average daily net assets)
Management Fees....................................... .70% .70% .70% .70%
12b-1 Fees after expense waivers/reimbursements.......
.00% .25% .00% .25%
Other Expenses........................................ .20% .20% .20% .20%
---- ------ ---- ------
Total Fund Operating Expenses After Expense
Waivers/Reimbursements............................. .90% 1.15% .90% 1.15%
</TABLE>
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>
BNY HAMILTON BNY HAMILTON
NEW YORK INTERMEDIATE
TAX-EXEMPT FUND TAX-EXEMPT FUND
--------------- ---------------
INSTITUTIONAL INVESTOR INSTITUTIONAL INVESTOR
SHARES SHARES SHARES SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
1 year.................................. $ 9 $ 12 $ 9 $12
3 years................................. $29 $ 37 $29 $37
5 years................................. N/A $ 64 N/A N/A
10 years.................................. N/A $140 N/A N/A
</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
each Fund to .90% and 1.15% of its average daily net
3
<PAGE>
assets of each Fund's Institutional Shares and Investor Shares, respectively.
Were expenses not so limited, Other Expenses would be .29% for each class
of shares in each Fund; and Total Fund Operating Expenses would be .99% and
1.24% for the Institutional Shares and Investor Shares, of each Fund,
respectively. 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 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. Expenses paid as shown above
reflect estimates made by the Funds as of the date of this prospectus.
4
<PAGE>
================================================================================
FINANCIAL HIGHLIGHTS
The following selected data for an outstanding Investor share of BNY Hamilton
Intermediate New York Tax-Exempt Fund, except for the six months ended June 30,
1996, 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 BNY
Hamilton Intermediate New York Tax-Exempt Fund is contained in the Funds' annual
report to shareholders, which may be obtained from the Funds upon request and
without charge. No shares of either class of BNY Hamilton Intermediate
Tax-Exempt Fund were outstanding during the periods noted below. In addition, no
Institutional Shares of BNY Hamilton Intermediate New York Tax-Exempt Fund
were outstanding during the periods noted
below.
<TABLE>
<CAPTION>
BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND
-----------------------------------------------------------------------
FOR THE
PERIOD
AUGUST 7,
SIX MONTHS 1992*
ENDED YEAR ENDED DECEMBER 31, THROUGH
JUNE 30, ---------------------------- 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 0.20 0.39 0.39 0.38 0.15
Net realized and unrealized gain (loss)
on investments (0.20) 0.75 (0.78) 0.40 0.03+
------ ---- ------ ---- -----
Total from investment operations (0.00) 1.14 (0.39) 0.78 0.12
------ ---- ------ ---- ----
Dividends
Dividends from net investment income
(0.20) (0.39) (0.39) (0.38) (0.15)
------ ------ ------ ------ ------
Net asset value at end of period $ 10.14 $ 10.34 $ 9.59 $ 10.37 $ 9.97
======= ======= ======= ======== =======
TOTAL RETURN: (0.03)%** 12.08% (3.81)% 7.99% 1.18%**
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period
(000's omitted) $38,491 $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
1.16%*** 1.20% 1.20% 1.30% 1.96%***
Net investment income, net of waiver
from the Bank of New York and
Administrator 3.89%*** 3.89% 3.92% 3.74% 3.79%***
Portfolio turnover rate 12% 4% 18% 6% ---
</TABLE>
5
<PAGE>
* 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 for the period August 10, 1992
through December 31, 1992 due to the timing of sales and repurchases of
shares of the Fund
================================================================================
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of each Fund is stated below, together with the
policies each Fund will employ in its efforts to achieve its objectives. There
can be no assurance that either Fund will attain its investment objective.
Introduction. The Funds are open-end management investment companies (commonly
known as mutual funds) registered under the Investment Company Act of 1940 (the
"1940 Act"). Each of the Funds will be considered a separate pool of assets with
its own distinctive investment objectives and policies, as described below.
BNY Hamilton Intermediate New York Tax-Exempt Fund (the "Intermediate New York
Tax-Exempt Fund"). The Intermediate New York Tax-Exempt Fund's investment
objective is to provide income that is exempt from federal, New York State and
New York City income taxes while maintaining relative stability of principal.
The Intermediate New York Tax-Exempt Fund will seek to accomplish this objective
by investing 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 hereafter referred to as
"Municipal Obligations".)
BNY Hamilton Intermediate Tax-Exempt Fund (the "Intermediate Tax-Exempt Fund").
The Intermediate Tax-Exempt Fund's investment objective is to provide income
that is exempt from federal income taxes while maintaining relative stability of
principal. A portion of income from the Intermediate Tax-Exempt Fund may also be
exempt from certain state and local income taxes. Shareholders will be notified
at the end of the calendar year what percentage, if any, of their income from
the Intermediate Tax-Exempt Fund is exempt from any income taxes in addition to
federal income taxes. In normal circumstances, the Intermediate Tax-Exempt Fund
will seek to accomplish this objective by investing primarily in Municipal
Obligations issued by states, territories and possessions of the United States
and the District of Columbia, which bonds are exempt from federal income taxes.
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. For
the Intermediate Tax-Exempt Fund, the dollar weighted average maturity will be
no more than ten nor less than three years.
6
<PAGE>
In addition, during normal conditions, each Fund will attempt to maintain a
ratio of 100% and, as a fundamental policy, at least 80%, of its net assets in
Municipal Obligations that are consistent with such Fund's specific investment
objective. If, due to market conditions or supply limitations, Municipal
Obligations are not available, the Intermediate New York Tax-Exempt Fund
may temporarily invest up to 20% of its net assets in fixed income
securities that are subject to federal, as well as certain state and
local income taxes, and the Intermediate Tax-Exempt Fund may temporarily invest
up to 20% of its net assets in fixed income securities that are subject to
federal 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, each Fund will invest a portion of
its assets in short-term Municipal Obligations related to its specific
investment objective and may temporarily increase investments 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 each 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
Municipal Obligations. Each Fund will invest primarily in Municipal Obligations.
For the Intermediate Tax-Exempt Fund, Municipal Obligations include notes and
bonds issued by or on behalf of the political subdivisions, agencies,
authorities and instrumentalities of states, territories and possessions of the
United States and the District of Columbia. For the Intermediate New York
Tax-Exempt Fund, Municipal Obligations includes notes or bonds issued by or on
behalf of the political subdivisions, agencies, authorities and
instrumentalities of New York State and the commonwealth of Puerto Rico, the
interest on which is exempt from federal, and for Municipal Obligations issued
by or on behalf of New York State and its political subdivisions, agencies,
authorities and instrumentalities, from New York State and New York City income
taxes as well. 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
also may 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
7
<PAGE>
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 "Tax Code"), is treated as a preference item for purposes of the
alternative minimum tax. In the event that a 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 and, where
applicable, state and local income tax.
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 of New York
issuers. 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 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 New York State's tax revenues. In 1991, Moody's Investors Services,
Inc. ("Moody's") and Standard
8
<PAGE>
and Poor's Ratings Group ("S&P") downgraded certain obligations backed by New
York State and have 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.
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. 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 its
investments were required to be diversified across the Municipal Obligations of
many issuers.
Quality Information. The Funds will limit their investments to investment grade
Municipal Obligations, which are Municipal Obligations rated in one of the four
highest investment rating categories by Moody's or S&P. Securities rated in the
lowest of these investment grade debt 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 Funds 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, a 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 a Fund
has its ratings 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.
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".
When-Issued and Delayed Delivery Securities. 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 is accrued until
9
<PAGE>
settlement. A Fund will maintain with its custodian a separate account with a
segregated portfolio of 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, a Fund may be disadvantaged. It is the current policy of
the Funds not to enter into when-issued commitments exceeding in the aggregate
25% of the market value of a Fund's total assets less liabilities other than the
obligations created by these commitments.
Repurchase Agreements. 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
at 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. The Fund always receives,
as collateral, securities with a market value at least equal to 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 lending
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".
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. The Funds are permitted to enter into reverse
repurchase agreements. In a reverse repurchase agreement, a Fund sells a
security and agrees to repurchase it at a mutually agreed upon date and at a
price reflecting the interest rate effective for the term of the agreement. It
may also be viewed as the borrowing of money by the 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. Neither Fund may 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 cash, U.S. Government securities or other liquid high-grade debt
securities in an amount at least equal to its purchase obligations under its
repurchase agreements.
Reverse repurchase agreements involve the risk that the market value of the
securities retained by the relevant 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
10
<PAGE>
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 the 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. Each Fund will attempt to invest 100% of its assets in
Municipal Obligations; however, either Fund 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 and, where applicable, New York State and New York City
income tax. If, in adverse market conditions, a Fund's investment adviser
determines, in its judgment, that, Municipal Obligations satisfying the Fund's
investment objective are not available, the Fund 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, and where applicable, New York State
and 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. The Funds 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 a security with a put may be higher than the price that would otherwise
be paid. Consistent with each Fund's investment objectives and subject to the
supervision of the Directors of BNY Hamilton Funds, Inc., the purpose of this
11
<PAGE>
practice is to permit a 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, 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 Fund's investment adviser will monitor each writer's ability to meet its
obligations under puts.
The amortized cost method will be used by each 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 a 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 Fund may acquire, in
privately negotiated transactions, restricted securities which 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, each Fund may invest up
to 25% of its total assets in Municipal Obligations issued as part of privately
negotiated transactions between one issuer and one or more purchasers.) Each
Fund 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 the Fund's 15% limitation on investments in illiquid securities
described below. 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 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.
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Hedging activity in the Funds 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.
Financial Futures Contracts and Options on Futures, Debt Securities and Indexes
of Debt Securities. The Funds may (a) sell futures contracts on debt securities
and indices 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 Funds may enter into
these transactions with respect to Municipal Obligations 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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<PAGE>
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 a 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 position. A Fund may have to sell securities to meet
daily maintenance margin requirements. The risk of loss to a Fund is
theoretically unlimited when an uncovered futures contract is sold because there
is an obligation to make delivery unless the contract closed out, regardless of
fluctuations in the price of the underlying security.
Each Fund intends 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 Fund's portfolio or which the
Fund intends to purchase. In accordance with current Commodity Futures Trading
Commission ("CFTC") regulations, a Fund will not 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 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 variation margins on its outstanding futures contracts, together with
premiums paid on options thereon, would exceed 20% of its total assets.
When either Fund attempts to hedge its portfolio by selling an interest rate
futures contract, purchasing a put option thereon, or by 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 a Fund, the Fund will segregate with its 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 Funds may purchase call options and write (sell) put options on debt
securities to close out open option positions, purchase put options to protect
its holding from a decline in market value, and write call options. The 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 these options. Either 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 a
Fund purchases a put option or call option, the maximum risk of loss
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<PAGE>
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 Fund will invest more than 5% of its
net assets in premium on put options.
The Funds may utilize futures contracts on municipal bond indices or related put
and call options on these index contracts. The Funds' strategies in employing
these contracts would be similar to the strategies applicable to futures and
options contracts generally. The Funds may also buy put options and sell call
options on municipal bond indices. The Funds 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 Funds will consider
purchasing or selling these options.
The hedging activities of the Funds are subject to several additional
restrictions. A Fund's ability to engage in hedging activities may be limited by
certain income tax considerations. See "Taxes" in the Statement of Additional
Information.
To the extent a Fund uses 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 a
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 a Fund's portfolio as hedging activities based on
municipal debt securities or indexes. Less closely correlated hedges are likely
to occur if a 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 Funds 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 Funds only intend to engage in options in
futures contracts for bona fide hedging purposes in compliance with CFTC
regulations. An option on a futures contracts 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.
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<PAGE>
When a 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 a
Fund writes a put option on a futures contract, it 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, a 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.
A Fund will be required to deposit initial and variation margin with respect to
put and call options on futures contracts written by it pursuant to the Fund's
futures commissions merchants' requirements, which are similar to those
applicable to interest rate futures contracts described above.
Municipal Bond Index Futures Contracts. Futures contracts on municipal bond
indexes began trading on the Chicago Board of Trade in 1985. These contracts,
which provide for each 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 a 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 are trading at prices that makes hedging with these
contracts less expensive than hedging with municipal bond index contracts.
Accordingly, the Funds intend to use both Treasury bond and municipal bond index
contracts for hedging purposes.
Risks of Futures Transactions. The Funds' successful use of futures contracts
and options thereon will depend on the ability of their investment adviser to
predict movements in 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 a Fund's potential for capital gains. For example,
if a Fund has hedged against the possibility of an increase in interest rates
which would adversely affect the price of securities in its portfolio and
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<PAGE>
prices of such securities increase instead, it will lose 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 a 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. A
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 a Fund is able to invest its cash in an orderly fashion, it is
possible that the market may decline instead; if a Fund's investment adviser
then concludes not to invest in securities at that time because 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 a Fund is theoretically unlimited
if no investment in securities is made as a result of the market conditions
noted above. Although a 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 a Fund's financial futures and options transactions and
premium costs for purchasing options may tend to reduce its yield.
For further information about a Fund's hedging activities, see "Investment
Objectives and Policies - Hedging Activities" in the Statement of Additional
Information.
Interest Rate Risk. 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.
================================================================================
INVESTMENT RESTRICTIONS
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 was 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 Tax Code. See
"Taxes" in the Statement of Additional Information.
Intermediate Tax-Exempt Fund. As a diversified series of a registered investment
company, 75% of the total assets of the Intermediate Tax-Exempt Fund's assets is
subject to the following limitations: (a) it may not invest more than 5% of
the value of its total assets in the securities of any one issuer,
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<PAGE>
except obligations of the United States Government and its agencies and
instrumentalities and (b) it may not own more than 10% of the outstanding voting
securities of any one issuer.
Each Fund also operates under certain investment restrictions that, together
with its investment objective, are deemed fundamental policies of a Fund - i.e.,
they may be changed only with the approval of the holders of a majority of the
Fund's outstanding shares.
A 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 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, (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 the Fund's 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
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 Fund's 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, NY 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 $51 billion in assets at
September 30, 1996. It is the leading retail bank in the greater New
York suburban area, having 376 branches at September 30, 1996. As of
September 30, 1996, the Adviser provided administrative or advisory
services to approximately $54 billion in assets.
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<PAGE>
Colleen M. Frey, Vice President, has been responsible for the day-to-day
portfolio management of 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.
Jeffrey B. Noss, Vice President, is responsible for the day-to-day portfolio
management for the Intermediate Tax-Exempt Fund. Mr. Noss has been managing
tax-exempt portfolios for the Adviser's Tax-Exempt Bond Management Division for
the past nine years.
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 .50% of average daily
net assets for each Fund.
Administrator. BNY Hamilton Distributors, Inc. ("BNY Hamilton Distributors")
serves as the Funds' administrator (the "Administrator") and assists generally
in supervising the operations of each 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 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 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 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
objective 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 for each Fund.
Distributor. In addition to acting as the Administrator, BNY Hamilton
Distributors will be the exclusive underwriter and distributor of shares of each
Fund (the "Distributor"); its offices are located at 125 West 55 Street, New
York, New York 10019.
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The Distributor will make 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., whose other subsidiaries provide distribution
and administration services for other mutual fund groups.
================================================================================
SUMMARY OF SHAREHOLDER SERVICES
A Fund's telephone representative will be happy to answer any questions you may
have.
<TABLE>
<CAPTION>
Telephone For Information Regarding
- --------- -------------------------
<S> <C>
1-800-4BNY-FND o Any of the Funds' investment objectives
(1-800-426-9363) and policies
8 a.m. to 9 p.m., Eastern time o Opening an account
1-800-952-6276 o Current account balances
8 a.m. to 9 p.m., Eastern time o Shareholder address/telephone changes
</TABLE>
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:
<TABLE>
<S> <C>
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
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mailed to each household, regardless of how many
accounts are in the household.
</TABLE>
================================================================================
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 Funds' 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, and maintaining the books
and records of, each class of shares for both Funds.
Transfer Agent. BISYS Fund Services, Inc. ("BISYS"), P.O. Box 163310,
Columbus, Ohio, 43216-3310, 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 the Investor Shares of each Fund
(collectively, the "12b-1 Plans").
Under the 12b-1 Plans, the subject Fund may reimburse the Distributor for
expenses incurred 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 each Fund) and in implementing and operating the 12b-1 Plans. To date, the
Directors have only adopted 12b-1 Plans with respect to the Investor Class of
each Fund.
Under the 12b-1 Plans, reimbursements for distribution expenses may not 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 BNY Hamilton Funds,
Inc., it is presently contemplated that the Distributor will not be reimbursed
for any of its overhead expenses by a Fund under its respective 12b-1 Plan.
The 12b-1 Plans provide 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
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<PAGE>
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' first 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 class of shares for each Fund.
================================================================================
PURCHASE OF SHARES
To purchase Institutional Shares in any Fund, contact your Bank of New York
representative for details.
The following table summarizes the types of investments available in each of the
Funds along with their respective minimum investment requirements. Unless
otherwise noted, all types of investments shown in the table are applicable to
Investor Shares of each Fund.
<TABLE>
<CAPTION>
MINIMUM INVESTMENT REQUIRED
---------------------------------------------
Type of Investment Initial Investment Additional Investment
- ------------------ ------------------ ---------------------
<S> <C> <C>
Regular Account $2,000 $100
- -------------------------------------------------------------------------------------------------
Regular Account with Automatic Investment Program $ 500 $100
- -------------------------------------------------------------------------------------------------
Regular Accounts for employees and retirees of The $ 500 $ 40
Bank of New York and its affiliates, and employees
of each of the Administrator, the Distributor and
their affiliates (1)
- -------------------------------------------------------------------------------------------------
</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.
Institutional and Investor Shares of any of the Funds may be purchased without
sales commission, at the net asset value per share next determined after the
purchase order and federal funds are received by the specific Fund.
See "Net Asset Value".
22
<PAGE>
The Distributor, from time to time, at its expense, will also provide additional
compensation to dealers in connection with sales of Investor 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 quality
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 purchase of a Fund's Investor Shares received by
4:00 P.M. (Eastern time) on any Business Day and transmitted to the Fund's
transfer agent by 4:00 P.M. (Eastern time) will be based on the next determined
net asset value. (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 Investor 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.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
METHOD OF
PURCHASE FOR INITIAL INVESTMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<S> <C>
By o Complete and sign a New Account Application and mail it,
Check together with a check payable to the specific Fund, to: BNY
Hamilton Funds, P. O. Box 163310, Columbus, Ohio 43216-3310.
o Purchases made by check are not permitted to be redeemed
until payment of the purchase has been collected, which may
take up to ten (10) Business Days after purchase.
o 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 o An investor desiring to purchase shares by wire should call
Federal the Transfer Agent at 1-800-952-6276 and place a purchase
Funds order.
Wire
o 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:
- --------------------------------------------------------------------------------
23
<PAGE>
- --------------------------------------------------------------------------------
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
appropriate address shown in "By Check" above.
o 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 o Follow the same procedure outlined under "By Federal Funds
Bank Wire Wire" above. Your bank may charge a service fee
for wiring funds.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
By o In certain circumstances, employees and retirees of The Bank
Direct of New York and its affiliates may purchase Fund shares by
Deposit having payments automatically deposited into their specific
Fund account.
o Call 1-800-4BNY-FND (1-800-426-9363) for details.
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
METHOD OF
PURCHASE FOR ADDITIONAL INVESTMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<S> <C>
By o Make check payable to the specific Fund and send to: BNY
Check Hamilton Funds, Inc., P.O. Box 806, Newark, New Jersey
07101-0806. If possible, please include the tear-off payment
stub that accompanies a Fund's confirmation statement.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
By o Have your bank wire federal funds according to the
Federal instructions on the previous page, except the wire should
Funds state that it is an additional investment.
Wire
- --------------------------------------------------------------------------------
24
<PAGE>
- --------------------------------------------------------------------------------
o Please include your account number.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
By o You may arrange, through the Automatic Investment Program,
Automatic for purchases of Fund shares (minimum of $100) by direct
Investment debit from your account at any domestic financial
Program institution that is an Automated Clearing House member.
o To elect this feature, please complete Section 7 on the new
account application.
o 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 o The procedure is identical to "By Federal Funds Wire" above.
Bank Wire
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
By o Call 1-800-4BNY-FND (1-800-426-9363) for details.
Direct
Deposit o Additional purchases will be processed in accordance with
your instructions.
- --------------------------------------------------------------------------------
</TABLE>
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 directly debiting 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 Investor 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. 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.
25
<PAGE>
You may cancel this privilege or change the amount of purchase at any time by
mailing written notification to:
BNY Hamilton Funds
P. O. Box 163310
Columbus, OH 43216-3310
Notification will be effective seven 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.
Other Purchase Information. Investors may purchase Investor Shares of any Equity
Fund, Fixed Income Fund, or Tax-Exempt Fund or Hamilton Classic Shares of BNY
Hamilton Money Fund offered by BNY Hamilton Funds, Inc. (except for BNY Hamilton
Intermediate New York Tax-Exempt Fund and BNY Hamilton Intermediate Tax-Exempt
Fund), or a combination of 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. Investors
are also advised to consult with their own legal counsel or tax adviser
regarding these investments.
In the interest of economy and convenience and because of its operating
procedures, a Fund will not issue certificates representing ownership of either
class 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 Fund offered by BNY Hamilton Funds, Inc.
Investors may also invest in any Fund offered by BNY Hamilton Funds, Inc. by
purchasing shares through registered broker-dealers, which are required to
effect the transaction at the net asset value 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.
================================================================================
REDEMPTION OF SHARES
26
<PAGE>
To redeem Institutional Shares in any Fund, contact your Bank of New York
representative for details.
Investors may withdraw all or any portion of the Investor 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 Investor Shares at the next determined
net asset value per share. A Fund's net asset value per Investor Share will be
determined on each Business Day at 4:00 p.m. (Eastern time). 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.
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
By o Send your request to: BNY Hamilton Funds, P. O. Box 163310,
Mail Columbus, Ohio 43216-3310. (Be sure to include the name of
the specific Fund and your account number.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
By o This option must have previously been elected. Call the
Telephone(1) 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 o Your account must have a value of $10,000 or more.
Systematic
Withdrawal o 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.
o Further information about establishing a Systematic
Withdrawal Plan may be obtained by calling 1-800-4BNY-FND
(1-800-426-9363).
- --------------------------------------------------------------------------------
27
<PAGE>
- --------------------------------------------------------------------------------
By o Redemption checks may be made payable to the order of any
Draft person in the amount of $500 or more.
o 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.
o Shares for which certificates have been issued may not be
redeemed by redemption check.
- --------------------------------------------------------------------------------
</TABLE>
(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.
Each Fund will redeem its Investor Shares at the net asset value next determined
after the request is received in good order. "Good order" means that the request
to redeem Investor 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 Investor 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
Investor Shares redeemed under these procedures within one Business Day of
receipt of the request, but in no event will payment be made more than seven
days after receipt of a redemption request in good order. At various times, the
Funds may be requested to redeem Investor Shares for which it has not yet
received good payment. In such circumstances, the Funds may delay the forwarding
of proceeds for up to 15 days or more until payment has been collected for the
purchase of such Investor Shares. 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
28
<PAGE>
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, P. O. Box 163310,
Columbus, Ohio 43216-3310. 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
Shareholders purchasing shares directly from the Funds may exchange those shares
at the current net asset per share for other BNY Hamilton Funds which have a
similar class of shares, in accordance with the terms of the current prospectus
of the Fund being acquired, 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 all shares
available to retail investors for each Fund in BNY Hamilton Funds, Inc.). Shares
will be exchanged on the basis of relative net asset value per share.
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 prospectuses for the
other Funds in BNY Hamilton Funds, Inc.
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
The net investment income for each class of each 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. The Directors may revise a Fund's dividend
policy without action by the shareholders.
29
<PAGE>
The net investment income of each class of each 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 a Fund will begin earning dividends on the next Business
Day after the date of the investment. See "Purchase of Shares" and "Redemption
of Shares".
Each of the Funds will distribute substantially all of any taxable net long-term
gains realized on investments to shareholders at least annually in accordance
with requirements under the Tax Code, 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.
If you elect to receive distributions in cash and checks (1) are returned and
marked as "undeliverable" or (2) remain uncashed for six months, your cash
election will be changed automatically and your future dividend and capital
gains distributions will be reinvested in the respective Fund at the per share
net asset value determined as of the date of payment of the distribution. In
addition, any undeliverable checks or checks that remain uncashed for six months
will be canceled and will be reinvested in the respective Fund at the per share
net asset value determined as of the date of cancellation.
================================================================================
NET ASSET VALUE
Net asset value per share for each class of shares of each Fund will be
determined by subtracting from the value of a Fund's total assets attributable
to that class the amount of its liabilities attributable to that class, and
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. See "Net Asset Value" in the
Statement of Additional Information for more information on valuation of
portfolio securities for each Fund.
Each Fund computes the net asset value of each class of its respective shares
once daily on Monday through Friday, except that net asset value of a particular
class will not be computed on any 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. Each Fund computes net
asset value as of the close of regular trading of the New York Stock Exchange
(normally 4:00 P.M., Eastern time).
30
<PAGE>
================================================================================
ORGANIZATION
BNY Hamilton Funds, Inc. is an open-end management investment company that was
organized as a Maryland corporation on May 1, 1992. 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>
Intermediate New York Tax-Exempt Fund
Institutional Shares....................... 200,000,000
Investor Shares............................ 200,000,000
Intermediate Tax-Exempt Fund
Institutional Shares....................... 200,000,000
Investor Shares............................ 200,000,000
</TABLE>
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 of 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 Funds' shares have any preemptive or
conversion rights. All shareholders will vote together as a single class on
matters affecting the Funds generally, including matters relating to each Fund's
investment advisory agreement, investment objective and fundamental investment
restrictions. Shareholders of a particular Fund, or of a particular class of
each Fund, will vote separately on any matters relating only to that Fund or
class, as appropriate. For example, to the extent shareholder votes are
necessary, holders of Investor 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 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, the Articles of Incorporation or Bylaws of BNY
Hamilton Funds, Inc.
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
31
<PAGE>
the question of 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.
================================================================================
TAXES
The following discussion of federal tax consequences is based on United States
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 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, and as to the
portion of each Fund's distribution that is attributable to interest that is
exempt from state and local income tax, if applicable, will be mailed to
shareholders shortly after the end of the taxable year.
Federal Income Taxes. Each Fund intends to qualify as a "regulated investment
company" under Subchapter M of the Tax 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 it
distributes annually at least 90% of its net investment income and realized net
short-term capital gains in excess of net long-term capital losses.
Each Fund intends to meet the requirements of the Tax Code so that distributions
of net interest income on obligations that are exempt from federal income tax
and held by the specific Fund when distributed to shareholders, and designated
by the specific Fund as "exempt-interest dividends", will be exempt from federal
income tax in the hands of shareholders.
Distributions of taxable net investment income and realized net short-term
capital gains in excess of net long-term capital losses will be taxable to
shareholders of a Fund as ordinary income, whether such distributions are taken
in cash or reinvested in additional shares. Such distributions will not be
eligible for the dividends-received deduction.
32
<PAGE>
Distributions of net long-term capital gains in excess of net short-term capital
losses will be taxable to shareholders as long-term capital gains regardless of
how long a shareholder has held the shares and regardless of whether taken in
cash or reinvested in additional shares.
Shareholders are urged to consult their tax advisers concerning the effect of
federal income taxes in their individual circumstances. Under the Tax 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 a Fund.
A portion of the exempt-interest dividends by a 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 a 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.
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, 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.
New York State and New York City Taxes. 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 (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 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
The Funds will send to their 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 the Funds should be sent to BNY Hamilton Funds, P. O. Box
163310, Columbus, Ohio 43216-3310.
33
<PAGE>
A Fund may make historical performance information available and may advertise
total return and 30-day 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 1-800-4BNY-FND (1-800-426-9363).
34
<PAGE>
APPENDIX A
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
Combined --------------------------------------------------------------------
Single Return Joint 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 - 41,200 20.82 5.05 5.68 6.31 6.95 7.58 8.21 8.84
$0 - 24,650 20.82 5.05 5.68 6.31 6.95 7.58 8.21 8.84
$41,201 - 99,600 32.93 5.96 6.71 7.45 8.20 8.95 9.69 10.44
$24,651 - 59,750 32.93 5.96 6.71 7.45 8.20 8.95 9.69 10.44
$99,601 - 151,750 35.73 6.22 7.00 7.78 8.56 9.34 10.11 10.89
$59,751 - 124,650 35.73 6.22 7.00 7.78 8.56 9.34 10.11 10.89
$151,751 - 271,050 40.38 6.71 7.55 8.39 9.23 10.06 10.90 11.74
$124,651 - 271,050 40.38 6.71 7.55 8.39 9.23 10.06 10.90 11.74
$271,051 - 43.74 7.11 8.00 8.89 9.78 10.66 11.55 12.44
$271,051 - 43.74 7.11 8.00 8.89 9.78 10.66 11.55 12.44
</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 State income tax rates for 1997 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.
<PAGE>
Appendix B
The following chart shows the comparison of the predecessor of BNY
Hamilton Intermediate Tax-Exempt Fund and a comparable index.
BNY HAMILTON LEHMAN BROTHERS
INTERMEDIATE SEVEN YEAR
TAX-EXEMPT FUND BOND INDEX
--------------- ----------
Average annual total return after one 3.68% 4.58%
year
Average annual total return after five 5.28% 6.72%
years
Average annual total return after ten 5.95% 7.54%
years
(The above information appears in the printed prospectus in bar chart
form.)
The performance results presented above are those of Bank of New York
CTF Intermediate Tax-Exempt Fund, a private trust fund advised by The
Bank of New York. These are not performance results of any class of BNY
Hamilton Intermediate Tax-Exempt Fund, and should not be interpreted as
indicative of the future performance of the Intermediate Tax-Exempt
Fund.
The Bank of New York CTF Intermediate Tax-Exempt Fund's investment
objective, policies and strategies are substantially similar to those of
the Intermediate Tax-Exempt Fund, although, unlike the Intermediate
Tax-Exempt Fund, the Bank of New York CTF Intermediate Tax-Exempt Fund
is not subject to certain investment limitations, diversification
requirements and other restrictions imposed by law upon mutual funds,
which, if applicable to the Bank of New York CTF Intermediate Tax-Exempt
Fund, may have adversely affected performance.
The Bank of New York CTF Intermediate Tax-Exempt Fund's performance
results reflect reinvestment of dividends. In addition, because the
Bank of New York CTF Intermediate Tax-Exempt Fund is not subject to
advisory or administrative expenses usually associated with mutual
funds, the performance results have been adjusted to reflect the
deduction of the aggregate advisory, administrative and other expenses
described in this prospectus as being applicable to Investor Shares of
BNY Hamilton Intermediate Tax-Exempt Fund. Performance shown conforms
to the standards established by the Association for Investment
Management and Research.
<PAGE>
The Lehman Brothers Seven Year Bond Index is an unmanaged index
generally considered representative of the Intermediate Municipal Bond
Market. The Index does not take into account fees and expenses.
Performance for the Intermediate New York Tax-Exempt Fund can be found
in its Annual Report to Shareholders, available from the Fund's
Distributor upon request and without charge.
<PAGE>
BNY HAMILTON FUNDS, INC.
Statement of Additional Information
BNY Hamilton Money Fund
BNY Hamilton Treasury Money Fund
BNY Hamilton Equity Income Fund
BNY Hamilton Large Cap Growth Fund
BNY Hamilton Small Cap Growth Fund
BNY Hamilton International Equity Fund
BNY Hamilton Intermediate Government Fund
BNY Hamilton Intermediate Investment Grade Fund
BNY Hamilton Intermediate New York Tax-Exempt Fund
BNY Hamilton Intermediate Tax-Exempt Fund
March 31, 1997
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS, BUT CONTAINS
ADDITIONAL INFORMATION ABOUT THE FUNDS LISTED ABOVE WHICH SHOULD BE READ IN
CONJUNCTION WITH THE RELEVANT PROSPECTUS, EACH DATED MARCH 31, 1997, 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>
Page Cross-Reference to Page in Prospectus
------ ------------------------------------------------------------
Money Fixed Tax-
Market Equity Income Exempt
Funds Funds Funds Funds
Prospectus Prospectus Prospectus Prospectus
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
General.......................... 2
Investment Objectives
and Policies.................. 2 8 6 6 6
Investment Restrictions.......... 27 12 16 15 17
Directors and Officers........... 35 13 17 15 18
Investment Adviser............... 38 13 17 16 18
Administrator.................... 39 13 17 16 19
Distributor...................... 41 14 18 17 19
Fee Waivers...................... 17 20 19 22
Fund, Shareholder
and Other Services............ 42 14 19 18 21
Purchase of Shares............... 43 17-22 21 21 22
Redemption of Shares............. 43 17-24 26 25 27
Exchange of Shares............... 44 25 27 27 29
Dividends and Distributions...... 44 26 28 28 29
Net Asset Value.................. 45 26 29 29 30
Performance Data................. 47
Portfolio Transactions
and Brokerage................. 50
Description of Shares............ 53 27 29 29 31
Taxes............................ 55 28 30 30 32
Special Considerations
Relating to Investments in New
York Municipal Obligations.... 60 8
Additional Information........... 72 29 31 31 33
Appendix A - Description of
Securities Ratings............ 74
</TABLE>
1
<PAGE>
================================================================================
GENERAL
BNY Hamilton Funds, Inc. is an open-end investment company, currently consisting
of ten series: BNY Hamilton Money Fund, BNY Hamilton Treasury Money Fund, BNY
Hamilton Equity Income Fund, BNY Hamilton Large Cap Growth Fund, BNY Hamilton
Small Cap Growth Fund, BNY Hamilton International Equity Fund, BNY Hamilton
Intermediate Government Fund, BNY Hamilton Intermediate Investment Grade Fund,
BNY Hamilton Intermediate New York Tax-Exempt Fund and BNY Hamilton Tax-Exempt
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 Prospectus for BNY Hamilton Money
Market Funds 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 Treasury Money Fund (the "Treasury Money Fund") is designed to be
an economical and convenient means of investing in securities issued or
guaranteed by the United States Government and in securities fully
collateralized by issues of the United States Government. 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 solely in
short-term obligations of the United States Treasury and repurchase agreements
fully collateralized by obligations of the United States Treasury. The Fund will
only invest in money market securities issued or guaranteed by the U.S.
Government, including but not limited to securities subject to repurchase
agreements secured by U.S. Government obligations. Securities issued or
guaranteed by the U.S. Government include U.S. Treasury securities which differ
in their interest rates, maturities, and times of issuance. In accordance with
Rule 2a-7 under the Investment Company Act of 1940, the Fund will maintain a
dollar-weighted average maturity of 90 days or less and will only purchase
securities having remaining maturity of 397 days or less. See "Quality and
Diversification Requirements".
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.
BNY Hamilton Large Cap Growth Fund (the "Large Cap Growth Fund") is designed as
an economical and convenient means of investing primarily in the stocks of
domestic and foreign institutions. The Fund's investment objective is to provide
long-term capital appreciation by investing primarily in common stocks and
securities convertible to common stocks; current income is a secondary
objective. During times of adverse market and/or economic conditions the Fund
may invest in securities with a high enough yield to offer possible resistance
to downward market and/or economic pressure. In selecting securities for the
Fund, a focus will be given to securities of corporations perceived to have a
relatively high potential for growth of earnings and/or revenues. In normal
circumstances the Fund will invest at least 65% of its assets in such equity
securities.
BNY Hamilton Small Cap Growth Fund (the "Small Cap Growth Fund") is designed for
investors who are interested in obtaining capital growth by investing in stocks
of smaller corporations. The Small Cap Growth Fund's investment objective is to
achieve long-term capital appreciation by investing primarily in equity
securities of small to medium size domestic and foreign corporations. In
selecting securities for the Small Cap Growth Fund a focus will be given to
securities of corporations perceived as having potential for rapid growth in
earnings or revenues due to expanded operations, new products, new technologies,
new channels of distribution, revitalized management, general industry condition
or other similar advantageous circumstances. Current income will not be a
consideration. The Fund currently considers small to medium size corporations to
be those with market capitalization of $1.5 billion or less. In normal
circumstances the Small Cap Growth Fund will invest at least 65% of the value of
its total assets in such equity securities.
BNY Hamilton International Equity Fund (the "International Equity Fund") is
designed for more aggressive investors who wish to participate in foreign
markets. The Fund's investment objective is to provide long-term capital
appreciation through investing primarily in equity securities of non-U.S.
issuers. In normal circumstances, the Fund will invest in securities principally
traded in countries outside the United States. The Fund may at any time include
American Depository Receipts which are United States securities representing
foreign securities that are deposited with foreign custodians or foreign
branches of U.S. commercial banks; American Depository Receipts are traded in
U.S. dollars on national exchanges and in over-the-
3
<PAGE>
counter markets. At any given time the Fund may invest 50% of its assets in the
securities principally traded in any one country, although the Fund will
ordinarily invest at least 65% of its net assets in at least three (3)
countries.
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 Investment Grade Fund (the "Intermediate Investment
Grade Fund") is designed for bond investors who wish to invest in debt
obligations of both domestic and foreign corporations and governments. The
Intermediate Investment Grade Fund's investment objective is to earn as high a
level of current income as is consistent with preservation of capital, moderate
stability in net asset value and maintenance of liquidity. In an effort to
attain its investment objective, the Fund will invest primarily in debt
obligations of domestic corporations, foreign corporations and foreign
governments, as well as obligations issued or guaranteed by the United States
Government and its agencies and instrumentalities. The debt securities the Fund
invests in will have ratings of at least investment grade quality, which would
be a rating no lower than BBB by Standard & Poor's Ratings Group ("S&P") and Baa
by Moody's Investors Services, Inc. ("Moody's"), or, if not rated, such
determined by the Adviser. In normal circumstances, the Fund will invest at
least 65% of its net assets in debt obligations of the above-mentioned entities,
but may at any time as determined appropriate by the Adviser invest a
substantial portion of the net assets in cash or cash equivalents.
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 total 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-
4
<PAGE>
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".
BNY Hamilton Intermediate Tax-Exempt Fund (the "Intermediate Tax-Exempt Fund")
is designed to be an economical and convenient means of making substantial
investments in debt obligations that are exempt from federal income tax. A
portion of the income recognized by the Intermediate Tax-Exempt Fund may be
exempt from state or local income tax as well; consult with your tax adviser for
details. The Intermediate Tax-Exempt Fund's investment objective will be to
provide income that is exempt from federal income taxes while maintaining
relative stability of principal. The Fund will attempt to invest 100%, and as a
fundamental policy will invest at least 80%, of its net assets in such
investments. The securities purchased by the Fund will be limited to be
investment grade, which means that investments cannot be rated lower than BBB by
S&P and Baa by Moody's. If the securities are not rated, the investment adviser
is to determine whether they are equivalent to investment grade securities at
the time of purchase. At any time, as deemed appropriate by the Adviser, the
Fund may hold a substantial portion of its net assets in cash. The Fund may
seek to moderate market risk and minimize fluctuations in its net asset value
per share through the use of financial futures and options. See "Hedging
Activities".
Throughout this Statement of Additional Information, the Money Fund and the
Treasury Money Fund are collectively referred to as the "Money Market Funds";
the Equity Income Fund, the Large Cap Growth Fund, the Small Cap Growth Fund,
and the International Equity Fund are collectively referred to as the "Equity
Funds"; the Intermediate Government Fund and the Intermediate Investment Grade
Fund are collectively referred to as the "Fixed Income Funds"; and the
Intermediate New York Tax-Exempt Fund and the Intermediate Tax-Exempt Fund are
collectively referred to as the "Tax-Exempt Funds".
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
5
<PAGE>
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. Except for the Treasury Money Fund, 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 Funds and
Intermediate Investment Grade Fund, in another currency. See "Foreign
Investments".
Bank Obligations. Except for the Treasury Money Fund, each of the Funds, unless
otherwise noted in its relevant 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 Tax-Exempt Funds, 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).
Commercial Paper. Except for the Treasury Money Fund, 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
6
<PAGE>
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 Prospectus for the Fixed Income Funds, the Intermediate
Government Fund and Intermediate Investment Grade Fund may invest in bonds and
other debt securities of domestic issuers to the extent consistent with their
investment objectives and policies. A description of these investments appears
in the Prospectus for the Fixed Income Funds 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 asset-backed securities
7
<PAGE>
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, a 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. A Fund's net asset value per share for each class
will vary with changes in the values of its portfolio securities. To the extent
that a 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 Prospectus for the Tax-Exempt Funds, the Intermediate New
York Tax-Exempt Fund and the Intermediate 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 Tax-Exempt Funds 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.
8
<PAGE>
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.
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 Tax-Exempt Funds 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. In addition, the Fixed Income Funds may purchase notes together with
the rights described above. 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
9
<PAGE>
for bonds or notes without puts. Consistent with a Fund's investment objective
and subject to the supervision of the Directors, the purpose of this practice is
to permit a Fund to be fully invested in securities (tax-exempt securities in
the case of the Tax-Exempt Funds) 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 a Tax-Exempt Fund or a Fixed Income 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 Tax-Exempt Funds and the Fixed Income Funds will value any securities
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 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, a 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 policy of the Tax Exempt Funds and the
Fixed Income Funds is to enter into put transactions only with securities
dealers or issuers who are approved by the Adviser. Each dealer will be approved
on its own merits, and it is a 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 securities markets, their net worth, their
efficiency in consummating transactions and any collateral arrangements, such as
letters of credit, securing the
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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 in the highest
rating categories as determined by a Nationally Recognized Statistical Rating
Organization ("NRSRO"). Currently, there are six NRSROs: Moody's, S&P, Fitch
Investors Services, L.P., Duff and Phelps/MCM, IBCA Limited and its affiliate,
IBCA, Inc. and Thomson Bankwatch. If a put writer is not rated by an NRSRO, it
must 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, a 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 Tax-Exempt Funds. 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 Prospectus for the Equity Funds, the Equity Income Fund, the
Large Cap Growth Fund, the Small Cap Growth Fund and the International Equity
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 Equity Funds 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 the Equity Funds appears in the Prospectus for the Equity Funds and
below. See "Quality and Diversification Requirements".
Equity Securities. The common stock in which the Equity Funds 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 Funds 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
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subordinated to the claims of other creditors and are senior to the claims of
preferred and common shareholders. In the case of convertible 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 Fund, the Equity Income Fund, the Large Cap Growth Fund, the Small Cap
Growth Fund, the International Equity Fund and the Intermediate Investment Grade
Fund may invest in certain foreign securities. The Money Fund does not expect to
invest more than 65% of its total assets at the time of purchase in securities
of foreign issuers. The Equity Income Fund, the Large Cap Growth Fund, the Small
Cap Growth Fund and the Intermediate Investment Grade Fund do not expect to
invest more than 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, the Large Cap Growth Fund,
the Small Cap Growth Fund and the Intermediate Investment Grade Fund do not
expect more than 15% of their respective foreign investments to be in securities
that are not either listed on a securities exchange or 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 Funds 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 they will not enter into such commitments
for speculative purposes. See "Additional Investment Information" in the
Prospectus for the Equity Funds.
For a description of the risks associated with investing in foreign securities,
see "Additional Investment Information" in the Prospectuses for the Money Market
Funds, the Equity Funds and the Fixed Income Funds. To the extent that the
Tax-Exempt Funds invest 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
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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 Funds, the Fixed Income Funds, and the
Tax-Exempt Funds 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 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. Except for the Treasury Money Fund, 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
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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. The Equity Funds, the Fixed Income Funds and the
Tax-Exempt Funds may lend 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 three 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 the lending Fund and its
shareholders. The Funds may pay reasonable finders' and custodial fees in
connection with loans. 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 permitted by applicable law.
Privately Placed and Certain Unregistered Securities. The Equity Funds, the
Fixed Income Funds and the Tax-Exempt Funds may invest in privately placed,
restricted, Rule 144A and other unregistered securities as described in their
respective Prospectuses.
Quality and Diversification Requirements
Each of the Funds except the Intermediate New York Tax-Exempt Fund is 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 such
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 Market Funds, 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 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 (the "Tax Code"),
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
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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 Tax Code, 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 non-governmental user, the non-governmental 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 guarantee. 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 Market Funds. In order to attain its objective of maintaining a stable net
asset value of $1.00 per share for each of its respective classes, each of the
Money Market Funds will (i) limit its investment in the securities (other than
U.S. Government securities) of any one issuer to no more than 5% of the Fund's
assets, measured at the time of purchase, except for investments held for not
more than three Business Days (subject, however, to each 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 the Money Fund's investments, it 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 NRSROs 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
will 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 Money 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 Money Fund's best interest.
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In addition, the Directors have adopted procedures that (i) require each Money
Market 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 each Money Market 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
each Money Market Fund.
Equity Funds. The Equity Funds may invest in convertible debt securities, for
which there are no specific quality requirements. In addition, at the time the
Equity Funds invest 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 an Equity 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.
Fixed Income Funds. During normal market conditions, each of the Fixed Income
Funds' portfolios will have a dollar weighted average maturity of not less than
three nor more than ten years. In addition, the Intermediate Investment Grade
Fund will not purchase a security with a maturity date of greater than fifteen
years at the time of purchase. The Intermediate Government Fund's portfolio
will, and the Intermediate Investment Grade Fund's portfolio may, include a
variety of securities that are issued or guaranteed by the United States
Treasury, by various 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 Intermediate Government Fund
will invest at least 65% of the value of its total assets in Government
securities.
Tax-Exempt Funds. The Intermediate New York Tax-Exempt Fund invests principally
in a portfolio of "high quality" and "investment grade" New York municipal
bonds. The Intermediate Tax-Exempt Fund invests principally in such municipal
bonds from throughout the United States. For purposes of the Intermediate New
York Tax-Exempt Fund, 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. Each 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
securities in the rating categories discussed above. In addition, at the time a
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
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<PAGE>
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.
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 risk that an investor does not desire to
assume during an uncertain market environment. In the case of the Fixed 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.
Fixed Income Funds and Tax-Exempt Funds. The Fixed Income Funds and the
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 Tax-Exempt
Funds 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 Fixed Income Funds and the Tax-Exempt 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 Fixed Income Funds and
Tax-Exempt 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 Fixed Income Funds and the Tax-Exempt 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.
Special Considerations Relating to Hedging Activities. Each of the Fixed Income
Funds and the 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 Tax-Exempt Funds based upon
non-municipal debt
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securities or indexes may not correlate as closely to a Tax-Exempt Fund's
portfolio as hedging activities based upon municipal debt securities or indexes.
Nevertheless, hedging activities may be useful to the Tax-Exempt Funds,
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 any of the Funds 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 a
specific Fund and certain income tax considerations. For example, the amount of
assets that a specific 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 a specific 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
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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 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 a Fund's securities
portfolio. For example, if interest rates were expected to increase, a Fund
might sell futures contracts. If interest rates did increase, the value of the
securities in the portfolio would decline. The value of a Fund's hedging
instruments would increase at approximately the same rate (depending on the
correlation between value in the futures markets and the prices of the Fund's
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. A Fund 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 Fixed Income Funds and the 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
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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 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
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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 Fixed Income Funds and
the Tax-Exempt Funds may purchase put options or write (sell) call options on
financial futures and debt securities.
The Fixed Income Funds and the Tax-Exempt 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 Fixed Income Fund or
Tax-Exempt Fund may, in addition, write call options only to the extent
necessary to neutralize a 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 Fixed Income Funds or the Tax-Exempt 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 Fixed Income Funds or the Tax
Exempt 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 contract. When a call option is
written by any of the Fixed Income Funds or the Tax Exempt Funds, the Fund will
make arrangements with its custodian to segregate the related portfolio
securities until either the option is exercised or the Fund closes 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
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holding of a security which might otherwise have been sold to protect against
depreciation in the market price of the security.
The Fixed Income Funds and the Tax-Exempt Funds will purchase call options to
close out open positions. In order to close out a position, the Fixed Income
Funds and the Tax-Exempt 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 Fixed Income Funds and the Tax-Exempt 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 a Fund. From time to
time, the Fixed Income Funds and the Tax-Exempt 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 Fixed Income Funds and the Tax-Exempt 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 Fixed Income
Funds and the Tax-Exempt Funds may engage in buy-and-write transactions in which
a 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
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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 Fixed Income Funds and the Tax-Exempt 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 Fixed Income Funds and the Tax-Exempt 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 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 Fixed Income Funds and the Tax-Exempt 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 Fixed Income Funds and the Tax-Exempt Funds may utilize
futures contracts on bond indexes (municipal bond indexes in the case of the
Tax-Exempt Funds), 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 Fixed Income Funds and the Tax-Exempt 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
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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 Funds
Stock Index Futures, Related Options and Options on Stock Indexes. The Equity
Funds 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 Funds' policies with respect to
hedging activities are discussed at length in the Prospectus for the Equity
Funds.
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 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
Funds 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.
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The Equity Funds 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, a 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. A Fund will sell options on stock index futures and on
stock indexes only to close out existing hedge positions.
The Equity Funds will not engage in transactions in stock index futures
contracts or related options for speculation. The Equity Funds will use these
instruments only as a hedge against changes resulting from market conditions in
the values of securities held in a 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 a Fund. In addition, a 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 a Fund's net assets. A 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 a Fund's existing
futures positions and premiums paid for such options would exceed 5% of the
market value of a 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 Funds' 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 specific Fund purchases futures to hedge against market advances before it
can invest in common stock in an advantageous manner and the market declines, it
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 - Fixed Income Funds and Tax-Exempt Funds". See also
"Portfolio Transactions and Brokerage".
Options on Securities. The Equity Funds 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 relevant
Fund is obligated as a writer. The Equity Funds do
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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 Equity Funds may, from time to time, write call options on its portfolio
securities. The Equity Funds may write only call options that are "covered",
meaning that the writing 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, a 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 a 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 a Fund by the purchaser of the option is the
"premium". A 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 a 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 Equity Funds
are not able to effect closing purchase transactions after they receive notice
of exercise.
In order to write a call option, a Fund is required to comply with the rules of
The Options Clearing Corporation and the various exchanges with respect to
collateral requirements. A 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 a Fund for writing the option.
The Equity Funds may also purchase listed put options. If a 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 a 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, a 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 a 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
a 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.
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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 Market Funds 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 a Fund's net assets would be in investments that are
illiquid;
2. Enter into reverse repurchase agreements (although the Money Fund may
enter into reverse repurchase agreements, provided such agreements do
not exceed in the aggregate one-third of the market value of the Money
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 relevant 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.
Neither Fund will purchase securities while borrowings (including
reverse repurchase agreements) exceed 5% of its 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, in the
case of the Money Fund, will 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
relevant Fund's total assets would be invested in securities or other
obligations of any one such issuer. This limitation does not apply to
issues of the United States Government, its agencies or
instrumentalities or to permitted investments of up to 25% of a Fund's
total assets;
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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
relevant Fund's total assets, except that the Fund may 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 relevant 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 Money 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
a 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.
In addition to the restrictions listed above, the Treasury Money Fund may not:
1. Invest in structured notes or other instruments commonly known as
derivatives;
2. Invest in any type of variable, adjustable or floating rate
securities;
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3. Invest in securities issued by agencies or instrumentalities of the
United States Government, such as the Federal National Mortgage
Association, Government National Mortgage Association, Federal Home
Loan Mortgage Corp. or the Small Business Administration; or,
4. Invest in zero coupon bonds.
The Equity Funds 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 a 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 relevant 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. A 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 a 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
relevant 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 a
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 a 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;
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5. Purchase the securities of an issuer if, immediately after such
purchase, the relevant 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 a Fund's investment objectives 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, except for a
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, a 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 a 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 a 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 its
total assets, less liabilities other than obligations created by
reverse repurchase agreements. A 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.
The Fixed Income Funds may not:
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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 relevant 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
relevant 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. A Fund will not purchase securities while
borrowings (including reverse repurchase agreements) exceed 5% of its
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 a 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
relevant 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 a Fund's total assets;
4. Purchase the securities of an issuer if, immediately after such
purchase, the relevant 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 a 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 a Fund's
total assets, except that a 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 relevant 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 a
Fund's interest in
31
<PAGE>
hedging activities as described under "Investment Objectives and
Policies"; or interest in oil, gas, or mineral exploration or
development programs. However, a 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 relevant 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 relevant 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 a 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 a Fund is
permitted to incur pursuant to Investment Restriction 2 and except
that a 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. A 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 Tax-Exempt Funds 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 relevant 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
relevant Fund's
32
<PAGE>
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. A 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 a 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
relevant 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 a 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
relevant Fund's investment in such industry would exceed 25% of the
value its total assets, except that a Fund will invest more than 25%
of its assets in securities issued or guaranteed by the United States
Government, (and, in the case of the Intermediate New York Tax-Exempt
Fund, New York State, New York City 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 the relevant Fund's total 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 relevant Fund's investment objective and policies (see
"Investment Objectives and Policies");
33
<PAGE>
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 a 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, a 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 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 relevant 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 a Fund is
permitted to incur pursuant to Investment Restriction 2 and except
that a 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
relevant Fund's total assets, less liabilities other than obligations
created by reverse repurchase agreements. A 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.
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,
34
<PAGE>
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.
35
<PAGE>
================================================================================
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>
Principal Occupations
Name and Address Position with Funds During Past Five Years
- ---------------- ------------------- ----------------------
<S> <C> <C>
Mr. Eugene Sullivan* Director and Chairman of the Director, The Bank of New York
BNY Hamilton Distributors Board Company, Inc., 1977 to 1991;
125 West 55th Street Director, W.R. Grace & Co.,
New York, NY 10019 1990 to present; Professor of
Age 76 Management, St. John's University,
1987 to Present.
</TABLE>
36
<PAGE>
<TABLE>
<S> <C> <C>
Edward L. Gardner Director Chairman of the Board, President and
411 Theodore Fremd Ave. Chief Executive Officer, Industrial
Rye, NY 10580 Solvents Corporation, 1981 to Present;
Age 62 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) and Director,
42 Sunnybrook Road The Bank of New York; President and
Bronxville, NY 10708 Director, The Bank of New York Company,
Age 70 Inc. (1984-92); Trustee, HRE Properties,
1990 to Present; Member, New York State
Banking Board, 1990-1993; Director,
Mastercard International, 1987-1992.
</TABLE>
37
<PAGE>
<TABLE>
<S> <C> <C>
Leif H. Olsen Director President, Leif H. Olsen Investments,
49 Locust Avenue, Suite 301 Inc., a registered investment adviser;
New Canaan, CT 06840 1987 to Present.
Age 71
Mr. Stephen Stamas* Director Chairman, New York Philharmonic, 1989 to
Windcrest Partners Present.
122 E. 42nd Street
49th Floor
New York, NY 10168
Age 66
James E. Quinn Director Member, Board of Directors, Tiffany &
727 Fifth Avenue Co., January 1995 to Present; Executive
New York, NY 10022 Vice President of Sales, Tiffany & Co.,
Age 45 March 1992 to Present; Senior Vice
President of Corporate Sales, Tiffany &
Co., 1990 to 1992.
J. David Huber Chief Executive Officer Employee, BISYS Fund Services, Inc.,
3435 Stelzer Road June 1987 to Present.
Columbus, OH 43219
Age 50
William J. Tomko President Vice President, BISYS Fund Services,
3435 Stelzer Road Inc., 1989 to Present.
Columbus, OH 43219
Age 38
Michael J. Brascetta Vice President Senior Vice President of Shareholder
3435 Stelzer Road Services, BISYS Fund Services, Inc.,
Columbus, OH 43219 April 1996 to Present; Employee, The
Age 37 Vanguard Group, 1981 to April 1996.
</TABLE>
38
<PAGE>
<TABLE>
<S> <C> <C>
Karen Doyle Vice President Manager, BISYS Fund Services, Inc.,
125 West 55th Street March 1995 to Present; Assistant Vice
New York, NY 10019 President, Administration, Concord
Age 39 Financial Group, October 1994 to March
1995; Assistant Treasurer, The Bank of
New York, 1979 to October, 1994.
Mary A. Madick Vice President Employee, BISYS Fund Services, Inc., May
3435 Stelzer Road 1996 to Present; Employee, T. Rowe
Columbus, OH 43219 Price, 1990 to May 1996.
Age 38
Martin R. Dean Assistant Treasurer Manager, Mutual Fund Accounting, BISYS
3435 Stelzer Road Fund Services, Inc., May 1994 to
Columbus, OH 43219 Present. Senior Manager, KPMG Peat
Age 32 Marwick, 1989 to May 1994.
George O. Martinez Secretary Senior Vice President and Director of
3435 Stelzer Road Legal and Compliance Services of BISYS
Columbus, OH 43219 Fund Services, Inc., April 1995 to
Age 37 Present; Vice President and Associate
General Counsel of Alliance Capital
Management L.P., 1989 to April 1995.
Bruce Treff Assistant Secretary Counsel, BISYS Fund Services, Inc.,
3435 Stelzer Road September 1995 to Present; Manager,
Columbus, OH 43219 Alliance Capital Management L.P. 1990 to
Age 30 June 1995.
Alaina V. Metz Assistant Secretary Chief Administrator, Administrative and
3435 Stelzer Road Regulatory Services of BISYS Fund
Columbus, OH 43219 Services, Inc., June 1995 to Present;
Age 29 Supervisor of Mutual Fund Legal
Department, Alliance Capital Management,
May 1989 to June 1995.
- --------------------------------------------------------------------------------------------------
</TABLE>
39
<PAGE>
* Interested person
The Directors are paid an annual fee of $10,000 and an additional $800 for each
meeting of the 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.
================================================================================
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.
The International Equity Fund is sub-advised by Indosuez Asset Management, a
subsidiary of Banque Indosuez. The Bank of New York and Indosuez Asset
Management each receive .425% of the average daily net assets of the
International Equity Fund as their respective compensation.
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 were no waivers or reimbursements of
expenses with respect to any other Funds in BNY Hamilton Funds, Inc. in
existence as of December 31, 1996.
40
<PAGE>
For the fiscal years ended December 31, 1994, 1995, and 1996, and for the six
months ended June 30, 1996 The Bank of New York received advisory fees from the
Funds as follows:
June 30,
1993 1994 1995 1996
---- ---- ---- ----
Money Fund $139,895 $301,506 $677,979 $546,568
Intermediate Government Fund $135,160 $316,370 $308,254 $156,757
Intermediate New York Tax-Exempt Fund $ 51,991 $164,340 $195,647 $ 97,520
Equity Income Fund $469,189 $789,873 $936,192 $575,398
The above chart reflects advisory fee waivers by The Bank of New York as
follows:
June 30,
1993 1994 1995 1996
---- ---- ---- ----
Money Fund $139,895 $48,945 $ 0 $ 0
Intermediate Government Fund $135,160 $22,326 $ 0 $ 0
Intermediate New York Tax-Exempt Fund $ 31,438 $97,652 $20,367 $ 0
Equity Income Fund $ 20,563 $ 0 $ 0 $ 0
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.
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
41
<PAGE>
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
Funds. The Administrator is a Delaware corporation organized to administer and
distribute mutual funds; its offices are located at 125 West 55th Street, New
York New York 10019.
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 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 semi-annual 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 Funds 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 will perform 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, and for the six
months ended June 30, 1996, the Funds paid administration fees as follows:
<TABLE>
<CAPTION>
June 30,
1993 1994 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
42
<PAGE>
Money Fund $279,790 $350,451 $677,980 $546,568
Intermediate Government Fund $108,127 $135,479 $123,301 $ 62,618
Intermediate New York Tax-Exempt Fund $ 48,110 $ 91,346 $ 64,804 $ 30,706
Equity Income Fund $163,251 $263,291 $312,064 $191,800
</TABLE>
The above chart reflects administration fee waivers from the Intermediate New
York Tax-Exempt Fund of $34,527, $13,452, $21,601 and $8,304 for the fiscal
years ended December 31, 1993, 1994, 1995, and the six months ended June 30,
1996, 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 will hold 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 described above under
"Investment Adviser". Each Distribution Agreement will terminate automatically
if assigned by either party thereto 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 as defined under "Additional
Information".
The Directors have adopted distribution plans ("12b-1 Plans") with respect to
Hamilton Classic Shares of the Money Fund, and the Investor Shares of each of
the Equity Funds, the Fixed Income Funds, and the Tax-Exempt Funds, which will
permit the respective Funds to reimburse the Distributor for distribution
expenses in an amount up to .25% per annum of average daily net assets of
Hamilton Classic Shares or Investor Shares, as applicable. 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 Hamilton Classic Shares or Investor Shares, as applicable. The
Hamilton Classic Shares or Investor Shares of each Fund also bear the costs
associated with implementing and operating the related 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 or Investor Shares of the related 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 or Investor Shares of each 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.
43
<PAGE>
Payments for distribution expenses under the 12b-1 Plans are subject to Rule
12b-1 (the "Rule") under the 1940 Act. Payments under the 12b-1 Plans 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 Funds. The Rule defines distribution expenses to include the cost
of "any activity which is primarily intended to result in the sales of shares".
The Rule provides, among other things, that a Fund may bear such expenses only
pursuant to a plan adopted in accordance with the Rule. In accordance with the
Rule, each 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. Each 12b-1 Plan provides
that it may not be amended to increase materially the costs which the related
Fund may bear for distribution pursuant to the 12b-1 Plan without shareholder
approval, and each 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 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 Plans are 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"), P.O. Box 163310, Columbus, Ohio,
43216-3310, serves as the 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 all 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 and Treasury Money Fund have entered into
Shareholder Servicing Agreements with respect to Hamilton Premier Shares of each
Fund and Hamilton Classic Shares of the Money Fund 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 of each Fund. Pursuant to the Shareholder Servicing
Agreement, the Hamilton Premier Shares of each Money Market Fund and the
Hamilton Classic Shares of the Money Fund 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 of each such
class represented by such Shareholder Servicing Agent's participation in each
Fund.
44
<PAGE>
The Bank of New York, 90 Washington Street, New York, New York 10286, serves as
the custodian and fund accounting agent for each Fund.
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 each
Prospectus under "Purchase of Shares".
Each Fund may accept securities in payment for Fund shares sold at the
applicable public offering price (net asset value) at the discretion of the
Fund, although the Fund would expect to accept securities in payment for Fund
shares only infrequently. Generally, a 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 a Fund would not
accept securities with a value of less than $100,000 per issue in payment for
shares. A 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. A Equity Income 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".
================================================================================
REDEMPTION OF SHARES
Investors may redeem shares as described in each Prospectus under "Redemption of
Shares." Shareholders redeeming shares of either Money Market Fund should be
aware that both Funds attempt to maintain a stable net asset value of $1.00 per
share for each class; however, there can be no assurance that either Fund will
be able to continue to do so and, in that case, the net asset value of either
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 Money Market
Fund Prospectus 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,
45
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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
Shareholders purchasing shares directly from the Funds may exchange those shares
at the current net asset value per share for other BNY Hamilton Funds which have
a similar class of shares, in accordance with the terms of the current
prospectus of the Fund being acquired. 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.
================================================================================
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 and the Treasury
Money Fund consists of accrued interest or discount and amortized premium
applicable to the specific class, less the accrued expenses of the relevant Fund
applicable to the specific class during that dividend
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<PAGE>
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 for each Money Market Fund will be made immediately prior
to the determination of net asset value at 4:30 P.M., Eastern time, on each
Business Day.
Dividends on each Hamilton Share and Hamilton Premier Share of the Money Fund
and the Treasury Money Fund 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 Prospectus for the Money Market Funds, and Hamilton
Classic Shares bear 12b-1 fees. In addition, each class of shares of the Money
Fund and the Treasury Money Fund bears certain other miscellaneous expenses
specific to that class (i.e., certain cash management, registration and transfer
agency expenses).
Determination of the net investment income for the Fixed Income Funds and the
Tax-Exempt Funds will be made immediately prior to the determination of net
asset value at 4:00 P.M., Eastern time, on each Business Day. Net investment
income for days other than Business Days is determined as of 4:00 P.M., Eastern
time, on the preceding Business Day. See "Purchase of Shares" in the relevant
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 the net asset value per share for each of its
classes once daily on Monday through Friday as described under "Net Asset Value"
in the relevant Prospectus, except that net asset value of any class need not be
computed on a day in which no orders to purchase or redeem shares of such class
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 Market Funds. In the case of the Money Market Funds, all portfolio
securities for each Fund 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".
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<PAGE>
Valuing the Money Fund's and the Treasury 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. Each of the Money
Market Funds intend to conduct their 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 either of the Money Market Funds.
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 and the Treasury Money
Fund at $1.00. Each day net asset value is computed, each class of shares of the
Money Fund and the Treasury Money Fund will calculate the net asset value of
each class of their respective 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
.5%.
If the Directors believe that a deviation from the Money Fund's or Treasury
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 and the Treasury
Money Fund's yield based on amortized cost may be higher than the corresponding
yields based on market valuations. Under these circumstances, a shareholder of
any class of shares of the Money Fund or the Treasury Money Fund would be able
to obtain a somewhat higher yield than would result if that Fund used market
valuations to determine its net asset value. The converse would apply in a
period of rising interest rates.
Fixed Income and Tax-Exempt Funds. In the case of the Fixed Income Funds and the
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
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<PAGE>
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 Funds and Intermediate Investment Grade Fund. In the case of the Equity
Funds, 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 for each class of shares in each of the Equity Funds and the
Intermediate Investment Grade Fund, 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.
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.
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================================================================================
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 and the
Treasury 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 and the Treasury
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 Shares of the Money
Fund as of June 30, 1996 were 5.15% and 5.28%, respectively. The current and
effective seven-day yields for the Hamilton Premier Shares of the Money Fund as
of June 30, 1996 were 4.89% and 5.01%, respectively. The current and seven-day
yields for the Hamilton Classic Shares of the Money Fund as of June 30, 1996
were 4.63% and 4.74%, respectively.
As required by regulations of the Securities and Exchange Commission, the
annualized yield for each of the Fixed Income Funds, the Tax-Exempt Funds and
the Equity Income Fund is computed by dividing the Fund's net investment income
per share for each class 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 Prospectus for the
Equity Funds, the Fixed Income Funds and the Tax-Exempt Funds.
The 30-day yields for the Investor Shares of the Intermediate Government Fund
and Investor Shares of the Intermediate New York Tax-Exempt Fund as of June 30,
1996 were 5.56% and 3.91%, respectively. Without reimbursement of expenses, the
30-day yield for the Investor Shares of the Intermediate New York Tax-Exempt
Fund as of June 30, 1996 would have been 3.59%.
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<PAGE>
Total Return Quotations. As required by regulations of the Securities and
Exchange Commission, the annualized total return of each of the Equity Funds,
the Fixed Income Funds and the Tax-Exempt Funds 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 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 aggregate total returns for the Investor Shares of the Intermediate
Government Fund, the Investor Shares of the Intermediate New York Tax-Exempt
Fund and the Investor Shares of the Equity Income Fund for the one year ended
June 30, 1996 and from inception (August 10, 1992) to June 30, 1996 were 4.08%
and 18.00%; (0.03)% and 17.76%; and 21.23% and 51.56%, respectively. The average
annual total return for the Investor Shares of the Intermediate Government Fund,
the Investor Shares of the Intermediate New York Tax-Exempt Fund and the
Investor Shares of the Equity Income Fund for the one year ended June 30, 1996
and from inception (August 10, 1992) to June 30, 1996 were 4.08% and 4.34%;
(0.03)% and 4.29%; and 21.23% and 12.53%, respectively.
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 each class of shares 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
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<PAGE>
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 1-800-4BNY-FND (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. Each of the Money Market Funds may compare the
performance of each class of shares to Money Fund Report, a service of IBC
Financial Data, Inc. 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 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
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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, and for the six months
ended June 30, 1996, the portfolio turnover rates for the Intermediate New York
Tax-Exempt Fund and the Equity Income Fund were 6%, 18%, 4% and 12%; 50%, 51%,
58%, and 20%, 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% and that each of the Intermediate Investment
Grade Fund, intermediate Tax-Exempt, Large Cap Growth Fund, Small Cap Growth
Fund and International Equity Fund are expected to have a portfolio turnover
rate of less than 100%.
For the fiscal years ended December 31, 1993, 1994, and 1995, and for the six
months ended June 30, 1996, the portfolio turnover rates for the Intermediate
Government Fund were 67%, 49%, 48%, and 28% 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 Market Funds, Fixed Income Funds and Tax-Exempt Funds. Portfolio
transactions for each of the Money Market Funds, the Fixed Income Funds and the
Tax-Exempt Funds will be undertaken principally to accomplish a Fund's objective
in relation to expected movements in the general level of interest rates. Each
of the Money Market Funds, the Fixed Income Funds and the Tax-Exempt Funds may
engage in short-term trading consistent with their objectives.
Each of the Money Market Funds' 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 Money Market
Funds make, turnover resulting from such investments should not adversely affect
the net asset value or net income of the Fund.
Equity Funds. In connection with portfolio transactions for the Equity Funds,
the overriding objective is to obtain the best possible execution of purchase
and sale orders. In selecting a broker, the Adviser (and, in the case of the
International Equity Fund, the sub-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 commissions and other transaction costs incurred
by the Equity Funds in light of facts and circumstances deemed relevant from
time to time, and, in that connection, 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
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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 Funds do not reduce their respective fees paid 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 any or all of the Equity Funds'
portfolio brokerage transactions to affiliates of the Adviser. In order for
affiliates of the Adviser to effect any portfolio transactions for the Equity
Funds, 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
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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.
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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 and Classes Thereof 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 Treasury Money Fund
- Hamilton Shares............................ 2,000,000,000
- Hamilton Premier Shares.................... 2,000,000,000
BNY Hamilton Equity Income Fund
- Institutional Shares....................... 200,000,000
- Investor Shares............................ 200,000,000
BNY Hamilton Large Cap Growth Fund
- Institutional Shares....................... 200,000,000
- Investor Shares............................ 200,000,000
BNY Hamilton Small Cap Growth Fund
- Institutional Shares....................... 200,000,000
- Investor Shares............................ 200,000,000
BNY Hamilton International Equity Fund
- Institutional Shares....................... 200,000,000
- Investor Shares............................ 200,000,000
BNY Hamilton Intermediate Government Fund
- Institutional Shares....................... 200,000,000
- Investor Shares............................ 200,000,000
BNY Hamilton Intermediate Investment Grade Fund
- Institutional Shares....................... 200,000,000
- Investor Shares............................ 200,000,000
BNY Hamilton Intermediate New York Tax-Exempt Fund
- Institutional Shares....................... 200,000,000
- Investor Shares............................ 200,000,000
BNY Hamilton Intermediate Tax-Exempt Fund
- Institutional Shares....................... 200,000,000
- Investor Shares............................ 200,000,000
Undesignated Common Stock........................... 3,800,000,000
</TABLE>
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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 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.
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 December 31, 1996:
<TABLE>
<CAPTION>
Fund Of Record % Beneficial Owner %
- ---- --------- - ---------------- -
<S> <C> <C> <C> <C>
Money The Bank of New York 7.12% The Bank of New York 10.86%
Profit Sharing Plan C 48 Wall Street
48 Wall Street New York, NY 10286
</TABLE>
57
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<TABLE>
<S> <C> <C> <C> <C>
New York, NY 10286
Intermediate Government The Bank of New York 31.31% The Bank of New York 42.73%
Profit Sharing Plan B 48 Wall Street
48 Wall Street New York, NY 10286
New York, NY 10286
The Bank of New York 5.73% Budget Rent-A-Car 7.58%
National Community Division 4225 Naperville Road
- 401(k) Plan Lisle, IL 60532-3656
New York, NY 10286
The Bank of New York 5.69%
Employee Incentive Savings Plan
48 Wall Street
New York, NY 10286
Intermediate New York NONE Robert J. Milano 9.25%
Tax-Exempt 860 United Nations Plaza
New York, NY 10017
Equity Income The Bank of New York 40.17% The Bank of New York 44.65%
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 Tax Code generally will be applied
to each Fund 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 Tax 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, after a holding period of less than three
months, of stock, securities, options, futures or forward contracts (other than
options, futures or forward contracts on foreign currencies) or foreign
currencies not directly related to the Fund's principal business of investing in
stock or securities (or options, futures or forward contracts or such foreign
currencies); and (c) diversify its holdings so that, at
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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). 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 at least annually.
Under the Tax 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 either of the Tax-Exempt Funds, 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. Each of the
Equity Funds expects that a portion of these distributions to their respective
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 any of the Equity Funds 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 either of the Tax-Exempt Funds. See "Tax-Exempt Funds"
below. Additionally, any loss realized on a redemption or exchange of shares of
a Fund will be disallowed to the extent the shares disposed
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<PAGE>
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 any of the Equity Funds, the Fixed Income Funds and the
Tax-Exempt Funds 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 each class of each 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
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 Tax 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
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<PAGE>
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 Tax
Code is made, in which case the rule for options and futures contracts will
apply.
The International Equity Fund will, and the Equity Income Fund, the Large Cap
Growth Fund and the Small Cap Growth Fund may, invest in equity securities of
foreign issuers. If these Funds purchase shares in certain foreign investment
companies, they 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 a Fund to its respective shareholders. In addition,
certain interest charges may be imposed on the Equity Funds or its respective
shareholders in respect of unpaid taxes arising from such distributions or
gains. Alternatively, the Equity Funds 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 Funds 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 Funds' 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 Funds 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 Funds
would recognize from the mark-to-market election would be included in the net
investment income they must distribute to shareholders, notwithstanding that a
Fund would receive no cash in respect of such gains.
It is expected that the Money Fund, the Equity Income Fund, the Large Cap
Growth Fund, the Small Cap Growth Fund, the International Equity Fund and the
Intermediate Investment Grade Fund may be subject to foreign withholding taxes
with respect to income received from sources within foreign countries. The
International Equity Fund intends to elect to "pass through" to its investors
the amount of foreign income taxes paid by the Fund, with the result that each
shareholder will (i) include in gross income, even though not actually
received, the pro rata share of the Fund's foreign income taxes, and (ii)
either deduct (in calculating U.S. taxable income) or credit (in calculating
U.S. federal income tax) the pro rata share of the Fund's foreign income taxes.
A foreign tax credit may not exceed the U.S. federal income tax otherwise
payable with respect to the Fund's foreign source income. For this purpose,
each shareholder must treat as foreign source gross income (i) his
proportionate share of foreign taxes paid by the Fund and (ii) the portion of
any dividend paid by the Fund which represents income derived from foreign
sources; the gain from the sale of securities will generally be treated as U.S.
source income. This foreign tax credit limitation is applied separately to
separate categories of income; dividends from the will be treated as "passive"
or "financial services" income for this purpose. The effect of this limitation
may be to prevent from claiming as a credit the full amount of their pro rate
share of the Fund's foreign income taxes.
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
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<PAGE>
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.
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.
Tax-Exempt Funds. Both of the Tax-Exempt Funds intend to qualify to pay
exempt-interest dividends to its respective 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 such 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 such Tax-Exempt Fund. In view of each Tax-Exempt Fund's investment
policies, it is expected that substantially all dividends will be
exempt-interest dividends, although each 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 either 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
either 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 Tax Code is treated as a tax preference item for purposes of the
alternative minimum tax, and any such interest received by a Tax-Exempt Fund and
distributed to shareholders will be so treated for purposes of any alternative
minimum tax liability of shareholders. The Tax-Exempt Funds are
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<PAGE>
permitted to invest up to 20% of their respective 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 a 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.
Holders of shares of either class of either 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 respective 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, 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 either class
of either 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 either 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 both Tax-Exempt Funds
that is attributable to interest that is exempt from federal income tax and, in
the case of the Intermediate New York Tax-Exempt Fund, New York State and City
personal income tax will be provided to shareholders shortly after the end of
the 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
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<PAGE>
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 11
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 240,000 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 current fiscal year commenced on April 1, 1996, and ends on March
31, 1997, and is referred to herein as the State's 1996-97 fiscal year. The
State's budget for the 1996-97 fiscal year was enacted by the Legislature on
July 13, 1996, more than three months after the start of the fiscal year. The
State Financial Plan for the 1996-97 fiscal year was formulated on July 25,
1996 and is based on the State's budget as enacted by the Legislature and
signed into law by the Governor, as well as actual results for the first
quarter of the current fiscal year.
After adjustments for comparability between fiscal years, the adopted 1996-97
budget projects a year-over-year increase in General Fund disbursements of 0.2
percent. Adjusted State Funds (excluding federal grants) disbursements are
projected to increase by 1.6 percent from the prior fiscal year. All
Governmental Funds projected disbursements increase by 4.1 percent over the
prior fiscal year, after adjustments for comparability.
The 1996-97 State Financial Plan is projected to be balanced on a cash basis.
As compared to the Governor's proposed budget as revised on March 20, 1996, the
State's adopted budget for 1996-97 increases General Fund spending by $842
million, primarily from increases for education, special education and higher
education ($563 million). The balance represents funding increases to a
variety of other programs, including community projects and increased
assistance to fiscally distressed cites. Resources used to fund these
additional expenditures include $540 million in increased revenues projected
for 1996-97 based on higher-than-projected tax collections during the first
half of calendar 1996, $110 million in projected receipts from a new State tax
amnesty program, and other resources including certain non-recurring resources.
The total amount of non-recurring resources included in the 1996-97 State
budget is projected by the Division of Budget (the "DOB") to be $1.3 billion,
or 3.9 percent of total General Fund receipts.
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. In addition, 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. The DOB believes that its
projections of receipts and disbursements relating to the current State
Financial Plan, and the assumptions on which they are based, are reasonable.
Actual results, however, could differ materially and adversely from the
projections set forth herein, and those projections may be changed materially
and adversely from time to time. There are also risks and uncertainties
concerning the future-year impact of actions taken in the 1996-97 budget.
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. This fund structure adheres to accounting standards of the
Governmental Accounting Standards Board. 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. In the State's 1996-97 fiscal
year, the General Fund is expected to account for approximately 47 percent of
total Governmental Funds disbursements and 71 percent of total State Funds
disbursements. General Fund moneys are also transferred to other funds,
primarily to support certain capital projects and debt service payments in
other fund types. The General Fund is projected to be balanced on a cash basis
for the 1996-97 fiscal year. Total receipts and transfers from other funds are
projected to be $33.17 billion, an increase of $365 million from the prior
fiscal year. Total General Fund disbursements and transfers to other funds are
projected to be $33.12 billion, an increase of $444 million from the total in
the prior fiscal year.
General Fund Receipts
Major statutory changes adopted with the 1996-97 budget that affect 1996-97
include: tax reductions totaling $83 million, adoption of a tax amnesty
program expected to increase receipts by $110 million, and a variety of
measures increasing miscellaneous receipts by approximately $675 million.
In 1995, the State enacted a tax-reduction program designed to reduce receipts
from the personal income tax by 20 percent over three years. Prior to 1995,
the tax had remained substantially unchanged since 1989 as a result of
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annual deferrals of tax reductions originally enacted in 1987. The
tax-reduction program is estimated to reduce receipts by $2.3 billion in the
1996-97 fiscal year, compared to what tax receipts would have been under the
pre-1995 rate structure. The program also includes increases in the standard
deduction, widening tax brackets to increase the income thresholds to which
higher tax rates apply, and modification of certain tax credits. The projected
yield of the personal income tax for the 1996-97 fiscal year is $17.1 billion,
an increase of $103 million from reported collections in the State's 1995-96
fiscal year. The increase 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 account transactions that depressed collections
in 1995-96 by $500 million. The income base for the tax is projected to rise
approximately 5 percent for the 1996 tax year.
User taxes and fees are comprised of three-quarters of the State four percent
sales and use tax (the balance, one percent, flows to support Local Government
Assistance Corporation ("LGAC") debt service requirements), cigarette,
alcoholic beverage container, and auto rental taxes, and a portion of the motor
fuel excise levies. Also included in this category are receipts from the motor
vehicle registration fees and alcoholic beverage license fees. Receipts in this
category in the State's 1996-97 fiscal year are expected to total $6.73
billion, an increase of $97 million from reported 1995-96 results. Underlying
growth in the continuing sales tax base is forecast to be 5 percent, accounting
for the increase in the category as a whole. Projected receipts in 1996-97 are
adversely affected by the full-year effects of reductions in the diesel motor
fuel, container and beer taxes adopted in 1995 and by a temporary reduction of
the sales tax on clothing enacted in 1996.
Business taxes include franchise taxes based generally on net income of general
business, bank and insurance corporations, as well as gross-receipts-based
taxes on utilities and gallonage-based petroleum business taxes. Total business
tax receipts in the State's 1996-97 fiscal year are projected at $4.62 billion,
a decline of $360 million from reported 1995-96 results. The decline results
from the continuing effects of tax reductions originally enacted in 1994 and
1995, valued at approximately $300 million more in 1996-97 than in 1995-96, and
the previously scheduled diversion of petroleum business and other tax receipts
to dedicated transportation funds (valued at approximately $130 million more in
1996-97 than in 1995-96). These factors outweigh the modest growth projected in
the bases of the continuing tax structure.
Other taxes include estate, gift and real estate transfer taxes, a tax on gains
from the sale or transfer of certain real estate where the total consideration
exceeds $1 million, a pari-mutuel tax and other minor levies. Total receipts
from this category in the State's 1996-97 fiscal year are projected at $948
million, $151 million less than in the preceding year.
Miscellaneous receipts include investment income, abandoned property receipts,
medical provider assessments, receipts from public authorities, and certain
other license and fee revenues. Receipts in this category in the State's
1996-97 fiscal year are expected to total $2.1 billion, an increase of $683
million above the amount received in the prior State fiscal year. This
includes $481 million in surplus revenues from the Medical Malpractice
Insurance Association ("MMIA"), and other various non-recurring resources.
MMIA is a statutorily-created joint underwriting association of
property/casualty insurance companies authorized to write certain personal
liability insurance in the State which provides primary and excess medical
malpractice insurance for medical service providers in the State. It has been
reported that certain health care providers are considering a challenge to the
State's right to these surplus revenues.
Transfers from other funds to the General Fund consist primarily of tax
revenues in excess of debt service requirements, particularly the one percent
sales tax used to support payments to LGAC. In the 1996-97 fiscal year, excess
sales tax revenues are projected to be $1.4 billion, $75 million more than in
the 1995-96 fiscal year. All other transfers are projected to decrease by $82
million, primarily reflecting the non-recurring transfer of $117 million from
the Mass Transportation Operating Assistance Fund to the Revenue Accumulation
fund in 1995-96. As a result, total transfers are virtually unchanged year-to-
year.
General Fund Disbursements
Grants to local governments is the largest category of General Fund
disbursements, and accounts for approximately 70 percent of overall General
Fund spending. Disbursements from this category are projected to total $23.13
billion in the 1996-97 State Financial Plan, an increase of $597 million (2.6
percent) from 1995-96 levels. This category of the State Financial Plan
includes $11.27 billion in aid for elementary, secondary, and higher education,
accounting for 49 cents of every dollar spent in this category. On a school
year basis, formula-based elementary and secondary education aid increased $217
million from 1995-96 levels.
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General Fund payments for Medicaid are projected to be $5.29 billion, virtually
unchanged from the level of $5.34 billion in 1995-96 and down from $5.79
billion in 1994-95. Other social service spending is forecast to increase by
only $7 million to $3.17 billion in 1996-97, down from $3.34 billion in
1994-95.
State operations spending reflects the administrative costs of operating the
State's agencies, including the prison system, mental hygiene institutions, the
State University system ("SUNY"), the Legislature, and the court system.
Personal service costs account for approximately 76 percent of this category in
1996-97. Since January 1995, the State's workforce has been reduced by about
15,000 positions, with a decrease of 5,000 positions expected in 1996-97.
State employees will not receive a general salary increase this year as part of
the collective bargaining agreements recently negotiated for the 1995-96
through 1998-99 fiscal years. Disbursements for State operations are projected
at $5.82 billion, a decrease of $135 million or 2.3 percent. The lack of
growth in this category reflects the workforce reduction program for 1996-97
that will be accomplished primarily through attrition, a continued hiring
freeze and implementation of a retirement incentive program.
General State charges primarily reflect the costs of providing fringe benefits
for State employees, including contributions to pension systems, the employer's
share of social security contributions, employer contributions toward the cost
of health insurance, and the costs of providing worker's compensation and
unemployment insurance benefits. This category also reflects certain fixed
costs such as payments in lieu of taxes, and payments of judgments against the
State or its public officers. Disbursements in this category are projected to
total $2.22 billion in the 1996-97 State Financial Plan, an increase of $138
million from the 1995-96 levels.
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Debt service paid from the General Fund for 1996-97 reflects only the $10
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 to other funds from the General Fund are made primarily to finance
certain portions of State capital project spending and debt service on
long-term bonds, where these costs are not funded from other sources.
Transfers are projected to total $1.94 billion, a decrease of $161 million or
7.7 percent from 1995-96 levels. Transfers in support of capital projects
decrease $210 million due to the availability of non-recurring revenues which
will be deposited directly to the Capital Projects Funds in 1996-97 and the
reclassification of economic development programs from capital projects to
grants to local governments. Transfers in support of debt service increase $60
million reflecting prior year bond sales for prisons, housing programs, and
SUNY.
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.
Although activity in this fund type is expected to comprise approximately 43
percent of total government funds receipts in the 1996-97 fiscal year,
three-quarters of that activity relates to federally-funded programs.
Projected receipts in this fund type total $28.04 billion, an increase of $2.43
billion (9.5 percent) over the prior year. Projected disbursements in this
fund type total $28.51 billion, an increase of $2.25 billion (8.6 percent) over
1995-96 levels. Disbursements from federal funds, primarily the federal share
of Medicaid and other social services programs, are projected to total $21.31
billion in the 1996-97 fiscal year. Remaining projected spending of $7.20
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.
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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 governments or
public authorities. This fund type consists of the Capital Projects Fund,
which is supported by tax receipts transferred from the General Fund, and 37
other capital funds established to distinguish specific capital construction
purposes supported by other revenues. In the 1996-97 fiscal year, activity in
these funds is expected to comprise 6 percent of total governmental receipts.
Total receipts in this fund type are projected at $3.58 billion. Disbursements
from this fund type are projected to be $3.85 billion, a decrease of $120
million (3.1 percent) over prior-year levels, due in part to a reclassification
of economic development projects to the category of grants to local governments
in the General Fund. The Dedicated Highway and Bridge Trust Fund is the single
largest dedicated fund, comprising an estimated $920 million (24 percent) of
the activity in this fund type. Total spending for capital projects will be
financed through a combination of sources: federal grants (28 percent), public
authority bond proceeds (34 percent), general obligation bond proceeds (12
percent), and pay-as-you-go revenues (26 percent).
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. This
fund type is expected to comprise 4 percent of total governmental fund receipts
and disbursements in the 1996-97 fiscal year. Receipts in these funds in excess
of debt service requirements may be transferred to the General Fund and Special
Revenue Funds, pursuant to law.
The Debt Service fund type consists of the General Debt Service Fund, which is
supported primarily by tax receipts transferred from the General Fund, and
other funds established to accumulate moneys for the payment of debt service.
In the 1996-97 fiscal year, total disbursements in this fund type are projected
at $2.58 billion, an increase of $164 million or 6.8 percent. The projected
transfer from the General Fund of $1.59 billion is expected to finance 62
percent of these payments.
The remaining payments are expected to be financed by pledged revenues,
including $1.83 billion in taxes, $234 million in dedicated fees, and $2.35
billion in patient revenues, including transfers of federal and State
reimbursements and State dedicated taxes. After required impoundment for debt
service, $3.7 billion is expected to be transferred to the General Fund and
other funds in support of State operations. The largest transfer -- $1.9
billion -- is made to the Special Revenue fund type in support of operations of
the mental hygiene agencies. Another $1.4 billion in excess sales tax is
expected to be transferred to the General Fund, following payment of projected
debt service on LGAC bonds.
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Out-year Projections of Receipts and Disbursements
The 1996-97 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 1996-97 State Financial Plan contains actions
that provide non-recurring resources or savings totaling approximately $1.3
billion. These include the use of $481 million in surplus funds available from
MMIA, $134 million in savings from a refinancing of certain pension
obligations, $88 million in projected savings from bond refundings, and $36
million in surplus fund transfers. The balance is composed of $314 million in
resources carried forward from the State's 1995-96 fiscal year and various
other actions, including that portion of the proposed tax amnesty program that
is projected to be non-recurring.
The State closed projected budget gaps of $5.0 billion and $3.9 billion for its
1995-96 and 1996-97 fiscal years, respectively. The 1997-98 gap was projected
at $1.44 billion, based on the Governor's proposed budget of December 1995. As
a result of changes made in the enacted budget, that gap is now expected to be
larger. However, the gap is not expected to be as large as those faced in the
prior two fiscal years. The Governor has indicated that he will propose to
close any potential imbalance primarily through General Fund expenditure
reductions and without increases in taxes or deferrals of scheduled tax
reductions.
The out-year projection will be impacted by a variety of factors. Enacted tax
reductions, which reduced receipts in the 1996-97 Fiscal year by an incremental
$2.4 billion, are projected to reduce receipts in the 1997-98 fiscal year by an
additional increment of $2.1 billion. The use of up to $1.3 billion of
non-recurring resources in 1996-97, and the annualized costs of certain program
increases in the 1996-97 enacted budget, will both add additional pressure in
closing the 1997-98 gap.
Actions undertaken in the State's 1996-97 fiscal year, such as workforce
reductions, health care and education reforms, and strict controls on State
agency spending, are expected to provide larger recurring savings in 1997-98.
Sustained growth in the State's economy and continued declines in welfare
caseload and Medicaid costs would produce additional savings in the 1997-98
Financial Plan. Finally, future federal reforms of welfare and/or Medicaid
could potentially provide savings to the State in State fiscal year 1997-98.
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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 1995-96.
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.
1995-96 Fiscal Year
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 program; 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 in the 1995-96 State Financial Plan was closed thorugh 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 called for (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.
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As a result of these and other efforts, the State ended its 1995-96 fiscal year
with balances in the General Fund, Special Revenue Funds and Debt Service Funds
of $287 million, $499 million and $160 million, respectively, and a deficit of
$292 million in the Capital Projects Funds.
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
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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 public schools in the City of Yonkers; (vii) an action
seeking reimbursement from the State for certain costs arising out of the
provision of preschool services and programs for children with handicapping
conditions; 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.
Similarly, certain litigation which by itself did not produce a material
judgement against the State could have an adverse impact on the State Financial
Plan because of the precedential nature of the court's decision. Specifically,
the State Court of Appeals has denied a motion to appeal a lower court decision
in the so-called "GTE Spacenet" case, in which the court ruled the GTE Spacenet
was not subject to the 3.5 percent tax on gross receipts imposed under section
186-a of the tax law. The court decision is limited to provisions of section
186-a as it existed prior to 1995 amendments, and has little prospective effect.
While this litigation in and of itself carries only a small judgement in favor
of GTE Spacenet and similar companies, the consequences of the ruling could
eventually entail refunds to other taxpayers of several hundred million dollars.
Refund claims of over $300 million have been filed which, with interest and
assuming a similar exposure for open years for which claims have yet to be
filed, could approach $600 million in potential claims.
The fiscal health of the State may also be affected by the fiscal health of New
York City (the "City"), which continues to require significant financial
assistance from the State. The State could also be affected by the ability of
the City to market its securities successfully in the public credit markets.
In response to the City's fiscal crisis in 1975, the State took action to assist
the City in returning to fiscal stability. Among those actions, the State
established NYC MAC to provide financing assistance to the City; the New York
State Financial Control Board (the "Control Board") to oversee the City's
financial affairs; and the Office of the State Deputy Comptroller for the City
of New York ("OSDC") to assist the Control Board in exercising its powers and
responsibilities. A "Control Period" existed from 1975 to 1986 during which the
City was subject to certain statutorily-prescribed fiscal controls. Although the
Control Board terminated the Control Period in 1986 when certain statutory
conditions were met and suspended certain Control Board powers, upon the
occurrence or "substantial likelihood and imminence" of the occurrence of
certain events, including (but not limited to) a City operating budget deficit
of more than $100 million or impaired access to the public credit markets, the
Control Board is required by law to reimpose a Control Period.
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Currently, the City and its Covered Organizations (i.e., those which receive or
may receive moneys from the City directly, indirectly or contingently) operate
under a four-year financial plan (the "Financial Plan") which the City prepares
annually and periodically updates. Implementation of the Financial Plan is
dependent upon the ability of the City and certain Covered Organizations to
market their securities successfully. The City issues securities to finance,
refinance and rehabilitate infrastructure and other capital needs, as well as
for seasonal financing needs. The City currently projects that if no action is
taken, it will exceed its State Constitutional general debt limit beginning in
City fiscal year 1998. The current Financial Plan includes certain alternative
methods of financing a portion of the City's capital program which require State
or other outside approval. Future developments concerning the City or its
Covered Organizations, and public discussion of such developments, as well as
prevailing market conditions and securities credit ratings, may affect the
ability or cost to sell securities issued by the City or such Covered
Organizations and may also affect the market for their outstanding securities.
The staffs of the Control Board, OSDC and the City Comptroller issue periodic
reports on the City's Financial Plans which analyze the City's forecasts of
revenues and expenditures, cash flow, and debt service requirements for, and
Financial Plan compliance by, the City and its Covered Organizations. According
to recent staff reports, the City's economy has experienced weak employment and
moderate wage and income growth throughout the mid-1990s. Although this trend
is expected to continue for the rest of the decade, there is the risk of a
slowdown in the City's economy in the next few years, which would depress
revenue growth and put further strains on the City's budget. These reports have
also indicated that recent City budgets have been balanced in part through the
use of non-recurring resources; that the City's Financial Plan tends to rely on
actions outside its direct control; that the City has not yet brought its
long-term expenditure growth in line with recurring revenue growth; and that
the City is therefore likely to continue to face substantial future budget gaps
that must be closed with reduced expenditures and/or increased revenues.
Other Localities
Certain localities outside New York City have experienced financial problems and
have requested and received additional State assistance during the last several
State fiscal years. The potential impact on the State of any future requests by
localities for additional assistance is not included in the projections of the
State's receipts and disbursements for the State's 1996-97 fiscal year.
Fiscal difficulties experienced by the City of Yonkers resulted in the
re-establishment of the Financial Control Board for the City of Yonkers by the
State in 1984. That Board is charged with oversight of the fiscal affairs of
Yonkers. Future actions taken by the State to assist Yonkers could result in
increased State expenditures for extraordinary local assistance.
Beginning in 1990, the City of Troy experienced a series of budgetary deficits
that resulted in the establishment of a Supervisory Board for the City of Troy
in 1994. The Supervisory Board's powers were increased in 1995, when Troy MAC
was created to help Troy avoid default on certain obligations. The legislation
creating Troy MAC prohibits the City of Troy from seeking federal bankruptcy
protection while Troy MAC bonds are outstanding.
Seventeen municipalities received extraordinary assistance during the 1996
legislative session through $50 million in special appropriations targeted for
distressed cities.
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
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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.
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 operates certain commuter rail and bus services in the New York
Metropolitan area through MTA's subsidiaries, the Long Island Rail Road Company,
the Metro-North Commuter Railroad Company, and the Metropolitan Suburban Bus
Authority. In addition, the Staten Island Rapid Transit Operating Authority, an
MTA subsidiary, operates a rapid transit line on Staten Island. Through its
affiliated agency, the Triborough Bridge and Tunnel Authority (the "TBTA"), the
MTA operates certain intrastate toll bridges and tunnels. Because fare revenues
are not sufficient to finance the mass transit portion of these operations, the
MTA has depended, and will continue to depend, for operating support upon a
system of State, local government and TBTA support, and, to the extent
available, federal operating assistance, including loans, grants and subsidies.
If current revenue projections are not realized and/or operating expenses exceed
current projections, the TA or commuter railroads may be required to seek
additional State assistance, raise fares or take other actions.
Since 1980, 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 Metropolitan Transportation Region served by the MTA
and a special one-quarter of 1 percent regional sales and use tax-that provide
revenues for mass transit purposes, including assistance to the MTA. Since 1987
State laws has required that the proceeds of a one-quarter of 1 percent mortgage
recording tax paid on certain mortgages in the Metropolitan Transportation
Region be deposited in a special MTA fund for operating or capital expenses. In
1993, the State dedicated a portion of certain additional State petroleum
business tax receipts to fund operating or capital assistance to the MTA. For
the 1997-97 State fiscal year, total State assistance to the MTA is estimated at
approximately $1.09 billion.
State legislation accompanying the 1996-97 adopted State budget authorized the
MTA, TBTA and TA to issue an aggregate of $6.5 billion in bonds to finance a
portion of a new $11.98 billion MTA capital plan for the 1995 through 1999
calendar years (the "1995-99 Capital Program"), and authorized the MTA to submit
the 1995-99 Capital Program to the Capital Program Review Board for approval.
This plan will supersede the overlapping portion of the MTA's 1992-96 Capital
Program. This is the fourth capital plan since the Legislature authorized
procedures for the adoption, approval and amendment of MTA capital programs and
is designed to upgrade the performance of the MTA's transportation systems by
investing in new rolling stock, maintaining replacement schedules for existing
assets and bringing the MTA system into a state of good repair. The 1995-99
Capital Program assumes the issuance of an estimated $5.1 billion in bonds under
this $6.5 billion aggregate bonding authority. The remainder of the plan is
projected to be financed through assistance from the State, the Federal
Government, and the City of New York, and from various other revenues generated
from actions taken by the MTA.
There can be no assurance that all the necessary governmental actions for the
1995-99 Capital Program or future capital programs will be taken, that funding
sources currently identified will not be decreased or eliminated, or that the
1995-99 Capital Program, or parts thereof, will not be delayed or reduced.
Should funding levels fall below current projections, the MTA would have to
revise its 1995-99 Capital Program accordingly. If the 1995-99 Capital Program
is delayed or reduced, ridership and fare revenues may decline, which could,
among other things, impair the MTA's ability to meets its operating expenses
without additional assistance.
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================================================================================
ADDITIONAL INFORMATION
As used in this Statement of Additional Information and the Prospectuses, the
term "majority of a Fund's outstanding shares" (of a series, if applicable)
means the vote of (i) 67% or more of the Fund's shares (of the series, if
applicable) present at a meeting, if the holders of more than 50% of the Fund's
outstanding shares (of the series, if applicable) are present or represented by
proxy, or (ii) more than 50% of the Fund's outstanding shares (of the series, if
applicable), whichever is less.
Telephone calls to the Funds and The Bank of New York as shareholder servicing
agent may be tape recorded.
With respect to the securities offered hereby, this Statement of Additional
Information and the Prospectuses do not contain all the information included in
the Funds' Registration Statement filed with the Securities and Exchange
Commission under the Securities Act. Pursuant to the rules and regulations of
the Securities and Exchange Commission, certain portions have been omitted. The
Registration Statement, including the exhibits filed therewith, may be examined
at the office of the Securities and Exchange Commission in Washington, D.C.
Statements contained in this Statement of Additional Information and the
Prospectuses concerning the contents of any contract or other document are not
necessarily complete, and in each instance, reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statements. Each such statement is qualified in all respects by such reference.
No dealer, salesman or any other person has been authorized to give any
information or to make any representations, other than those contained in the
Prospectuses and this Statement of Additional Information, in connection with
the offer contained in the Prospectuses and this Statement of Additional
Information and, if given or made, such other information or representations
must not be relied upon as having been authorized by any of the Funds or the
Distributor. The Prospectuses and this Statement of Additional Information do
not constitute an offer by any Fund or by the Distributor to sell or
solicitation of any offer to buy any of the securities offered hereby in any
jurisdiction to any person to whom it is unlawful for the Funds or the
Distributor to make such offer in such jurisdictions.
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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.
77
<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 capacity will normally be evidenced by the following
characteristics:
- Leading market positions in well established industries.
- High rates of return on funds employed.
78
<PAGE>
- 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.
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.
79
<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
--------- ------------
<S> <C> <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
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
--------- ------------
<S> <C> <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
--------- ------------
<S> <C> <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
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------------
<S> <C> <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
--------- ------------
<S> <C> <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
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------------
<S> <C> <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
--------- ------------
<S> <C> <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
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------------
<S> <C> <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 Equity Income 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
--------- ------------
<S> <C> <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
--------- ------------
<S> <C> <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
--------- ------------
<S> <C> <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
--------- ------------
<S> <C> <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
- --------------------------------------------------------------------------------
NUMBER OF
SHARES MARKET VALUE
--------- ------------
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
------------
PRINCIPAL
AMOUNT
---------
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
------------
PRINCIPAL MARKET
AMOUNT VALUE
--------- -----------
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
-----------
See notes to financial statements.
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
- ------
BNY HAMILTON EQUITY INCOME FUND
Schedule of Investments (Continued)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
STRIKE MARKET
CONTRACTS PRICE VALUE
--------- ------ ------------
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
============
* 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
-------------------------------------------------------------------------------
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
============
Statement of Operations
FOR THE YEAR ENDED DECEMBER 31, 1995
- -------------------------------------------------------------------------------
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
===========
See notes to financial statements.
- --------------------------------------------------------------------------------
5
<PAGE>
- --------------------------------------------------------------------------------
BNY HAMILTON EQUITY INCOME FUND
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------
1995 1994
------------ ------------
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
============ ============
See notes to financial statements.
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
BNY HAMILTON EQUITY INCOME FUND
- ------
Financial Highlights
- --------------------------------------------------------------------------------
FOR THE
PERIOD
AUGUST 10,
1992*
YEAR ENDED DECEMBER 31, THROUGH
----------------------------- DECEMBER
1995 1994 1993 31, 1992
-------- -------- -------- ----------
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
* 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
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
--------- -----------
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
-----------
PRINCIPAL MARKET
AMOUNT VALUE
--------- -----------
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
===========
See notes to financial statements.
(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.
- --------------------------------------------------------------------------------
8
<PAGE>
- --------------------------------------------------------------------------------
BNY HAMILTON INTERMEDIATE GOVERNMENT FUND
Statement of Assets and Liabilities
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
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
===========
Statement of Operations
DECEMBER 31, 1995
- -------------------------------------------------------------------------------
INVESTMENT INCOME:
67 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
==========
See notes to financial statements.
- --------------------------------------------------------------------------------
9
<PAGE>
- --------------------------------------------------------------------------------
BNY HAMILTON INTERMEDIATE GOVERNMENT FUND
- ------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------
1995 1994
----------- -----------
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
=========== ===========
See notes to financial statements.
- --------------------------------------------------------------------------------
10
<PAGE>
- --------------------------------------------------------------------------------
- ------
BNY HAMILTON INTERMEDIATE GOVERNMENT FUND
Financial Highlights
- --------------------------------------------------------------------------------
FOR THE
PERIOD
AUGUST 10,
1992*
YEAR ENDED DECEMBER 31, THROUGH
-------------------------- DECEMBER
1995 1994 1993 31, 1992
------- ------- ------- ----------
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%
* 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>
<C>
- --------------------------------------------------------------------------------
*MOODY'S
PRINCIPAL /S&P INTEREST MATURITY MARKET
AMOUNT RATINGS RATE DATE VALUE
--------- -------- -------- -------- -----------
<S> <C> <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
- --------------------------------------------------------------------------------
*MOODY'S
PRINCIPAL /S&P INTEREST MATURITY MARKET
AMOUNT RATINGS RATE DATE VALUE
--------- -------- -------- -------- ----------
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
----------
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
--------- --------- -------- -------- -----------
<S> <C> <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
- --------------------------------------------------------------------------------
*MOODY'S
PRINCIPAL /S&P INTEREST MATURITY MARKET
AMOUNT RATINGS RATE DATE VALUE
--------- -------- -------- -------- -----------
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
===========
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
------------------------------------------------------------------------------
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
===========
Statement of Operations
FOR THE YEAR ENDED DECEMBER 31, 1995
- -------------------------------------------------------------------------------
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
==========
See notes to financial statements.
- --------------------------------------------------------------------------------
16
<PAGE>
- --------------------------------------------------------------------------------
- ------
BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------
1995 1994
----------- -----------
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
=========== ===========
See notes to financial statements.
- --------------------------------------------------------------------------------
17
<PAGE>
- --------------------------------------------------------------------------------
BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND
Financial Highlights
- --------------------------------------------------------------------------------
FOR THE
PERIOD
AUGUST 10,
1992*
YEAR ENDED DECEMBER 31, THROUGH
--------------------------- DECEMBER
1995 1994 1993 31, 1992
---- ---- --------- ----------
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% --
* 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:
% OF AVERAGE
DAILY NET ASSETS
----------------
Equity Income Fund............................................. .60%
Intermediate Government Fund .50%
Intermediate New York Tax-Exempt Fund.......................... .50%
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:
% OF AVERAGE
DAILY NET ASSETS
----------------
Equity Income Fund............................................. .20%
Intermediate Government Fund .20%
Intermediate New York Tax-Exempt Fund.......................... .20%
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:
EQUITY
INCOME FUND
-----------------------
PURCHASES SALES
----------- -----------
US Gov't Securities..................................... $ -- $ --
All Others.............................................. 87,087,927 81,212,081
INTERMEDIATE
GOVERNMENT FUND
-----------------------
PURCHASES SALES
----------- -----------
US Gov't Securities..................................... $27,548,620 $28,713,238
All Others.............................................. -- 87,251
- --------------------------------------------------------------------------------
21
<PAGE>
- --------------------------------------------------------------------------------
- ------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
INTERMEDIATE
NEW YORK
TAX-EXEMPT FUND
--------------------
PURCHASES SALES
--------- ----------
US Gov't Securities........................................ $ -- $ --
All Others................................................. 1,740,993 8,601,443
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.
CAPITAL LOSS
CARRYFORWARD EXPIRATION
------------ ----------
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
6. WRITTEN OPTION ACTIVITY
Transactions in written options during the year ended December 31, 1995 were
as follows:
AMOUNT OF NUMBER OF
PREMIUMS OPTIONS
------------ ---------
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
------------ -------
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-EXEMPT FUND
(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>
- --------------------------------------------------------------------------------
- --------- CHAIRMAN'S LETTER
July 15, 1996
DEAR SHAREHOLDER:
I am pleased to report to you on the performance of the BNY Hamilton Money
Fund for the first half of 1996. I would like to take this opportunity to
express my appreciation for the confidence you have placed in the Fund to invest
your money. Growth in the Fund was strong. Net assets increased 17%, finishing
the first half of the year at $1.1 billion.
The Fund is invested to provide safety, liquidity and high yield.
Consistent with these objectives, overnight repurchase agreements backed by U.S.
Government securities currently constitute the largest portion of the Fund.
Other Fund investments include commercial paper, U.S. Treasuries and Agencies
and floating rate notes. Selection of maturities are determined by the supply
and type of money market instruments available in the market as well as Federal
Reserve policy and by the liquidity needs of our shareholders.
At the end of June 1996, the 7-day current yield for the Hamilton Class of
the BNY Hamilton Money Fund was 5.15%. The year to date annualized return was
5.22%. For the Premier Class, the 7-day current yield was 4.89%. The year to
date annualized return was 4.96%. The 7-day current yield for the Classic Class
was 4.63%. The year to date annualized return was 4.70%.*
The Fund has achieved special recognition by Standard & Poor's, receiving a
AAAm rating. This rating is historical and is based upon the Fund's credit
quality, market price exposure and management. It signifies that the Fund's
safety is excellent and that it has a superior capacity to maintain a $1.00 net
asset value per share.
We are pleased to provide you with the safety, liquidity and high yield the
BNY Hamilton Money Fund offers. The Bank of New York as investment adviser to
the Funds will continue to manage your assets with the same degree of
conscientiousness, prudence and sensitivity to market changes in the months
ahead.
Thank you for your support.
Sincerely,
Eugene J. Sullivan
Chairman of the Board
- ------------------
* An investment in the Fund is neither insured nor guaranteed by the U.S.
Government. Yields will fluctuate with market conditions. Past performance is
no guarantee of future results. There can be no assurance that 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......................... 9
DIRECTORS AND OFFICERS................................ 11
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
- --------- BNY HAMILTON MONEY FUND
Schedule of Investments
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ------------ --------------
<S> <C> <C>
COMMERCIAL PAPER-- 28.78%
ASSET BACKED SECURITIES--
TRADE & LEASE RECEIVABLES
(PARTIAL SUPPORT)--5.57%
$ 25,000,000 Matterhorn Capital Corp.,
5.35%+, 8/13/96............. $ 24,840,243
20,000,000 New Center Asset Trust,
5.30%+, 7/1/96.............. 20,000,000
17,127,000 Sheffield Receivables Corp.,
5.28%+, 7/1/96.............. 17,127,000
--------------
61,967,243
--------------
BANK HOLDING COMPANIES--
0.63%
7,000,000 Chase Manhattan Corp.,
4.93%+, 7/8/96.............. 6,993,290
--------------
BANKS--FOREIGN
INSTITUTIONS--5.57%
25,000,000 Dresdner U.S. Finance, Inc.,
5.34%+, 7/3/96.............. 24,992,583
25,000,000 Louis Dreyfus Corp., Series
B, 5.14%+, 7/8/96 (LOC:
Credit Agricole)*........... 24,974,139
12,000,000 Royal Bank of Canada,
5.12%+, 7/8/96.............. 11,988,053
--------------
61,954,775
--------------
BEVERAGES--2.25%
25,000,000 Coca-Cola Co., 5.28%+,
7/9/96...................... 24,970,667
--------------
BROKERAGE SERVICES--4.03%
20,000,000 Lehman Brothers Holdings,
Inc., 5.45%+, 8/12/96....... 19,872,833
25,000,000 Morgan Stanley, 5.29%+,
7/16/96..................... 24,944,896
--------------
44,817,729
--------------
CHEMICALS--1.79%
20,000,000 du Pont (E.I.) de Nemours &
Co., 5.30%+, 7/23/96........ 19,934,733
--------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ------------ --------------
<S> <C> <C>
ELECTRICAL & ELECTRONIC
EQUIPMENT--2.23%
$ 25,000,000 Lucent Technologies, Inc.,
5.38%+, 8/27/96............. $ 24,787,042
--------------
FOREIGN GOVERNMENTS &
RELATED ISSUES--
FRANCE--1.33%
15,000,000 Caisse D'Amortissement De La
Sociale, 5.39%+, 9/24/96.... 14,809,104
--------------
LEASING (WHOLESALE &
RETAIL)--AUTOS, TRUCKS &
RV'S--3.59%
20,000,000 Ford Motor Credit Co.,
5.32%+, 7/11/96............. 19,970,611
20,000,000 Hertz Corp., 5.29%+,
7/18/96..................... 19,950,039
--------------
39,920,650
--------------
PHARMACEUTICALS, HEALTH
CARE, COSMETICS & SOAP--
1.79%
20,000,000 Abbott Laboratories, 5.30%+,
7/16/96..................... 19,955,833
--------------
TOTAL COMMERCIAL PAPER (Cost
$320,111,066)............... 320,111,066
--------------
UNITED STATES GOVERNMENT
AGENCIES &
OBLIGATIONS--21.52%
UNITED STATES GOVERNMENT
AGENCY SECURITIES--17.49%
Federal Farm Credit Bank,
11,150,000 5.08%+, 7/3/96.............. 11,146,853
15,300,000 5.75%, 8/1/96............... 15,299,683
10,000,000 5.40%, 4/1/97............... 9,991,367
Federal Home Loan Bank,
7,500,000 5.71%, 8/9/96............... 7,499,719
14,000,000 5.04%, 2/28/97.............. 13,989,184
5,000,000 5.325%, 3/18/97............. 4,992,480
5,000,000 5.325%, 4/17/97............. 4,998,937
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
1
<PAGE>
- --------------------------------------------------------------------------------
- --------- BNY HAMILTON MONEY FUND
Schedule of Investments (continued)
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ------------ --------------
UNITED STATES GOVERNMENT
AGENCIES & OBLIGATIONS
(CONTINUED)
<S> <C> <C>
Federal Home Loan Mortgage
Corporation,
$ 30,000,000 5.22%+, 7/8/96.............. $ 29,969,317
4,040,000 4.96%, 2/3/97............... 4,036,033
Federal National Mortgage
Association,
5,000,000 4.82%+, 8/16/96............. 4,969,206
5,000,000 4.81%+, 8/29/96............. 4,960,585
10,000,000 5.32%+, 9/16/96............. 9,886,211
9,000,000 5.68%, 10/7/96.............. 8,999,577
5,000,000 5.13%+, 10/30/96............ 4,913,788
7,000,000 5.47%, 11/14/96............. 6,998,870
10,000,000 5.07%, 1/23/97.............. 9,998,241
10,000,000 4.82%, 2/10/97.............. 9,996,439
12,000,000 4.97%, 3/10/97.............. 11,983,253
20,000,000 5.48%, 4/24/97.............. 19,987,286
--------------
194,617,029
--------------
UNITED STATES TREASURY
BILLS--0.87%
10,000,000 5.11%+, 2/6/97.............. 9,686,098
--------------
UNITED STATES TREASURY
NOTES--3.16%
16,000,000 6.125%, 5/31/97............. 16,054,847
9,000,000 6.75%, 5/31/97.............. 9,074,860
10,000,000 5.625%, 6/30/97............. 9,988,223
--------------
35,117,930
--------------
TOTAL UNITED STATES
GOVERNMENT AGENCIES &
OBLIGATIONS (Cost
$239,421,057)............... 239,421,057
--------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ------------ --------------
<S> <C> <C>
FLOATING RATE
NOTES--7.55%
BANK HOLDING COMPANIES--
2.88%
$ 12,000,000 American Express Centurion
Bank, 5.4661%+, payable
monthly, interest rate
resets monthly, next
interest rate reset date
7/16/96, final maturity
10/16/96.................... $ 11,998,948
20,000,000 Boatmens National Bank of
St. Louis, 5.62%+, payable
quarterly, interest rate
resets weekly, next interest
rate reset date 7/2/96,
final maturity 6/17/97...... 20,000,000
--------------
31,998,948
--------------
BROKERAGE SERVICES--3.77%
13,000,000 Bear Stearns Companies,
Inc., 5.4875%+, payable
monthly, interest rate
resets monthly, next
interest rate reset date
7/3/96, final maturity
10/3/96..................... 13,000,000
12,000,000 Bear Stearns Companies,
Inc., 5.5344%+, payable
monthly, interest rate
resets monthly, next
interest rate reset date
7/15/96, final maturity
6/13/97..................... 12,000,000
17,000,000 Merrill Lynch & Co., Inc.,
5.4861%+, payable monthly,
interest rate resets
monthly, next interest rate
reset date 7/16/96, final
maturity 5/27/97............ 17,000,000
--------------
42,000,000
--------------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
- --------- BNY HAMILTON MONEY FUND
Schedule of Investments (continued)
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ------------ --------------
FLOATING RATE NOTES
(CONTINUED)
<S> <C> <C>
UNITED STATES GOVERNMENT
AGENCY SECURITIES--0.90%
$ 10,000,000 Federal Farm Credit Bank,
5.39%+, payable quarterly,
interest rate resets weekly,
next interest rate reset
date 7/3/96, final maturity
11/8/96..................... $ 9,996,113
--------------
TOTAL FLOATING RATE NOTES
(Cost $83,995,061).......... 83,995,061
--------------
CERTIFICATE OF
DEPOSIT--2.52%
BANK HOLDING COMPANIES--
1.80%
20,000,000 First Alabama Bank,
Montgomery, 5.36%,
7/22/96..................... 20,000,000
--------------
BANKS--FOREIGN
INSTITUTIONS--0.72%
8,000,000 ABN AMRO Bank, 5.53%,
3/18/97..................... 8,001,094
--------------
TOTAL CERTIFICATE OF DEPOSIT
(Cost $28,001,094).......... 28,001,094
--------------
FIXED RATE DEBT
OBLIGATIONS--0.94%
ASSET BACKED SECURITIES--
OTHER ASSET BACKED
PROGRAMS--0.04%
456,082 Navistar Financial Corp.,
5.75%, 11/15/96............. 456,080
--------------
FINANCE COMPANIES--
NON-CAPTIVE &
INDEPENDENT--0.90%
10,000,000 General Electric Capital
Corp., 5.10%, 1/27/97....... 9,999,315
--------------
TOTAL FIXED RATE DEBT
OBLIGATIONS (Cost
$10,455,395)................ 10,455,395
--------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ------------ --------------
<S> <C> <C>
TIME DEPOSITS-- FOREIGN
INSTITUTIONS--
0.18%
$ 2,048,000 Societe Generale, 5.375%,
7/1/96 (Cost $2,048,000).... $ 2,048,000
--------------
REPURCHASE
AGREEMENTS--38.65%
REPURCHASE AGREEMENTS WITH
BARCLAYS DEZOETE WEDD--
8.99%
100,000,000 5.60%, due 7/1/96,
repurchase price
$100,046,667 (Collateral--
Federal Home Loan Mortgage
Corporation Bonds,
6.00%-9.00%,
11/15/06-5/1/26; Federal
National Mortgage
Association Bonds,
6.00%-7.00%, 7/25/99-6/1/26;
aggregate market value plus
accrued interest
$103,000,000) (Cost
$100,000,000)............... 100,000,000
--------------
REPURCHASE AGREEMENTS WITH
DEAN WITTER REYNOLDS,
INC.--10.78%
120,000,000 5.50%-5.55%, due 7/1/96,
repurchase price
$120,055,083 (Collateral--
Federal Farm Credit Bank
Zero Coupon Note, 7/30/96;
Federal Home Loan Bank
Notes, 5.82%-7.03%,
8/8/00-1/11/06; Federal Home
Loan Mortgage Corporation
Bonds including Zero Coupon
Notes, 0.00%-7.50%,
7/24/96-2/15/24; Federal
National Mortgage
Association Notes/Bonds,
5.55%-7.00%,
3/12/99-8/25/23; Tennessee
Valley Authority Bond,
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
- --------- BNY HAMILTON MONEY FUND
Schedule of Investments (continued)
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ------------ --------------
<S> <C> <C>
REPURCHASE AGREEMENTS
(CONTINUED)
7.625%, 9/1/22;
United States Treasury Bill,
Zero Coupon, 8/8/96; United
States Treasury Notes,
5.75%-7.875%,
8/31/96-12/31/99; United
States Treasury Bonds
including Zero Coupon Bonds,
0.00%-7.50%,
5/15/00-11/15/24; World Bank
Global Bond, 6.375%,
7/21/05; aggregate market
value plus accrued interest
$123,321,241) (Cost
$120,000,000)............... $ 120,000,000
--------------
REPURCHASE AGREEMENTS WITH
DEUTSCHE BANK AG--9.89%
$110,000,000 5.50%, due 7/1/96,
repurchase price
$110,050,417 (Collateral--
Federal Home Loan Mortgage
Corporation Notes/Bonds,
5.84%-7.88%,
12/20/96-1/1/26; Federal
National Mortgage
Association Bonds,
5.74%-7.50%,
8/25/08-4/25/23; aggregate
market value plus accrued
interest $113,297,401) (Cost
$110,000,000)............... 110,000,000
--------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ------------ --------------
<S> <C> <C>
REPURCHASE AGREEMENTS WITH
GOLDMAN, SACHS & CO.-- 8.99%
$100,000,000 5.50%, due 7/1/96,
repurchase price
$100,045,833 (Collateral--
African Development Bank
Bonds, 7.75%-9.30%,
7/1/00-12/15/01;
InterAmerican Development
Bank Notes/Bonds,
8.50%-9.45%,
9/15/98-3/15/11; World Bank
Zero Coupon Notes,
7/18/96-3/4/97; United
States Treasury Note,
5.375%, 5/31/98; aggregate
market value plus accrued
interest $102,000,556) (Cost
$100,000,000)............... $ 100,000,000
--------------
TOTAL REPURCHASE AGREEMENTS
(Cost $430,000,000)......... 430,000,000
--------------
TOTAL INVESTMENTS--
(Cost $1,114,031,673)(a)--
100.14%..................... 1,114,031,673
Other assets less
liabilities-- (0.14%)....... (1,591,129)
--------------
NET ASSETS--100%............ $1,112,440,544
==============
</TABLE>
(a) The cost stated also represents the aggregate cost for Federal income tax
purposes.
+ Represents yield at time of purchase for commercial paper, discounted rate at
time of purchase for United States Government agencies & obligations, and
interest rate in effect at June 30, 1996 for floating rate notes.
* Backed by a letter of credit.
See notes to financial statements.
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
- --------- Statement of Assets and Statement of Operations
Liabilities
JUNE 30, 1996
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments at market value,
including repurchase agreements
of $430,000,000 (Identified cost
$1,114,031,673).................. $1,114,031,673
Cash................................ 377
Interest receivable................. 3,293,769
Deferred organization costs and
other assets..................... 181,904
--------------
TOTAL ASSETS..................... 1,117,507,723
--------------
LIABILITIES:
Dividends
payable: Hamilton Shares......... 2,980,913
Hamilton Premier
Shares................ 1,615,466
Hamilton Classic
Shares................ 50,712
Services provided by The Bank of New
York and Administrator........... 319,315
Accrued expenses and other
liabilities...................... 100,773
--------------
TOTAL LIABILITIES................ 5,067,179
--------------
NET ASSETS:
(applicable to shares issued and
outstanding; 9 billion shares of
$.001 par value authorized)...... $1,112,440,544
==============
SOURCES OF NET ASSETS:
Capital stock @ par................. $ 1,112,386
Capital surplus..................... 1,111,273,228
Accumulated net realized gain on
investments...................... 54,930
--------------
NET ASSETS............................ $1,112,440,544
==============
HAMILTON SHARES:
Net asset value, offering price and
redemption price per share
($723,760,681/723,729,988
shares).......................... $ 1.00
==============
HAMILTON PREMIER SHARES:
Net asset value, offering price and
redemption price per share
($374,750,801/374,727,174
shares).......................... $ 1.00
==============
HAMILTON CLASSIC SHARES:
Net asset value, offering price and
redemption price per share
($13,929,062/13,928,452 shares).. $ 1.00
==============
</TABLE>
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest............................... $29,596,701
-----------
EXPENSES:
Advisory............................... 546,568
Administration......................... 546,568
12b-1 fee--Hamilton Classic Shares..... 13,711
Servicing fee: Hamilton Premier
Shares.................. 526,194
Hamilton Classic
Shares.................. 13,711
Accounting services.................... 29,836
Cash management: Hamilton
Shares............ 4,340
Hamilton
Premier
Shares............ 14,814
Custodian.............................. 84,515
Transfer agent: Hamilton Shares........ 8,912
Hamilton Premier
Shares................. 17,359
Hamilton Classic
Shares................. 814
Audit.................................. 24,334
Insurance.............................. 16,197
Directors'............................. 8,307
Reports to shareholders................ 11,160
Registration and filing................ 106,970
Legal.................................. 30,935
Other.................................. 28,321
-----------
TOTAL EXPENSES...................... 2,033,566
-----------
NET INVESTMENT INCOME............... 27,563,135
Net realized gain on investments......... 54,930
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS............................. $27,618,065
-----------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
5
<PAGE>
- --------------------------------------------------------------------------------
- --------- Statements of Changes in Net Assets (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED DECEMBER 31,
JUNE 30, 1996 1995
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income....................................................... $ 27,563,135 $ 37,796,901
Net realized gain on investments............................................ 54,930 --
-------------- --------------
Net increase in net assets resulting from operations........................ 27,618,065 37,796,901
-------------- --------------
DIVIDENDS TO SHAREHOLDERS:
Dividends from net investment income: Hamilton Shares....................... (17,028,505) (24,629,959)
Hamilton Premier Shares............ (10,281,030) (13,159,984)
Hamilton Classic Shares............ (253,600) (6,958)
-------------- --------------
(27,563,135) (37,796,901)
-------------- --------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from capital stock sold: Hamilton Shares........................... 1,196,652,570 2,243,841,012
Hamilton Premier Shares................... 2,116,539,237 2,810,413,019
Hamilton Classic Shares................... 16,745,422 3,150,632
Proceeds from shares issued on reinvestment of
dividends: Hamilton Shares............................................... 1,694,749 3,388,955
Hamilton Premier Shares....................................... 4,325,744 7,918,171
Hamilton Classic Shares....................................... 198,695 6,393
Cost of capital stock repurchased: Hamilton Shares.......................... (1,078,669,837) (1,878,397,366)
Hamilton Premier Shares.................. (2,086,300,903) (2,585,966,924)
Hamilton Classic Shares.................. (6,114,057) (58,633)
-------------- --------------
Increase in net assets resulting from capital stock transactions......... 165,071,620 604,295,259
-------------- --------------
INCREASE IN NET ASSETS................................................. 165,126,550 604,295,259
NET ASSETS:
Beginning of period......................................................... 947,313,994 343,018,735
-------------- --------------
End of period............................................................... $1,112,440,544 $ 947,313,994
============== ==============
CHANGES IN CAPITAL STOCK OUTSTANDING:
Shares sold: Hamilton Shares................................................ 1,196,652,570 2,243,841,012
Hamilton Premier Shares......................................... 2,116,539,237 2,810,413,019
Hamilton Classic Shares......................................... 16,745,422 3,150,632
Shares issued on reinvestment of dividends: Hamilton Shares................. 1,694,749 3,388,955
Hamilton Premier Shares......... 4,325,744 7,918,171
Hamilton Classic Shares......... 198,695 6,393
Shares repurchased: Hamilton Shares......................................... (1,078,669,837) (1,878,397,366)
Hamilton Premier Shares................................. (2,086,300,903) (2,585,966,924)
Hamilton Classic Shares................................. (6,114,057) (58,633)
-------------- --------------
Net increase............................................................. 165,071,620 604,295,259
Shares outstanding, beginning of period..................................... 947,313,994 343,018,735
-------------- --------------
Shares outstanding, end of period........................................... 1,112,385,614 947,313,994
============== ==============
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
- --------- Financial Highlights (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HAMILTON SHARES
----------------------------------------------------------------------
FOR THE
PERIOD
AUGUST 7,
SIX MONTHS 1992*
ENDED YEAR ENDED DECEMBER 31, THROUGH
JUNE 30, ------------------------------------ DECEMBER 31,
1996 1995 1994 1993 1992
---------- -------- -------- -------- ------------
<S> <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
--------- -------- -------- -------- ----------
INCOME FROM INVESTMENT OPERATIONS
Net investment income............... 0.026 0.057 0.040 0.030 0.012
--------- -------- -------- -------- ----------
DIVIDENDS
Dividends from net investment
income............................ (0.026) (0.057) (0.040) (0.030) (0.012)
--------- -------- -------- -------- ----------
Net asset value at end of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ======== ======== ======== ==========
TOTAL RETURN:....................... 2.60%** 5.84% 4.02% 3.03% 1.26%**
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period
(000's omitted)................... $723,761 $604,053 $235,220 $307,395 $135,852
Ratio to average net assets of:
Expenses, net of waiver from The
Bank of New York............... 0.27%*** 0.26% 0.30% 0.27% 0.20%***
Expenses, prior to waiver from The
Bank of New York............... 0.27%*** 0.26% 0.32% 0.32% 0.49%***
Net investment income, net of
waiver from The Bank of New
York........................... 5.17%*** 5.67% 3.92% 2.97% 3.11%***
</TABLE>
* Commencement of investment operations.
** Not annualized.
*** Annualized.
See notes to financial statements.
- --------------------------------------------------------------------------------
7
<PAGE>
- --------------------------------------------------------------------------------
- --------- Financial Highlights (Unaudited) (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HAMILTON PREMIER SHARES HAMILTON CLASSIC SHARES
------------------------------------------ --------------------------
FOR THE FOR THE
PERIOD PERIOD
AUGUST 15, DECEMBER 4,
SIX MONTHS 1994* SIX MONTHS 1995*
ENDED YEAR ENDED THROUGH ENDED THROUGH
JUNE 30, DECEMBER 31, DECEMBER 31, JUNE 30, DECEMBER 31,
1996 1995 1994 1996 1995
---------- ------------ ------------ ---------- ------------
<S> <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
-------- -------- -------- -------- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income............... 0.024 0.054 0.017 0.023 0.004
-------- -------- -------- -------- ------
DIVIDENDS
Dividends from net investment
income............................ (0.024) (0.054) (0.017) (0.023) (0.004)
-------- -------- -------- -------- ------
Net asset value at end of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======
TOTAL RETURN:....................... 2.46%** 5.54% 1.69%** 2.34%** 0.40%**
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period
(000's omitted)................... $374,751 $340,163 $107,799 $ 13,929 $3,098
Ratio to average net assets of:
Expenses.......................... 0.53%*** 0.54% 0.61%*** 0.78%*** 0.76%***
Net investment income ............ 4.90%*** 5.40% 4.40%*** 4.65%*** 5.18%***
</TABLE>
* Commencement of investment operations for the respective class of shares.
** Not annualized.
*** Annualized.
See notes to financial statements.
- --------------------------------------------------------------------------------
8
<PAGE>
- --------------------------------------------------------------------------------
- --------- Notes to Financial Statements (Unaudited)
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. The BNY Hamilton Money Fund (the 'Fund') commenced
investment 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
assumes 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
obligation to repurchase, the Fund has 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
agreement, 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 responsible 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
'Administrator') 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,
- --------------------------------------------------------------------------------
9
<PAGE>
- --------------------------------------------------------------------------------
- --------- Notes to Financial Statements (Unaudited) (continued)
providing the services of persons who may be appointed as officers and directors
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
Servicing Agents will perform shareholder support services. Pursuant to the
Shareholder Servicing Agreements, the Hamilton Premier Shares and Hamilton
Classic Shares will pay the Shareholder Servicing Agents an annual shareholder
servicing 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 payable to, Shareholder Organizations with respect to Hamilton Shares.
The Fund has adopted a distribution plan ('12b-1 Plan') with respect to
Hamilton Classic Shares of the Fund, pursuant to which the Fund will pay BNY
Hamilton Distributors, Inc. for expenses incurred during the year in connection
with the distribution of Hamilton Classic Shares. The aggregate amount payable
annually by the Fund as provided in the 12b-1 Plan may not exceed .25% of the
Hamilton Classic Shares' average daily net assets.
- --------------------------------------------------------------------------------
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
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
Mark E. Nagle, Treasurer
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, 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 RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
BNY-0039
BNY HAMILTON
MONEY FUND
SEMI-ANNUAL REPORT
JUNE 30, 1996
(UNAUDITED)
O HAMILTON SHARES
O HAMILTON PREMIER
SHARES
O HAMILTON CLASSIC
SHARES
[LOGO]
<PAGE>
- --------------------------------------------------------------------------------
- --------- CHAIRMAN'S LETTER
July 15, 1996
DEAR FELLOW SHAREHOLDER,
I am pleased to report to you on the performance of the BNY Hamilton Equity
Income, Intermediate Government and Intermediate New York Tax-Exempt Funds for
the first half of 1996. Additionally, I want to take this opportunity to express
my appreciation for the confidence you have placed in the Funds to manage your
money.
INVESTMENT OUTLOOK
According to Kevin J. Bannon, Chief Investment Officer at The Bank of New
York, the long-term outlook for the financial markets is positive. In his view,
'the economy has been fairly hot, but should be cooling off by the fall with
inflation staying in check'. Mr. Bannon notes that 'too much growth is bad for
inflation and bonds and too little is bad for profits and stocks. While the
pick-up in economic activity during the second quarter has reduced the margin
for error, our judgment is that the economy will continue to successfully walk
the fine line down the middle, which is positive for both stocks and bonds.'
BNY HAMILTON EQUITY INCOME FUND
The BNY Hamilton Equity Income Fund delivered a 9.05% return during the
first six months of 1996, which compared very favorably to the Lipper Equity
Income Fund Average of 7.14%. The Fund's emphasis on large capitalization
dividend paying issues helped it closely track the Standard and Poor's 500
return of 10.19%.
<TABLE>
<CAPTION>
BNY HAMILTON LIPPER
EQUITY INCOME S&P 500 EQUITY INCOME
FUND INDEX FUND
------------- ------- -------------
<S> <C> <C> <C>
Six Months to June 30, 1996... 9.05% 10.19% 7.14%
One Year to June 30, 1996..... 21.23% 26.06% 20.96%
</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.
The Lipper Equity Income Fund Index is an index of similarly managed mutual
funds which takes into account fees and expenses.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
-----------------------------------------------
PUBLIC OFFERING PRICE
PERIOD NET ASSET VALUE (INCLUDES 4.5% SALES CHARGE)
- ------------------------- --------------- ----------------------------
<S> <C> <C>
1 Year................... 21.23% 15.80%
3 Year................... 11.61% 9.92%
Inception (8/10/92)...... 12.53% 11.21%
</TABLE>
BNY HAMILTON INTERMEDIATE GOVERNMENT FUND
The first half of 1996 was a difficult period for the fixed income markets
as anxieties regarding the potential for overheating economic activity to
rekindle inflationary pressures pushed bond yields higher and prices lower. We
are pleased to report the BNY Hamilton Intermediate Government Fund outperformed
the Lipper Intermediate Government Fund Average during this period.
<TABLE>
<CAPTION>
LIPPER
BNY HAMILTON LEHMAN BROTHERS INTERMEDIATE
INTERMEDIATE INTERMEDIATE GOVERNMENT
GOVERNMENT FUND GOVERNMENT INDEX FUND AVERAGE
--------------- ---------------- ------------
<S> <C> <C> <C>
Six Months to June 30, 1996... -.69% -.01% -1.49%
One Year to June 30, 1996..... 4.08% 4.93% 3.76%
</TABLE>
(CONTINUED)
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
- --------- CHAIRMAN'S LETTER (CONTINUED)
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. The Lipper
Intermediate Government Fund Average is a composite of similarly managed
intermediate-term U.S. Government Bond funds which takes into account fees and
expenses.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
----------------------------------------------
PUBLIC OFFERING PRICE
PERIOD NET ASSET VALUE (INCLUDING 3% SALES CHARGE)
- ------------------------- --------------- ---------------------------
<S> <C> <C>
1 Year................... 4.08% 0.98%
3 Year................... 3.43% 2.38%
Inception (8/10/92)...... 4.34% 3.53%
</TABLE>
BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND
Inflation fears weighed on all fixed income markets, including municipal
bonds, during the first half of the year, but lessened concerns regarding the
proposed 'flat tax' contributed to tax-exempt issues outperforming taxable
issues.
For the six months through June 30, 1996, the BNY Hamilton Intermediate New
York Tax-Exempt Fund outperformed the Lipper Intermediate New York Tax-Exempt
Average and was competitive with the Lehman Brothers 5 Year State G.O. Bond
Index.
<TABLE>
<CAPTION>
LIPPER
INTERMEDIATE
INTERMEDIATE LEHMAN BROTHERS NEW YORK
NEW YORK 5-YEAR STATE TAX-EXEMPT
TAX-EXEMPT FUND G.O. INDEX FUND AVERAGE
--------------- --------------- ------------
<S> <C> <C> <C>
Six Months to June 30, 1996... -.03% 0.75% -0.35%
One Year to June 30, 1996..... 3.91% 5.40% 4.77%
</TABLE>
The Lehman Brothers 5-Year State G.O. Index is an unmanaged index generally
considered representative of the intermediate-term state general obligation
municipal bond market. The Index does not take into account fees and expenses.
The Lipper Intermediate New York Tax-Exempt Fund Average is a composite of
similarly managed New York State Tax-Exempt Bond Funds which takes into account
fees and expenses. The total return set forth may reflect the waiver of a
portion of the Fund's advisory or administrative fees. In such instances, and
without waiver offset, total return would have been lower. Some investors may be
subject to the alternative minimum tax and/or state and local taxes.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
----------------------------------------------
PUBLIC OFFERING PRICE
PERIOD NET ASSET VALUE (INCLUDING 3% SALES CHARGE)
- ------------------------- --------------- ---------------------------
<S> <C> <C>
1 Year................... 3.91% 0.83%
3 Year................... 3.60% 2.55%
Inception (8/10/92)...... 4.29% 3.47%
</TABLE>
(CONTINUED)
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
- --------- CHAIRMAN'S LETTER (CONTINUED)
As of July 15, 1996, the Funds removed the front end sales charge.
Again, thank you for your continued investments in the BNY Hamilton Family
of Mutual Funds. We look forward to serving your investment needs in the months
to come.
Sincerely,
Eugene J. Sullivan
Chairman of the Board
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 the original cost.
- --------------------------------------------------------------------------------
<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
DIRECTORS AND OFFICERS............................ 23
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
- --------- BNY HAMILTON EQUITY INCOME FUND
Schedule of Investments
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
- --------------- ---------------
<S> <C> <C>
COMMON STOCKS--74.08%
AIRCRAFT MANUFACTURING--2.25%
53,100 Boeing Co. .................................. $ 4,626,338
---------------
BANKING--3.97%
33,280 Chase Manhattan Corp. ....................... 2,350,400
50,000 CoreStates Financial Corp. .................. 1,925,000
6,500 HSBC Holdings PLC (ADR)...................... 982,493
80,000 U.S. Bancorp................................. 2,890,000
---------------
8,147,893
---------------
BUSINESS EQUIPMENT
& SERVICES--1.56%
60,000 Xerox Corp. ................................. 3,210,000
---------------
CHEMICALS--BASIC--1.67%
105,500 Monsanto Co. ................................ 3,428,750
---------------
CHEMICALS--PETROLEUM--0.96%
25,000 duPont (E.I.) De Nemours..................... 1,978,125
---------------
COMMERCIAL SERVICES--1.56%
30,000 Flightsafety International, Inc. ............ 1,627,500
53,879 Olsten Corp. ................................ 1,582,696
---------------
3,210,196
---------------
COMMUNICATIONS
& PUBLISHING--1.34%
55,000 Harcourt General, Inc. ...................... 2,750,000
---------------
COMPUTERS--SOFTWARE
& PERIPHERALS--2.96%
*42,600 Cisco Systems, Inc. ......................... 2,412,225
45,482 Electronic Data Systems Corp. ............... 2,444,657
*53,900 Informix Corp. .............................. 1,212,750
---------------
6,069,632
---------------
CONGLOMERATES--2.14%
21,100 General Electric Co. ........................ 1,825,150
50,000........ Tenneco, Inc. ............................... 2,556,250
---------------
4,381,400
---------------
COSMETICS & TOILETRIES--1.32%
60,000 Avon Products, Inc. ......................... 2,707,500
---------------
ELECTRICAL EQUIPMENT--1.19%
130,000 Westinghouse Electric Corp. ................. 2,437,500
---------------
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
- --------------- ---------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
ELECTRONICS--1.86%
15,000 Hewlett-Packard Co. ......................... $ 1,494,375
35,000 Sony Corp. (ADR)............................. 2,314,375
---------------
3,808,750
---------------
FINANCIAL SERVICES--1.02%
60,000 Invesco PLC (ADR)............................ 2,100,000
---------------
FINANCIAL SERVICES--
MORTGAGE COMPANIES--1.48%
90,800 Federal National Mortgage Association........ 3,041,800
---------------
FOOD & BEVERAGES--3.69%
39,500 Coca-Cola Co. ............................... 1,930,563
67,500 McDonald's Corp. ............................ 3,155,625
70,000 PepsiCo, Inc. ............................... 2,476,250
---------------
7,562,438
---------------
FOOD PROCESSING--3.44%
35,000 CPC International, Inc. ..................... 2,520,000
75,000 Heinz (H.J.) Co. ............................ 2,278,125
70,000 Sara Lee Corp. .............................. 2,266,250
---------------
7,064,375
---------------
HEALTH CARE PRODUCTS
& SERVICES--1.08%
41,350 Columbia Healthcare Corp. ................... 2,207,056
---------------
HOUSEHOLD & PERSONAL CARE
PRODUCTS--1.33%
30,000 Procter & Gamble Co. ........................ 2,718,750
---------------
INSURANCE--1.82%
19,050 American International Group, Inc. .......... 1,878,806
75,000 Equitable Cos., Inc. ........................ 1,865,625
---------------
3,744,431
---------------
MACHINERY & EQUIPMENT--0.92%
63,200 Stanley Works................................ 1,880,200
---------------
MEDICAL CARE PRODUCTS
& SUPPLIES--2.16%
25,000 Becton Dickinson & Co. ...................... 2,006,250
49,200 Johnson & Johnson............................ 2,435,400
---------------
4,441,650
---------------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
1
<PAGE>
- --------------------------------------------------------------------------------
- --------- BNY HAMILTON EQUITY INCOME FUND
Schedule of Investments (Continued)
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
- --------------- ---------------
COMMON STOCKS (CONTINUED)
<S> <C> <C>
NATURAL GAS--0.66%
40,000 Questar Corp. ............................... $ 1,360,000
---------------
OIL & GAS--0.97%
40,000 Williams Cos. ............................... 1,980,000
---------------
OIL--DOMESTIC--1.16%
20,000 Atlantic Richfield Co. ...................... 2,370,000
---------------
OIL--INTERNATIONAL--2.95%
45,000 Elf Aquitaine (ADR).......................... 1,653,750
31,200 Exxon Corp. ................................. 2,710,500
15,000 Mobil Corp. ................................. 1,681,875
---------------
6,046,125
---------------
PHARMACEUTICALS--4.70%
60,000 American Home Products Corp. ................ 3,607,500
11,600 Amgen, Inc. ................................. 626,400
45,000 Pfizer, Inc. ................................ 3,211,875
40,000 Warner-Lambert Co. .......................... 2,200,000
---------------
9,645,775
---------------
PHOTOGRAPHY EQUIPMENT--1.56%
41,200 Eastman Kodak Co. ........................... 3,203,300
---------------
RAILROADS--3.71%
37,234 Burlington Northern Santa Fe Corp. .......... 3,011,300
73,300 Canadian National Railway.................... 1,346,887
46,600 Union Pacific Corp. ......................... 3,256,175
---------------
7,614,362
---------------
REAL ESTATE INVESTMENT
TRUST--4.20%
85,000 Avalon Properties, Inc. ..................... 1,848,750
80,833 Camden Property Trust........................ 1,919,784
80,000 Federal Realty Investment Trust.............. 1,800,000
85,000 General Growth Properties.................... 2,050,625
30,000 Meditrust Corporation........................ 1,001,250
---------------
8,620,409
---------------
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
- --------------- ---------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
RESORTS & ENTERTAINMENT--1.27%
41,600 Walt Disney Co. ............................. $ 2,615,600
---------------
RETAIL--SPECIALTY STORES--2.79%
*50,000 Borders Group, Inc. ......................... 1,612,500
52,600 Melville Corp. .............................. 2,130,300
*83,000 Office Max, Inc. ............................ 1,981,625
---------------
5,724,425
---------------
TECHNOLOGY INDUSTRIES--1.17%
38,200 Motorola, Inc. .............................. 2,401,825
---------------
TELECOMMUNICATIONS--
NON-U.S.--2.58%
*39,473 LCI International, Inc. ..................... 1,238,465
35,000 Nokia Corp. (ADR)............................ 1,295,000
50,000 Telefonica de Espana (ADR)................... 2,756,250
---------------
5,289,715
---------------
UTILITIES--GAS & ELECTRIC--6.64%
60,000 DQE, Inc. ................................... 1,650,000
85,000 Florida Progress Corp. ...................... 2,953,750
40,000 Oklahoma Gas & Electric...................... 1,585,000
75,000 Portland General Corp. ...................... 2,315,625
65,000 SCANA Corp. ................................. 1,828,125
77,150 Texas Utilities Co. ......................... 3,298,163
---------------
13,630,663
---------------
TOTAL COMMON STOCKS
(Cost $122,381,034).......................... 152,018,983
---------------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
- --------- BNY HAMILTON EQUITY INCOME FUND
Schedule of Investments (Continued)
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
- --------------- ---------------
CONVERTIBLE PREFERRED
STOCKS--12.56%
<S> <C> <C>
BUSINESS EQUIPMENT
& SERVICES--1.01%
25,000 Alco Standard Corp., Ser. BB................. $ 2,075,000
---------------
COMPUTER SERVICES--1.47%
27,163 Ceridian Corp. .............................. 3,015,093
---------------
CONTAINERS--1.00%
45,000 Crown Cork & Seal............................ 2,047,500
---------------
FINANCIAL SERVICES--1.44%
45,000 American Express (DECS)...................... 2,953,125
---------------
GOLD & PRECIOUS METALS--1.06%
70,000 Freeport--McMoran Copper & Gold.............. 2,170,000
---------------
INDUSTRIAL GOODS
& EQUIPMENT--1.03%
35,000 Sonoco Products, Ser. A...................... 2,108,750
---------------
INSURANCE--1.07%
25,000 Allstate Corp. .............................. 987,500
15,000 Jefferson-Pilot 'NB' (ACES).................. 1,222,500
---------------
2,210,000
---------------
OIL & GAS--1.45%
80,000 Atlantic Richfield Co. ...................... 1,950,000
40,000 Enron Corp. ................................. 1,035,000
---------------
2,985,000
---------------
PHARMACEUTICALS--1.30%
11,000 Lehman 6.50% Amgen Yield
Enhanced Equity Linked Debt
Securities ('YEELDS') ....................... 673,750
30,000 Salomon 6.50% Amgen Yield
Enhanced Equity Linked Debt
Securities ('YEELDS') ....................... 2,002,500
---------------
2,676,250
---------------
RETAILING--1.19%
45,000 K mart Financing............................. 2,441,250
---------------
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
- --------------- ---------------
<S> <C> <C>
CONVERTIBLE PREFERRED
STOCKS (CONTINUED)
STEEL--0.54%
30,000 AK Steel..................................... $ 1,102,500
---------------
TOTAL CONVERTIBLE
PREFERRED STOCKS
(Cost $20,848,320)........................... 25,784,468
---------------
<CAPTION>
PRINCIPAL
AMOUNT
- ---------------
<S> <C> <C>
CONVERTIBLE BONDS--6.92%
ELECTRONICS--0.98%
$ 2,000,000 Altera Corp., 5.75%, 6/15/02(a).............. 2,020,000
---------------
HEALTH CARE
& HOSPITAL MANAGEMENT--1.18%
1,250,000 HEALTHSOUTH Rehabilitation Corp., 5.00%,
4/01/01...................................... 2,418,750
---------------
INDUSTRIAL DEVELOPMENT--1.47%
1,500,000 Alza Corp., 5.00%, 5/01/06................... 1,458,750
1,500,000 Imax Corp., 5.75%, 4/01/03(a)................ 1,552,500
---------------
3,011,250
---------------
<CAPTION>
INDUSTRIAL GOODS
& EQUIPMENT--0.26%
<S> <C> <C>
500,000 LaFarge Corp., 7.00%, 7/01/13................ 531,250
---------------
OIL--DOMESTIC--0.69%
1,000,000 Pennzoil, 6.50%, 1/15/03..................... 1,408,750
---------------
REAL ESTATE INVESTMENT
TRUST--0.75%
1,500,000 Liberty Property Trust, 8.00%, 7/01/01....... 1,537,500
---------------
RESORTS & ENTERTAINMENT--0.49%
600,000 Carnival Corp., 4.50%, 7/01/97............... 999,750
---------------
SEMICONDUCTORS--0.39%
900,000 VLSI Technology, Inc., 8.25%, 10/01/05....... 795,375
---------------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
- --------- BNY HAMILTON EQUITY INCOME FUND
Schedule of Investments (Continued)
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- --------------- ---------------
CONVERTIBLE BONDS (CONTINUED)
<S> <C> <C>
WASTE MANAGEMENT--0.71%
$ 1,500,000 Molten Metal Technology, 5.50%, 5/01/06(a)... $ 1,470,000
---------------
TOTAL CONVERTIBLE BONDS
(Cost $12,701,159)........................... 14,192,625
---------------
FOREIGN BOND--0.75%
1,500,000 Republic of Italy, 5.00%, 6/28/01
(Cost $1,525,000)............................ 1,533,750
---------------
REPURCHASE
AGREEMENT--5.95%
12,205,000 Repurchase agreement with Deutsche Bank,
5.50%, due 7/01/96, repurchase price
$12,210,594 (Collateral--Various U.S.
Governmental Agency Debt Obligations,
5.74%-7.88%, 12/20/96-11/01/22; aggregate
market value plus accrued interest
$12,570,420) (Cost $12,205,000).............. 12,205,000
---------------
</TABLE>
<TABLE>
<CAPTION>
STRIKE MARKET
CONTRACTS PRICE VALUE
- --------------- ---------- ---------------
<S> <C> <C>
PURCHASED PUT OPTIONS--0.00%
* 100 Philadelphia Utility Index,
expiration 7/22/96
(Cost $16,550)..................... 240 $ 1,250
---------------
TOTAL INVESTMENTS BEFORE
OUTSTANDING WRITTEN CALL OPTIONS
(Cost $169,677,063)--
(b) 100.26%............................ 205,736,076
---------------
OUTSTANDING WRITTEN CALL OPTIONS--(0.02)%
* 350 Monsanto Co., expiration 7/22/96
(Premium received $59,288)......... 32 (35,000)
---------------
TOTAL INVESTMENTS NET OF
OUTSTANDING WRITTEN CALL OPTIONS
(Cost $169,617,775) 100.24%........ 205,701,076
Liabilities in excess of cash,
receivables and other
assets--(0.24%).................... (497,059)
---------------
NET ASSETS--100.00% $ 205,204,017
---------------
</TABLE>
<TABLE>
<S> <C>
* Non-income producing security.
ACES Automatic Common Exchange Securities.
ADR American Depository Receipt.
DECS Debt Exchangeable for Common Stock.
(a) Illiquid security, valued at fair value (see Note 2A).
(b) The cost stated also represents the aggregate cost for
Federal income tax purposes. At June 30, 1996, net
unrealized appreciation was $36,059,013 based on cost
for Federal income tax purposes. This consisted of
aggregate gross unrealized appreciation of $37,574,945
and aggregate gross unrealized depreciation of
$1,515,932. </TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
- --------- BNY HAMILTON EQUITY INCOME FUND
Statement of Assets and Liabilities
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments at market value,
(Identified cost $169,677,063)..... $205,736,076
Cash.................................. 360
Receivables:
Investments sold................... 12,535,747
Interest........................... 213,336
Dividends.......................... 571,387
Capital stock sold................. 5,048,841
Deferred organization costs and other
assets............................. 30,659
------------
TOTAL ASSETS....................... 224,136,406
------------
LIABILITIES:
Payables:
Investments purchased.............. 17,976,565
Capital stock repurchased.......... 28,969
Dividends.......................... 585,964
Services provided by the Bank of
New York and Administrator....... 274,495
Outstanding call options written
(premiums received $59,288)........ 35,000
Accrued expenses and other
liabilities........................ 31,396
------------
TOTAL LIABILITIES.................. 18,932,389
------------
NET ASSETS:
(applicable to 14,645,499 shares
issued and outstanding; 200 million
shares of $.001 par value
authorized)........................ $205,204,017
============
Net asset value, offering price and
repurchase price per share
($205,204,017/14,645,499 shares)... $ 14.01
============
Maximum public offering price per
share ($14.01/.955)................ $ 14.67
============
SOURCES OF NET ASSETS:
Capital stock @ par................... $ 14,645
Capital surplus....................... 162,066,509
Undistributed net investment income... 66,670
Accumulated net realized gain on
investments........................ 6,972,892
Net unrealized appreciation on
investments........................ 36,083,301
------------
NET ASSETS.............................. $205,204,017
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of
$39,145)..................................... $ 2,385,991
Interest........................................ 706,206
-----------
TOTAL INCOME................................. 3,092,197
-----------
EXPENSES:
Advisory........................................ 575,398
Administration.................................. 191,800
Accounting services............................. 29,836
Custodian....................................... 21,541
Cash management................................. 5,955
Transfer agent.................................. 34,908
Audit........................................... 4,564
Insurance....................................... 3,356
Directors....................................... 8,473
Reports to shareholders......................... 10,968
Registration and filings........................ 5,749
Legal........................................... 5,828
Other........................................... 12,699
-----------
TOTAL EXPENSES............................... 911,075
-----------
NET INVESTMENT INCOME........................ 2,181,122
-----------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investment transactions.... 6,768,734
Net realized gain on written call options....... 123,157
-----------
Net realized gain on investments................ 6,891,891
-----------
Increase in unrealized appreciation on
investments during the period................ 7,521,679
Increase in unrealized appreciation on written
call options during the period............... 216,904
-----------
Net unrealized gain on investments during the
period....................................... 7,738,583
-----------
Net realized and unrealized gain on
investments.................................. 14,630,474
-----------
Net increase in net assets resulting from
operations................................... $16,811,596
===========
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
5
<PAGE>
- --------------------------------------------------------------------------------
- --------- BNY HAMILTON EQUITY INCOME FUND
Statements of Changes in Net Assets
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income........................... $ 2,181,122 $ 4,157,218
Net realized gain on investments................ 6,891,891 6,729,207
Net unrealized gain on investments during the
period....................................... 7,738,583 24,728,968
------------ ------------
Net increase in net assets resulting from
operations.................................. 16,811,596 35,615,393
------------ ------------
DIVIDENDS AND DISTRIBUTION TO SHAREHOLDERS:
Dividends from net investment income............ (2,179,955) (4,143,915)
Distribution from capital gains................. -- (1,521,251)
------------ ------------
Total dividends and distribution to
shareholders................................ (2,179,955) (5,665,166)
------------ ------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from capital stock sold................ 34,255,210 28,650,069
Proceeds from reinvestment of dividends and
distribution................................. 1,014,698 3,841,802
Cost of capital stock repurchased............... (14,538,377) (27,731,884)
------------ ------------
Net increase in net assets resulting from
capital stock transactions.................. 20,731,531 4,759,987
------------ ------------
INCREASE IN NET ASSETS..................... 35,363,172 34,710,214
NET ASSETS:
Beginning of period............................. 169,840,845 135,130,631
------------ ------------
End of period................................... $205,204,017 $169,840,845
============ ============
CHANGE IN CAPITAL STOCK OUTSTANDING:
Shares sold..................................... 2,559,797 2,490,205
Shares issued on reinvestment of dividends and
distribution................................. 74,002 312,500
Shares repurchased.............................. (1,065,688) (2,352,875)
------------ ------------
Net increase................................. 1,568,111 449,830
Shares outstanding, beginning of period......... 13,077,388 12,627,558
------------ ------------
Shares outstanding, end of period............... 14,645,499 13,077,388
============ ============
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
- --------- BNY HAMILTON EQUITY INCOME FUND
Financial Highlights
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE
PERIOD
AUGUST 10,
SIX MONTHS 1992*
ENDED YEAR ENDED DECEMBER 31, THROUGH
JUNE 30, -------------------------------- 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.............. 0.15 0.32 0.31 0.29 0.11
Net realized and unrealized gain
(loss) on investments............ 1.02 2.41 (0.60) 0.94 0.47
-------- -------- -------- -------- --------
Total from investment
operations.................. 1.17 2.73 (0.29) 1.23 0.58
-------- -------- -------- -------- --------
DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment
income........................... (0.15) (0.32) (0.31) (0.28) (0.12)
-------- -------- -------- -------- --------
Distributions from capital gains... -- (0.12) -- (0.08) (0.03)
-------- -------- -------- -------- --------
Total dividends and
distributions............... (0.15) (0.44) (0.31) (0.36) (0.15)
-------- -------- -------- -------- --------
Net asset value at end of period... $ 14.01 $ 12.99 $ 10.70 $ 11.30 $ 10.43
======== ======== ======== ======== ========
TOTAL RETURN:+..................... 9.05%** 25.78% (2.58)% 11.94% 5.86%**
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period
(000's omitted).................. $205,204 $169,841 $135,131 $112,849 $ 20,440
Ratio to average net assets of:
Expenses, net of waiver from The
Bank of New York.............. 0.95%*** 1.00% 1.04% 1.09% 1.10%***
Expenses, prior to waiver from
The Bank of New York.......... 0.95%*** 1.00% 1.04% 1.12% 2.12%***
Net investment income, net of
waiver from The Bank of New
York.......................... 2.27%*** 2.66% 2.89% 2.82% 3.33%***
Portfolio turnover rate............ 20% 58% 51% 50% 25%
Average commission rate paid per
share traded..................... $ .0597 $ .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
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
- --------------- ---------------
U.S. GOV'T AGENCIES & OBLIGATIONS--75.28%
UNITED STATES GOVERNMENT AGENCY
SECURITIES--32.05%
<S> <C> <C>
Federal Home Loan Bank,
$ 500,000 5.25%, 7/16/97............................... $ 495,315
4,000,000 5.37%, 11/3/00............................... 3,816,360
Federal Home Loan Mortgage Corporation,
500,000 5.76%, 7/13/98............................... 491,078
1,000,000 5.55%, 9/7/00................................ 958,452
3,300,000 6.61%, 3/4/03................................ 3,164,046
250,000 7.60%, 5/12/05............................... 248,281
Federal National Mortgage Association,
500,000 5.35%, 8/12/98............................... 488,899
3,200,000 6.20%, 7/10/03............................... 3,042,451
500,000 6.25%, 8/12/03............................... 475,492
132,250 8.50%, 2/25/04............................... 134,206
100,000 6.40%, 9/27/05............................... 95,821
Tennessee Valley Authority,
1,500,000 6.25%, 8/1/99................................ 1,486,630
1,350,000 6.00%, 11/1/00............................... 1,317,315
5,000,000 6.125%, 7/15/03.............................. 4,822,120
---------------
21,036,466
---------------
UNITED STATES TREASURY BONDS--10.69%
2,535,000 5.875%, 8/15/98.............................. 2,519,947
4,275,000 7.50%, 2/15/05............................... 4,495,427
---------------
7,015,374
---------------
UNITED STATES TREASURY NOTES--31.41%
75,000 6.50%, 5/15/97............................... 75,469
800,000 5.625%, 1/31/98.............................. 794,749
1,500,000 5.125%, 11/30/98............................. 1,463,905
3,625,000 6.375%, 1/15/99.............................. 3,634,063
2,000,000 6.75%, 6/30/99............................... 2,023,750
1,000,000 6.375%, 7/15/99.............................. 1,002,187
150,000 8.00%, 8/15/99............................... 156,937
1,500,000 6.875%, 8/31/99.............................. 1,521,562
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
- --------------- ---------------
<S> <C> <C>
U.S. GOV'T AGENCIES & OBLIGATIONS (CONTINUED)
UNITED STATES TREASURY NOTES
(CONTINUED)
$ 1,000,000 6.375%, 1/15/00.............................. $ 999,687
2,750,000 6.75%, 4/30/00............................... 2,779,219
300,000 7.50%, 5/15/02............................... 313,875
4,000,000 6.375%, 8/15/02.............................. 3,962,500
550,000 6.25%, 2/15/03............................... 540,031
1,000,000 5.75%, 8/15/03............................... 951,562
375,000 7.875%, 11/15/04............................. 403,242
---------------
20,622,738
---------------
UNITED STATES TREASURY STRIPPED
PRINCIPAL--1.13%
1,000,000 0.00%, 2/15/01............................... 743,640
---------------
TOTAL U.S. GOV'T AGENCIES & OBLIGATIONS (Cost
$51,009,002)................................. 49,418,218
---------------
MORTGAGE BACKED SECURITIES--10.41%
Federal Home Loan Mortgage Corporation,
491,800 Pool # 251836, 8.50%, 5/01/04................ 507,119
Federal National Mortgage Association
1,226,950 Pool # 195152, 7.00%, 1/1/08................. 1,216,177
885,551 Pool # 124118, 9.00%, 3/1/22................. 930,528
929,463 Pool # 190203, 8.00%, 2/1/23................. 942,513
915,061 Pool # 330091, 8.00%, 2/1/23................. 929,363
Government National Mortgage Association,
89,053 Pool # 7774, 8.00%, 9/15/04.................. 89,831
66,020 Pool # 6400, 8.00%, 6/15/05.................. 66,597
84,107 Pool # 7038, 8.00%, 10/15/05................. 84,843
76,399 Pool # 11310, 8.00%, 11/15/05................ 77,067
30,343 Pool # 9839, 8.00%, 7/15/06.................. 30,609
51,681 Pool # 10459, 8.00%, 8/15/06................. 52,133
185,257 Pool # 10419, 8.00%, 9/15/06................. 186,877
85,023 Pool # 12590, 8.00%, 9/15/06................. 85,766
161,098 Pool # 14295, 8.00%, 1/15/07................. 162,506
159,985 Pool # 204365, 9.00%, 3/15/17................ 169,280
801,480 Pool # 407323, 8.25%, 4/15/25................ 816,252
492,262 Pool # 417331, 7.50%, 3/15/26................ 485,028
---------------
TOTAL MORTGAGE BACKED SECURITIES (Cost
$6,931,877).................................. 6,832,489
---------------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
8
<PAGE>
- --------------------------------------------------------------------------------
- --------- BNY HAMILTON INTERMEDIATE GOVERNMENT FUND
Schedule of Investments (Continued)
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
- --------------- ---------------
COLLATERALIZED MORTGAGE
OBLIGATIONS--10.22%
<S> <C> <C>
Federal Home Loan Mortgage Corporation,
$ 1,057,716 Series 1317E, 7.00%, 6/15/04................. $ 1,064,094
500,000 Series 1202E, 7.00%, 7/15/05................. 502,410
500,000 Series 1467D, 6.70%, 8/15/05................. 499,120
500,000 Series 1338G, 6.75%, 1/15/06................. 500,385
252,552 Series G00100, 8.00%, 2/01/23................ 255,155
Federal National Mortgage Association,
500,000 Series 1992-108 G, 7.00%, 8/25/05............ 501,805
250,000 Series 1990-31 H, 7.00%,
6/25/19...................................... 250,230
2,000,000 Series 1991-137, 8.30%,
6/25/20...................................... 2,054,820
Government National Mortagage Association,
1,067,000 Series 1995-2D, 8.50%,
11/20/15..................................... 1,080,252
---------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $6,728,747)............................ 6,708,271
---------------
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
- --------------- ---------------
<S> <C> <C>
REPURCHASE AGREEMENT--2.95%
$ 1,934,000 Repurchase agreement with Deutsche Bank,
5.50%, due 7/1/96, repurchase price
$1,934,886 (Collateral--Various U.S.
Governmental Agency Debt Instruments,
5.641%-7.88%, 12/20/96-9/25/08; aggregate
market value plus accrued interest $1,993,446
(Cost $1,934,000)............................ $ 1,934,000
---------------
TOTAL INVESTMENTS--
(Cost $66,603,626)--(a) 98.86%............... 64,892,978
Cash, receivables and other assets less
liabilities--1.14%........................... 750,378
---------------
NET ASSETS--100.00%.......................... $ 65,643,356
===============
</TABLE>
(a) The cost stated also represents the aggregate cost for Federal income tax
purposes. At June 30,1996, net unrealized depreciation was $1,710,648 based
on cost for Federal income tax purposes. This consisted of aggregate gross
unrealized appreciation of $109,408 and aggregate gross unrealized
depreciation of $1,820,056.
See notes to financial statements.
- --------------------------------------------------------------------------------
9
<PAGE>
- --------------------------------------------------------------------------------
- --------- BNY HAMILTON INTERMEDIATE GOVERNMENT FUND
Statement of Assets and Liabilities
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments at market value, (Identified cost
$66,603,626)................................. $64,892,978
Cash............................................ 849
Receivables:
Investments sold............................. 38,085
Interest..................................... 1,194,857
Capital stock sold........................... 5,108,967
Deferred organization costs and other assets.... 24,700
-----------
TOTAL ASSETS................................. 71,260,436
-----------
LIABILITIES:
Payables:
Investments purchased........................ 4,973,478
Capital stock repurchased.................... 236,507
Dividends.................................... 293,195
Services provided by The Bank of New York and
Administrator.............................. 88,109
Accrued expenses and other liabilities.......... 25,791
-----------
TOTAL LIABILITIES............................ 5,617,080
-----------
NET ASSETS:
(applicable to 6,834,695 shares issued and
outstanding; 200 million shares of $.001 par
value authorized)............................ $65,643,356
===========
Net asset value, offering price and repurchase
price per share ($65,643,356/6,834,695
shares)...................................... $ 9.60
===========
Maximum public offering price per share
($9.60/.97).................................. $ 9.90
===========
SOURCES OF NET ASSETS:
Capital stock @ par............................. $ 6,835
Capital surplus................................. 69,704,775
Accumulated net realized loss on investments.... (2,357,606)
Net unrealized depreciation on investments...... (1,710,648)
-----------
NET ASSETS........................................ $65,643,356
===========
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(Unaudited)
<S> <C>
INVESTMENT INCOME:
Interest........................................ $2,065,719
----------
EXPENSES:
Advisory........................................ 156,757
Administration.................................. 62,618
Accounting services............................. 29,836
Custodian....................................... 11,300
Cash management................................. 4,619
Transfer agent.................................. 16,425
Audit........................................... 1,652
Insurance....................................... 1,292
Directors....................................... 8,473
Reports to shareholders......................... 3,899
Registration and filing......................... 5,287
Legal........................................... 1,945
Other........................................... 9,807
----------
TOTAL EXPENSES............................... 313,910
----------
NET INVESTMENT INCOME........................ 1,751,809
----------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on investment transactions.... (247,521)
Decrease in unrealized appreciation on
investments during the period................ (1,915,002)
----------
Net realized and unrealized loss on
investments.................................. (2,162,523)
----------
Net decrease in net assets resulting from
operations................................... $ (410,714)
==========
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
10
<PAGE>
- --------------------------------------------------------------------------------
- --------- BNY HAMILTON INTERMEDIATE GOVERNMENT FUND
Statements of Changes in Net Assets
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1996 1995
----------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income........................... $ 1,751,809 $ 3,406,583
Net realized loss on investments................ (247,521) (704,447)
Increase in unrealized appreciation
(depreciation) on investments during the
period....................................... (1,915,002) 6,144,249
----------- -----------
Net increase (decrease) in net assets
resulting from operations................... (410,714) 8,846,385
----------- -----------
DIVIDENDS TO SHAREHOLDERS:
Dividends from net investment income............ (1,751,809) (3,406,583)
----------- -----------
CAPITAL STOCK TRANSACTIONS:
Proceeds from capital stock sold................ 16,040,515 10,197,215
Proceeds from reinvestment of dividends......... 995,274 2,247,470
Cost of capital stock repurchased............... (9,888,831) (16,553,657)
----------- -----------
Increase (decrease) in net assets resulting
from capital stock transactions............. 7,146,958 (4,108,972)
----------- -----------
INCREASE IN NET ASSETS..................... 4,984,435 1,330,830
NET ASSETS:
Beginning of period............................. 60,658,921 59,328,091
----------- -----------
End of period................................... $65,643,356 $60,658,921
=========== ===========
CHANGE IN CAPITAL STOCK OUTSTANDING:
Shares sold..................................... 1,665,293 1,074,090
Shares issued on reinvestment of dividends...... 83,829 233,341
Shares repurchased.............................. (1,016,529) (1,726,729)
----------- -----------
Net increase (decrease)...................... 732,593 (419,298)
Shares outstanding, beginning of period......... 6,102,102 6,521,400
----------- -----------
Shares outstanding, end of period............... 6,834,695 6,102,102
=========== ===========
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
11
<PAGE>
- --------------------------------------------------------------------------------
- --------- BNY HAMILTON INTERMEDIATE GOVERNMENT FUND
Financial Highlights
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE
PERIOD
AUGUST 10,
SIX MONTHS 1992*
ENDED YEAR ENDED DECEMBER 31, THROUGH
JUNE 30, ------------------------------- 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.............. 0.27 0.53 0.50 0.51 0.18
Net realized and unrealized gain
(loss) on investments............ (0.34) 0.84 (1.02) 0.27 (0.13)
-------- ------- ------- ------- --------
Total from investment
operations.................. (0.07) 1.37 (0.52) 0.78 0.05
-------- ------- ------- ------- --------
DIVIDENDS AND DISTRIBUTION
Dividends from net investment
income........................... (0.27) (0.53) (0.50) (0.51) (0.18)
Distribution from capital gains.... -- -- -- (0.02) --
-------- ------- ------- ------- --------
Total dividends and
distribution................ (0.27) (0.53) (0.50) (0.53) (0.18)
-------- ------- ------- ------- --------
Net asset value at end of period... $ 9.60 $ 9.94 $ 9.10 $ 10.12 $ 9.87
======== ======= ======= ======= ========
TOTAL RETURN:+..................... (0.69)%** 15.40% (5.17)% 8.03% 0.51%**
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's
omitted)......................... $ 65,643 $60,659 $59,328 $72,069 $ 25,575
Ratio to average net assets of:
Expenses, net of waiver from The
Bank of New York.............. 1.00%*** 1.06% 1.07% 0.86% 0.75%***
Expenses, prior to waiver from
The Bank of New York.......... 1.00%*** 1.06% 1.10% 1.15% 1.64%***
Net investment income, net of
waiver from The Bank of New
York.......................... 5.58%*** 5.52% 5.30% 5.04% 4.62%***
Portfolio turnover rate............ 28% 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
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/
PRINCIPAL S&P INTEREST MATURITY MARKET
AMOUNT RATINGS RATE DATE VALUE
- --------------- ---------- -------- -------- -----------
MUNICIPAL BONDS--97.48%
CERTIFICATES OF PARTICIPATION--1.29%
<S> <C> <C> <C> <C> <C>
$ 500,000 New York State Certificate of
Participation........................... Baa1/BBB 5.000% 03/01/00 $ 495,505
-----------
EDUCATION--10.48%
235,000 Dutchess County, New York IDA Civic
Facility Revenue, Bard College.......... A/NR 6.000 11/01/99 242,059
250,000 New York State Dormitory Authority,
Columbia University..................... Aaa/AA+ 5.000 07/01/00 253,805
1,000,000 New York State Dormitory Authority,
Cornell University...................... Aa/AA 4.600 07/01/00 1,002,540
1,000,000 New York State Dormitory Authority, New
York University, MBIA Insured+.......... Aaa/AAA 5.500 07/01/04 1,033,330
1,000,000 New York State Dormitory Authority,
Strong Hospital (University of
Rochester).............................. A1/A+ 5.000 07/01/02 1,001,540
500,000 New York State Dormitory Authority,
University of Rochester................. A1/A+ 4.700 07/01/00 500,360
-----------
4,033,634
-----------
GENERAL OBLIGATION--10.43%
500,000 Monroe County, New York, MBIA
Insured+................................ Aaa/AAA 4.800 06/01/02 502,030
60,000 Monroe County, New York Series B,
Unrefunded Balance, Callable 6/01/98.... Aa/AA- 7.000 06/01/03 63,674
1,000,000 New York State, General Obligation...... A/A- 4.600 03/15/01 991,420
1,000,000 New York State, General Obligation...... A/A- 5.125 06/15/04 1,003,480
500,000 New York State Municipal Bond Bank
Agency (City of Rochester).............. NR/A+ 6.400 03/15/01 528,385
950,000 Town of New Castle, New York
(Westchester County).................... Aa/NR 4.000 06/01/00 925,395
-----------
4,014,384
-----------
HEALTH CARE--1.51%
500,000 New York State Medical Care
Facilities--Downstate Medical Center.... NR/AAA 5.700 02/15/04 518,735
60,000 New York State Medical Care
Facilities--Millard Fillmore Hospital
FHA..................................... Aa/AA 5.600 02/15/02 61,419
-----------
580,154
-----------
HOUSING--2.61%
500,000 New York State Mortgage Revenue
Agency.................................. Aa/NR 5.300 04/01/04 499,390
500,000 New York State Mortgage Revenue
Agency--Homeowner Mtg Series 37-A....... Aa/NR 5.850 04/01/06 503,085
-----------
1,002,475
-----------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
13
<PAGE>
- --------------------------------------------------------------------------------
- --------- BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND
Schedule of Investments (Continued)
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/
PRINCIPAL S&P INTEREST MATURITY MARKET
AMOUNT RATINGS RATE DATE VALUE
- --------------- ---------- -------- -------- -----------
MUNICIPAL BONDS (CONTINUED)
<S> <C> <C> <C> <C> <C>
INDUSTRIAL DEVELOPMENT BONDS--3.90%
$ 500,000 Puerto Rico Industrial Medical
Environmental PCR, Intel Corp; Put
Option 9/01/98.......................... A1/A+ 4.000% 09/01/13 $ 497,405
1,000,000 Westchester County Industrial
Development Authority................... Aaa/AAA 4.850 07/01/00 1,005,420
-----------
1,502,825
-----------
PREREFUNDED/ESCROWED/US
GUARANTEED--4.55%
990,000 New York State Housing Finance Agency
ETM State University Construction....... Aaa/AAA 6.500 11/01/06 1,059,696
311,000 Puerto Rico Aqueduct & Sewer Authority
ETM..................................... Aaa/AAA 4.200 07/01/00 305,054
390,000 Puerto Rico Aqueduct & Sewer Authority
ETM..................................... Aaa/AAA 4.500 07/01/02 386,903
-----------
1,751,653
-----------
SPECIAL TAX--19.42%
2,500,000 Municipal Assistance Corp for New York
City.................................... Aa/A+ 6.000 07/01/05 2,657,175
300,000 New York State Local Government
Assistance Corp......................... A/A 6.700 04/01/00 319,677
1,000,000 New York State Local Government
Assistance Corp......................... A/A 5.300 04/01/00 1,017,960
340,000 New York State Local Government
Assistance Corp......................... A/A 6.750 04/01/02 371,906
655,000 New York State Local Government
Assistance Corp......................... A/A 5.000 04/01/02 655,923
1,000,000 New York State Local Government
Assistance Corp......................... A/A 4.600 04/01/03 967,870
500,000 New York State Local Government
Assistance Corp......................... A/A 4.800 04/01/05 479,580
1,000,000 New York State Thruway Authority Highway
& Bridge Trust Fund..................... A/A- 4.750 04/01/98 1,005,290
-----------
7,475,381
-----------
STATE APPROPRIATION--16.47%
420,000 Metropolitan Transportation Authority... Baa1/BBB 5.100 07/01/00 420,449
450,000 New York State Dormitory Authority,
State University........................ Baa1/BBB+ 7.100 05/15/98 471,380
900,000 New York State Dormitory Authority,
State University........................ Baa1/BBB+ 5.200 05/15/03 870,750
500,000 New York State Dormitory Authority,
State University........................ Baa1/BBB+ 5.500 05/15/07 482,905
1,400,000 New York State Dormitory Authority,
Upstate Community Colleges.............. Baa1/BBB- 4.500 07/01/00 1,364,454
500,000 New York State Medical Care
Facilities--Mental Health............... Baa1/BBB+ 4.600 08/15/99 494,555
275,000 New York State Medical Care
Facilities--Mental Health............... Baa1/BBB+ 4.700 02/15/01 265,334
505,000 New York State Medical Care
Facilities--Mental Health............... Baa1/BBB+ 4.700 08/15/01 485,593
480,000 New York State Medical Care
Facilities--Mental Health............... Baa1/BBB+ 6.100 08/15/02 491,520
1,000,000 New York State Thruway Authority Service
Contract................................ Baa1/BBB 5.000 04/01/00 993,840
-----------
6,340,780
-----------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
14
<PAGE>
- --------------------------------------------------------------------------------
- --------- BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND
Schedule of Investments (Continued)
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/
PRINCIPAL S&P INTEREST MATURITY MARKET
AMOUNT RATINGS RATE DATE VALUE
- --------------- ---------- -------- -------- -----------
MUNICIPAL BONDS (CONTINUED)
<S> <C> <C> <C> <C> <C>
TRANSPORTATION--13.87%
$ 625,000 New York State Thruway Authority General
Revenue................................. A1/A 5.125% 01/01/00 $ 632,694
1,500,000 New York State Thruway Authority General
Revenue................................. A1/A 5.250 01/01/01 1,525,845
650,000 Port Authority of New York & New
Jersey.................................. A1/AA- 5.100 08/01/01 659,861
500,000 Port Authority of New York & New
Jersey.................................. A1/AA- 6.100 10/15/02 533,525
1,000,000 Port Authority of New York & New
Jersey.................................. A1/AA- 5.300 08/01/03 1,021,270
1,000,000 Triborough Bridge & Tunnel Authority
General Purpose......................... Aa/A+ 4.300 01/01/02 965,440
-----------
5,338,635
-----------
UTILITY--10.45%
300,000 Great Neck North Water Authority, New
York.................................... A1/A- 6.900 01/01/00 321,717
250,000 New York State Environment Facs. Corp.
State Water............................. Aaa/AAA 6.000 05/15/02 264,803
500,000 New York State Envir. Fac. Corp. PCR
Water Revol............................. Aa/A- 5.100 06/15/00 508,050
400,000 New York State Envir. Fac. Corp. PCR
Water Revol............................. Aaa/AAA 6.300 09/15/00 425,148
500,000 New York State Power Authority.......... Aa/AA- 7.500 01/01/02 530,155
250,000 Onondaga County, New York Water
Authority............................... A1/A 6.250 01/15/98 257,592
700,000 Suffolk County Water Authority, New York
MBIA Insured+........................... Aaa/AAA 4.800 06/01/97 706,419
1,000,000 Suffolk County Water Authority, New York
MBIA Insured+........................... Aaa/AAA 4.800 06/01/00 1,006,720
-----------
4,020,604
-----------
OTHER--2.50%
340,000 New York City, Trust for Cultural
Resources Museum MOMA--AMBAC Insured+... Aaa/AAA 4.900 01/01/01 343,281
240,000 New York City, Trust for Cultural
Resources Museum MOMA--AMBAC Insured+... Aaa/AAA 5.000 01/01/02 242,299
350,000 New York City, Trust for Cultural
Resources Museum MOMA--AMBAC Insured+... Aaa/AAA 6.300 01/01/03 377,510
-----------
963,090
-----------
TOTAL MUNICIPAL BONDS (Cost
$37,439,399)............................ 37,519,120
-----------
TAX-EXEMPT MONEY MARKET FUND--1.31%
504,981 Dreyfus New York Municipal Cash
Management (Cost $504,981).............. NR/NR 3.190%(a) 504,981
-----------
TOTAL INVESTMENTS (Cost $37,944,380)
(b)--98.79%............................. 38,024,101
Cash, receivables, and other assets less
liabilities--1.21%...................... 467,186
-----------
NET ASSETS--100%........................ $38,491,287
===========
</TABLE>
<TABLE>
<S> <C>
NR Not rated by Moody's or Standard & Poor's ('S&P').
+ Insured or guaranteed by the indicated municipal bond
insurance corporation.
(a) Represents annualized yield at June 30, 1996.
(b) The cost stated also represents the aggregate cost for
Federal income tax purposes. At June 30, 1996, net
unrealized appreciation was $79,721 based on cost for
Federal income tax purposes. This consisted of aggregate
gross unrealized appreciation of $319,105 and aggregate
gross unrealized depreciation of $239,384.
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
15
<PAGE>
- --------------------------------------------------------------------------------
- --------- BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND
Statement of Assets and Liabilities
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments at market value,
(Identified cost $37,944,380)...... $38,024,101
Receivables:
Interest........................... 617,659
Capital stock sold................. 99,500
Deferred organization costs and other
assets............................. 75,189
-----------
TOTAL ASSETS....................... 38,816,449
-----------
LIABILITIES:
Payables:
Investment purchased............... 83,477
Dividends.......................... 127,694
Services provided by The Bank of
New York and Administrator....... 88,488
Accrued expenses and other
liabilities........................ 25,503
-----------
TOTAL LIABILITIES.................. 325,162
-----------
NET ASSETS:
(applicable to 3,795,793 shares issued
and outstanding; 200 million shares
of $.001 par value authorized)..... $38,491,287
===========
Net asset value, offering price and
repurchase price per share
($38,491,287/3,795,793 shares)..... $ 10.14
===========
Maximum public offering price per
share ($10.14/.97)................. $ 10.45
===========
SOURCES OF NET ASSETS:
Capital stock @ par................... $ 3,796
Capital surplus....................... 38,738,469
Accumulated net realized loss on
investments........................ (330,699)
Net unrealized appreciation on
investments........................ 79,721
-----------
NET ASSETS.............................. $38,491,287
===========
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
<S> <C>
INVESTMENT INCOME:
Interest.............................. $933,045
--------
EXPENSES:
Advisory.............................. 97,520
Administration........................ 39,010
Accounting services................... 29,836
Custodian............................. 6,565
Cash management....................... 5,362
Transfer agent........................ 15,348
Audit................................. 1,228
Insurance............................. 894
Directors............................. 8,473
Reports to shareholders............... 2,470
Registration and filing............... 5,776
Legal................................. 1,407
Other................................. 11,747
--------
TOTAL EXPENSES..................... 225,636
Fees waived by The Bank of New York... (50,067)
--------
NET EXPENSES....................... 175,569
--------
NET INVESTMENT INCOME.............. 757,476
--------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS--
Net realized gain on investment
transactions....................... 128,992
Decrease in unrealized appreciation on
investments during the year........ (874,513)
--------
Net realized and unrealized loss on
investments........................ (745,521)
--------
Net increase in net assets resulting
from operations.................... $ 11,955
========
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
16
<PAGE>
- --------------------------------------------------------------------------------
- --------- BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND
Statements of Changes in Net Assets
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1996 1995
----------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income........................... $ 757,476 $ 1,680,844
Net realized gain (loss) on investments......... 128,992 (75,562)
Increase in unrealized appreciation
(depreciation) on investments during the
period....................................... (874,513) 3,351,479
----------- -----------
Net increase in net assets resulting from
operations.................................. 11,955 4,956,761
----------- -----------
DIVIDENDS TO SHAREHOLDERS:
Dividends from net investment income............ (757,476) (1,680,844)
----------- -----------
CAPITAL STOCK TRANSACTIONS:
Proceeds from capital stock sold................ 3,661,067 4,068,695
Proceeds from reinvestment of dividends......... 216,566 604,529
Cost of capital stock repurchased............... (5,571,760) (10,231,201)
----------- -----------
Decrease in net assets resulting from capital
stock transactions.......................... (1,694,127) (5,557,977)
----------- -----------
DECREASE IN NET ASSETS..................... (2,439,648) (2,282,060)
NET ASSETS:
Beginning of period............................. 40,930,935 43,212,995
----------- -----------
End of period................................... $38,491,287 $40,930,935
=========== ===========
CHANGE IN CAPITAL STOCK OUTSTANDING:
Shares sold..................................... 358,948 410,516
Shares issued on reinvestment of dividends...... 21,131 59,793
Shares repurchased.............................. (543,811) (1,014,728)
----------- -----------
Net decrease................................. (163,732) (544,419)
Shares outstanding, beginning of period......... 3,959,525 4,503,944
----------- -----------
Shares outstanding, end of period............... 3,795,793 3,959,525
=========== ===========
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
17
<PAGE>
- --------------------------------------------------------------------------------
- --------- BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND
Financial Highlights
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE
PERIOD
AUGUST 10,
SIX MONTHS 1992*
ENDED YEAR ENDED DECEMBER 31, THROUGH
JUNE 30, ----------------------------- 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.............. 0.20 0.39 0.39 0.38 0.15
Net realized and unrealized gain
(loss) on investments............ (0.20) 0.75 (0.78) 0.40 (0.03)+
-------- ------- ------- ------- --------
Total from investment
operations.................. 0.00 1.14 (0.39) 0.78 0.12
-------- ------- ------- ------- --------
DIVIDENDS
Dividends from net investment
income........................... (0.20) (0.39) (0.39) (0.38) (0.15)
-------- ------- ------- ------- --------
Net asset value at end of period... $ 10.14 $ 10.34 $ 9.59 $ 10.37 $ 9.97
-------- ------- ------- ------- --------
TOTAL RETURN:++.................... (0.03)%** 12.08% (3.81)% 7.99% 1.18%**
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's
omitted)......................... $ 38,491 $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................. 1.16%*** 1.20% 1.20% 1.30% 1.96%***
Net investment income, net of
waiver from the Bank of New
York and Administrator........ 3.89%*** 3.89% 3.92% 3.74% 3.79%***
Portfolio turnover rate............ 12% 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 (UNAUDITED)
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 (UNAUDITED) (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 (UNAUDITED) (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) 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% 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.
- --------------------------------------------------------------------------------
21
<PAGE>
- --------------------------------------------------------------------------------
- --------- NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
4. PORTFOLIO SECURITIES
During the six months ended June 30, 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.................... 55,758,439 35,296,988
<CAPTION>
INTERMEDIATE
GOVERNMENT FUND
-------------------------
PURCHASES SALES
----------- -----------
<S> <C> <C>
US Gov't Securities........... $22,865,774 $16,283,189
All Others.................... -- 1,148,988
<CAPTION>
INTERMEDIATE
NEW YORK
TAX-EXEMPT FUND
-------------------------
PURCHASES SALES
----------- -----------
<S> <C> <C>
US Gov't Securities........... $ -- $ --
All Others.................... 4,673,470 5,400,730
</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 six months ended June 30, 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 six
months ended June 30,
1996........................ 1,185 512,883
Options terminated in closing
purchase transactions....... (890) (1,024,109)
Options expired............... (50) (25,026)
------ ----------
Options outstanding at June
30, 1996.................... 350 $ 59,288
------ ----------
</TABLE>
The cost of cancelling options in closing purchase transactions was $1,227,669,
resulting in a net-short term capital gain of $203,560.
- --------------------------------------------------------------------------------
22
<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
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
Mark E. Nagle, Treasurer
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, Inc.
CUSTODIAN
The Bank of New York
INDEPENDENT ACCOUNTANTS
Deloitte & Touche LLP
LEGAL COUNSEL
Sullivan & Cromwell
- --------------------------------------------------------------------------------
23
<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-0040
BNY HAMILTON
FUNDS
Semi-Annual Report
June 30, 1996
(Unaudited)
o EQUITY INCOME FUND
o INTERMEDIATE GOVERNMENT FUND
o INTERMEDIATE NEW YORK TAX-EXEMPT FUND
[LOGO]
<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, and Unaudited Financial Statements of BNY
Hamilton Money Fund as of June 30, 1996
- 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, and Unaudited
Financial Statements of BNY Hamilton Intermediate Government
Fund as of June 30, 1996
- 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, and Unaudited
Financial Statements of BNY Hamilton Intermediate New York
Tax-Exempt Fund as of June 30, 1996
- 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, and Unaudited Financial
Statements of BNY Hamilton Equity Income Fund as of June 30,
1996
- 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:
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<S> <C>
(1)(a) Articles of Incorporation of Registrant.*
(b) Articles of Amendment, dated June 29, 1992.*
(c) Articles Supplementary, dated June 29,
1994.*
(d) Articles Supplementary, dated August 15,
1995.*
(e) Articles of Amendment, dated January 22, 1997.
(f) Articles Supplementary, dated January 22, 1997.
(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
</TABLE>
<PAGE>
<TABLE>
<S> <C>
New York.*
(d) Investment Advisory Agreement between BNY
Hamilton Equity Income Fund and The Bank of New
York.*
(e) Investment Advisory Agreement between BNY
Hamilton Treasury Money Fund and The Bank of
New York.
(f) Investment Advisory Agreement between BNY
Hamilton Large Cap Growth Fund and The Bank of
New York.
(g) Investment Advisory Agreement between BNY
Hamilton Small Cap Growth Fund and The Bank of
New York.
(h) Investment Advisory Agreement between BNY
Hamilton International Equity Fund and The Bank
of New York.
(i) Investment Advisory Agreement between BNY
Hamilton Intermediate Investment Grade Fund and
The Bank of New York.
(j) Investment Advisory Agreement between BNY
Hamilton Intermediate Tax-Exempt Fund and The
Bank of New York.
(k) Sub-advisory agreement between BNY Hamilton
International Equity Fund and
(6)(a) Distribution Agreements between Registrant and
BNY Hamilton Distributors, Inc.*
(b) Supplement to Disbribution 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.*
(c) Supplement to Custody Agreement between
Registrant and The Bank of New York.
(d) Supplement to Cash Management and Related
Services Agreement between 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).*
(g) No longer applicable.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
(h) Shareholder Servicing Plan of BNY Hamilton
Money Fund (Hamilton Classic Shares).*
(i) Rule 18f-3 Plan of BNY Hamilton Money Fund.*
(j) Supplement to Administration Agreement between
Registrant and BNY Hamilton Distributors, Inc.
(k) Supplement to Fund Accounting Services
Agreement between Registrant and The Bank of
New York.
(l) Updated Transfer Agency Agreement between
Registrant and BISYS Fund Services, Inc.
(m) Shareholder Servicing Plan of BNY Hamilton
Treasury Money Fund (Hamilton Premier Shares).
(n) Revised Rule 18f-3 Plan of BNY Hamilton Funds, Inc.
(o) Supplement to Form of Sub-Administration
Agreement between BNY Hamilton Distributors, Inc.
and The Bank of New York.
(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.*
(e) Rule 12b-1 Plan of BNY Hamilton Large Cap
Growth Fund - Investor Shares.
(f) Rule 12b-1 Plan of BNY Hamilton Small Cap
Growth Fund - Investor Shares.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
(g) Rule 12b-1 Plan of BNY Hamilton International
Equity Fund - Investor Shares.
(h) Rule 12b-1 Plan of BNY Hamilton Intermediate
Investment Grade Fund - Investor Shares.
(i) Rule 12b-1 Plan of BNY Hamilton Intermediate
Tax-Exempt Fund - Investor Shares.
(16) Schedule for computation of performance
quotations.
(17) Financial Data Schedule.
</TABLE>
- ----------
* 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 December 31, 1996.
<TABLE>
<CAPTION>
Number
Title of Class of record holders
-------------- -----------------
<S> <C>
BNY Hamilton Intermediate New York Tax-Exempt Fund 692
BNY Hamilton Intermediate Government Fund 767
BNY Hamilton Equity Income Fund 2,638
BNY Hamilton Money Fund - Hamilton Shares 47
BNY Hamilton Money Fund - Hamilton Premier Shares 1,336
BNY Hamilton Money Fund - Hamilton Classic Shares 327
</TABLE>
Item 27. Indemnification.
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,
<PAGE>
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:
Name Title/Company
---- -------------
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 (media)
Martha T. Muse........... Chairman of the Tinker Foundation
Incorporated (private foundation)
<PAGE>
Catherine A. Rein........ Executive Vice President of Metropolitan
Life Insurance Company (insurance and
financial services)
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.
The Registrant hereby also undertakes to file a post-effective
amendment, using financial statements which need not be certified,
within four to six months from the effective date of registrant's
1993 Act registration statement.
<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(a) 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 January,
1997.
BNY HAMILTON FUNDS, INC.
By /s/ William J. Tomko
------------------------------
William J. Tomko
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 January, 1997.
<TABLE>
<CAPTION>
Name Title
- ---- -----
<S> <C>
/s/ Eugene J. Sullivan
________________________________ Director and Chairman of
(Eugene J. Sullivan) the Board of Directors
/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/ James E. Quinn
________________________________ Director
(James E. Quinn)
/s/ J. David Huber
________________________________ Chief Executive Officer
(J. David Huber)
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description Page
- ------ ----------- ----
<S> <C> <C>
(1)(a) Articles of Incorporation of Registrant.*
(b) Articles of Amendment, dated June 29, 1992.*
(c) Articles Supplementary, dated June 29, 1994.*
(d) Articles Supplementary, dated August 15, 1995.*
(e) Articles of Amendment, dated January 22, 1997.
(f) Articles Supplementary, dated January 22, 1997.
(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.*
(e) Investment Advisory Agreement between BNY
Hamilton Treasury Money Fund and The Bank of
New York.
(f) Investment Advisory Agreement between BNY
Hamilton Large Cap Growth Fund and The Bank of
New York.
(g) Investment Advisory Agreement between BNY
Hamilton Small Cap Growth Fund and The Bank of
New York.
(h) Investment Advisory Agreement between BNY
Hamilton International Equity Fund and The Bank
of New York.
(i) Investment Advisory Agreement between BNY
Hamilton Intermediate Investment Grade Fund and
The Bank of New York.
(j) Investment Advisory Agreement between BNY
Hamilton Intermediate Tax-Exempt Fund and The
Bank of New York.
<PAGE>
(k) Sub-advisory agreement between BNY Hamilton
International Equity Fund and Indosuez Asset
Management.
(6)(a) Distribution Agreements between Registrant and
BNY Hamilton Distributors, Inc.*
(b) Supplement to Disbribution 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.*
(c) Supplement to Custody Agreement between
Registrant and The Bank of New York.
(d) Supplement to Cash Management and Related
Services Agreement between 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).*
(g) No longer applicable.
<PAGE>
(h) Shareholder Servicing Plan of BNY Hamilton
Money Fund (Hamilton Classic Shares).*
(i) Rule 18f-3 Plan of BNY Hamilton Money Fund.*
(j) Supplement to Administration Agreement between
Registrant and BNY Hamilton Distributors, Inc.
(k) Supplement to Fund Accounting Services
Agreement between Registrant and The Bank of
New York.
(l) Updated Transfer Agency Agreement between
Registrant and BISYS Fund Services, Inc.
(m) Shareholder Servicing Plan of BNY Hamilton
Treasury Money Fund (Hamilton Premier Shares).
(n) Revised Rule 18f-3 Plan of BNY Hamilton Funds, Inc.
(o) Supplement to Form of Sub-Administration
Agreement between BNY Hamilton Distributors, Inc.
and The Bank of New York.
(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.*
(e) Rule 12b-1 Plan of BNY Hamilton Large Cap
Growth Fund - Investor Shares.
(f) Rule 12b-1 Plan of BNY Hamilton Small Cap
Growth Fund - Investor Shares.
(g) Rule 12b-1 Plan of BNY Hamilton International
Equity Fund - Investor Shares.
(h) Rule 12b-1 Plan of BNY Hamilton Intermediate
Investment Grade Fund - Investor Shares.
(i) Rule 12b-1 Plan of BNY Hamilton Intermediate
Tax-Exempt Fund - Investor Shares.
(16) Schedule for computation of performance
quotations.
(17) Financial Data Schedule.
</TABLE>
- ----------
* Previously filed.
<PAGE>
BNY HAMILTON FUNDS, INC.
ARTICLES OF AMENDMENT
CHANGING NAMES OF SERIES
PURSUANT TO MGCL SECTION 2-605(B)
BNY Hamilton Funds, Inc., a Maryland corporation, having its
principal office in Baltimore, Maryland (hereinafter called the "Corporation"),
hereby certifies to the State Department of Assessments and Taxation of Maryland
that:
FIRST: The Charter of the Corporation is hereby amended as follows:
(1) to provide that the designation of the shares of Common Stock of
the BNY Hamilton Intermediate Government Bond Fund is changed to the "BNY
Hamilton Intermediate Government Fund;"
(2) to provide that the designation of the shares of Common Stock of
each of the BNY Hamilton Equity Income Fund, BNY Hamilton Intermediate
Government Fund, and BNY Hamilton Intermediate New York Tax-Exempt Fund shall
include the additional designation "--Investor Class" as part of the designation
of the Series (and in this regard, another class of each such series is being
created by the filing of Articles Supplementary promptly after the filing of
these Articles of Amendment); and
(3) to confirm the designation of the classes of shares of Common Stock
of the BNY Hamilton Money Fund series of Common Stock, as contemplated by the
Articles Supplementary dated August 15, 1995 shall be the "Hamilton Class", the
"Hamilton Premier Class", and the "Hamilton Classic Class".
SECOND: The amendment does not change the outstanding capital stock of
the corporation or the aggregate par value thereof.
THIRD: The foregoing amendment to the Charter of the Corporation has
been approved by the Board of Directors and is limited to a change expressly
permitted by Section 2-605 of the Maryland General Corporation Law.
FOURTH: The Corporation is registered as an open-end company under the
Investment Company Act of 1940.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused these presents
to be signed in its name and on its behalf by its Vice President and witnessed
by its Assistant Secretary on this 22nd day of January, 1997.
BNY HAMILTON FUNDS, INC.
By:/s/Anthony L. Mecure
---------------------------
Name: Anthony L. Mercure
Title: Vice President
ATTEST:
/s/Bruce Treff
- ----------------------
Name: Bruce Treff
Title: Assistant Secretary
THE UNDERSIGNED, Vice President of BNY Hamilton Funds, Inc.,
who executed on behalf of the Corporation the foregoing Articles of Amendment of
which this certificate is made a part, hereby acknowledges in the name and on
behalf of the Corporation the foregoing Articles of Amendment to be the
corporate act of the Corporation and hereby certifies to the best of his
knowledge, information and belief the matters and facts set forth herein with
respect to the authorization and approval thereof are true in all material
respects under the penalties of perjury.
/s/Anthony L. Mercure
----------------------------
Name: Anthony L. Mercure
-2-
<PAGE>
ARTICLES SUPPLEMENTARY
TO
THE ARTICLES OF INCORPORATION OF BNY HAMILTON FUNDS, INC.
BNY Hamilton Funds, Inc., a Maryland corporation having its
principal office in Baltimore, Maryland (the "Corporation"), hereby certifies to
the State Department of Assessments and Taxation of Maryland that:
FIRST: Immediately prior to the filing of these
Articles Supplementary (i) the Corporation was authorized to issue
twenty billion (20,000,000,000) shares of capital stock designated as
Common Stock and having a par value of one tenth of one cent ($.001)
per share for an aggregate par value of twenty million dollars
($20,000,000), (ii) 9,600,000,000 authorized shares of Common Stock
were previously classified by the Board of Directors and were allocated
among the Corporation's four series as follows:
<TABLE>
<S> <C>
BNY Hamilton Equity Income Fund--Investor Class 200,000,000
BNY Hamilton Intermediate
Government Fund--Investor Class 200,000,000
BNY Hamilton Intermediate New
York Tax-Exempt Fund--Investor Class 200,000,000
BNY Hamilton Money Fund
Hamilton Class 3,000,000,000
Hamilton Premier Class 3,000,000,000
Hamilton Classic Class 3,000,000,000;
</TABLE>
and (iii) the remaining 10,400,000,000 authorized shares of Common
Stock were undesignated as to series or class.
SECOND: Acting pursuant to authority granted to the
Board of Directors in Article FIFTH of the Corporation's Articles of
Incorporation, as amended, and Section 2-105 of the Maryland General
Corporation Law to classify and reclassify authorized but unissued
shares of Common Stock and of each series thereof, the Board of
Directors has (i) created an additional class of each of the BNY
Hamilton Equity Income Fund series, BNY Hamilton Intermediate
Government Fund series, and BNY Hamilton Intermediate New York
Tax-Exempt Fund series to be designated as the "Institutional" class,
(ii) created the following named series of Common Stock: BNY Hamilton
Treasury Money Fund, BNY Hamilton Large Cap Growth Fund, BNY Hamilton
Small Cap Growth Fund, BNY Hamilton International Equity Fund,
<PAGE>
BNY Hamilton Intermediate Investment Grade Fund and BNY Hamilton
Intermediate Tax-Exempt Fund, each of which series is divided into two
classes, which are designated as the "Hamilton" class and the "Hamilton
Premier" class, in the case of BNY Hamilton Treasury Money Fund, and
which are designated as the "Institutional" class and the "Investor"
class, in the case of BNY Hamilton Large Cap Growth Fund, BNY Hamilton
Small Cap Growth Fund, BNY Hamilton International Equity Fund, BNY
Hamilton Intermediate Investment Grade Fund and BNY Hamilton
Intermediate Tax-Exempt Fund, and (iii) provided for the issuance of
shares of each of the classes described in items (i) and (ii) above,
with the result that the authorized shares of the Corporation's Common
Stock are now classified as follows:
<TABLE>
<S> <C>
BNY Hamilton Equity Income Fund
Institutional Class 200,000,000
Investor Class 200,000,000
BNY Hamilton Intermediate
Government Fund
Institutional Class 200,000,000
Investor Class 200,000,000
BNY Hamilton Intermediate New
York Tax-Exempt Fund
Institutional Class 200,000,000
Investor Class 200,000,000
BNY Hamilton Money Fund
Hamilton Class 3,000,000,000
Hamilton Premier Class 3,000,000,000
Hamilton Classic Class 3,000,000,000
BNY Hamilton Treasury Money Fund
Hamilton Class 2,000,000,000
Hamilton Premier Class 2,000,000,000
BNY Hamilton Large Cap Growth Fund
Institutional Class 200,000,000
Investor Class 200,000,000
BNY Hamilton Small Cap Growth Fund
Institutional Class 200,000,000
Investor Class 200,000,000
</TABLE>
-2-
<PAGE>
<TABLE>
<S> <C>
BNY Hamilton International Equity Fund
Institutional Class 200,000,000
Investor Class 200,000,000
BNY Hamilton Intermediate Investment Grade Fund
Institutional Class 200,000,000
Investor Class 200,000,000
BNY Hamilton Intermediate Tax-Exempt Fund
Institutional Class 200,000,000
Investor Class 200,000,000
</TABLE>
and the remaining 3,800,000 authorized shares of Common Stock remain
undesignated as to series or class.
THIRD: The terms of the shares of each series, and
class thereof, designated above are as set forth in the Corporation's
Articles of Incorporation filed with the State Department of
Assessments and Taxation of Maryland on May 1, 1992, as amended by
Articles of Amendment, dated June 29, 1992 and January 22, 1997, and
supplemented by Articles Supplementary, dated June 29, 1994 and August
15, 1995.
FOURTH: The Corporation is registered as an open-end
management investment company under the Investment Company Act of 1940.
FIFTH: After giving effect to the foregoing, the
total number of shares of capital stock that the Corporation has authority
to issue remains unchanged.
-3-
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused these presents
to be signed in its name and on its behalf by its Vice President and witnessed
by its Assistant Secretary on January 22, 1997.
WITNESS: BNY HAMILTON FUNDS, INC.
/s/ Bruce Treff By:/s/Anthony L. Mercure
- ---------------------- ----------------------
Bruce Treff Anthony L. Mercure
Assistant Secretary Vice President
THE UNDERSIGNED, Vice President of BNY Hamilton Funds, Inc.,
who executed on behalf of the corporation Articles Supplementary of which this
certificate is made a part, hereby acknowledges in the name and on behalf of
said corporation the foregoing Articles Supplementary to be the corporate act of
said corporation and hereby certifies that the matters and facts set forth
herein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
/s/Anthony L. Mercure
----------------------
Anthony L. Mercure
-4-
<PAGE>
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this ___st day of __________, 1997 by and between BNY
Hamilton Treasury Money Fund (the "Series"), a series of BNY Hamilton Funds,
Inc., a Maryland corporation (the "Corporation") and The Bank of New York, a New
York bank (the "Adviser").
1. Duties of Adviser. The Series hereby appoints the Adviser to act
as investment adviser to the Series for the period and on such terms as are set
forth in this Agreement. The Series employs the Adviser to manage the
investment and reinvestment of the assets of the Series, to continuously review,
supervise and administer the investment program of the Series, to determine in
its discretion the securities to be purchased or sold and the portion of the
Series' assets to be held uninvested, to provide the Corporation with records
concerning the Adviser's activities which the Corporation is required to
maintain, and to render regular reports to the Corporation's officers and Board
of Directors concerning the Adviser's discharge of the foregoing
responsibilities. The Advisor shall discharge the foregoing responsibilities
subject to the control of the officers and the Board of Directors of the
Corporation, and in compliance with the objectives, policies and limitations set
forth in the Corporation's Registration Statement (No. 811-6654), including the
Series' prospectus and statement of
<PAGE>
additional information, applicable laws and regulations. The Adviser accepts
such employment and agrees to render the services and to provide, at its own
expense, the office space, furnishings and equipment and the personnel required
by it to perform the services on the terms and for the compensation provided
therein.
2. Portfolio Transactions. The Adviser is authorized to select the
brokers or dealers that will execute the purchases and sales of securities for
the Series and is directed to use its best efforts to obtain the best available
price and most favorable execution, except as prescribed herein. Unless and
until otherwise directed by the Board of Directors of the Corporation, the
Adviser may also effect individual securities transactions at commission rates
in excess of the minimum commission rates available, if the Adviser determines
in good faith that such amount of commission is reasonable in relation to the
value of the brokerage or research services provided by such broker or dealer,
viewed in terms of either that particular transaction or the Adviser's overall
responsibilities with respect to the Corporation. The execution of such
transactions shall not be deemed to represent an unlawful act or breach of any
duty created by this Agreement or otherwise. The Adviser will promptly
communicate to the officers and Directors of the Corporation such information
relating to Series transactions as they may reasonably request.
<PAGE>
3. Compensation of the Adviser. For the services to be rendered by
the Adviser as provided in Section 1 of this Agreement, the Corporation shall
pay to the Adviser at the end of each month an advisory fee accrued daily and
payable monthly based on an annual percentage rate of 0.10% of the Series'
average daily net assets.
In the event of termination of this Agreement, the fee provided in
this Section shall be computed on the basis of the period ending on the last
business day on which this Agreement is in effect, subject to a pro rata
adjustment based on the number of days elapsed in the month as a percentage of
the total number of days in such month.
4. Reports. The Series and the Adviser agree to furnish to each
other current prospectuses, proxy statements, reports to shareholders, certified
copies of their financial statements, and such other information with regard to
their affairs as each may reasonably request.
5. Status of Adviser. The services of the Adviser to the Series are
not be deemed exclusive, and the Adviser shall be free to render similar
services to others.
6. Liability of Adviser. In the absence of (i) wilful misfeasance,
bad faith or gross negligence on the part of the Adviser in performance of its
obligations and duties hereunder, (ii) reckless disregard by the Adviser of its
obligations and duties hereunder, or (iii) a loss resulting from a breach of
fiduciary duty with respect to
<PAGE>
the receipt of compensation for services (in which case any award of damages
shall be limited to the period and the amount set forth in Section 36(b)(3) of
the Investment Company Act of 1940 ("1940 Act"), the Adviser shall not be
subject to any liability whatsoever to the Series, or to any shareholder of the
Series, for any error of judgment, mistake of law or any other act or omission
in the course of, or connected with, rendering services hereunder including,
without limitation, for any losses that may be sustained in connection with the
purchase, holding, redemption or sale of any security on behalf of the Series.
7. Permissible Interests. Subject to and in accordance with the
Articles of Incorporation of the Corporation and applicable law and regulation,
Directors, officers, agents and shareholders of the Corporation are or may be
interested in the Adviser (or any successor thereof) as Directors, officers,
agents, shareholders or otherwise; Directors, officers, agents and shareholders
of the Adviser are or may be interested in the Corporation as Directors,
officers, shareholders or otherwise; and the Adviser (or any successor) is or
may be interested in the Corporation as a shareholder or otherwise; and the
effect of any such interrelationships shall be governed by said Articles of
Incorporation and the provisions of the 1940 Act.
8. Duration and Termination. This Agreement, unless sooner terminated
as provided herein, shall continue
4
<PAGE>
until June 30, 1998 and thereafter shall continue for periods of one year so
long as such continuance is specifically approved at least annually (a) by the
vote of a majority of those members of the Board of Directors of the Corporation
who are not parties to this Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Board of Directors of the Corporation or by vote of a majority of
the outstanding voting securities of the Series. This Agreement may be
terminated by the Series at any time, without the payment of any penalty, by
vote of a majority of the entire Board of Directors of the Corporation or by
vote of a majority of the outstanding voting securities of the Series on 60
days' written notice to the Adviser. This Agreement may be terminated by the
Adviser at any time, without the payment of any penalty, upon 60 days' written
notice to the Series. This Agreement will automatically and immediately
terminate in the event of its assignment. Any notice under this Agreement shall
be given in writing, addressed and delivered or mailed postpaid, to the other
party at any office of such party and shall be deemed given when received by the
addressee.
As used in this Section 9, the terms "assignment", "interested
persons", and "a vote of a majority of the outstanding voting securities" shall
have the respective
5
<PAGE>
meanings set forth in Section 2(a)(4), Section 2(a)(19) and Section 2(a)(42) of
the 1940 Act.
9. Amendment of Agreement. This Agreement may be amended by mutual
consent, but the consent of the Series must be approved (a) by vote of majority
of those members of the Board of Directors of the Corporation who are not
parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such amendment, and (b)
by vote of a majority of the outstanding voting securities of the Series.
10. Use of Name. The Series agrees that if this Agreement is
terminated and the Adviser shall no longer be the adviser to the Series, the
Series will, within a reasonable periods of time, change its name to delete
reference to "BNY Hamilton".
11. Severability. If any provisions of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby.
12. Applicable Law. This Agreement shall be construed in accordance
with the laws of the State of New York, provided, however, that nothing herein
shall be
6
<PAGE>
construed as being inconsistent with the 1940 Act.
13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their officers thereunto duly authorized as of the day and year
first written above.
THE BANK OF NEW YORK BNY HAMILTON FUNDS, INC.
for BNY HAMILTON TREASURY
MONEY FUND
By ______________________ By _____________________
Name: Name:
Title: Title:
7
<PAGE>
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this ___st day of _____, 1997 by and between BNY
Hamilton Large Cap Growth Fund (the "Series"), a series of BNY Hamilton Funds,
Inc., a Maryland corporation (the "Corporation") and The Bank of New York, a New
York bank (the "Adviser").
1. Duties of Adviser. The Series hereby appoints the Adviser to act
as investment adviser to the Series for the period and on such terms as are set
forth in this Agreement. The Series employs the Adviser to manage the
investment and reinvestment of the assets of the Series, to continuously review,
supervise and administer the investment program of the Series, to determine in
its discretion the securities to be purchased or sold and the portion of the
Series' assets to be held uninvested, to provide the Corporation with records
concerning the Adviser's activities which the Corporation is required to
maintain, and to render regular reports to the Corporation's officers and Board
of Directors concerning the Adviser's discharge of the foregoing
responsibilities. The Advisor shall discharge the foregoing responsibilities
subject to the control of the officers and the Board of Directors of the
Corporation, and in compliance with the objectives, policies and limitations set
forth in the Corporation's Registration Statement (No. 811-6654), including the
Series' prospectus and statement of
<PAGE>
additional information, applicable laws and regulations. The Adviser accepts
such employment and agrees to render the services and to provide, at its own
expense, the office space, furnishings and equipment and the personnel required
by it to perform the services on the terms and for the compensation provided
therein.
2. Portfolio Transactions. The Adviser is authorized to select the
brokers or dealers that will execute the purchases and sales of securities for
the Series and is directed to use its best efforts to obtain the best available
price and most favorable execution, except as prescribed herein. Unless and
until otherwise directed by the Board of Directors of the Corporation, the
Adviser may also effect individual securities transactions at commission rates
in excess of the minimum commission rates available, if the Adviser determines
in good faith that such amount of commission is reasonable in relation to the
value of the brokerage or research services provided by such broker or dealer,
viewed in terms of either that particular transaction or the Adviser's overall
responsibilities with respect to the Corporation. The execution of such
transactions shall not be deemed to represent an unlawful act or breach of any
duty created by this Agreement or otherwise. The Adviser will promptly
communicate to the officers and Directors of the Corporation such information
relating to Series transactions as they may reasonably request.
<PAGE>
3. Compensation of the Adviser. For the services to be rendered by
the Adviser as provided in Section 1 of this Agreement, the Corporation shall
pay to the Adviser at the end of each month an advisory fee accrued daily and
payable monthly based on an annual percentage rate of 0.60% of the Series'
average daily net assets.
In the event of termination of this Agreement, the fee provided in this
Section shall be computed on the basis of the period ending on the last business
day on which this Agreement is in effect, subject to a pro rata adjustment based
on the number of days elapsed in the month as a percentage of the total number
of days in such month.
4. Reports. The Series and the Adviser agree to furnish to each other
current prospectuses, proxy statements, reports to shareholders, certified
copies of their financial statements, and such other information with regard to
their affairs as each may reasonably request.
5. Status of Adviser. The services of the Adviser to the Series are
not be deemed exclusive, and the Adviser shall be free to render similar
services to others.
6. Liability of Adviser. In the absence of (i) wilful misfeasance,
bad faith or gross negligence on the part of the Adviser in performance of its
obligations and duties hereunder, (ii) reckless disregard by the Adviser of its
obligations and duties hereunder, or (iii) a loss resulting from a breach of
fiduciary duty with respect to
3
<PAGE>
the receipt of compensation for services (in which case any award of damages
shall be limited to the period and the amount set forth in Section 36(b)(3) of
the Investment Company Act of 1940 ("1940 Act"), the Adviser shall not be
subject to any liability whatsoever to the Series, or to any shareholder of the
Series, for any error of judgment, mistake of law or any other act or omission
in the course of, or connected with, rendering services hereunder including,
without limitation, for any losses that may be sustained in connection with the
purchase, holding, redemption or sale of any security on behalf of the Series.
7. Permissible Interests. Subject to and in accordance with the
Articles of Incorporation of the Corporation and applicable law and regulation,
Directors, officers, agents and shareholders of the Corporation are or may be
interested in the Adviser (or any successor thereof) as Directors, officers,
agents, shareholders or otherwise; Directors, officers, agents and shareholders
of the Adviser are or may be interested in the Corporation as Directors,
officers, shareholders or otherwise; and the Adviser (or any successor) is or
may be interested in the Corporation as a shareholder or otherwise; and the
effect of any such interrelationships shall be governed by said Articles of
Incorporation and the provisions of the 1940 Act.
8. Duration and Termination. This Agreement, unless sooner terminated
as provided herein, shall continue
4
until June 30, 1998 and thereafter shall continue for periods of one year so
long as such continuance is specifically approved at least annually (a) by the
vote of a majority of those members of the Board of Directors of the Corporation
who are not parties to this Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Board of Directors of the Corporation or by vote of a majority of
the outstanding voting securities of the Series. This Agreement may be
terminated by the Series at any time, without the payment of any penalty, by
vote of a majority of the entire Board of Directors of the Corporation or by
vote of a majority of the outstanding voting securities of the Series on 60
days' written notice to the Adviser. This Agreement may be terminated by the
Adviser at any time, without the payment of any penalty, upon 60 days' written
notice to the Series. This Agreement will automatically and immediately
terminate in the event of its assignment. Any notice under this Agreement shall
be given in writing, addressed and delivered or mailed postpaid, to the other
party at any office of such party and shall be deemed given when received by the
addressee.
As used in this Section 9, the terms "assignment", "interested
persons", and "a vote of a majority of the outstanding voting securities" shall
have the respective
5
<PAGE>
meanings set forth in Section 2(a)(4), Section 2(a)(19) and
Section 2(a)(42) of the 1940 Act.
9. Amendment of Agreement. This Agreement may be amended by mutual
consent, but the consent of the Series must be approved (a) by vote of majority
of those members of the Board of Directors of the Corporation who are not
parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such amendment, and (b)
by vote of a majority of the outstanding voting securities of the Series.
10. Use of Name. The Series agrees that if this Agreement is
terminated and the Adviser shall no longer be the adviser to the Series, the
Series will, within a reasonable periods of time, change its name to delete
reference to "BNY Hamilton".
11. Severability. If any provisions of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby.
12. Applicable Law. This Agreement shall be construed in accordance
with the laws of the State of New York, provided, however, that nothing herein
shall be
6
<PAGE>
construed as being inconsistent with the 1940 Act.
13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their officers thereunto duly authorized as of the day and year
first written above.
THE BANK OF NEW YORK BNY HAMILTON FUNDS, INC.
for BNY HAMILTON LARGE CAP
GROWTH FUND
By ______________________ By _____________________
Name: Name:
Title: Title:
<PAGE>
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this ___st day of _____, 1997 by and between
BNY Hamilton Small Cap Growth Fund (the "Series"), a series of BNY Hamilton
Funds, Inc., a Maryland corporation (the "Corporation") and The Bank of New
York, a New York bank (the "Adviser").
1. Duties of Adviser. The Series hereby appoints the
Adviser to act as investment adviser to the Series for the period and on such
terms as are set forth in this Agreement. The Series employs the Adviser to
manage the investment and reinvestment of the assets of the Series, to
continuously review, supervise and administer the investment program of the
Series, to determine in its discretion the securities to be purchased or sold
and the portion of the Series' assets to be held uninvested, to provide the
Corporation with records concerning the Adviser's activities which the
Corporation is required to maintain, and to render regular reports to the
Corporation's officers and Board of Directors concerning the Adviser's discharge
of the foregoing responsibilities. The Advisor shall discharge the foregoing
responsibilities subject to the control of the officers and the Board of
Directors of the Corporation, and in compliance with the objectives, policies
and limitations set forth in the Corporation's Registration Statement (No.
811-6654), including the Series' prospectus and statement of
<PAGE>
additional information, applicable laws and regulations. The Adviser accepts
such employment and agrees to render the services and to provide, at its own
expense, the office space, furnishings and equipment and the personnel required
by it to perform the services on the terms and for the compensation provided
therein.
2. Portfolio Transactions. The Adviser is authorized to
select the brokers or dealers that will execute the purchases and sales of
securities for the Series and is directed to use its best efforts to obtain the
best available price and most favorable execution, except as prescribed herein.
Unless and until otherwise directed by the Board of Directors of the
Corporation, the Adviser may also effect individual securities transactions at
commission rates in excess of the minimum commission rates available, if the
Adviser determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage or research services provided by such
broker or dealer, viewed in terms of either that particular transaction or the
Adviser's overall responsibilities with respect to the Corporation. The
execution of such transactions shall not be deemed to represent an unlawful act
or breach of any duty created by this Agreement or otherwise. The Adviser will
promptly communicate to the officers and Directors of the Corporation such
information
2
<PAGE>
relating to Series transactions as they may reasonably request.
3. Compensation of the Adviser. For the services to be
rendered by the Adviser as provided in Section 1 of this Agreement, the
Corporation shall pay to the Adviser at the end of each month an advisory fee
accrued daily and payable monthly based on an annual percentage rate of 0.75% of
the Series' average daily net assets.
In the event of termination of this Agreement, the fee
provided in this Section shall be computed on the basis of the period ending on
the last business day on which this Agreement is in effect, subject to a pro
rata adjustment based on the number of days elapsed in the month as a percentage
of the total number of days in such month.
4. Reports. The Series and the Adviser agree to furnish to
each other current prospectuses, proxy statements, reports to shareholders,
certified copies of their financial statements, and such other information with
regard to their affairs as each may reasonably request.
5. Status of Adviser. The services of the Adviser to the
Series are not be deemed exclusive, and the Adviser shall be free to render
similar services to others.
6. Liability of Adviser. In the absence of (i) wilful
misfeasance, bad faith or gross negligence on the part of the Adviser in
performance of its obligations and duties hereunder, (ii) reckless disregard by
the Adviser of
3
<PAGE>
its obligations and duties hereunder, or (iii) a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services (in
which case any award of damages shall be limited to the period and the amount
set forth in Section 36(b)(3) of the Investment Company Act of 1940 ("1940
Act"), the Adviser shall not be subject to any liability whatsoever to the
Series, or to any shareholder of the Series, for any error of judgment, mistake
of law or any other act or omission in the course of, or connected with,
rendering services hereunder including, without limitation, for any losses that
may be sustained in connection with the purchase, holding, redemption or sale of
any security on behalf of the Series.
7. Permissible Interests. Subject to and in accordance
with the Articles of Incorporation of the Corporation and applicable law and
regulation, Directors, officers, agents and shareholders of the Corporation are
or may be interested in the Adviser (or any successor thereof) as Directors,
officers, agents, shareholders or otherwise; Directors, officers, agents and
shareholders of the Adviser are or may be interested in the Corporation as
Directors, officers, shareholders or otherwise; and the Adviser (or any
successor) is or may be interested in the Corporation as a shareholder or
otherwise; and the effect of any such interrelationships shall be governed by
said Articles of Incorporation and the provisions of the 1940 Act.
4
<PAGE>
8. Duration and Termination. This Agreement, unless sooner
terminated as provided herein, shall continue until June 30, 1998 and thereafter
shall continue for periods of one year so long as such continuance is
specifically approved at least annually (a) by the vote of a majority of those
members of the Board of Directors of the Corporation who are not parties to this
Agreement or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the Board of
Directors of the Corporation or by vote of a majority of the outstanding voting
securities of the Series. This Agreement may be terminated by the Series at any
time, without the payment of any penalty, by vote of a majority of the entire
Board of Directors of the Corporation or by vote of a majority of the
outstanding voting securities of the Series on 60 days' written notice to the
Adviser. This Agreement may be terminated by the Adviser at any time, without
the payment of any penalty, upon 60 days' written notice to the Series. This
Agreement will automatically and immediately terminate in the event of its
assignment. Any notice under this Agreement shall be given in writing,
addressed and delivered or mailed postpaid, to the other party at any office of
such party and shall be deemed given when received by the addressee.
As used in this Section 9, the terms "assignment",
"interested persons", and "a vote of a majority of the
5
<PAGE>
outstanding voting securities" shall have the respective meanings set forth in
Section 2(a)(4), Section 2(a)(19) and Section 2(a)(42) of the 1940 Act.
9. Amendment of Agreement. This Agreement may be amended
by mutual consent, but the consent of the Series must be approved (a) by vote of
majority of those members of the Board of Directors of the Corporation who are
not parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such amendment, and (b)
by vote of a majority of the outstanding voting securities of the Series.
10. Use of Name. The Series agrees that if this Agreement
is terminated and the Adviser shall no longer be the adviser to the Series, the
Series will, within a reasonable periods of time, change its name to delete
reference to "BNY Hamilton".
11. Severability. If any provisions of this Agreement shall
be held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
12. Applicable Law. This Agreement shall be construed in
accordance with the laws of the State of New York, provided, however, that
nothing herein shall be
6
<PAGE>
construed as being inconsistent with the 1940 Act.
13. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their officers thereunto duly authorized as of the day and year
first written above.
THE BANK OF NEW YORK BNY HAMILTON FUNDS, INC.
for BNY HAMILTON SMALL
CAP GROWTH FUND
By ______________________ By _____________________
Name: Name:
Title: Title:
7
<PAGE>
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this ___st day of _____, 1997 by and between BNY
Hamilton International Equity Fund (the "Series"), a series of BNY Hamilton
Funds, Inc., a Maryland corporation (the "Corporation") and The Bank of New
York, a New York bank (the "Adviser").
1. Duties of Adviser. The Series hereby appoints the Adviser to act
as investment adviser to the Series for the period and on such terms as are set
forth in this Agreement. The Series employs the Adviser to manage the
investment and reinvestment of the assets of the Series, to continuously review,
supervise and administer the investment program of the Series, to determine in
its discretion the securities to be purchased or sold and the portion of the
Series' assets to be held uninvested, to provide the Corporation with records
concerning the Adviser's activities which the Corporation is required to
maintain, and to render regular reports to the Corporation's officers and Board
of Directors concerning the Adviser's discharge of the foregoing
responsibilities. The Advisor shall discharge the foregoing responsibilities
subject to the control of the officers and the Board of Directors of the
Corporation, and in compliance with the objectives, policies and limitations set
forth in the Corporation's Registration Statement (No. 811-6654), including the
Series' prospectus and statement of
<PAGE>
additional information, applicable laws and regulations. The Adviser accepts
such employment and agrees to render the services and to provide, at its own
expense, the office space, furnishings and equipment and the personnel required
by it to perform the services on the terms and for the compensation provided
therein.
The Corporation agrees that the Adviser may delegate certain of its
responsibilities under this Agreement to a subadviser (the "Subadviser") under a
subadvisory agreement (the "Subadvisory Agreement") approved as may be required
under the Investment Company Act of 1940 (the "1940 Act"), provided that any
such delegation will not relieve the Adviser of its duties and obligations under
this Agreement and, provided further, that the Adviser shall be available on a
continuous basis to consult with the Subadviser with respect to all investment
matters relating to the Series and the Adviser shall be required to supervise
and monitor the performance of the duties delegated to the Subadviser. The
Adviser agrees that it will not seek to amend any such subadvisory agreement
unless the Adviser gives the Corporation at least 60 days' prior written notice
thereof and otherwise complies with the requirements of the 1940 Act applicable
to such amendment.
2. Portfolio Transactions. Subject to any delegation pursuant to a
Subadvisory Agreement, the Adviser is authorized to select the brokers or
dealers that will
2
<PAGE>
execute the purchases and sales of securities for the Series and is directed to
use its best efforts to obtain the best available price and most favorable
execution, except as prescribed herein. Unless and until otherwise directed by
the Board of Directors of the Corporation, the Adviser may also effect
individual securities transactions at commission rates in excess of the minimum
commission rates available, if the Adviser determines in good faith that such
amount of commission is reasonable in relation to the value of the brokerage or
research services provided by such broker or dealer, viewed in terms of either
that particular transaction or the Adviser's overall responsibilities with
respect to the Corporation. The execution of such transactions shall not be
deemed to represent an unlawful act or breach of any duty created by this
Agreement or otherwise. The Adviser will promptly communicate to the officers
and Directors of the Corporation such information relating to Series
transactions as they may reasonably request.
3. Compensation of the Adviser. For the services to be rendered by
the Adviser as provided in Section 1 of this Agreement, the Corporation shall
pay to the Adviser at the end of each month an advisory fee accrued daily and
payable monthly based on an annual percentage rate of 0.85% of the Series'
average daily net assets.
3
<PAGE>
In the event of termination of this Agreement, the fee provided in
this Section shall be computed on the basis of the period ending on the last
business day on which this Agreement is in effect, subject to a pro rata
adjustment based on the number of days elapsed in the month as a percentage of
the total number of days in such month.
4. Reports. The Series and the Adviser agree to furnish to each
other current prospectuses, proxy statements, reports to shareholders, certified
copies of their financial statements, and such other information with regard to
their affairs as each may reasonably request.
5. Status of Adviser. The services of the Adviser to the Series are
not be deemed exclusive, and the Adviser shall be free to render similar
services to others.
6. Liability of Adviser. In the absence of (i) wilful misfeasance,
bad faith or gross negligence on the part of the Adviser in performance of its
obligations and duties hereunder, (ii) reckless disregard by the Adviser of its
obligations and duties hereunder, or (iii) a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services (in
which case any award of damages shall be limited to the period and the amount
set forth in Section 36(b)(3) of the 1940 Act, the Adviser shall not be subject
to any liability whatsoever to the Series, or to any shareholder of the Series,
for any error of judgment, mistake of law or any other act or
4
<PAGE>
omission in the course of, or connected with, rendering services hereunder
including, without limitation, for any losses that may be sustained in
connection with the purchase, holding, redemption or sale of any security on
behalf of the Series.
7. Permissible Interests. Subject to and in accordance with the
Articles of Incorporation of the Corporation and applicable law and regulation,
Directors, officers, agents and shareholders of the Corporation are or may be
interested in the Adviser (or any successor thereof) as Directors, officers,
agents, shareholders or otherwise; Directors, officers, agents and shareholders
of the Adviser are or may be interested in the Corporation as Directors,
officers, shareholders or otherwise; and the Adviser (or any successor) is or
may be interested in the Corporation as a shareholder or otherwise; and the
effect of any such interrelationships shall be governed by said Articles of
Incorporation and the provisions of the 1940 Act.
8. Duration and Termination. This Agreement, unless sooner terminated
as provided herein, shall continue until June 30, 1998 and thereafter shall
continue for periods of one year so long as such continuance is specifically
approved at least annually (a) by the vote of a majority of those members of the
Board of Directors of the Corporation who are not parties to this Agreement or
interested persons of any such party, cast in person at a
5
<PAGE>
meeting called for the purpose of voting on such approval, and (b) by the Board
of Directors of the Corporation or by vote of a majority of the outstanding
voting securities of the Series. This Agreement may be terminated by the Series
at any time, without the payment of any penalty, by vote of a majority of the
entire Board of Directors of the Corporation or by vote of a majority of the
outstanding voting securities of the Series on 60 days' written notice to the
Adviser. This Agreement may be terminated by the Adviser at any time, without
the payment of any penalty, upon 60 days' written notice to the Series. This
Agreement will automatically and immediately terminate in the event of its
assignment. Any notice under this Agreement shall be given in writing,
addressed and delivered or mailed postpaid, to the other party at any office of
such party and shall be deemed given when received by the addressee.
As used in this Section 9, the terms "assignment", "interested
persons", and "a vote of a majority of the outstanding voting securities" shall
have the respective meanings set forth in Section 2(a)(4), Section 2(a)(19) and
Section 2(a)(42) of the 1940 Act.
9. Amendment of Agreement. This Agreement may be amended by mutual
consent, but the consent of the Series must be approved (a) by vote of
majority of those members of the Board of Directors of the Corporation who are
not parties to this Agreement or interested persons of any such
6
<PAGE>
party, cast in person at a meeting called for the purpose of voting on such
amendment, and (b) by vote of a majority of the outstanding voting securities of
the Series.
10. Use of Name. The Series agrees that if this Agreement is
terminated and the Adviser shall no longer be the adviser to the Series, the
Series will, within a reasonable periods of time, change its name to delete
reference to "BNY Hamilton".
11. Severability. If any provisions of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby.
12. Applicable Law. This Agreement shall be construed in accordance
with the laws of the State of New York, provided, however, that nothing herein
shall be construed as being inconsistent with the 1940 Act.
13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original.
7
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their officers thereunto duly authorized as of the day and year
first written above.
THE BANK OF NEW YORK BNY HAMILTON FUNDS, INC.
for BNY HAMILTON
INTERNATIONAL EQUITY
FUND
By ______________________ By _____________________
Name: Name:
Title: Title:
8
<PAGE>
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this ___st day of ____________, 1997 by and between BNY
Hamilton Intermediate Investment Grade Fund (the "Series"), a series of BNY
Hamilton Funds, Inc., a Maryland corporation (the "Corporation") and The Bank of
New York, a New York bank (the "Adviser").
1. Duties of Adviser. The Series hereby appoints the Adviser to act
as investment adviser to the Series for the period and on such terms as are set
forth in this Agreement. The Series employs the Adviser to manage the
investment and reinvestment of the assets of the Series, to continuously review,
supervise and administer the investment program of the Series, to determine in
its discretion the securities to be purchased or sold and the portion of the
Series' assets to be held uninvested, to provide the Corporation with records
concerning the Adviser's activities which the Corporation is required to
maintain, and to render regular reports to the Corporation's officers and Board
of Directors concerning the Adviser's discharge of the foregoing
responsibilities. The Advisor shall discharge the foregoing responsibilities
subject to the control of the officers and the Board of Directors of the
Corporation, and in compliance with the objectives, policies and limitations set
forth in the Corporation's Registration Statement (No. 811-6654), including the
Series' prospectus and statement of additional information, applicable laws and
regulations.
<PAGE>
The Adviser accepts such employment and agrees to render the services and to
provide, at its own expense, the office space, furnishings and equipment and the
personnel required by it to perform the services on the terms and for the
compensation provided therein.
2. Portfolio Transactions. The Adviser is authorized to select the
brokers or dealers that will execute the purchases and sales of securities for
the Series and is directed to use its best efforts to obtain the best available
price and most favorable execution, except as prescribed herein. Unless and
until otherwise directed by the Board of Directors of the Corporation, the
Adviser may also effect individual securities transactions at commission rates
in excess of the minimum commission rates available, if the Adviser determines
in good faith that such amount of commission is reasonable in relation to the
value of the brokerage or research services provided by such broker or dealer,
viewed in terms of either that particular transaction or the Adviser's overall
responsibilities with respect to the Corporation. The execution of such
transactions shall not be deemed to represent an unlawful act or breach of any
duty created by this Agreement or otherwise. The Adviser will promptly
communicate to the officers and Directors of the Corporation such information
relating to Series transactions as they may reasonably request.
2
<PAGE>
3. Compensation of the Adviser. For the services to be rendered by
the Adviser as provided in Section 1 of this Agreement, the Corporation shall
pay to the Adviser at the end of each month an advisory fee accrued daily and
payable monthly based on an annual percentage rate of 0.50% of the Series'
average daily net assets.
In the event of termination of this Agreement, the fee provided in
this Section shall be computed on the basis of the period ending on the last
business day on which this Agreement is in effect, subject to a pro rata
adjustment based on the number of days elapsed in the month as a percentage of
the total number of days in such month.
4. Reports. The Series and the Adviser agree to furnish to each
other current prospectuses, proxy statements, reports to shareholders, certified
copies of their financial statements, and such other information with regard to
their affairs as each may reasonably request.
5. Status of Adviser. The services of the Adviser to the Series are
not be deemed exclusive, and the Adviser shall be free to render similar
services to others.
6. Liability of Adviser. In the absence of (i) wilful misfeasance,
bad faith or gross negligence on the part of the Adviser in performance of its
obligations and duties hereunder, (ii) reckless disregard by the Adviser of its
obligations and duties hereunder, or (iii) a loss resulting from a breach of
fiduciary duty with respect to
3
<PAGE>
the receipt of compensation for services (in which case any award of damages
shall be limited to the period and the amount set forth in Section 36(b)(3) of
the Investment Company Act of 1940 ("1940 Act"), the Adviser shall not be
subject to any liability whatsoever to the Series, or to any shareholder of the
Series, for any error of judgment, mistake of law or any other act or omission
in the course of, or connected with, rendering services hereunder including,
without limitation, for any losses that may be sustained in connection with the
purchase, holding, redemption or sale of any security on behalf of the Series.
7. Permissible Interests. Subject to and in accordance with the
Articles of Incorporation of the Corporation and applicable law and regulation,
Directors, officers, agents and shareholders of the Corporation are or may be
interested in the Adviser (or any successor thereof) as Directors, officers,
agents, shareholders or otherwise; Directors, officers, agents and shareholders
of the Adviser are or may be interested in the Corporation as Directors,
officers, shareholders or otherwise; and the Adviser (or any successor) is or
may be interested in the Corporation as a shareholder or otherwise; and the
effect of any such interrelationships shall be governed by said Articles of
Incorporation and the provisions of the 1940 Act.
8. Duration and Termination. This Agreement, unless sooner terminated
as provided herein, shall continue
4
<PAGE>
until June 30, 1998 and thereafter shall continue for periods of one year so
long as such continuance is specifically approved at least annually (a) by the
vote of a majority of those members of the Board of Directors of the Corporation
who are not parties to this Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Board of Directors of the Corporation or by vote of a majority of
the outstanding voting securities of the Series. This Agreement may be
terminated by the Series at any time, without the payment of any penalty, by
vote of a majority of the entire Board of Directors of the Corporation or by
vote of a majority of the outstanding voting securities of the Series on 60
days' written notice to the Adviser. This Agreement may be terminated by the
Adviser at any time, without the payment of any penalty, upon 60 days' written
notice to the Series. This Agreement will automatically and immediately
terminate in the event of its assignment. Any notice under this Agreement shall
be given in writing, addressed and delivered or mailed postpaid, to the other
party at any office of such party and shall be deemed given when received by the
addressee.
As used in this Section 9, the terms "assignment", "interested
persons", and "a vote of a majority of the outstanding voting securities" shall
have the respective
5
<PAGE>
meanings set forth in Section 2(a)(4), Section 2(a)(19) and Section 2(a)(42)
of the 1940 Act.
9. Amendment of Agreement. This Agreement may be amended by mutual
consent, but the consent of the Series must be approved (a) by vote of majority
of those members of the Board of Directors of the Corporation who are not
parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such amendment, and (b)
by vote of a majority of the outstanding voting securities of the Series.
10. Use of Name. The Series agrees that if this Agreement is
terminated and the Adviser shall no longer be the adviser to the Series, the
Series will, within a reasonable periods of time, change its name to delete
reference to "BNY Hamilton".
11. Severability. If any provisions of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby.
12. Applicable Law. This Agreement shall be construed in accordance
with the laws of the State of New York, provided, however, that nothing herein
shall be
6
<PAGE>
construed as being inconsistent with the 1940 Act.
13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their officers thereunto duly authorized as of the day and year
first written above.
THE BANK OF NEW YORK BNY HAMILTON FUNDS, INC.
for BNY HAMILTON INTERMEDIATE
INVESTMENT GRADE FUND
By ______________________ By _____________________
Name: Name:
Title: Title:
7
<PAGE>
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this ___st day of _____, 1997 by and between BNY Hamilton
Intermediate Tax-Exempt Fund (the "Series"), a series of BNY Hamilton Funds,
Inc., a Maryland corporation (the "Corporation") and The Bank of New York, a New
York bank (the "Adviser").
1. Duties of Adviser. The Series hereby appoints the Adviser to act as
investment adviser to the Series for the period and on such terms as are set
forth in this Agreement. The Series employs the Adviser to manage the
investment and reinvestment of the assets of the Series, to continuously review,
supervise and administer the investment program of the Series, to determine in
its discretion the securities to be purchased or sold and the portion of the
Series' assets to be held uninvested, to provide the Corporation with records
concerning the Adviser's activities which the Corporation is required to
maintain, and to render regular reports to the Corporation's officers and Board
of Directors concerning the Adviser's discharge of the foregoing
responsibilities. The Advisor shall discharge the foregoing responsibilities
subject to the control of the officers and the Board of Directors of the
Corporation, and in compliance with the objectives, policies and limitations set
forth in the Corporation's Registration Statement (No. 811-6654), including the
Series' prospectus and statement of additional information, applicable laws and
regulations.
<PAGE>
The Adviser accepts such employment and agrees to render the services and
to provide, at its own expense, the office space, furnishings and equipment and
the personnel required by it to perform the services on the terms and for the
compensation provided therein.
2. Portfolio Transactions. The Adviser is authorized to select the
brokers or dealers that will execute the purchases and sales of securities for
the Series and is directed to use its best efforts to obtain the best available
price and most favorable execution, except as prescribed herein. Unless and
until otherwise directed by the Board of Directors of the Corporation, the
Adviser may also effect individual securities transactions at commission rates
in excess of the minimum commission rates available, if the Adviser determines
in good faith that such amount of commission is reasonable in relation to the
value of the brokerage or research services provided by such broker or dealer,
viewed in terms of either that particular transaction or the Adviser's overall
responsibilities with respect to the Corporation. The execution of such
transactions shall not be deemed to represent an unlawful act or breach of any
duty created by this Agreement or otherwise. The Adviser will promptly
communicate to the officers and Directors of the Corporation such information
relating to Series transactions as they may reasonably request.
2
<PAGE>
3. Compensation of the Adviser. For the services to be rendered by the
Adviser as provided in Section 1 of this Agreement, the Corporation shall pay to
the Adviser at the end of each month an advisory fee accrued daily and payable
monthly based on an annual percentage rate of 0.50% of the Series' average daily
net assets.
In the event of termination of this Agreement, the fee provided in this
Section shall be computed on the basis of the period ending on the last business
day on which this Agreement is in effect, subject to a pro rata adjustment based
on the number of days elapsed in the month as a percentage of the total number
of days in such month.
4. Reports. The Series and the Adviser agree to furnish to each other
current prospectuses, proxy statements, reports to shareholders, certified
copies of their financial statements, and such other information with regard to
their affairs as each may reasonably request.
5. Status of Adviser. The services of the Adviser to the Series are not
be deemed exclusive, and the Adviser shall be free to render similar services to
others.
6. Liability of Adviser. In the absence of (i) wilful misfeasance, bad
faith or gross negligence on the part of the Adviser in performance of its
obligations and duties hereunder, (ii) reckless disregard by the Adviser of its
obligations and duties hereunder, or (iii) a loss resulting from a breach of
fiduciary duty with respect to
3
<PAGE>
the receipt of compensation for services (in which case any award of
damages shall be limited to the period and the amount set forth in Section
36(b)(3) of the Investment Company Act of 1940 ("1940 Act"), the Adviser shall
not be subject to any liability whatsoever to the Series, or to any shareholder
of the Series, for any error of judgment, mistake of law or any other act or
omission in the course of, or connected with, rendering services hereunder
including, without limitation, for any losses that may be sustained in
connection with the purchase, holding, redemption or sale of any security on
behalf of the Series.
7. Permissible Interests. Subject to and in accordance with the Articles
of Incorporation of the Corporation and applicable law and regulation,
Directors, officers, agents and shareholders of the Corporation are or may be
interested in the Adviser (or any successor thereof) as Directors, officers,
agents, shareholders or otherwise; Directors, officers, agents and shareholders
of the Adviser are or may be interested in the Corporation as Directors,
officers, shareholders or otherwise; and the Adviser (or any successor) is or
may be interested in the Corporation as a shareholder or otherwise; and the
effect of any such interrelationships shall be governed by said Articles of
Incorporation and the provisions of the 1940 Act.
8. Duration and Termination. This Agreement, unless sooner terminated as
provided herein, shall continue
4
<PAGE>
until June 30, 1998 and thereafter shall continue for periods of one year
so long as such continuance is specifically approved at least annually (a) by
the vote of a majority of those members of the Board of Directors of the
Corporation who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Board of Directors of the Corporation or by vote of a
majority of the outstanding voting securities of the Series. This Agreement may
be terminated by the Series at any time, without the payment of any penalty, by
vote of a majority of the entire Board of Directors of the Corporation or by
vote of a majority of the outstanding voting securities of the Series on 60
days' written notice to the Adviser. This Agreement may be terminated by the
Adviser at any time, without the payment of any penalty, upon 60 days' written
notice to the Series. This Agreement will automatically and immediately
terminate in the event of its assignment. Any notice under this Agreement shall
be given in writing, addressed and delivered or mailed postpaid, to the other
party at any office of such party and shall be deemed given when received by the
addressee.
As used in this Section 9, the terms "assignment", "interested persons",
and "a vote of a majority of the outstanding voting securities" shall have the
respective
5
<PAGE>
meanings set forth in Section 2(a)(4), Section 2(a)(19) and Section
2(a)(42) of the 1940 Act.
9. Amendment of Agreement. This Agreement may be amended by mutual
consent, but the consent of the Series must be approved (a) by vote of majority
of those members of the Board of Directors of the Corporation who are not
parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such amendment, and (b)
by vote of a majority of the outstanding voting securities of the Series.
10. Use of Name. The Series agrees that if this Agreement is terminated
and the Adviser shall no longer be the adviser to the Series, the Series will,
within a reasonable periods of time, change its name to delete reference to "BNY
Hamilton".
11. Severability. If any provisions of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
12. Applicable Law. This Agreement shall be construed in accordance with
the laws of the State of New York, provided, however, that nothing herein shall
be
6
<PAGE>
construed as being inconsistent with the 1940 Act.
13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their officers thereunto duly authorized as of the day and year first written
above.
THE BANK OF NEW YORK BNY HAMILTON FUNDS, INC.
for BNY HAMILTON INTERMEDIATE
TAX-EXEMPT FUND
By ______________________ By _____________________
Name: Name:
Title: Title:
7
<PAGE>
SUBADVISORY AGREEMENT
AGREEMENT made this ___st day of _____, 1997 by and between The Bank of
New York, a New York bank (the "Adviser") and Indosuez Asset Management, a
_____________ (the "Subadviser").
1. Duties of Subadviser. The Adviser hereby appoints the Subadviser to
act as investment adviser to BNY Hamilton International Equity Fund (the
"Series"), a series of BNY Hamilton Funds, Inc., a Maryland corporation (the
"Corporation"), for the period and on such terms as are set forth in this
Agreement. The Adviser employs the Subadviser to manage the investment and
reinvestment of the assets of the Series, to continuously review, supervise and
administer the investment program of the Series, to determine in its discretion
the securities to be purchased or sold and the portion of the Series' assets to
be held uninvested, to provide the Adviser and the Corporation with records
concerning the Subadviser's activities which the Corporation is required to
maintain, and to render regular reports to the Adviser, the Corporation's
officers and Board of Directors concerning the Subadviser's discharge of the
foregoing responsibilities. The Subadviser shall discharge the foregoing
responsibilities subject to the control of the Adviser and the officers and the
Board of Directors of the Corporation, and in compliance with the objectives,
policies
<PAGE>
and limitations set forth in the Corporation's Registration Statement (No.
811-6654), including the Series' prospectus and statement of additional
information, applicable laws and regulations. In carrying out its
responsibilities hereunder, the Subadviser will consult with the Adviser on a
continuous basis regarding the management of the Series. The Subadviser accepts
such employment and agrees to render the services and to provide, at its own
expense, the office space, furnishings and equipment and the personnel required
by it to perform the services on the terms and for the compensation provided
therein.
2. Portfolio Transactions. The Subadviser is authorized to select the
brokers or dealers that will execute the purchases and sales of securities for
the Series and is directed to use its best efforts to obtain the best available
price and most favorable execution, except as prescribed herein. Unless and
until otherwise directed by the Adviser or the Board of Directors of the
Corporation, the Subadviser may also effect individual securities transactions
at commission rates in excess of the minimum commission rates available, if the
Subadviser determines in good faith that such amount of commission is reasonable
in relation to the value of the brokerage or research services provided by such
broker or dealer, viewed in terms of either that particular transaction or the
Subadviser's overall responsibilities with respect to the Adviser and the
2
<PAGE>
Corporation. The execution of such transactions shall not be deemed to
represent an unlawful act or breach of any duty created by this Agreement or
otherwise. The Subadviser will promptly communicate to the Adviser and the
officers and Directors of the Corporation such information relating to Series
transactions as they may reasonably request.
3. Compensation of the Subadviser. For the services to be rendered by
the Subadviser as provided in Section 1 of this Agreement, the Adviser shall pay
to the Subadviser at the end of each month an advisory fee accrued daily and
payable monthly based on an annual percentage rate of 0.425% of the Series'
average daily net assets. Neither the Corporation nor the Series shall be
responsible for any portion of the compensation payable to the Subadviser
hereunder.
In the event of termination of this Agreement, the fee provided in this
Section shall be computed on the basis of the period ending on the last business
day on which this Agreement is in effect, subject to a pro rata adjustment based
on the number of days elapsed in the month as a percentage of the total number
of days in such month.
4. Reports. The Adviser agrees to furnish to the Subadviser current
prospectuses, proxy statements, reports to shareholders, financial statements
and such other information relating to the Series as the Subadviser may
reasonably request. The Subadviser agree to furnish to the
3
<PAGE>
Adviser and to the Corporation such information concerning its own
affairs, including certified copies of its financial statements, as the Adviser
or the Corporation may reasonably request.
5. Status of Subadviser. The services of the Subadviser to the Adviser
and the Series are not be deemed exclusive, and the Subadviser shall be free to
render similar services to others.
6. Liability of Subadviser. In the absence of (i) willful misfeasance,
bad faith or gross negligence on the part of the Subadviser in performance of
its obligations and duties hereunder, (ii) reckless disregard by the Subadviser
of its obligations and duties hereunder, or (iii) a loss resulting from a breach
of fiduciary duty with respect to the receipt of compensation for services (in
which case any award of damages shall be limited to the period and the amount
set forth in Section 36(b)(3) of the Investment Company Act of 1940 ("1940
Act"), the Subadviser shall not be subject to any liability whatsoever to the
Adviser or the Series, or to any shareholder of the Series, for any error of
judgment, mistake of law or any other act or omission in the course of, or
connected with, rendering services hereunder including, without limitation, for
any losses that may be sustained in connection with the purchase, holding,
redemption or sale of any security on behalf of the Series.
4
<PAGE>
7. Permissible Interests. Subject to and in accordance with the Articles
of Incorporation of the Corporation and applicable law and regulation,
Directors, officers, agents and shareholders of the Corporation and/or the
Adviser are or may be interested in the Subadviser (or any successor thereof) as
Directors, officers, agents, shareholders or otherwise; Directors, officers,
agents and shareholders of the Subadviser are or may be interested in the
Corporation and/or the Adviser as Directors, officers, shareholders or
otherwise; and the Subadviser (or any successor) is or may be interested in the
Corporation and/or the Adviser as a shareholder or otherwise; and the effect of
any such interrelationships shall be governed by said Articles of Incorporation
and the provisions of the 1940 Act.
8. Duration and Termination. This Agreement, unless sooner terminated as
provided herein, shall continue until June 30, 1998 and thereafter shall
continue for periods of one year so long as such continuance is specifically
approved at least annually (a) by the Manager and (b) (1) by the vote of a
majority of those members of the Board of Directors of the Corporation who are
not parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval, and (2)
by the Board of Directors of the Corporation or by vote of a majority of the
5
<PAGE>
outstanding voting securities of the Series. This Agreement may be
terminated by the Adviser or by the Series at any time, without the payment of
any penalty (in the case of termination by the Series, by vote of a majority of
the entire Board of Directors of the Corporation or by vote of a majority of the
outstanding voting securities of the Series), on 60 days' written notice to the
Subadviser and, in the case of termination by the Adviser, to the Corporation.
This Agreement may be terminated by the Subadviser at any time, without the
payment of any penalty, upon 60 days' written notice to the Adviser and the
Series. This Agreement will automatically and immediately terminate in the event
of its assignment. Any notice under this Agreement shall be given in writing,
addressed and delivered or mailed postpaid, to the other party at any office of
such party and shall be deemed given when received by the addressee.
As used in this Section 9, the terms "assignment", "interested persons",
and "a vote of a majority of the outstanding voting securities" shall have the
respective meanings set forth in Section 2(a)(4), Section 2(a)(19) and Section
2(a)(42) of the 1940 Act.
9. Amendment of Agreement. This Agreement may be amended by mutual
consent of the parties, but the consent of the Corporation must also be
obtained, which consent must be approved (a) by vote of majority of those
members of the
6
<PAGE>
Board of Directors of the Corporation who are not parties to this
Agreement or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such amendment, and (b) by vote of a
majority of the outstanding voting securities of the Series.
10. Severability. If any provisions of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
11. Applicable Law. This Agreement shall be construed in accordance with
the laws of the State of New York, provided, however, that nothing herein shall
be construed as being inconsistent with the 1940 Act.
12. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original.
7
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their officers thereunto duly authorized as of the day and year first written
above.
THE BANK OF NEW YORK INDOSUEZ ASSET MANAGEMENT
By ______________________ By _____________________
Name: Name:
Title: Title:
8
<PAGE>
The Distribution Agreement between the Registrant and BNY Hamilton
Distributors, Inc., originally filed as Exhibit 6, will be effective for
all series of the Registrant, listed as follows:
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 Treasury Money Fund
BNY Hamilton Large Cap Growth Fund
BNY Hamilton Small Cap Growth Fund
BNY Hamilton International Equity Fund
BNY Hamilton Intermediate Tax-Exempt Fund
BNY Hamilton Intermediate Investment Grade Fund
<PAGE>
The Custody Agreement between the Registrant and The Bank of New York,
originally filed as Exhibit 8a, will be effective for all series of the
Registrant, listed as follows:
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 Treasury Money Fund
BNY Hamilton Large Cap Growth Fund
BNY Hamilton Small Cap Growth Fund
BNY Hamilton International Equity Fund
BNY Hamilton Intermediate Tax-Exempt Fund
BNY Hamilton Intermediate Investment Grade Fund
<PAGE>
The Cash Management and Related Services Agreement between the
Registrant and The Bank of New York, originally filed as Exhibit 8b,
will be effective for all series of the Registrant, listed as follows:
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 Treasury Money Fund
BNY Hamilton Large Cap Growth Fund
BNY Hamilton Small Cap Growth Fund
BNY Hamilton International Equity Fund
BNY Hamilton Intermediate Tax-Exempt Fund
BNY Hamilton Intermediate Investment Grade Fund
<PAGE>
The Administration Agreement between the Registrant and BNY Hamilton
Distributors, Inc., originally filed as Exhibit 9a, will be effective for
all series of the Registrant, listed as follows:
Adminstration Fee
as a percent of average
Name of Series daily net assets
-------------- -----------------------
1) BNY Hamilton Money Fund .10%
2) BNY Hamilton Equity Intermediate
Government Fund .20%
3) BNY Hamilton Intermediate
New York Tax-Exempt Fund .20%
4) BNY Hamilton Equity Income Fund .20%
5) BNY Hamilton Treasury Money Fund .10%
6) BNY Hamilton Large Cap Growth Fund .20%
7) BNY Hamilton Small Cap Growth Fund .20%
8) BNY Hamilton International Equity Fund .20%
9) BNY Hamilton Intermediate Tax-Exempt Fund .20%
10) BNY Hamilton Intermediate Investment
Grade Fund .20%
<PAGE>
The Fund Accounting Services Agreement between the Registrant and The Bank of
New York, originally filed as Exhibit 9b, will be effective for all Series of
the Registrant, listed as follows:
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 Treasury Money Fund
BNY Hamilton Large Cap Growth Fund
BNY Hamilton Small Cap Growth Fund
BNY Hamilton International Equity Fund
BNY Hamilton Intermediate Tax-Exempt Fund
BNY Hamilton Intermediate Investment Grade Fund
<PAGE>
TRANSFER AGENCY AGREEMENT
AGREEMENT made this -- day of -----------, 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. There after, 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 of 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-13 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 1 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:________________________________
BISYS FUND SERVICES OHIO, INC.
By:________________________________
9
<PAGE>
Dated: ------------
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 Treasury Money Fund
BNY Hamilton Large Cap Growth Fund
BNY Hamilton Small Cap Growth Fund
BNY Hamilton International Equity Fund
BNY Hamilton Intermediate Tax-Exempt Fund
BNY Hamilton Intermediate Investment Grade Fund
BNY HAMILTON FUNDS, INC.
By:________________________________
BISYS FUND SERVICES OHIO, INC.
By:________________________________
<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
-------------------
Annual Per Fund Fee:
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 (Institutional) $ -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
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.
<PAGE>
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.
<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>
THE BNY HAMILTON TREASURY MONEY FUND
PREMIER SHARES
SHAREHOLDER SERVICING PLAN
Introduction
We recommend to the Directors of the BNY Hamilton Funds (the "Fund") to adopt on
behalf of the BNY Hamilton Treasury Money Fund-Premier Shares (the "Premier
Class") a Shareholder Servicing Plan (the "Plan"). The Plan provides that it
will continue in effect from year to year only upon annual approval of the Plan
by the votes of a majority of both (a) the Directors of the Fund and (b) the
independent Directors of the Fund, cast in person at a meeting called for the
purpose of approving the Plan.
The Plan
The Plan provides that the Premier Class pay a shareholder servicing fee to
certain organizations at an annual rate equal to .25% of the average daily net
asset value of the shares of the BNY Hamilton Treasury Money Fund-Premier Class
which are owned beneficially by the customer of such service organization during
such period.
The types of shareholder services and expenses for which Shareholder Service
Organizations may be compensated under this Plan include, without limitation:
(i) aggregating and processing purchase, exchange and redemption requests from
clients and placing net purchase, exchange and redemption orders with the
distributor; (ii) providing clients with a service that invests the assets of
their accounts in shares pursuant to specific or pre-authorized instructions;
(iii) processing dividend payments from the Fund on behalf of clients and
assisting clients in changing dividend options, account designations and
addresses; (iv) providing and maintaining elective services such as check
writing and wire transfer sercices; (v) acting as sole shareholder of record and
nominee for clients; (vi) maintaining account records for clients; (vii)
issuing confirmations of transactions; (viii) providing sub-accounting with
respect to shares beneficially owned by clients or the information to the Fund
necessary for sub-accounting; (ix) 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 clients; and (x) providing other similar administrative
services.
11
<PAGE>
Current Environment
The BNY Hamilton Money Fund has previously entered into a Service Agreement,
under the Service Plan, with The Bank of New York in respect of BNY
Hamilton/Money Fund - Premier Shares and Classic Shares. This affiliate has
demonstrated its ability to perform the necessary functions under the Plan.
Description of Service Plan
It is currently contemplated that the following functions would be among those
provided by a Service Organization under the Plan.
Functions
* Aggregating and processing purchase, exchange, and redemption requests from
customers and placing net purchase, exchange, and redemption order with the
Distributor;
* Providing customers with a service that invests the assets of their account in
Fund shares pursuant to specific or pre-authorized instructions;
* Processing dividend payments from the fund on behalf of customers and
assisting customers in changing dividend options, account designations, and
addresses;
* Providing and maintaining elective services such as check writing, wire
transfer services, and automatic investment and withdrawal plans;
* Acting as sole shareholder of record and nominee for customers;
* Maintaining account records for customers;
* Issuing confirmations of transactions;
* Providing sub-accounting with respect to shares beneficially owned by
customers or providing the information to the Fund necessary for fund
accounting;
* If required by law, forwarding shareholder communications from the Fund (such
as proxies, shareowner reports, annual and semi-annual financial statements,
and dividend distribution and tax notices) to customers;
* Preparing, printing, and distributing prospectuses and shareholder reports to
existing clients;
* Providing facilities to answer questions about the Fund shares from
prospective and existing investors;
* Receiving and answering correspondence including requests for prospectuses and
statements of additional information;
* Complying with certain federal and state securities laws pertaining to the
sale of shares to existing clients;
* Assisting investors in completing application forms and selecting dividends
payment options and other account options;
* Furnishing such office space, equipment, facilities and personnel as may be
necessary to perform its duties and bearing all costs incurred by it in
performing such duties;
12
<PAGE>
SHAREHOLDER SERVICING PLAN
BNY HAMILTON FUNDS, INC.:
BNY HAMILTON TREASURY MONEY FUND (Hamilton Premier Class)
Introduction: It has been proposed that the Hamilton Premier Class (the
"Hamilton Premier Class") of BNY Hamilton Treasury Money Fund, a series of BNY
Hamilton Funds, Inc. (the "Fund") adopt a Shareholder Servicing Plan (the
"Plan") relating to its Hamilton Premier Class. The Plan is not to be adopted
pursuant to Rule 12b-1 promulgated under the Investment Company Act of 1940 (the
"1940 Act") and the fee payable under the Plan is intended to be a "service fee"
as defined in Article III, Section 26, of the NASD Rules of Fair Practice (the
"NASD Rules"). Under the Plan, the Fund would pay various organizations
("Service Organizations") that provide personal services and administration
assistance to the Hamilton Premier Class Shareholder accounts.
The Fund's Board of Directors, in considering whether the Fund should
implement the Plan, has requested and evaluated such information as to whether
the Plan should be implemented and has considered such pertinent factors as it
deemed necessary to form the basis for a decision to use assets attributable to
the Fund's Hamilton Premier Class shares for such purposes.
In voting to approve the implementation of such a plan, the members of the
Funds' Board of Directors have concluded, in exercise of their reasonable
business judgment and in light of their respective fiduciary duties, that there
is a reasonable likelihood that the plan set forth below will benefit the Fund
and holders of its Hamilton Premier Class shares.
The Plan: The material aspects of the Plan are as follows:
Section 1. The Fund will enter into written agreements, in the form of the
Shareholder Servicing Agreement attached hereto as Annex A, with financial
institutions and other organizations ("Service Organizations") under which such
Service Organizations will provide personal shareholder service and
administration assistance to the holders of Hamilton Premier shares of BNY
Hamilton Treasury Money Fund, and will receive payment for such services from
the Fund as described in Section 2 of this Plan.
Section 2. Pursuant to this Plan, the Fund may pay to Service Organizations
up to .25% on an annual basis of the average daily net assets of the Fund
represented by Hamilton Premier Class shares for shareholder service,
administration and distribution assistance, provided that, at no time shall the
amount paid to Shareholder Organizations under this Plan, together with any
amounts otherwise paid by the Fund as a "service fee" under the NASD Rules,
exceed the maximum amount then permitted under the NASD Rules as a "service
fee." The fees payable to Service Organizations from tiem to time shall, within
such limits, be determined by the Board of Directors of the Fund.
13
<PAGE>
Section 3. For purposes of determining the fees payable under this
Plan, the value of the Fund's net assets attributable to the Hamilton
Premier Class shares shall be computed in the manner specified in the
Fund's charter as then in effect for computation of the value of the
Fund's net assets attributable to such a class.
Section 4. The Fund's Board shall be provided, at least quarterly,
with a written report of all amounts expended pursuant to this Plan and
the purposes therefore.
Section 5. This Plan shall be effective on the date upon which it
has been approved by a majority of the members of the Board of Directors
of the Fund, including a majority of the board members who are not
"interested persons" (as defined in the 1940 Act) of the Fund and have
no direct or indirect financial interest in the operation of this Plan
or in any agreements entered into in connection with this Plan, pursuant
to a vote cast in person at a meeting called for the purpose of voting
on the approval of this Plan.
Section 6. This Plan and each related agreement will continue in
effect for one year from its effective date unless earlier terminated in
accordance with its terms, and will remain in effect from year to year
thereafter if such continuance is specifically approved at least
annually in the manner described in Section 5 hereof.
Section 7. The Plan is terminable without penalty at any time by
vote of a majority of the board members who are not "interested persons"
(as defined in the 1940 Act) of the Fund and have no direct or indirect
financial interest in the operation of this Plan or in any agreements
entered into in connection with this Plan, and the Plan may be amended
at any time by the Board of Directors, provided that any material
amendments of the terms of this Plan shall only become effective upon
approval in the manner described in Section 5 hereof.
Section 8. The obligations hereunder and under any agreement
related to this Plan shall only be binding upon the assets and property
of the Fund and shall not be binding upon any director, officer or
shareholder of the Fund individually.
14
<PAGE>
THE BNY HAMILTON FUNDS
RULE 18f-3 MULTIPLE CLASS PLAN
WHEREAS, The BNY Hamilton Funds (the "Trust") is an open-end management
investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act");
WHEREAS, shares of beneficial interest of the Trust are currently
divided into a number of separate series (the "Funds"), including the BNY
Hamilton Money Fund and the BNY Hamilton Treasury Money Fund (collectively, the
"Money Market Funds"); the BNY Hamilton Equity Income Fund, the BNY Hamilton
Large Cap Growth Fund, the BNY Hamilton Small Cap Growth Fund and the BNY
Hamilton International Equity Income Fund (collectively, the "Equity Funds");
the BNY Hamilton Intermediate Government Fund and the BNY Hamilton Intermediate
Investment Grade Fund (collectively, the "Fixed Income Funds"); and the BNY
Hamilton Intermediate New York Tax-Exempt Fund and the BNY Hamilton Intermediate
Tax-Exempt Fund (collectively, the "Tax-Exempt" Funds);
WHEREAS, the Trust desires to offer multiple classes of shares pursuant
to Rule 18f-3 under the 1940 Act;
WHEREAS, Rule 18f-3 requires that the Directors of the Trust 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 Trust, including a majority of the
Independent Directors, as defined in Section 7 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 Trust as a whole.
NOW, THEREFORE, the Trust hereby adopts, on behalf of the Funds, the
Plan, in accordance with Rule 18f-3 under the 1940 Act on the following terms
and conditions:
1. Features of the Classes.
The BNY Hamilton Money Fund issues its shares of beneficial interest in
three classes: "Hamilton Shares", "Hamilton Premier Shares", and "Hamilton
Classic Shares". The BNY Hamilton Treasury Money Fund issues its shares of
beneficial interest in two classes: "Hamilton Shares" and "Hamilton Premier
Shares". Each of the Equity Funds, the Fixed Income Funds and the Tax-Exempt
Funds also issues its shares of beneficial interest in two classes:
"Institutional
<PAGE>
Shares" and "Investor Shares". Shares of each class of a 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 4 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, 4 and 5 below.
2. Administration, Service and Distribution Plans.
(a) Hamilton Shares. Hamilton Shares of each of the Money Market
Funds will not pay a fee for account administration services, shareholder
liaison services or distribution services (each as defined in paragraph
(f) below).
(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
2
<PAGE>
materials borne by the distributor in connection with sales or selling efforts
on behalf of the Hamilton Classic Shares of BNY Hamilton Money Fund and the
Investor Shares of each of the Equity Funds, the Fixed Income Funds and the
Tax-Exempt Funds, and costs associated with implementing and operating their
respective 12b-1 plans.
3. Allocation of Income and Expenses.
(a) Daily Dividend Funds. Funds that declare distributions of net
investment income daily and that maintain the same net asset value per share in
each class ("Daily Dividend Funds") 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 particular Daily Dividend Fund. Expenses to be so allocated also include
expenses of the Trust that are allocated to a Fund and are not attributable to a
particular Fund or class of a Fund ("Trust Expenses") and expenses of the
particular Fund that are not attributable to a particular class of the Fund
("Fund Expenses"). Trust Expenses include, but are not limited to, Directors'
fees, insurance costs and certain legal fees. 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.
(b) Non-Daily Dividend Funds. The gross income, realized and unrealized
capital gains and losses and expenses (other than Class Expenses, as defined
below) of each Fund, other than the Daily Dividend Funds, shall be allocated to
each class on the basis of its net asset value relative to the net asset value
of the Fund. Expenses to be so allocated also include expenses of the Trust that
are allocated to a Fund and are not attributable to a particular Fund or class
of a Fund ("Trust Expenses") and expenses of the particular Fund that are not
attributable to a particular class of the Fund ("Fund Expenses"). Trust Expenses
include, but are not limited to. Directors' insurance costs and certain legal
fees. Fund Expenses include, but are not limited to, certain registration fees,
including SEC registration fees, advisory fees, custodial fees, and other
expenses relating to the management of the Fund's assets.
(c) 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) transfer agent fees attributable to a specific class;
(iii) printing and postage expenses related to preparing and distributing
materials such as shareholder reports, prospectuses and proxies to current
shareholders of a specific class; (iv) Blue Sky registration fees incurred by a
class; (v) the expense of administrative personnel and services to support the
shareholders of a specific class; (vi) litigation or other legal expenses
relating solely to one class; and (vii) Directors' fees incurred as a result of
issues relating to one class. Expenses in category (i) above must be allocated
to the class for which such expenses are incurred. All other "Class Expenses"
listed in categories (ii) - (vii) above may be allocated to a class, but only if
the President and Chief Financial Officer have determined, subject to Board
approval or ratification, which of such categories of expenses will be treated
as Class Expenses, consistent with applicable legal principles under the 1940
Act and the Internal Revenue Code of 1986, as amended (the "Code").
3
<PAGE>
Therefore, expenses of a Fund shall be apportioned to each class of
shares depending on the nature of the expense item. Trust Expenses and 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 Trust. 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 a 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 Trust 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 Funds'
prospectuses, shareholders may exchange shares of one class of a Fund for shares
of the same class of another Fund, provided that the amount to be exchanged
meets the applicable minimum 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 Trust who are not
"interested persons" of the Trust (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.
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 each 12b-1 class of 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.
4
<PAGE>
(c) The fund accountant shall allocate income and Corporate
Level 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, and in relation to the net asset value of the Trust for Corporate
Level Expenses. These calculations shall be based on net asset values for all
non-money market Funds and the relative value of settled shares for the Money
Market Funds.
(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 (3) above and the
additional fees calculated from paragraphs (1) and (2) 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.
7. Waiver or Reimbursement of Expenses.
Expenses may be waived or reimbursed by any adviser to the Trust, by
the Trust's underwriter or by any other provider of services to the Trust
without the prior approval of the Trust'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 Trust 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.
IN WITNESS WHEREOF, the Trust, on behalf of the Funds, has adopted this
Multiple Class Plan as of the 22nd day of January, 1997, to be effective January
22, 1997.
THE BNY HAMILTON FUNDS
By:
-----------------------
Title: Secretary
5
<PAGE>
The Form of Sub-Administration Agreement between BNY Hamilton Distributors, Inc.
and The Bank of New York, originally filed as Exhibit 9e, will be effective for
all Series of the Registrant, listed as follows:
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 Treasury Money Fund
BNY Hamilton Large Cap Growth Fund
BNY Hamilton Small Cap Growth Fund
BNY Hamilton International Equity Fund
BNY Hamilton Intermediate Tax-Exempt Fund
BNY Hamilton Intermediate Investment Grade Fund
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in Post-Effective Amendment No. 9 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
January 24, 1997
<PAGE>
BNY HAMILTON LARGE CAP GROWTH FUND
Plan of Distribution Pursuant to Rule 12b-1 for the Investor Class
Under the Investment Company Act of 1940
Introduction
The Plan of Distribution (the "Plan") set forth below, which is designed to
conform to the requirements of Rule 12b-1 under the Investment Company Act of
1940 (the "Investment Company Act"), has been adopted by BNY Hamilton Large Cap
Growth Fund (the "Fund"), a Series of BNY Hamilton Funds Inc. (the
"Corporation"), and by BNY Hamilton Distributors, Inc., the Fund's distributor,
(the "Distributor").
The Fund expects to enter into a distribution agreement with the Distributor
(the "Distribution Agreement") pursuant to which the Fund will employ the
Distributor to distribute Investor Shares issued by the Fund (the "Shares").
Under the Plan, the Fund intends to reimburse the Distributor for costs incurred
by the Distributor in distributing Shares.
A majority of the Board of Directors of the Fund, including a majority of
those Directors who are not "interested persons" of the Fund (as defined in the
Investment Company Act) and who have no direct or indirect financial interest in
the operation of this Plan or any agreements related to it (the "Rule 12b-1
Directors"), have determined by votes cast in person at a meeting called for the
purpose of voting on this Plan that there is a reasonable likelihood that
adoption of this Plan will benefit the Fund and its shareholders. Expenditures
under this Plan by the Fund are primarily intended to result in the sale of
Shares within the meaning of paragraph (a)(2) of Rule 12b-1 promulgated under
the Investment Company Act.
The purpose of the Plan is to create incentives for the Distributor and
other qualified broker-dealers to provide distribution assistance to their
customers who are or may become investors in the
<PAGE>
Fund, and to defray the costs and expenses associated with the preparation,
printing and distribution of prospectuses and sales literature, advertising,
marketing and other promotional and distribution activities.
The Plan
1. Distribution Activities.
The Fund shall engage the Distributor to distribute Shares and to service
shareholder accounts using the facilities of the distribution networks of such
qualified broker-dealers and financial institutions as the Distributor may
select. Services provided and activities undertaken hereunder, under the
Distribution Agreement or under any "related agreement" between the Distributor
and any such qualified broker-dealer to distribute Shares are referred to herein
as "Distribution Activities."
2. Reimbursement for Distribution Activities.
The Fund shall reimburse the Distributor for costs incurred by it in
performing Distribution Activities at a rate which shall not exceed .25% per
annum of the average daily net assets of the Fund, excluding from such
calculation, however, the net asset value of all Shares acquired via a transfer
of assets into the Fund from customer accounts at The Bank of New York. The Fund
shall calculate and accrue daily amounts reimbursable hereunder and shall pay
such amounts monthly or at such other intervals as the Board of Directors and
the Distributor may agree.
Costs of the Distributor subject to reimbursement hereunder are costs of
performing Distribution Activities and may include, among others:
(a) amounts paid to qualified broker-dealer and financial
institutions selected by the Distributor in reimbursement of costs
incurred by such broker-dealers in performing services under a
selected dealer
2
<PAGE>
agreement between those broker-dealers and the Distributor for sales of
Shares of the Fund, including account servicing fees (trailer
commissions) paid to, or on account of, account executives and
indirect and overhead costs associated with performance of
distribution activities including central office and branch expenses;
(b) expenses related to telemarketing operations established for the
Fund;
(c) costs and expenses of preparing, printing and distributing any
materials not prepared by the Corporation and other materials used by
the Distributor in connection with its offering of the Shares for
sale to the public, including the additional cost of printing
copies, at printer's over-run cost, of the Prospectus and of annual and
interim reports to shareholders other than copies thereof required for
distribution to shareholders or for filing with any federal and state
securities authorities; and
(d) any expenses of advertising incurred by the Distributor in
connection with its offering of the Shares for sale to the public.
If, in any month, the Distributor incurs costs subject to reimbursement that
exceed the amount accrued in respect of such month at the rate of .25% per annum
of average daily net assets, the Fund will carry forward the unpaid amount from
month to month while the Plan is in effect, until such time as it may be paid;
provided, however, that no amount shall be carried forward beyond the fiscal
year during which it is accrued and the Fund shall have no obligation to the
Distributor or any other person in respect thereof. The Fund shall not pay the
Distributor any carrying or other finance charge with respect to amounts that
are accrued but unpaid.
3. Quarterly Reports: Additional Information.
An appropriate officer of the Fund will provide to the Board of Directors of
the Fund for review, at least quarterly, a written report specifying in
reasonable detail the amounts expended for Distribution Activities and the
purposes for which such expenditures were made in compliance with
3
<PAGE>
the requirements of Rule 12b-1. The Distributor will provide to the Board of
Directors of the Fund such additional information as the Board shall from time
to time reasonably request, including information about Distribution Activities
undertaken or to be undertaken by the Distributor.
The Distributor will inform the Board of Directors of the Fund of the
account servicing fees to be paid by the Distributor to broker-dealers and
financial institutions that have selected dealer agreements with the
Distributor.
4. Effectiveness: Continuation.
The Plan shall take effect upon the approval of the sole shareholder of the
Fund. If so approved, the Plan shall, unless earlier terminated in accordance
with its terms, continue in full force and effect until June 30, 1997, and from
year to year thereafter for so long as such continuance is specifically approved
at least annually by a majority of the Board of Directors of the Fund and a
majority of the Rule 12b-l Directors by votes cast in person at a meeting called
for the purpose of voting on the continuation of the Plan.
5. Termination.
This Plan may be terminated at any time by vote of a majority of the Rule
12b-1 Directors, or by vote of a majority of the outstanding voting securities
(as defined in the Investment Company Act) of the Shares.
6. Amendments.
The Plan may not be amended to change the distribution expenses to be paid
as provided for in Section 2 hereof so as to increase materially the amounts
payable under this Plan unless such amendment shall be approved by the vote of a
majority of the outstanding voting securities (as defined in the Investment
Company Act) of the Series. All material amendments of the Plan,
<PAGE>
including the addition or deletion of categories of expenditures that are
reimbursable hereunder, shall be approved by a majority of the Board of
Directors of the Fund and a majority of the Rule 12b-1 Directors by votes cast
in person at a meeting called for the purpose of voting on the Plan.
7. Non-interested Directors.
While the Plan is in effect, the selection and nomination of the Directors
who are not "interested persons" of the Fund (non-interested Directors) shall
be committed to the discretion of the non-interested Directors.
8. Records.
The Fund shall preserve copies of the Plan and any related agreements and
all reports made pursuant to Section 3 hereof, for a period of not less than six
years from the date of effectiveness of the Plan, such agreements or reports,
and for at least the first two years in an easily accessible place.
5
<PAGE>
BNY HAMILTON SMALL CAP GROWTH FUND
Plan of Distribution Pursuant to Rule 12b-1 for the Investor Class
Under the Investment Company Act of 1940
Introduction
The Plan of Distribution (the "Plan") set forth below, which is
designed to conform to the requirements of Rule 12b-1 under the Investment
Company Act of 1940 (the "Investment Company Act"), has been adopted by BNY
Hamilton Small Cap Growth Fund (the "Fund"), a Series of BNY Hamilton Funds Inc.
(the "Corporation"), and by BNY Hamilton Distributors, Inc., the Fund's
distributor, (the "Distributor").
The Fund expects to enter into a distribution agreement with the
Distributor (the "Distribution Agreement") pursuant to which the Fund will
employ the Distributor to distribute Investor Shares issued by the Fund (the
"Shares"). Under the Plan, the Fund intends to reimburse the Distributor for
costs incurred by the Distributor in distributing Shares.
A majority of the Board of Directors of the Fund, including a majority
of those Directors who are not "interested persons" of the Fund (as defined in
the Investment Company Act) and who have no direct or indirect financial
interest in the operation of this Plan or any agreements related to it (the
"Rule 12b-1 Directors"), have determined by votes cast in person at a meeting
called for the purpose of voting on this Plan that there is a reasonable
likelihood that adoption of this Plan will benefit the Fund and its
shareholders. Expenditures under this Plan by the Fund are primarily intended to
result in the sale of Shares within the meaning of paragraph (a)(2) of Rule
12b-1 promulgated under the Investment Company Act.
The purpose of the Plan is to create incentives for the Distributor
and other qualified broker-dealers to provide distribution assistance to their
customers who are or may become investors in the
<PAGE>
Fund, and to defray the costs and expenses associated with the preparation,
printing and distribution of prospectuses and sales literature, advertising,
marketing and other promotional and distribution
activities.
The Plan
1. Distribution Activities.
The Fund shall engage the Distributor to distribute Shares and to
service shareholder accounts using the facilities of the distribution networks
of such qualified broker-dealers and financial institutions as the Distributor
may select. Services provided and activities undertaken hereunder, under the
Distribution Agreement or under any "related agreement" between the Distributor
and any such qualified broker-dealer to distribute Shares are referred to herein
as "Distribution Activities."
2. Reimbursement for Distribution Activities.
The Fund shall reimburse the Distributor for costs incurred by it in
performing Distribution Activities at a rate which shall not exceed .25% per
annum of the average daily net assets of the Fund, excluding from such
calculation, however, the net asset value of all Shares acquired via a transfer
of assets into the Fund from customer accounts at The Bank of New York. The Fund
shall calculate and accrue daily amounts reimbursable hereunder and shall pay
such amounts monthly or at such other intervals as the Board of Directors and
the Distributor may agree.
Costs of the Distributor subject to reimbursement hereunder are costs
of performing Distribution Activities and may include, among others:
(a) amounts paid to qualified broker-dealer and financial institutions
selected by the Distributor in reimbursement of costs incurred by such
broker-dealers in performing services under a selected dealer
2
<PAGE>
agreement between those broker-dealers and the Distributor for sales of
Shares of the Fund, including account servicing fees (trailer
commissions) paid to, or on account of, account executives and
indirect and overhead costs associated with performance of
distribution activities including central office and branch expenses;
(b) expenses related to telemarketing operations established for the
Fund;
(c) costs and expenses of preparing, printing and distributing any
materials not prepared by the Corporation and other materials used by
the Distributor in connection with its offering of the Shares for sale
to the public, including the additional cost of printing copies, at
printer's over-run cost, of the Prospectus and of annual and interim
reports to shareholders other than copies thereof required for
distribution to shareholders or for filing with any federal and state
securities authorities; and
(d) any expenses of advertising incurred by the Distributor in
connection with its offering of the Shares for sale to the public.
If, in any month, the Distributor incurs costs subject to reimbursement
that exceed the amount accrued in respect of such month at the rate of .25% per
annum of average daily net assets, the Fund will carry forward the unpaid amount
from month to month while the Plan is in effect, until such time as it may be
paid; provided, however, that no amount shall be carried forward beyond the
fiscal year during which it is accrued and the Fund shall have no obligation to
the Distributor or any other person in respect thereof. The Fund shall not pay
the Distributor any carrying or other finance charge with respect to amounts
that are accrued but unpaid.
3. Quarterly Reports: Additional Information.
An appropriate officer of the Fund will provide to the Board of
Directors of the Fund for review, at least quarterly, a written report
specifying in reasonable detail the amounts expended for Distribution Activities
and the purposes for which such expenditures were made in compliance with
3
<PAGE>
the requirements of Rule 12b-1. The Distributor will provide to the Board of
Directors of the Fund such additional information as the Board shall from time
to time reasonably request, including information about Distribution Activities
undertaken or to be undertaken by the Distributor.
The Distributor will inform the Board of Directors of the Fund of the
account servicing fees to be paid by the Distributor to broker-dealers and
financial institutions that have selected dealer agreements with the
Distributor.
4. Effectiveness; Continuation.
The Plan shall take effect upon the approval of the sole shareholder
of the Fund. If so approved, the Plan shall, unless earlier terminated in
accordance with its terms, continue in full force and effect until June 30,
1997, and from year to year thereafter for so long as such continuance is
specifically approved at least annually by a majority of the Board of Directors
of the Fund and a majority of the Rule 12b-1 Directors by votes cast in person
at a meeting called for the purpose of voting on the continuation of the Plan.
5. Termination.
This Plan may be terminated at any time by vote of a majority of the
Rule 12b-1 Directors, or by vote of a majority of the outstanding voting
securities (as defined in the Investment Company Act) of the Shares.
6. Amendments.
The Plan may not be amended to change the distribution expenses to
be paid as provided for in Section 2 hereof so as to increase materially the
amounts payable under this Plan unless such amendment shall be approved by the
vote of a majority of the outstanding voting securities (as defined in the
Investment Company Act) of the Series. All material amendments of the Plan,
4
<PAGE>
including the addition or deletion of categories of expenditures that are
reimbursable hereunder, shall be approved by a majority of the Board of
Directors of the Fund and a majority of the Rule 12b-1 Directors by votes cast
in person at a meeting called for the purpose of voting on the Plan.
7. Non-interested Directors.
While the Plan is in effect, the selection and nomination of the
Directors who are not "interested persons" of the Fund (non-interested
Directors) shall be committed to the discretion of the non-interested Directors.
8. Records.
The Fund shall preserve copies of the Plan and any related agreements
and all reports made pursuant to Section 3 hereof, for a period of not less than
six years from the date of effectiveness of the Plan, such agreements or
reports, and for at least the first two years in an easily accessible place.
5
<PAGE>
BNY HAMILTON INTERNATIONAL EQUITY FUND
Plan of Distribution Pursuant to Rule 12b-1 for the Investor Class
Under the Investment Company Act of 1940
Introduction
The Plan of Distribution (the "Plan") set forth below, which is designed to
conform to the requirements of Rule 12b-l under the Investment Company Act of
1940 (the "Investment Company Act"), has been adopted by BNY Hamilton
International Equity Fund (the "Fund"), a Series of BNY Hamilton Funds Inc. (the
"Corporation"), and by BNY Hamilton Distributors, Inc., the Fund's distributor,
(the "Distributor").
The Fund expects to enter into a distribution agreement with the Distributor
(the "Distribution Agreement") pursuant to which the Fund will employ the
Distributor to distribute Investor Shares issued by the Fund (the "Shares").
Under the Plan, the Fund intends to reimburse the Distributor for costs incurred
by the Distributor in distributing Shares.
A majority of the Board of Directors of the Fund, including a majority of
those Directors who are not "interested persons" of the Fund (as defined in the
Investment Company Act) and who have no direct or indirect financial interest in
the operation of this Plan or any agreements related to it (the "Rule 12b-l
Directors"), have determined by votes cast in person at a meeting called for the
purpose of voting on this Plan that there is a reasonable likelihood that
adoption of this Plan will benefit the Fund and its shareholders. Expenditures
under this Plan by the Fund are primarily intended to result in the sale of
Shares within the meaning of paragraph (a)(2) of Rule 12b-1 promulgated under
the Investment Company Act.
The purpose of the Plan is to create incentives for the Distributor and other
qualified broker-dealers to provide distribution assistance to their customers
who are or may become investors in the
<PAGE>
Fund, and to defray the costs and expenses associated with the preparation,
printing and distribution of prospectuses and sales literature, advertising,
marketing and other promotional and distribution activities.
The Plan
1. Distribution Activities.
The Fund shall engage the Distributor to distribute Shares and to
service shareholder accounts using the facilities of the distribution networks
of such qualified broker-dealers and financial institutions as the Distributor
may select. Services provided and activities undertaken hereunder, under the
Distribution Agreement or under any "related agreement" between the Distributor
and any such qualified broker-dealer to distribute Shares are referred to herein
as "Distribution Activities."
2. Reimbursement for Distribution Activities.
The Fund shall reimburse the Distributor for costs incurred by it in
performing Distribution Activities at a rate which shall not exceed .25% per
annum of the average daily net assets of the Fund, excluding from such
calculation, however, the net asset value of all Shares acquired via a transfer
of assets into the Fund from customer accounts at The Bank of New York. The Fund
shall calculate and accrue daily amounts reimbursable hereunder and shall pay
such amounts monthly or at such other intervals as the Board of Directors and
the Distributor may agree.
Costs of the Distributor subject to reimbursement hereunder are costs of
performing Distribution Activities and may include, among others:
(a) amounts paid to qualified broker-dealer and financial institutions
selected by the Distributor in reimbursement of costs incurred by
such broker-dealers in performing services under a selected dealer
2
<PAGE>
agreement between those broker-dealers and the Distributor for sales
of Shares of the Fund, including account servicing fees (trailer
commissions) paid to, or on account of, account executives and
indirect and overhead costs associated with performance of
distribution activities including central office and branch expenses;
(b) expenses related to telemarketing operations established for the
Fund;
(c) costs and expenses of preparing, printing and distributing any
materials not prepared by the Corporation and other materials used by
the Distributor in connection with its offering of the Shares for
sale to the public, including the additional cost of printing copies,
at printer's over-run cost, of the Prospectus and of annual and
interim reports to shareholders other than copies thereof required
for distribution to shareholders or for filing with any federal and
state securities authorities; and
(d) any expenses of advertising incurred by the Distributor in
connection with its offering of the Shares for sale to the public.
If, in any month, the Distributor incurs costs subject to reimbursement that
exceed the amount accrued in respect of such month at the rate of .25% per annum
of average daily net assets, the Fund will carry forward the unpaid amount from
month to month while the Plan is in effect, until such time as it may be paid;
provided, however, that no amount shall be carried forward beyond the fiscal
year during which it is accrued and the Fund shall have no obligation to the
Distributor or any other person in respect thereof. The Fund shall not pay the
Distributor any carrying or other finance charge with respect to amounts that
are accrued but unpaid.
3. Ouarterly Reports: Additional Information.
An appropriate officer of the Fund will provide to the Board of
Directors of the Fund for review, at least quarterly, a written report
specifying in reasonable detail the amounts expended for Distribution Activities
and the purposes for which such expenditures were made in compliance with
3
<PAGE>
the requirements of Rule 12b-1. The Distributor will provide to the Board of
Directors of the Fund such additional information as the Board shall from time
to time reasonably request, including information about Distribution Activities
undertaken or to be undertaken by the Distributor.
The Distributor will inform the Board of Directors of the Fund of the
account servicing fees to be paid by the Distributor to broker-dealers and
financial institutions that have selected dealer agreements with the
Distributor.
4. Effectiveness; Continuation.
The Plan shall take effect upon the approval of the sole shareholder of
the Fund. If so approved, the Plan shall, unless earlier terminated in
accordance with its terms, continue in full force and effect until June 30,
1997, and from year to year thereafter for so long as such continuance is
specifically approved at least annually by a majority of the Board of Directors
of the Fund and a majority of the Rule 12b-1 Directors by votes cast in person
at a meeting called for the purpose of voting on the continuation of the Plan.
5. Termination
This Plan may be terminated at any time by vote of a majority of the
Rule 12b-1 Directors, or by vote of a majority of the outstanding voting
securities (as defined in the Investment Company Act) of the Shares.
6. Amendments.
The Plan may not be amended to change the distribution expenses to be
paid as provided for in Section 2 hereof so as to increase materially the
amounts payable under this Plan unless such amendment shall be approved by the
vote of a majority of the outstanding voting securities (as defined in the
Investment Company Act) of the Series. All material amendments of the Plan,
4
<PAGE>
including the addition or deletion of categories of expenditures that are
reimbursable hereunder, shall be approved by a majority of the Board of
Directors of the Fund and a majority of the Rule 12b-1 Directors by votes cast
in person at a meeting called for the purpose of voting on the Plan.
7. Non-interested Directors.
While the Plan is in effect, the selection and nomination of the
Directors who are not "interested persons" of the Fund (non-interested
Directors) shall be committed to the discretion of the non-interested Directors.
8. Records.
The Fund shall preserve copies of the Plan and any related agreements
and all reports made pursuant to Section 3 hereof, for a period of not less than
six years from the date of effectiveness of the Plan, such agreements or
reports, and for at least the first two years in an easily accessible place.
<PAGE>
BNY HAMILTON INTERMEDIATE INVESTMENT GRADE FUND
Plan of Distribution Pursuant to Rule 12b-1
Under the Investment Company Act of 1940
Introduction
The Plan of Distribution (the "Plan") set forth below, which is
designed to conform to the requirements of Rule 12b-1 under the Investment
Company Act of 1940 (the "Investment Company Act"), has been adopted by BNY
Hamilton Intermediate Investment Grade Fund (the "Fund"), a Series of BNY
Hamilton Funds Inc. (the "Corporation"), and by BNY Hamilton Distributors, Inc.,
the Fund's distributor, (the "Distributor").
The Fund expects to enter into a distribution agreement with the
Distributor (the "Distribution Agreement") pursuant to which the Fund will
employ the Distributor to distribute shares issued by the Fund (the "Shares").
Under the Plan, the Fund intends to reimburse the Distributor for costs incurred
by the Distributor in distributing Shares.
A majority of the Board of Directors of the Fund, including a majority
of those Directors who are not "interested persons" of the Fund (as defined in
the Investment Company Act) and who have no direct or indirect financial
interest in the operation of this Plan or any agreements related to it (the
"Rule 12b-1 Directors"), have determined by votes cast in person at a meeting
called for the purpose of voting on this Plan that there is a reasonable
likelihood that adoption of this Plan will benefit the Fund and its
shareholders. Expenditures under this Plan by the Fund are primarily intended to
result in the sale of Shares within the meaning of paragraph (a)(2) of Rule
12b-1 promulgated under the Investment Company Act.
The purpose of the Plan is to create incentives for the Distributor and
other qualified broker-dealers to provide distribution assistance to their
customers who are or may become investors in the Fund, and to defray the costs
and expenses associated with the preparation, printing and distribution of
prospectuses and sales literature, advertising, marketing and other promotional
and distribution activities.
THE PLAN
1. Distribution Activities.
The Fund shall engage the Distributor to distribute Shares and to
service shareholder accounts using the facilities of the distribution networks
of such qualified broker-dealers and financial institutions as the Distributor
may select. Services provided and activities undertaken hereunder, under the
Distribution Agreement or under any "related agreement" between the
<PAGE>
Distributor and any such qualified broker-dealer to distribute Shares are
referred to herein as "Distribution Activities."
2. Reimbursement for Distribution Activities.
The Fund shall reimburse the Distributor for costs incurred by it in
performing Distribution Activities at a rate which shall not exceed .25% per
annum of the average daily net assets of the Fund, excluding from such
calculation, however, the net asset value of all Shares acquired via a transfer
of assets into the Fund from customer accounts at The Bank of New York. The Fund
shall calculate and accrue daily amounts reimbursable hereunder and shall pay
such amounts monthly or at such other intervals as the Board of Directors and
the Distributor may agree.
Costs of the Distributor subject to reimbursement hereunder are costs
of performing Distribution Activities and may include, among others:
(a) amounts paid to qualified broker-dealer and financial
institutions selected by the Distributor in reimbursement of
costs incurred by such broker-dealers in performing services
under a selected dealer agreement between those broker-dealers
and the Distributor for sales of Shares of the Fund, including
account servicing fees (trailer commissions) paid to, or on
account of, account executives and indirect and overhead costs
associated with performance of distribution activities
including central office and branch expenses;
(b) expenses related to telemarketing operations
established for the Fund;
(c) costs and expenses of preparing, printing and distributing
any materials not prepared by the Corporation and other
materials used by the Distributor in connection with its
offering of the Shares for sale to the public, including the
additional cost of printing copies, at printer's over-run
cost, of the Prospectus and of annual and interim reports to
shareholders other than copies thereof required for
distribution to shareholders or for filing with any federal
and state securities authorities; and
(d) any expenses of advertising incurred by the Distributor in
connection with its offering of the Shares for sale to the
public.
If, in any month, the Distributor incurs costs subject to reimbursement
that exceed the amount accrued in respect of such month at the rate of .25% per
annum of average daily net assets, the Fund will carry forward the unpaid amount
from month to month while the Plan is in effect, until such time as it may be
paid; provided, however, that no amount shall be carried forward beyond the
2
<PAGE>
fiscal year during which it is accrued and the Fund shall have no obligation to
the Distributor or any other person in respect thereof. The Fund shall not pay
the Distributor any carrying or other finance charge with respect to amounts
that are accrued but unpaid.
3. Quarterly Reports; Additional Information.
An appropriate officer of the Fund will provide to the Board of
Directors of the Fund for review, at least quarterly, a written report
specifying in reasonable detail the amounts expended for Distribution Activities
and the purposes for which such expenditures were made in compliance with the
requirements of Rule 12b-1. The Distributor will provide to the Board of
Directors of the Fund such additional information as the Board shall from time
to time reasonably request, including information about Distribution Activities
undertaken or to be undertaken by the Distributor.
The Distributor will inform the Board of Directors of the Fund of the
account servicing fees to be paid by the Distributor to broker-dealers and
financial institutions that have selected dealer agreements with the
Distributor.
4. Effectiveness; Continuation.
The Plan shall take effect upon the approval of the sole shareholder of
the Fund. If so approved, the Plan shall, unless earlier terminated in
accordance with its terms, continue in full force and effect until June 30,
1998, and from year to year thereafter for so long as such continuance is
specifically approved at least annually by a majority of the Board of Directors
of the Fund and a majority of the Rule 12b-1 Directors by votes cast in person
at a meeting called for the purpose of voting on the continuation of the Plan.
5. Termination.
This Plan may be terminated at any time by vote of a majority of the
Rule 12b-1 Directors, or by vote of a majority of the outstanding voting
securities (as defined in the Investment Company Act) of the Shares.
6. Amendments.
The Plan may not be amended to change the distribution expenses to be
paid as provided for in Section 2 hereof so as to increase materially the
amounts payable under this Plan unless such amendment shall be approved by the
vote of a majority of the outstanding voting securities (as defined in the
Investment Company Act) of the Series. All material amendments of the Plan,
including the addition or deletion of categories of expenditures that are
reimbursable hereunder, shall be approved by a majority of the Board of
Directors of the Fund and a majority of the Rule 12b-1 Directors by votes cast
in person at a meeting called for the purpose of voting on the Plan.
3
<PAGE>
7. Non-interested Directors.
While the Plan is in effect, the selection and nomination of the
Directors who are not "interested persons" of the Fund (non-interested
Directors) shall be committed to the discretion of the non-interested Directors.
8. Records.
The Fund shall preserve copies of the Plan and any related agreements
and all reports made pursuant to Section 3 hereof, for a period of not less than
six years from the date of effectiveness of the Plan, such agreements or
reports, and for at least the first two years in an easily accessible place.
4
<PAGE>
BNY HAMILTON INTERMEDIATE TAX-EXEMPT FUND
Plan of Distribution Pursuant to Rule 12b-1
Under the Investment Company Act of 1940
Introduction
The Plan of Distribution (the "Plan") set forth below, which is
designed to conform to the requirements of Rule 12b-1 under the Investment
Company Act of 1940 (the "Investment Company Act"), has been adopted by BNY
Hamilton Intermediate Tax-Exempt Fund (the "Fund"), a Series of BNY Hamilton
Funds Inc. (the "Corporation"), and by BNY Hamilton Distributors, Inc., the
Fund's distributor, (the "Distributor").
The Fund expects to enter into a distribution agreement with the
Distributor (the "Distribution Agreement") pursuant to which the Fund will
employ the Distributor to distribute shares issued by the Fund (the "Shares").
Under the Plan, the Fund intends to reimburse the Distributor for costs incurred
by the Distributor in distributing Shares.
A majority of the Board of Directors of the Fund, including a majority
of those Directors who are not "interested persons" of the Fund (as defined in
the Investment Company Act) and who have no direct or indirect financial
interest in the operation of this Plan or any agreements related to it (the
"Rule 12b-1 Directors"), have determined by votes cast in person at a meeting
called for the purpose of voting on this Plan that there is a reasonable
likelihood that adoption of this Plan will benefit the Fund and its
shareholders. Expenditures under this Plan by the Fund are primarily intended to
result in the sale of Shares within the meaning of paragraph (a)(2) of Rule
12b-1 promulgated under the Investment Company Act.
The purpose of the Plan is to create incentives for the Distributor and
other qualified broker-dealers to provide distribution assistance to their
customers who are or may become investors in the Fund, and to defray the costs
and expenses associated with the preparation, printing and distribution of
prospectuses and sales literature, advertising, marketing and other promotional
and distribution activities.
THE PLAN
1. Distribution Activities.
The Fund shall engage the Distributor to distribute Shares and to
service shareholder accounts using the facilities of the distribution networks
of such qualified broker-dealers and financial institutions as the Distributor
may select. Services provided and activities undertaken hereunder, under the
Distribution Agreement or under any "related agreement" between the
<PAGE>
Distributor and any such qualified broker-dealer to distribute Shares are
referred to herein as "Distribution Activities."
2. Reimbursement for Distribution Activities.
The Fund shall reimburse the Distributor for costs incurred by it in
performing Distribution Activities at a rate which shall not exceed .25% per
annum of the average daily net assets of the Fund, excluding from such
calculation, however, the net asset value of all Shares acquired via a transfer
of assets into the Fund from customer accounts at The Bank of New York. The Fund
shall calculate and accrue daily amounts reimbursable hereunder and shall pay
such amounts monthly or at such other intervals as the Board of Directors and
the Distributor may agree.
Costs of the Distributor subject to reimbursement hereunder are costs
of performing Distribution Activities and may include, among others:
(a) amounts paid to qualified broker-dealer and financial
institutions selected by the Distributor in reimbursement of
costs incurred by such broker-dealers in performing services
under a selected dealer agreement between those broker-dealers
and the Distributor for sales of Shares of the Fund, including
account servicing fees (trailer commissions) paid to, or on
account of, account executives and indirect and overhead costs
associated with performance of distribution activities
including central office and branch expenses;
(b) expenses related to telemarketing operations
established for the Fund;
(c) costs and expenses of preparing, printing and distributing
any materials not prepared by the Corporation and other
materials used by the Distributor in connection with its
offering of the Shares for sale to the public, including the
additional cost of printing copies, at printer's over-run
cost, of the Prospectus and of annual and interim reports to
shareholders other than copies thereof required for
distribution to shareholders or for filing with any federal
and state securities authorities; and
(d) any expenses of advertising incurred by the Distributor in
connection with its offering of the Shares for sale to the
public.
If, in any month, the Distributor incurs costs subject to reimbursement
that exceed the amount accrued in respect of such month at the rate of .25% per
annum of average daily net assets, the Fund will carry forward the unpaid amount
from month to month while the Plan is in effect, until such time as it may be
paid; provided, however, that no amount shall be carried forward beyond the
2
<PAGE>
fiscal year during which it is accrued and the Fund shall have no obligation to
the Distributor or any other person in respect thereof. The Fund shall not pay
the Distributor any carrying or other finance charge with respect to amounts
that are accrued but unpaid.
3. Quarterly Reports; Additional Information.
An appropriate officer of the Fund will provide to the Board of
Directors of the Fund for review, at least quarterly, a written report
specifying in reasonable detail the amounts expended for Distribution Activities
and the purposes for which such expenditures were made in compliance with the
requirements of Rule 12b-1. The Distributor will provide to the Board of
Directors of the Fund such additional information as the Board shall from time
to time reasonably request, including information about Distribution Activities
undertaken or to be undertaken by the Distributor.
The Distributor will inform the Board of Directors of the Fund of the
account servicing fees to be paid by the Distributor to broker-dealers and
financial institutions that have selected dealer agreements with the
Distributor.
4. Effectiveness; Continuation.
The Plan shall take effect upon the approval of the sole shareholder of
the Fund. If so approved, the Plan shall, unless earlier terminated in
accordance with its terms, continue in full force and effect until June 30,
1998, and from year to year thereafter for so long as such continuance is
specifically approved at least annually by a majority of the Board of Directors
of the Fund and a majority of the Rule 12b-1 Directors by votes cast in person
at a meeting called for the purpose of voting on the continuation of the Plan.
5. Termination.
This Plan may be terminated at any time by vote of a majority of the
Rule 12b-1 Directors, or by vote of a majority of the outstanding voting
securities (as defined in the Investment Company Act) of the Shares.
6. Amendments.
The Plan may not be amended to change the distribution expenses to be
paid as provided for in Section 2 hereof so as to increase materially the
amounts payable under this Plan unless such amendment shall be approved by the
vote of a majority of the outstanding voting securities (as defined in the
Investment Company Act) of the Series. All material amendments of the Plan,
including the addition or deletion of categories of expenditures that are
reimbursable hereunder, shall be approved by a majority of the Board of
Directors of the Fund and a majority of the Rule 12b-1 Directors by votes cast
in person at a meeting called for the purpose of voting on the Plan.
3
<PAGE>
7. Non-interested Directors.
While the Plan is in effect, the selection and nomination of the
Directors who are not "interested persons" of the Fund (non-interested
Directors) shall be committed to the discretion of the non-interested Directors.
8. Records.
The Fund shall preserve copies of the Plan and any related agreements
and all reports made pursuant to Section 3 hereof, for a period of not less than
six years from the date of effectiveness of the Plan, such agreements or
reports, and for at least the first two years in an easily accessible place.
4
<PAGE>
BNY HAMILTON MONEY MARKET
<TABLE>
<CAPTION>
HAMILTON PREMIER CLASSIC HAMILTON PREMIER CLASSIC HAMILTON PREMIER CLASSIC
DAILY DAILY DAILY DAILY DAILY DAILY 7 DAY 7 DAY 7 DAY
DATE FACTOR FACTOR FACTOR YIELD YIELD YIELD YIELD YIELD YIELD
- --------- ----------- ----------- ----------- ------- ------- ------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
06/01/96 0.000141211 0.000134042 0.000126982 5.15% 4.89% 4.63% 0.74% 0.70% 0.66%
06/02/96 0.000141211 0.000134042 0.000126982 5.15% 4.89% 4.63% 1.47% 1.40% 1.32%
06/03/96 0.000140317 0.000133157 0.000126092 5.12% 4.86% 4.60% 2.20% 2.09% 1.98%
06/04/96 0.000140065 0.000132892 0.000125838 5.11% 4.85% 4.59% 2.93% 2.79% 2.64%
06/05/96 0.000141222 0.000134055 0.000126973 5.15% 4.89% 4.63% 3.67% 3.48% 3.30%
06/06/96 0.000139510 0.000132346 0.000125260 5.09% 4.83% 4.57% 4.40% 4.17% 3.95%
06/07/96 0.000138971 0.000131803 0.000124720 5.07% 4.81% 4.55% 5.12% 4.86% 4.60%
06/08/96 0.000138971 0.000131803 0.000124720 5.07% 4.81% 4.55% 5.11% 4.85% 4.59%
06/09/96 0.000138970 0.000131803 0.000124720 5.07% 4.81% 4.55% 5.10% 4.84% 4.58%
06/10/96 0.000139238 0.000132067 0.000124986 5.08% 4.82% 4.56% 5.09% 4.83% 4.57%
06/11/96 0.000139396 0.000132219 0.000125147 5.09% 4.83% 4.57% 5.09% 4.83% 4.57%
06/12/96 0.000139092 0.000131916 0.000124840 5.08% 4.81% 4.56% 5.08% 4.82% 4.56%
06/13/96 0.000139167 0.000131990 0.000124914 5.08% 4.82% 4.56% 5.08% 4.82% 4.56%
06/14/96 0.000139040 0.000131825 0.000124781 5.07% 4.81% 4.55% 5.08% 4.82% 4.56%
06/15/96 0.000139040 0.000131825 0.000124781 5.07% 4.81% 4.55% 5.08% 4.82% 4.56%
06/16/96 0.000139039 0.000131824 0.000124780 5.07% 4.81% 4.55% 5.08% 4.82% 4.56%
06/17/96 0.000140647 0.000133429 0.000126391 5.13% 4.87% 4.61% 5.09% 4.82% 4.57%
06/18/96 0.000139859 0.000132636 0.000125613 5.10% 4.84% 4.58% 5.09% 4.83% 4.57%
06/19/96 0.000141525 0.000134306 0.000127280 5.17% 4.90% 4.65% 5.10% 4.84% 4.58%
06/20/96 0.000141750 0.000134536 0.000127509 5.17% 4.91% 4.65% 5.11% 4.85% 4.59%
06/21/96 0.000140498 0.000133307 0.000126267 5.13% 4.87% 4.61% 5.12% 4.86% 4.60%
06/22/96 0.000140497 0.000133306 0.000126267 5.13% 4.87% 4.61% 5.13% 4.87% 4.61%
06/23/96 0.000140497 0.000133306 0.000126266 5.13% 4.87% 4.61% 5.14% 4.87% 4.62%
06/24/96 0.000140954 0.000133772 0.000126724 5.14% 4.88% 4.63% 5.14% 4.88% 4.62%
06/25/96 0.000140553 0.000133369 0.000126331 5.13% 4.87% 4.61% 5.14% 4.88% 4.62%
06/26/96 0.000140347 0.000133147 0.000126125 5.12% 4.86% 4.60% 5.14% 4.87% 4.62%
06/27/96 0.000140503 0.000133312 0.000126286 5.13% 4.87% 4.61% 5.13% 4.87% 4.61%
06/28/96 0.000144369 0.000137126 0.000130149 5.27% 5.01% 4.75% 5.15% 4.89% 4.63%
<CAPTION>
HAMILTON PREMIER CLASSIC HAMILTON PREMIER CLASSIC
EFFECTIVE 7 EFFECTIVE 7 EFFECTIVE 7 30 DAY 30 DAY 30 DAY
DATE YIELD 7 DAY YIELD 7 DAY YIELD 7 DAY YIELD YIELD YIELD
- -------- ---------- ------------ ----------- ----------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
06/01/96 0.74% 0.70% 0.66% 0.17% 0.16% 0.15%
06/02/96 1.48% 1.41% 1.33% 0.34% 0.33% 0.31%
06/03/96 2.23% 2.11% 2.00% 0.51% 0.49% 0.46%
06/04/96 2.98% 2.82% 2.67% 0.68% 0.65% 0.62%
06/05/96 3.74% 3.54% 3.35% 0.86% 0.81% 0.77%
06/06/96 4.49% 4.26% 4.03% 1.03% 0.97% 0.92%
06/07/96 5.25% 4.98% 4.71% 1.20% 1.13% 1.07%
06/08/96 5.24% 4.97% 4.70% 1.36% 1.29% 1.23%
06/09/96 5.23% 4.95% 4.68% 1.53% 1.46% 1.38%
06/10/96 5.22% 4.95% 4.68% 1.70% 1.62% 1.53%
06/11/96 5.22% 4.95% 4.67% 1.87% 1.78% 1.68%
06/12/96 5.21% 4.93% 4.66% 2.04% 1.94% 1.83%
06/13/96 5.21% 4.93% 4.66% 2.21% 2.10% 1.99%
06/14/96 5.21% 4.93% 4.66% 2.38% 2.26% 2.14%
06/15/96 5.21% 4.93% 4.66% 2.55% 2.42% 2.29%
06/16/96 5.21% 4.93% 4.66% 2.72% 2.58% 2.44%
06/17/96 5.22% 4.94% 4.67% 2.89% 2.74% 2.60%
06/18/96 5.22% 4.94% 4.67% 3.06% 2.90% 2.75%
06/19/96 5.23% 4.95% 4.69% 3.23% 3.07% 2.90%
06/20/96 5.25% 4.97% 4.70% 3.40% 3.23% 3.06%
06/21/96 5.25% 4.98% 4.71% 3.58% 3.39% 3.21%
06/22/96 5.26% 4.98% 4.72% 3.75% 3.55% 3.37%
06/23/96 5.27% 4.99% 4.72% 3.92% 3.72% 3.52%
06/24/96 5.27% 4.99% 4.73% 4.09% 3.88% 3.67%
06/25/96 5.27% 5.00% 4.73% 4.26% 4.04% 3.83%
06/26/96 5.27% 4.99% 4.72% 4.43% 4.20% 3.98%
06/27/96 5.26% 4.99% 4.72% 4.60% 4.37% 4.13%
06/28/96 5.28% 5.01% 4.74% 5.12% 4.86% 4.60%
</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) 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 9.96 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% - - - 4.34%
05/31/93 10.08 0.044942 0.461106 103.8815 1,047.13 -0.15% 0.75% - - - 4.19%
06/30/93 10.22 0.043774 0.444944 104.3264 1,066.22 1.82% 2.38% - - - 6.09%
07/31/93 10.19 0.045819 0.469103 104.7955 1,067.87 0.15% 1.83% 6.79% 6.25%
08/31/93 10.33 0.045060 0.457126 105.2526 1,087.26 1.82% 3.83% 8.90% 8.18%
09/30/93 10.34 0.043409 0.441868 105.6945 1,092.88 0.52% 2.50% 7.85% 8.74%
10/31/93 10.33 0.043776 0.447911 106.1424 1,096.45 0.33% 2.68% 9.73% 9.09%
11/30/93 10.15 0.042840 0.447994 106.5904 1,081.89 -1.33% -0.49% 8.84% 7.64%
12/31/93 10.12 0.042917 0.023000 0.694285 107.2847 1,085.72 0.35% -0.66% 8.03% 8.03%
- ----------------------------------------------------------------------------------------------------------------------------------
01/31/94 10.22 0.041857 0.439390 107.7241 1,100.94 1.40% 0.41% 7.69% 1.40%
02/28/94 9.93 0.039303 0.426369 108.1505 1,073.93 -2.45% -0.74% 3.33% -1.09%
03/31/94 9.64 0.043760 0.490946 108.6414 1,047.30 -2.48% -3.54% 0.56% -3.54%
04/30/94 9.51 0.042297 0.483197 109.1246 1,037.77 -0.91% -5.74% -1.04% -4.42%
05/31/94 9.45 0.043570 0.503128 109.6277 1,035.98 -0.17% -3.53% -1.06% -4.58%
06/30/94 9.35 0.042415 0.497311 110.1250 1,029.67 -0.61% -1.68% -3.43% -5.16%
07/31/94 9.43 0.041005 0.478863 110.6039 1,042.99 1.29% 0.50% -2.33% -3.94%
08/31/94 9.41 0.040674 0.478077 111.0820 1,045.28 0.22% 0.90% -3.86% -3.72%
09/30/94 9.24 0.041107 0.494183 111.5762 1,030.96 -1.37% 0.13% -5.67% -5.04%
10/31/94 9.18 0.042907 0.521503 112.0977 1,029.06 -0.18% -1.34% -6.15% -5.22%
11/30/94 9.10 0.041370 0.509613 112.6073 1,024.73 -0.42% -1.97% -5.28% -5.62%
12/31/94 9.10 0.043245 0.535132 113.1424 1,029.60 0.48% -0.13% -5.17% -5.17%
- ----------------------------------------------------------------------------------------------------------------------------------
01/31/95 9.20 0.043580 0.535951 113.6784 1,045.84 1.58% 1.63% -5.00% 1.58%
02/28/95 9.36 0.040390 0.490542 114.1689 1,068.62 2.18% 4.28% -0.49% 3.79%
03/31/95 9.37 0.044622 0.543697 114.7126 1,074.86 0.58% 4.40% 2.63% 4.40%
04/30/95 9.45 0.043662 0.530009 115.2426 1,089.04 1.32% 4.13% 4.94% 5.77%
05/31/95 9.74 0.043864 0.518994 115.7616 1,127.52 3.53% 5.51% 8.84% 9.51%
06/30/95 9.75 0.043571 0.517318 116.2789 1,133.72 0.55% 5.48% 10.11% 10.11%
07/31/95 9.68 0.045053 0.541188 116.8201 1,130.82 -0.26% 3.84% 8.42% 9.83%
08/31/95 9.72 0.045151 0.542649 117.3627 1,140.77 0.88% 1.18% 9.14% 10.80%
09/30/95 9.75 0.044625 0.537160 117.8999 1,149.52 0.77% 1.39% 11.50% 11.65%
10/31/95 9.80 0.046131 0.554984 118.4549 1,160.86 0.99% 2.66% 12.81% 12.75%
11/30/95 9.88 0.044648 0.535301 118.9902 1,175.62 1.27% 3.05% 14.72% 14.18%
12/31/95 9.94 0.045420 0.543716 119.5339 1,188.17 1.07% 3.36% 15.40% 15.40%
- ----------------------------------------------------------------------------------------------------------------------------------
01/31/96 9.95 0.045516 0.546805 120.0807 1,194.80 0.56% 2.92% 14.24% 0.56%
02/29/96 9.79 0.045195 0.554346 120.6350 1,181.02 -1.15% 0.46% 10.52% -0.60%
03/31/96 9.70 0.045967 0.571673 121.2067 1,175.70 -0.45% -1.05% 9.38% -1.05%
04/30/96 9.61 0.044940 0.566808 121.7735 1,170.24 -0.46% -2.06% 7.46% -1.51%
05/31/96 9.54 0.045728 0.583696 122.3572 1,167.29 -0.25% -1.16% 3.53% -1.76%
06/30/96 9.60 0.044077 0.561785 122.9190 1,180.02 1.09% 0.37% 4.08% -0.69%
<CAPTION>
======================================================================
Trailing Trailing 3 Yr Total Since Avg. Annual
Date 3 Years Avg.Ann.Rtn. Inception Return
======================================================================
<S> <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 - - - - - - 4.87% 6.79%
05/31/93 - - - - - - 4.71% 5.86%
06/30/93 - - - - - - 6.62% 7.47%
07/31/93 - - - - - - 6.79% 6.96%
08/31/93 - - - - - - 8.73% 8.21%
09/30/93 - - - - - - 9.29% 8.08%
10/31/93 - - - - - - 9.65% 7.79%
11/30/93 - - - - - - 8.19% 6.19%
12/31/93 - - - - - - 8.57% 6.07%
- ------------------------------------------------------------
01/31/94 - - - - - - 10.09% 6.72%
02/28/94 - - - - - - 7.39% 4.69%
03/31/94 - - - - - - 4.73% 2.86%
04/30/94 - - - - - - 3.78% 2.17%
05/31/94 - - - - - - 3.60% 1.97%
06/30/94 - - - - - - 2.97% 1.56%
07/31/94 - - - - - - 4.30% 2.15%
08/31/94 - - - - - - 4.53% 2.17%
09/30/94 - - - - - - 3.10% 1.43%
10/31/94 - - - - - - 2.91% 1.29%
11/30/94 - - - - - - 2.47% 1.06%
12/31/94 - - - - - - 2.96% 1.23%
- ------------------------------------------------------------
01/31/95 - - - - - - 4.58% 1.82%
02/28/95 - - - - - - 6.86% 2.63%
03/31/95 - - - - - - 7.49% 2.77%
04/30/95 - - - - - - 8.90% 3.18%
05/31/95 - - - - - - 12.75% 4.37%
06/30/95 - - - - - - 13.37% 4.44%
07/31/95 - - - - - - 13.08% 4.22%
08/31/95 14.26% 4.54% 14.08% 4.40%
09/30/95 13.44% 4.29% 14.95% 4.53%
10/31/95 16.18% 5.12% 16.09% 4.73%
11/30/95 18.26% 5.75% 17.56% 5.01%
12/31/95 18.22% 5.73% 18.82% 5.21%
- ------------------------------------------------------------
01/31/96 16.87% 5.33% 19.48% 5.25%
02/29/96 13.63% 4.34% 18.10% 4.79%
03/31/96 12.89% 4.12% 17.57% 4.54%
04/30/96 11.59% 3.72% 17.02% 4.31%
05/31/96 11.48% 3.68% 16.73% 4.14%
06/30/96 10.67% 3.43% 18.00% 4.34%
</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>
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%
- --------------------------------------------------------------------------------------------------------------------------------
01/31/96 10.38 0.033527 0.367952 114.2864 1,186.29 0.71% 2.14% 11.21% 0.71%
02/29/96 10.34 0.031274 0.345667 114.6321 1,185.30 -0.08% 1.24% 8.43% 0.63%
03/31/96 10.22 0.033406 0.374697 115.0068 1,175.37 -0.84% -0.22% 6.51% -0.22%
04/30/96 10.17 0.032508 0.367615 115.3744 1,173.36 -0.17% -1.09% 5.87% -0.39%
05/31/96 10.13 0.033666 0.383435 115.7578 1,172.63 -0.06% -1.07% 3.49% -0.45%
06/30/96 10.14 0.032830 0.374786 116.1326 1,177.58 0.42% 0.19% 3.91% -0.03%
<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%
- --------------------------------------------------------------------------------------------
01/31/96 15.92% 5.04% 18.63% 5.03%
02/29/96 13.35% 4.26% 18.53% 4.89%
03/31/96 13.49% 4.30% 17.54% 4.53%
04/30/96 12.51% 4.00% 17.34% 4.38%
05/31/96 12.20% 3.90% 17.26% 4.27%
06/30/96 11.22% 3.60% 17.76% 4.29%
</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)
Date NAV Regular Cap Gain Shares Shares Value 1 Month 3 Months
==========================================================================================================================
<S> <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%
05/31/93 11.01 0.0270 0.250643 102.4571 1,128.05 1.82% 4.90%
06/30/93 11.08 0.0300 0.277411 102.7345 1,138.30 0.91% 1.99%
07/31/93 11.14 0.0200 0.184443 102.9189 1,146.52 0.72% 3.48%
08/31/93 11.41 0.0300 0.270602 103.1895 1,177.39 2.69% 4.37%
09/30/93 11.42 0.0250 0.225896 103.4154 1,181.00 0.31% 3.75%
10/31/93 11.42 0.0200 0.181113 103.5965 1,183.07 0.18% 3.19%
11/30/93 11.13 0.0300 0.279236 103.8757 1,156.14 -2.28% -1.80%
12/31/93 11.30 0.0275 0.0810 0.997391 104.8731 1,185.07 2.50% 0.34%
- --------------------------------------------------------------------------------------------------------------------------------
01/31/94 11.67 0.0200 0.179731 105.0528 1,225.97 3.45% 3.63%
02/28/94 11.42 0.0200 0.183980 105.2368 1,201.80 -1.97% 3.95%
03/31/94 10.87 0.0325 0.314645 105.5514 1,147.34 -4.53% -3.18%
04/30/94 10.77 0.0200 0.196010 105.7474 1,138.90 -0.74% -7.10%
05/31/94 10.90 0.0300 0.291048 106.0384 1,155.82 1.49% -3.83%
06/30/94 10.52 0.0350 0.352789 106.3912 1,119.24 -3.16% -2.45%
07/31/94 10.85 0.0200 0.196113 106.5873 1,156.47 3.33% 1.54%
08/31/94 11.08 0.0300 0.288594 106.8759 1,184.18 2.40% 2.45%
09/30/94 10.84 0.0300 0.295782 107.1717 1,161.74 -1.89% 3.80%
10/31/94 10.95 0.0150 0.146811 107.3185 1,175.14 1.15% 1.61%
11/30/94 10.58 0.0300 0.304306 107.6228 1,138.65 -3.11% -3.84%
12/31/94 10.70 0.0275 0.276601 107.8994 1,154.52 1.39% -0.62%
- --------------------------------------------------------------------------------------------------------------------------------
01/31/95 10.77 0.0200 0.200370 108.0998 1,164.23 0.84% -0.93%
02/28/95 11.06 0.0275 0.268783 108.3686 1,198.56 2.95% 5.26%
03/31/95 11.24 0.0300 0.289240 108.6578 1,221.31 1.90% 5.79%
04/30/95 11.47 0.0150 0.142098 108.7999 1,247.93 2.18% 7.19%
05/31/95 11.70 0.0375 0.348718 109.1486 1,277.04 2.33% 6.55%
06/30/95 11.94 0.0275 0.251389 109.4000 1,306.24 2.29% 6.95%
07/31/95 12.37 0.0200 0.176880 109.5769 1,355.47 3.77% 8.62%
08/31/95 12.29 0.0325 0.289768 109.8667 1,350.26 -0.38% 5.73%
09/30/95 12.66 0.0150 0.130174 109.9969 1,392.56 3.13% 6.61%
10/31/95 12.50 0.0275 0.241993 110.2389 1,377.99 -1.05% 1.66%
11/30/95 12.94 0.0275 0.234279 110.4732 1,429.52 3.74% 5.87%
12/31/95 12.99 0.0375 0.1175 1.318194 111.7914 1,452.17 1.58% 4.28%
- --------------------------------------------------------------------------------------------------------------------------------
01/31/96 13.36 0.0150 0.125514 111.9169 1,495.21 2.96% 8.51%
02/29/96 13.58 0.0200 0.164826 112.0817 1,522.07 1.80% 6.47%
03/31/96 13.70 0.0300 0.245434 112.3271 1,538.88 1.10% 5.97%
04/30/96 13.79 0.0275 0.224003 112.5511 1,552.08 0.86% 3.80%
05/31/96 14.03 0.0200 0.160443 112.7115 1,581.34 1.89% 3.89%
06/30/96 14.01 0.0400 0.321803 113.0333 1,583.60 0.14% 2.91%
<CAPTION>
==================================================================================================
Year Trailing Trailing 3 Yr Total Since Avg.Ann.Rtn.
Date 12 Months to Date 3 Years Avg.Ann.Rtn. Inception Since Inc.
==================================================================================================
<S> <C> <C> <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 -- 4.66% -- -- 10.79% 15.22%
05/31/93 -- 6.56% -- -- 12.81% 16.08%
06/30/93 -- 7.52% -- -- 13.83% 15.66%
07/31/93 14.65% 8.30% -- -- 14.65% 15.05%
08/31/93 18.81% 11.22% -- -- 17.74% 16.65%
09/30/93 16.94% 11.56% -- -- 18.10% 15.68%
10/31/93 16.57% 11.75% -- -- 18.31% 14.68%
11/30/93 10.52% 9.21% -- -- 15.61% 11.72%
12/31/93 11.94% 11.94% -- -- 18.51% 12.95%
- --------------------------------------------------------------------------------------------------
01/31/94 14.49% 3.45% -- -- 22.60% 14.76%
02/28/94 11.76% 1.41% -- -- 20.18% 12.54%
03/31/94 2.80% -3.18% -- -- 14.73% 8.74%
04/30/94 2.80% -3.90% -- -- 13.89% 7.84%
05/31/94 2.46% -2.47% -- -- 15.58% 8.34%
06/30/94 -1.67% -5.55% -- -- 11.92% 6.14%
07/31/94 0.87% -2.41% -- -- 15.65% 7.64%
08/31/94 0.58% -0.08% -- -- 18.42% 8.55%
09/30/94 -1.63% -1.97% -- -- 16.17% 7.25%
10/31/94 -0.67% -0.84% -- -- 17.51% 7.51%
11/30/94 -1.51% -3.92% -- -- 13.87% 5.78%
12/31/94 -2.58% -2.58% -- -- 15.45% 6.18%
- --------------------------------------------------------------------------------------------------
01/31/95 -5.04% 0.84% -- -- 16.42% 6.32%
02/28/95 -0.27% 3.81% -- -- 19.86% 7.34%
03/31/95 6.45% 5.79% -- -- 22.13% 7.86%
04/30/95 9.57% 8.09% -- -- 24.79% 8.47%
05/31/95 10.49% 10.61% -- -- 27.70% 9.10%
06/30/95 16.71% 13.14% -- -- 30.62% 9.68%
07/31/95 17.21% 17.41% -- -- 35.55% 10.76%
08/31/95 14.02% 16.95% 36.25% 10.85% 35.03% 10.31%
09/30/95 19.87% 20.62% 37.89% 11.29% 39.26% 11.11%
10/31/95 17.26% 19.36% 35.77% 10.72% 37.80% 10.44%
11/30/95 25.55% 23.82% 36.65% 10.96% 42.95% 11.40%
12/31/95 25.78% 25.78% 37.17% 11.10% 45.22% 11.62%
- --------------------------------------------------------------------------------------------------
01/31/96 28.43% 2.96% 39.63% 11.76% 49.52% 12.26%
02/29/96 26.99% 4.81% 41.54% 12.25% 52.21% 12.53%
03/31/96 26.00% 5.97% 37.88% 11.28% 53.89% 12.56%
04/30/96 24.37% 6.88% 40.09% 11.87% 55.21% 12.52%
05/31/96 23.83% 8.89% 40.18% 11.89% 58.13% 12.78%
06/30/96 21.23% 9.05% 39.12% 11.61% 58.36% 12.53%
</TABLE>
<PAGE>
BNY HAMILTON INTERMEDIATE
GOVERNMENT FUND
30 DAY SEC YIELD
Income 346,235.19
Net Expenses 52,692.61
Avg. Shares 6,478,014.8400
Share Price 9.90
1.004577138
1.004577138 1.009175226
1.004577138 1.013794360
1.004577138 1.018434637
1.004577138 1.023096153
1.004577138 1.027779005
SEC YIELD 5.56%
<PAGE>
BNY HAMILTON INTERMEDIATE
NEW YORK TAX-EXEMPT FUND
30 DAY SEC YIELD
Income 156,470.82
Net Expenses 28,364.76
Avg. Shares 3,804,117.6670
Share Price 10.42
1.003231826
1.003231826 1.006474097
1.003231826 1.009726846
1.003231826 1.012990107
1.003231826 1.016263915
1.003231826 1.019548303
SEC YIELD 3.91%
<PAGE>
BNY HAMILTON INTERMEDIATE
NEW YORK TAX-EXEMPT FUND
(WITHOUT REIMBURSEMENT)
30 DAY SEC YIELD
Income 156,470.82
Gross Expenses 38,783.54
Avg. Shares 3,804,117.6670
Share Price 10.42
1.002968984
1.002968984 1.005946783
1.002968984 1.008933423
1.002968984 1.011928930
1.002968984 1.014933331
1.002968984 1.017946652
SEC YIELD 3.59%
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.023
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<SERIES>
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<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,065,719
<OTHER-INCOME> 0
<EXPENSES-NET> 313,910
<NET-INVESTMENT-INCOME> 1,751,809
<REALIZED-GAINS-CURRENT> (247,521)
<APPREC-INCREASE-CURRENT> (1,915,002)
<NET-CHANGE-FROM-OPS> (410,714)
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<PER-SHARE-NII> 0.27
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<SERIES>
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<NAME> BNY HAMILTON INT TAX-EXEMPT FUND
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<SERIES>
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<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
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<LEGEND>
BNY HAMILTON MONEY FUND CLASSIC SHARES
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<NAME> BNY HAMILTON MONEY FUND
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
BNY HAMILTON MONEY FUND HAMILTON SHARES
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> BNY HAMILTON MONEY FUND
<S> <C>
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<TABLE> <S> <C>
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<LEGEND>
BNY HAMILTON MONEY FUND PREMIER SHARES
</LEGEND>
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<NAME> BNY HAMILTON MONEY FUND
<S> <C>
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