BNY HAMILTON FUNDS INC, 485BPOS, 1999-04-30

BNY HAMILTON FUNDS INC
485BPOS, 1999-04-30

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<PAGE>

As filed with the Securities and Exchange Commission on April 30, 1999

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. 13 [x]

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [x]

AMENDMENT NO. 16

(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:

Nimish Bhatt John E. Baumgardner, Jr.
3435 Stelzer Road Sullivan & Cromwell
Columbus, Ohio 43219-3035 125 Broad Street
(Name and Address of Agent for Service) New York, New York 10004

Approximate date of proposed public offering: As soon as practicable after the
effective date of this Registration Statement. It is proposed that this filing
will become effective (check appropriate box):

/x/ immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)

/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / on (date) pursuant to paragraph (a)(2), of Rule 485.

If appropriate, check the following box:

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

The Registrant has registered an indefinite number of shares under the
Securities Act of 1933, pursuant to Rule 24f-2 of the Investment Company Act
of 1940. Registrant's Rule 24f-2 Notice for the fiscal year ended December 31,
1998, will be filed with the Commission on or about March 16, 1999.

Total Number of Pages __________

Exhibit Number on Page __________

<PAGE>

BNY
HAMILTON

[GRAPHIC APPEARS HERE]

PROSPECTUS

MONEY MARKET FUNDS--

HAMILTON SHARES

As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or said whether the information in this
prospectus is adequate and accurate. Anyone who indicates otherwise is
committing a crime.

o MONEY FUND

o TREASURY MONEY FUND

APRIL 30, 1999

BNY

HAMILTON

Funds

<PAGE>

ABOUT THE FUNDS

4 BNY Hamilton Money Fund

8 BNY Hamilton Treasury Money Fund

ACCOUNT POLICIES

12 Daily NAV Calculation

12 Distributions and Tax Considerations

14 Investment Adviser

14 Portfolio Manager

14 Year 2000 (Y2K) Compliance

For More Information
Back Cover

<PAGE>

AN INTRODUCTION TO BNY HAMILTON FUNDS

The BNY Hamilton Funds aim for high returns with consistent performance over
many market cycles.

The BNY Hamilton Money Funds are designed for investors who seek stability of
principal. They are a valuable component of most portfolios and well-suited for
investing money that may be needed in the near future. The funds take extra
measures to provide for safety and liquidity, including:

o avoiding investing in split-rated securities--securities that are rated
higher by one rating agency than another

o limiting the average dollar-weighted maturity of their portfolios to 60
days rather than the 90 days permitted.

Risks of mutual fund investing

Investments in mutual funds are not bank deposits, nor are they guaranteed by
the Federal Deposit Insurance Corporation or any other government agency. It is
important to read all the disclosure information provided and to understand that
you could lose money by investing in any of these funds.

<PAGE>

MONEY FUND

[GRAPHIC APPEARS HERE]

CUSIP Number:
Hamilton Shares
05561M101

Investment Objective

The Fund seeks as high a level of current income as is consistent with
preservation of capital and maintenance of liquidity by investing principally in
high-quality money market instruments.

Portfolio Management Strategy

The Fund seeks to maintain a stable $1 share price and invests exclusively in
debt securities within the highest short-term credit rating categories and their
unrated equivalents. The maximum allowable maturity for any individual holding
is 397 days, and the Fund maintains an average dollar-weighted maturity of 90
days or less. The Fund may invest in debt securities that meet these criteria
and are issued by U.S. and foreign issuers, including:

o corporations

o banks

o governments

o U.S. agencies, states, and municipalities

The Fund may also invest in money market securities issued by multinational
organizations such as the World Bank.

The Fund's investments are diversified through broad exposure to fixed- and
variable-rate securities across issuers and sectors. The Fund also invests in
repurchase agreements, which are contracts to sell and buy back a given security
at a specific time and price, to enhance yields.

4 BNY Hamilton Money Fund
<PAGE>

Main Investment Risks

The value of money market securities is most affected by short-term interest
rates. An extreme rise in short-term interest rates could substantially decrease
the value of the Fund's investments and jeopardize its $1 share price.

The portfolio manager's investment strategies may not work out as planned, and
the Fund could underperform its peers. Any of the money market securities held
by the Fund could be downgraded in credit rating below minimum standards or go
into default. An investment in the Fund is not insured or guaranteed by the FDIC
or any other government agency. Although the Fund seeks to preserve the value of
your investment at $1 per share, it is possible to lose money by investing in
the Fund.

Money Funds and the AAAm/Aaa Rating

All money market funds that utilize amortized costs must comply with the SEC's
Rule 2a-7, which covers diversification standards, credit quality restrictions,
and maturity limits for individual securities and the portfolio as a whole.

In order to obtain the AAAm/Aaa rating from Standard & Poor's and Moody's, money
market funds observe additional, more conservative investment guidelines. First,
the fund's weighted average maturity may not exceed 60 days. In addition --

To obtain Standard & Poor's AAAm:

o Investments must have a minimum rating of A-1.

o Fifty percent of the fund's assets must be invested in securities with the
highest short-term credit rating--A-1+.

To obtain Moody's Aaa rating:

o Investments must have Moody's highest short-term credit rating--P-1.

Hamilton Money Fund

BNY Hamilton Money Fund 5

<PAGE>

Past Performance

The following chart demonstrates the risk of investing in the Fund by showing
the year-to-year returns and pattern of price volatility . Returns for the
Fund's single best and single worst quarters suggest how widely performance has
varied over the short term. Past performance does not guarantee future
performance.

Annual total returns (%) as of 12/31/98(1)

[GRAPHIC APPEARS HERE]

3.03 4.02 5.84 5.30 5.47 5.41

93 94 95 96 97 98

Best quarter: Q2 '95 +1.46 Worst quarter: Q3 '93 +0.73

The table below presents the Fund's average annual returns over various
periods.

Average annual total returns (%) as of 12/31/98*

Life

1 Year 5 Years of fund

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

Hamilton Shares(1) 5.41 5.20 4.73

* Assumptions: $1,000 initial investment with all dividends and distributions
reinvested.

Fees and Expenses

The table below outlines the fees and expenses you could expect as an investor
in the Fund. "Annual Operating Expenses" come out of fund assets, and are
reflected in the total return. Since these funds are "no-load," shareholders pay
no fees or out of pocket expenses.

Fee table (% of average net assets)

Hamilton
Shares

------

Shareholder Fees None

Annual Operating Expenses

Management fee 0.10
Servicing fee None
Other expenses 0.16

Total annual operating expenses 0.26

The table below shows the anticipated expenses on a $10,000 investment in the
Fund over various periods. All mutual funds present this information so that you
can make comparisons. Your actual costs could be higher or lower than this
example.

Expenses on a $10,000 investment* ($)

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------

Hamilton Shares 27 84 146 331

* Assumptions: $10,000 original investment, all dividends and distributions
reinvested, 5% annual returns and no change in operating expenses.

(1) Hamilton Shares commenced operations on 8/7/92.

6 BNY Hamilton Money Fund

<PAGE>

Financial Highlights

The financial highlights table is intended to help you understand the Fund's
financial performance over the past five years (or since inception). Certain
information reflects financial results for a single fund share. The total
returns in the table represent the rate that an investor would have earned (or
lost) on an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by KPMG LLP*, whose report,
along with the Fund's financial statement, is included in the annual report,
which is available upon request.

Year Ended December 31, 1998 1997 1996 1995 1994
Per-Share Data ($)

- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period 1.00 1.00 1.00 1.00 1.00

-----------------------------------------------------
Income from investment operations:

Net investment income 0.053 0.053 0.052 0.057 0.040
Less distributions:
Dividends from net investment income (0.053) (0.053) (0.052) (0.057) (0.040)
-----------------------------------------------------
Net asset value at end of period 1.00 1.00 1.00 1.00 1.00
-----------------------------------------------------

Total return 5.41 5.47 5.30 5.84 4.02

Ratios/Supplemental Data (%)

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

Net assets, end of period ($ x 1,000) 1,439,525 1,063,579 609,424 604,053 235,220
Ratio of expenses (after reduction) to average net assets 0.26 0.25 0.27 0.26 0.30
Ratio of expenses (before reduction) to average net assets 0.26 0.25 0.27 0.26 0.32
Ratio of net investment income (after reduction) to average net assets 5.25 5.34 5.17 5.67 3.92

</TABLE>

* KPMG LLP, has audited the figures for 1997 and 1998.

Previous years' data were audited by Deloitte & Touch LLP.

BNY Hamilton Money Fund 7

<PAGE>

TREASURY MONEY FUND

[GRAPHIC APPEARS HERE]

CUSIP Number:
Hamilton Shares
05561M705

Investment Objective

The Fund seeks 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 U.S. Treasury and repurchase agreements fully
collateralized by obligations of the U.S. Treasury.

Management Strategy

The Fund seeks to maintain a stable $1 share price and invests exclusively in
securities backed by the full faith and credit of the U.S. government. These

securities include:

o Treasury bills

o Treasury notes

o Treasury bonds

o repurchase agreements fully collateralized by U.S. Treasury obligations

The maximum allowable maturity for any individual security is 397 days, and the
Fund maintains an average dollar-weighted maturity of 90 days or less.

In investing the Fund's assets, the portfolio manager seeks to take advantage of
the dynamics of short-term interest rates by actively managing the Fund's
average weighted maturity. The Fund may invest in repurchase agreements, which
are contracts to sell and buy back a given security at a specific time and
price, to enhance yields.

8 BNY Hamilton Treasury Money Fund

<PAGE>

Main Investment Risks

Since the fund invests only in U.S. Treasury obligations and repurchase
agreements based on them, its yield may lag other money market funds that invest
in higher-yielding securities with some credit risk. The portfolio manager's
investment strategies may not work out as planned, and the Fund could
underperform its peers.

An investment in the Fund is not insured or guaranteed by the FDIC or any other
government agency. Although the Fund seeks to preserve the value of your
investment at $1 per share, it is possible to lose money by investing in the
Fund.

Money Funds and the AAAm/Aaa Rating

In order to obtain the AAAm/Aaa rating from Standard & Poor's and Moody's, money
market funds observe additional, more conservative investment guidelines. U.S.
Treasury obligations automatically meet the most stringent credit quality
requirements. In addition, the fund's weighted average maturity may not exceed
60 days.

BNY Hamilton Treasury Money Fund 9

<PAGE>

Past Performance

Annual total returns (%) as of 12/31/98(1)

[GRAPHIC APPEARS HERE]

5.25

Best quarter: Q3 '97 +1.34 Worst quarter: Q4 '98 +1.19

The table below presents the Fund's average annual returns over various
periods.

Average annual total returns (%) as of 12/31/98*

Life
1 Year of fund

Hamilton Shares(1) 5.25 5.30

* Assumptions: $1,000 initial investment with all dividends and distributions
reinvested.

Fees and Expenses

Fee table (% of average net assets)

Hamilton
Shares

------

Shareholder Fees None

Annual Operating Expenses

Management fee 0.10
Servicing fee None
Other expenses 0.17
Total annual operating expenses 0.27

Expenses on a $10,000 investment* ($)

1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------
Hamilton Shares 28 87 152 344

* Assumptions: $10,000 original investment, all dividends and distributions
reinvested, 5% annual returns and no change in operating expenses.

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

Hamilton Shares commenced operations on 4/1/97.

10 BNY Hamilton Treasury Money Fund

<PAGE>

Financial Highlights

The financial highlights table is intended to help you understand the Fund's
financial performance over the past five years (or since inception). Certain
information reflects financial results for a single fund share. The total
returns in the table represent the rate that an investor would have earned (or
lost) on an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by KPMG LLP, whose report,
along with the Fund's financial statement, is included in the annual report,
which is available upon request.

Year Ended December 31, 1998 1997(1)

Per-Share Data ($)

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

<S> <C> <C>
Net asset value at beginning of period 1.00 1.00
------------------------------------------------
Income from investment operations:

Net investment income 0.051 0.040
Less distributions:
Dividends from net investment income (0.051) (0.040)
------------------------------------------------
Net asset value at end of period 1.00 1.00
- -------------------------------------------------------------------------------------------------
Total return (%) 5.25 4.02(2)

Ratios/Supplemental Data (%)

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

Net assets, end of period ($ x 1,000) 201,363 110,719
Ratio of expenses (after reduction) to average net assets 0.27 0.25(3)
Ratio of expenses (before reduction) to average net assets 0.28 0.33(3)
Ratio of net investment income (after reduction) to average net assets 5.09 5.29(3)

</TABLE>

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

1. Hamilton Shares commenced operations on 4/1/97.
2. Not annualized.

3. Annualized.

BNY Hamilton Treasury Money Fund 11

<PAGE>

Account Policies

Daily NAV Calculation

Each fund calculates its net asset value per share (NAV) at 4:30 p.m. eastern
time each business day (Monday through Friday), though they may not do so on a
day when no purchase or redemption orders are received. A business day is a day
on which the New York Stock Exchange is open and any other day during which
trading in the funds' portfolio securities could materially affect the fund's
NAV. The funds use the amortized cost method to value their securities;
dividends and expenses accrue daily.

Purchase orders received before the regular close of the New York Stock Exchange
will be executed at the offering price calculated at that day's close.

Wire Order Processing

Wire order processing services for direct investors will be provided by the
transfer agent. Shareholder organizations will provide similar services for
their customers.

Monthly Statements

Shareholders receive monthly statements, reflecting all account activity,
including dividends reinvested in additional shares or credited as cash.
Shareholders will also receive confirmations of each purchase, exchange or
redemption.

Distributions and Tax Considerations

Net investment income for Hamilton Shares of each fund will be determined
immediately before calculation of NAV each business day. Hamilton Shares will
begin earning dividends on the first business day their purchase is effective.

Net investment income for Hamilton Shares of each fund will be declared as
dividends daily and paid monthly within five business days after the end of the
month. Dividends and distributions will be payable to shareholders of record at
the time of declaration. Each fund automatically pays distributions in the form
of additional fund shares. Notify the transfer agent in writing to:

o choose to receive distributions in cash

o change your options

Your tax liability is the same either way. If you choose to receive
distributions in cash, and the checks are either returned as undeliverable or
left uncashed for six months, your future distributions will be reinvested in
your fund, and uncashed checks will be cancelled and reinvested at the fund's
share price as of the day of cancellation.

The funds do not expect to realize long-term capital gains or losses.
Distributions from the funds are expected to be primarily ordinary income from
dividends.

The funds issue detailed annual tax information statements for each investor,
recording all distributions and redemptions for the preceding year. Any
investors who do not provide a valid Social Security or taxpayer identification
number to the funds may be subject to federal backup withholding tax and charges
against their accounts related to fines.

You should consult your tax adviser about your own particular tax situation.

12 Account Policies

<PAGE>

Purchasing and Redeeming Hamilton Shares

Minimum investment requirements

Initial investment

$1,000,000

Clients of the Bank of New York and other institutions that have entered into an
agreement with the adviser may purchase and redeem shares of these funds. You
should contact your financial institution for detailed instructions and
additional policies.

Fund shares are redeemed at the next NAV per share calculated after the transfer
agent receives the purchase order. The funds do not impose any fee for direct
purchase or redemption orders, but broker-dealers may charge a fee for these
services. Payments must be in U.S. dollars. Purchases made by check will not be
redeemed until the purchase check clears, which may take up to ten business
days.

Investors are entitled to purchase, exchange or redeem shares by telephone at no
charge. Telephone privileges are not available for ten days following a change
of address. You must notify the transfer agent in writing if you want to disable
telephone transactions.

The funds do not issue share certificates.

Redemption proceeds are normally wired to the redeeming shareholder on the same
business day, if the order is received before the close of business. In order
for the adviser to manage each fund most effectively, investors are urged to
initiate redemptions early in the day, if possible, and to notify the transfer
agent at least one day in advance for redemptions of more than $5 million.

Reserved rights The funds reserve the following rights:

o To suspend sale of shares to the public

o To reject any exchange request and to modify or terminate exchange privileges

o To delay wiring redemption proceeds for up to seven days, if the adviser
believes an earlier payment could adversely affect a fund

o To suspend the right of redemption

Exchange minimums You may exchange shares between the funds in this prospectus
and any other BNY Hamilton fund. An exchange for Investor Shares of any other
BNY Hamilton fund must have a value of at least $500. If you will be investing
in a new fund, you must also exchange enough shares to meet the minimum balance
requirement.

To make an exchange for Institutional Shares of any other BNY Hamilton fund,
contact your Bank of New York representative.

From the perspective of tax liability, an exchange is the same as a redemption
from one fund and purchase of another, meaning that you are likely to generate a
capital gain or loss when you make an exchange.

Signature guarantees You can get a signature guarantee from many brokers and
from some banks, savings institutions and credit unions. A notary public cannot
provide a signature guarantee.

Account Policies 13

<PAGE>

Investment Adviser

The investment adviser of these funds is The Bank of New York, located at One
Wall Street, New York, NY 10286. Founded by Alexander Hamilton in 1784 , it is
one of the largest commercial banks in the United States, with over $66.6
billion in assets. The Bank of New York began offering investment services in
the 1830s and today manages more than $48.4 billion in investments for
institutions and individuals.

Adviser compensation The adviser is responsible for all business activities and
investment decisions for the funds. In return for these services, each fund pays
the adviser an annual fee. The adviser's fee accrues daily and is payable
monthly at an annual rate of 0.10% of average daily net assets.

Portfolio Manager

BNY Hamilton Money Fund and BNY Hamilton Treasury Money Fund Richard Klingman is
a vice president of the adviser and has managed the funds since 1997. He joined
the adviser in 1996 and has been managing assets since 1990.

Year 2000 (Y2K) Compliance

The Year 2000, or Y2K, problem refers to the inability of many computer systems
to distinguish the year 2000 from the year 1900. The funds' operations, and
therefore their shareholders, could be adversely affected if the computer
systems used by the funds, their service providers and other entities with
computer systems linked to the funds do not properly recognize and process
January 1, 2000 and later dates. The Bank of New York has worked actively to
avoid the Y2K problem on its own software systems, and it is obtaining
assurances from its outside service providers that they are taking similar
steps. It is not certain, however, that these actions will be adequate to
prevent these problems from adversely impacting the funds or their shareholders.
Furthermore, the net asset value of the funds may decline due to the Y2K
problem's effect on foreign or U.S. issuers of securities held by the fund or
securities markets generally.

14 Account Policies

<PAGE>

NOTES

<PAGE>

For More Information

Annual and Semi-Annual Reports These include commentary from the fund manager on
the market conditions and investment strategies that significantly affected each
fund's performance, detailed performance data, a complete inventory of the
funds' securities and a report from the funds' auditor.

Statement of Additional Information (SAI) The SAI contains more detailed
disclosure on features and policies of the funds. A current SAI has been filed
with the Securities and Exchange Commission and is incorporated by reference
into this document (that is, it is legally a part of this prospectus).

You can obtain these documents free of charge, make inquiries or request other
information about the funds by contacting your dealer or:

BNY Hamilton Funds
P.O. Box 163310
Columbus, OH 43216-3310

800-426-9363 (800-4BNY-FND)

Information is also available from the SEC:

Securities and Exchange Commission
Public Reference Section
Washington, DC 20549-6009
www.sec.gov

For information on the operation of the SEC's public reference room, where
documents may be viewed and copied, call:

1-800-SEC-0330

Note: The SEC requires a duplicating fee for paper copies.

SEC File Number: 811-6654

BNY
HAMILTON

FUNDS

<PAGE>

BNY
HAMILTON

[GRAPHIC]

PROSPECTUS

MONEY MARKET FUNDS--

HAMILTON PREMIER SHARES

o MONEY FUND

o TREASURY MONEY FUND

April 30, 1999

BNY
HAMILTON

FUNDS

<PAGE>

ABOUT THE FUNDS

4 BNY Hamilton Money Fund

8 BNY Hamilton Treasury Money Fund

SERVICES PROVIDED

12 Services Provided

ACCOUNT POLICIES

13 Daily NAV Calculation

13 Distributions and Tax Considerations

15 Investment Adviser

15 Portfolio Manager

15 Year 2000 (Y2K) Compliance

FOR MORE INFORMATION

Back Cover

<PAGE>

AN INTRODUCTION TO BNY HAMILTON FUNDS

The BNY Hamilton Funds aim for high returns with consistent performance over
many market cycles.

o avoiding investing in split-rated securities--securities that are rated
higher by one rating agency than another

o limiting the average dollar-weighted maturity of their portfolios to 60
days rather than the 90 days permitted.

RISKS OF MUTUAL FUND INVESTING

<PAGE>

MONEY FUND

[GRAPHIC]

CUSIP Number:

Hamilton Premier Shares
05561M507

Investment Objective

The Fund seeks as high a level of current income as is consistent with
preservation of capital and maintenance of liquidity by investing principally in
high-quality money market instruments.

Portfolio Management Strategy

o corporations

o banks

o governments

o U.S. agencies, states, and municipalities

The Fund may also invest in money market securities issued by multinational
organizations such as the World Bank.

4 BNY Hamilton Money Fund

<PAGE>

MAIN INVESTMENT RISKS

Money Funds and the AAAm/Aaa Rating

To obtain Standard & Poor's AAAm:

o Investments must have a minimum rating of A-1.

o Fifty percent of the fund's assets must be invested in securities with the
highest short-term credit rating--A-1+.

To obtain Moody's Aaa rating:

o Investments must have Moody's highest short-term credit rating--P-1.

BNY Hamilton Money Fund 5

<PAGE>

PAST PERFORMANCE

Annual total returns (%) as of 12/31/98(1)

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

5.54 5.03 5.19 5.14
- ----------------------------------------------------

95 96 97 98

Best quarter: Q2 '95 +1.39 Worst quarter: Q4 '94 +1.15

The table below presents the Fund's average annual returns over various
periods.

Average annual total returns (%) as of 12/31/98 *

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

Life
1 Year of fund

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

Hamilton Premier Shares(1) 5.14 5.16

* Assumptions: $1,000 initial investment with all dividends and distributions
reinvested.

FEES AND EXPENSES

The table below outlines the fees and expenses you could expect as an investor
in the Fund. "Annual Operating Expenses" come out of Fund assets, and are
reflected in the total return. Since these funds are "no-load," shareholders pay
no fees or out of pocket expenses.

Fee table (% of average net assets)

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

Hamilton
Premier

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

Shareholder Fees None

Annual Operating Expenses

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

Management fee 0.10
Servicing fee 0.25
Other expenses 0.16

Total annual operating expenses 0.51

Expenses on a $10,000 investment* ($)

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

1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------

Hamilton Premier

Shares 52 164 286 642

* Assumptions: $10,000 original investment, all dividends and distributions
reinvested, 5% annual returns and no change in operating expenses.

- -------------------------------------------------------------------------------
(1) Hamilton Premier Shares commenced operations on 8/15/94.

6 BNY Hamilton Money Fund
<PAGE>

FINANCIAL HIGHLIGHTS

Year Ended December 31, 1998 1997 1996 1995 1994(1)
- ----------------------------------------------------------------------------------------------------------------------

Per-Share Data ($)

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

<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period 1.00 1.00 1.00 1.00 1.00

----------------------------------------------------------
Income from investment operations:

Net investment income 0.050 0.051 0.049 0.054 0.017
Less dividends:
Dividends from net investment income (0.050) (0.051) (0.049) (0.054) (0.017)
----------------------------------------------------------
Net asset value at end of period 1.00 1.00 1.00 1.00 1.00
----------------------------------------------------------

Total return (%) 5.14 5.19 5.03 5.54 1.69(2)

Ratios/Supplemental Data (%)

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

Net assets, end of period ($ x 1,000) 1,064,645 688,339 463,759 340,163 107,799
Ratio of actual operating expenses to average net assets 0.51 0.51 0.53 0.54 0.61(3)
Ratio of net investment income to average net assets 5.01 5.09 4.91 5.40 4.40(3)

</TABLE>

* KPMG LLP, has audited the figures for 1997 and 1998. Previous years' data
were audited by Deloitte & Touche LLP.

(1) Hamilton Premier Shares commenced operations on 8/15/94.

(2) Not annualized.

(3) Annualized.

BNY Hamilton Money Fund 7

<PAGE>

TREASURY MONEY FUND

CUSIP Number:

Hamilton Premier Shares
05561M804

Investment Objective

Management Strategy

The Fund seeks to maintain a stable $1 share price and invests exclusively in
securities backed by the full faith and credit of the U.S. government. These

securities include:

o Treasury bills

o Treasury notes

o Treasury bonds

o repurchase agreements fully collateralized by U.S. Treasury obligation.

The maximum allowable maturity for any individual security is 397 days, and the
Fund maintains an average dollar-weighted maturity of 90 days or less.

8 BNY Hamilton Treasury Money Fund

<PAGE>

MAIN INVESTMENT RISKS

Money Funds and the AAAm/Aaa Rating

BNY Hamilton Treasury Money Fund 9

<PAGE>

PAST PERFORMANCE

Annual total returns (%) as of 12/31/98(1)

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

4.99

- -----------------------------------------------------
98

Best quarter: Q4 '97 +1.28 Worst quarter: Q4 '98 +1.13

The table below presents the Fund's average annual returns over various
periods.

Average annual total returns (%) as of 12/31/98*

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

Life
1 Year of fund

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

Hamilton Premier Shares(1) 4.99 5.04

* Assumptions: $1,000 initial investment with all dividends and distributions
reinvested.

FEES AND EXPENSES

Fee table (% of average net assets)

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

Hamilton
Premier

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

Shareholder Fees None

Annual Operating Expenses

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

Management fee 0.10
Servicing fee 0.25
Other expenses 0.17

Total annual operating expenses 0.52

Expenses on a $10,000 investment* ($)

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

1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------

Hamilton Premier

Shares 53 167 291 654

* Assumptions: $10,000 original investment, all dividends and distributions
reinvested, 5% annual returns and no change in operating expenses.

- -------------------------------------------------------------------------------
(1) Hamilton Premier Shares commenced operations on 4/1/97.

10 BNY Hamilton Treasury Money Fund

<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the Fund's
financial performance over the past five years (or since inception). Certain
information reflects financial results for a single fund share. The total
returns in the table represent the rate that an investor would have earned (or
lost) on an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by KPMG LLP, whose report,
along with the Fund's financial statement, is included in the annual report,
which is available upon request.

Year Ended December 31, 1998 1997(1)
- ----------------------------------------------------------------------------------------------------

<S> <C> <C>
Per-Share Data ($)

Net asset valueat beginning of period 1.00 1.00

----------------------------
Income from investment operations:

Net investment income 0.049 0.038
Less distributions:
Dividends from net investment income (0.049) (0.038)
----------------------------
Net asset value at end of period 1.00 1.00
----------------------------

Total return (%) 4.99 3.83(2)

Ratios/Supplemental Data (%)

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

Net assets, end of period ($ x 1,000) 520,492 183,895
Ratio of expenses (after reduction) to average net assets 0.52 0.50(3)
Ratio of expenses (before reduction) to average net assets 0.53 0.56(3)
Ratio of net investment income (after reduction) to average net assets 4.82 5.06(3)

</TABLE>

- --------------------------------------------------------------------------------
(1) Hamilton Premier Shares commenced operations on 4/1/97.
(2) Not annualized.

(3) Annualized.

BNY Hamilton Treasury Money Fund11

<PAGE>

SERVICES PROVIDED

SHAREHOLDER SERVICING PLANS

The adviser has entered into servicing agreements with certain institutions
(shareholder organizations) that invest in Hamilton Premier Shares of these
funds for their customers. Under these agreements, the institutions provide
support services to their customers, and the funds, in turn, pay the
institutions 0.25% (annualized) of the average daily NAV of their customers'
Hamilton Premier Shares.

Services that the shareholder organizations are responsible for providing to
their customers include the following:

o aggregating and processing customer purchase and redemption orders, then
placing net purchase and redemption orders with the distributor

o providing automatic reinvestment of customers' cash balances in other
investment accounts in Hamilton Premier Shares, if requested

o processing customers' dividend payments

o providing periodic statements to their customers

o arranging for bank wires

o providing adequate customer support facilities

o performing all necessary sub-accounting

o forwarding shareholder communications from the funds

Some shareholder organizations may charge their customers additional fees for
their services connected with investments in these funds. If so, they are
required to disclose them. Their customers should read this prospectus along
with the terms governing their accounts.

Fee waivers The funds' service providers normally pay all expenses in connection
with the performance of their services, while each fund pays its own operating
expenses. During the course of the funds' fiscal year, the administrator and/or
adviser may voluntarily reduce their fees or pay certain fund expenses. This
will have the effect of increasing investors' yields. But the adviser and/or
administrator may still be reimbursed by the funds before the end of the fiscal
year. If so, investors' yields will then decrease correspondingly.

WIRE ORDER PROCESSING

Wire order processing services for direct investors will be provided by the
transfer agent. Shareholder organizations will provide similar services for
their customers.

MONTHLY STATEMENTS

SWEEP FACILITY FOR AUTOMATIC REINVESTMENT

Accounts are automatically "swept" each day, and amounts above a pre-arranged
minimum balance are invested in Hamilton Premier Shares of the funds. Further
information on the sweep facility is available from the adviser or from your
shareholder organization.

12 Services Provided

<PAGE>

ACCOUNT POLICIES

DAILY NAV CALCULATION

Each fund calculates its net asset value per share (NAV) at 4:30 p.m eastern
time each business day (Monday through Friday), though they may not do so on a
day when no purchase or redemption orders are received. A business day is a day
on which the New York Stock Exchange is open and any other day during which
trading in the funds' portfolio securities could materially affect the funds'
NAV. The funds use the amortized cost method to value their securities.

Dividends and expenses accrue daily.

Purchase orders received before the regular close of the New York Stock Exchange
will be executed at the offering price calculated at that day's close.

DISTRIBUTIONS AND TAX

CONSIDERATIONS

Net investment income for Hamilton Premier Shares of each fund will be
determined immediately before calculation of NAV each business day. Hamilton
Premier Shares will begin earning dividends on the first business day their
purchase is effective.

Net investment income for Hamilton Premier Shares of each fund will be declared
as dividends daily and paid monthly within five business days after the end of
the month. Dividends and distributions will be payable to shareholders of record
at the time of declaration. Each fund automatically pays distributions in the
form of additional fund shares. Notify the transfer agent in writing to:

o choose to receive distributions in cash

o change the way you currently receive distributions

Your taxable income is the same either way. If you choose to receive
distributions in cash, and the checks are either returned as undeliverable or
left uncashed for six months, your future distributions will be reinvested in
your fund, and uncashed checks will be cancelled and reinvested at the fund's
share price as of the day of cancellation.

The funds do not expect to realize long-term capital gains or losses.
Distributions from the funds are expected to be primarily ordinary income from
dividends.

You should consult your tax adviser about your own particular tax situation.

Account Policies 13

<PAGE>

PURCHASING AND REDEEMING
PREMIER SHARES

Minimum investment requirements

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

Initial investment

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

$500,000

The funds do not issue share certificates.

Reserved rights The funds reserve the following rights:

o To suspend sale of shares to the public

o To reject any exchange request and to modify or terminate exchange
privileges

o To delay wiring redemption proceeds for up to seven days, if the adviser
believes an earlier payment could adversely affect a fund

o To suspend the right of redemption

To make an exchange for Institutional Shares of any other BNY Hamilton fund,
contact your Bank of New York representative.

Signature guarantees You can get a signature guarantee from many brokers and
from some banks, savings institutions and credit unions. A notary public cannot
provide a signature guarantee.

14 Account Policies

<PAGE>

INVESTMENT ADVISER

PORTFOLIO MANAGER

YEAR 2000 (Y2K) COMPLIANCE

Account Policies 15

<PAGE>

FOR MORE INFORMATION

You can obtain these documents free of charge, make inquiries or request other
information about the funds by contacting your dealer or:

BNY Hamilton Funds
P.O. Box 163310
Columbus, OH 43216-3310

800-426-9363 (800-4BNY-FND)

Information is also available from the SEC:

Securities and Exchange Commission
Public Reference Section
Washington, DC 20549-6009
www.sec.gov

For information on the operation of the SEC's public reference room, where
documents may be viewed and copied, call:

1-800-SEC-0330

Note: The SEC requires a duplicating fee for
paper copies.

SEC File Number: 811-6654

BNY

HAMILTON

FUNDS

BNY- 0088 4/99

<PAGE>

BNY HAMILTON

PROSPECTUS

MONEY MARKET FUNDS--

HAMILTON CLASSIC SHARES

/ / MONEY FUND

/ / TREASURY MONEY FUND

APRIL 30, 1999

BNY
HAMILTON

FUNDS

<PAGE>

ABOUT THE FUNDS

4 BNY Hamilton Money Fund

8 BNY Hamilton Treasury Money Fund

SERVICES PROVIDED

12 Services Provided

ACCOUNT POLICIES

13 Daily NAV Calculation

13 Distribution (12b-1) Plan

14 Opening an Account/Purchasing Shares

16 Making Exchanges/Redeeming Shares

17 Distributions and Tax Considerations

18 Investment Adviser

18 Portfolio Manager

18 Year 2000 (Y2K) Compliance

For More Information
Back Cover

<PAGE>

AN INTRODUCTION TO BNY HAMILTON FUNDS

The BNY Hamilton Funds aim for high returns with consistent performance over
many market cycles.

o avoiding investing in split-rated securities--securities that are rated
higher by one rating agency than another

o limiting the average dollar-weighted maturity of their portfolios to 60 days
rather than the 90 days permitted.

RISKS OF MUTUAL FUND INVESTING

<PAGE>

MONEY FUND

CUSIP Number: [GRAPHIC]
Hamilton Classic Shares

05561M606

INVESTMENT OBJECTIVE

The Fund seeks as high a level of current income as is consistent with
preservation of capital and maintenance of liquidity by investing principally in
high-quality money market instruments.

PORTFOLIO MANAGEMENT STRATEGY

o corporations

o banks

o governments

o U.S. agencies, states, and municipalities

The Fund may also invest in money market securities issued by multinational
organizations such as the World Bank.

4 BNY Hamilton Money Fund
<PAGE>

MAIN INVESTMENT RISKS

Money Funds and the AAAm/Aaa Rating

To obtain Standard & Poor's AAAm:

o Investments must have a minimum rating of A-1.

o Fifty percent of the fund's assets must be invested in securities with the
highest short-term credit rating--A-1+.

To obtain Moody's Aaa rating:

o Investments must have Moody's highest short-term credit rating--P-1.

BNY Hamilton Money Fund 5

<PAGE>

PAST PERFORMANCE

Annual total returns (%) as of 12/31/98(1)

4.73 4.80 4.81

96 97 98

Best quarter: Q3 '98 +1.22 Worst quarter: Q1 '97 +1.11

The table below presents the Fund's average annual returns over various
periods.

Average annual total returns (%) as of 12/31/98*

Life
1 Year of fund

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

Hamilton Classic Shares(1) 4.81 4.79

* Assumptions: $1,000 initial investment with all dividends and distributions
reinvested.

FEES AND EXPENSES

Fee table (% of average net assets)

Hamilton
Classic
Shares

--------

Shareholder Fees None

Annual Operating Expenses

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

Management fee 0.10
Distribution (12b-1) fees 0.25
Servicing fee 0.25
Other expenses 0.23

Total annual operating expenses 0.83

Expenses on a $10,000 investment* ($)

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------

Hamilton Classic

Shares 85 266 462 1,029

* Assumptions: $10,000 original investment, all dividends and distributions
reinvested, 5% annual returns and no change in operating expenses.

- ----------
(1) Hamilton Classic Shares commenced operations on 12/4/95.

6 BNY Hamilton Money Fund
<PAGE>

FINANCIAL HIGHLIGHTS

Year Ended December 31, 1998 1997 1996 1995(1)
- ----------------------- ---- ---- ---- -------
Per-Share Data ($)

Net asset value at beginning of period 1.00 1.00 1.00 1.00
--------------------------------------
Income from investment operations:

Net investment income 0.047 0.047 0.046 0.004

Less distributions:

Dividends from net investment income (0.047) (0.047) (0.046) (0.004)
---------------------------------------
Net asset value at end of period 1.00 1.00 1.00 1.00
---------------------------------------

Total return (%) 4.81 4.80 4.73 0.40(2)

Ratios/Supplemental Data (%)

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

Net assets, end of period ($ x 1,000) 19,995 16,725 13,478 3,098

Ratio of expenses to average net assets 0.83 0.88 0.82 0.76(3)

Ratio of net investment income to average net assets 4.70 4.71 4.67 5.18(3)

</TABLE>

* KPMG LLP has audited the figures for 1997 and 1998. Previous years' data were
audited by Deloitte & Touche LLP.

- ----------
(1) Hamilton Classic Shares commenced operations on 12/4/95.
(2) Not annualized.

(3) Annualized.

BNY Hamilton Money Fund 7

<PAGE>

TREASURY MONEY FUND

CUSIP Number: [GRAPHIC]
Hamilton Classic Shares

05561M747

INVESTMENT OBJECTIVE

MANAGEMENT STRATEGY

The Fund seeks to maintain a stable $1 share price and invests exclusively in
securities backed by the full faith and credit of the U.S. government. These

securities include:

o Treasury bills

o Treasury notes

o Treasury bonds

o repurchase agreements fully collateralized by U.S. Treasury obligations.

The maximum allowable maturity for any individual security is 397 days, and the
Fund maintains an average dollar-weighted maturity of 90 days or less.

8 BNY Hamilton Treasury Money Fund
<PAGE>

MAIN INVESTMENT RISKS

Since the fund invests only in U.S. Treasury obligations or repurchase
agreements based on them, its yields may lag other money market funds that
invest in higher-yielding securities with some credit risk. The portfolio
manager's investment strategies may not work out as planned, and the Fund could
underperform its peers.

Money Funds and the AAAm/Aaa Rating

BNY Hamilton Treasury Money Fund 9

<PAGE>

PAST PERFORMANCE

Since this is a new share class, the performance data provided below is for
Hamilton Shares of this Fund.

Annual total returns (%) as of 12/31/98(1)

5.25

Best quarter: Q3 '97 +1.34 Worst quarter: Q4 '98 +1.19

The table below presents the Fund's average annual returns over various
periods.

Average annual total returns (%) as of 12/31/98*

Life
1 Year of fund

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

Hamilton Shares(1) 5.25 5.30

* Assumptions: $1,000 initial investment with all dividends and distributions
reinvested.

FEES AND EXPENSES

Fee table (% of average net assets)

Hamilton
Classic

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

Shareholder Fees None

Annual Operating Expenses

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

Management fee 0.10
Distribution (12b-1) fees 0.25
Servicing fee 0.25
Other expenses 0.23

Total annual operating expenses 0.83

Expenses on a $10,000 investment*($)

1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------------

Hamilton Classic

Shares 85 266 462 1,029

* Assumptions: $10,000 original investment, all dividends and distributions
reinvested, 5% annual returns and no change in operating expenses.

(1) Hamilton Shares commenced operations on 4/1/97.

10 BNY Hamilton Treasury Money Fund
<PAGE>

FINANCIAL HIGHLIGHTS

Since this is a new share class, the financial highlights provided below are for
Hamilton Shares of this Fund. The financial highlights table is intended to help
you understand the Fund's financial performance over the past five years (or
since inception). Certain information reflects financial results for a single
fund share. The total returns in the table represent the rate that an investor
would have earned (or lost) on an investment in the Fund (assuming reinvestment
of all dividends and distributions). This information has been audited by KPMG
LLP, whose report, along with the Fund's financial statement, is included in the
annual report, which is available upon request.

Year Ended December 31, 1998 1997(1)
- ----------------------- ---- -------

Per-Share Data ($)

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

Net asset value at beginning of period 1.00 1.00

Income from investment operations:

Net investment income 0.051 0.040

Less distributions:

Dividends from net investment income (0.051) (0.040)
- -------------------------------------------------------------------------------
Net asset value at end of period 1.00 1.00
- -------------------------------------------------------------------------------

Total return (%) 5.25 4.02(2)

Ratios/Supplemental Data (%)

Net assets, end of period ($ x 1,000) 201,363 110,719
Ratio of expenses (after reduction) to average

net assets 0.27 0.25(3)
Ratio of expenses (before reduction) to average
net assets 0.28 0.33(3)
Ratio of net investment income (after reduction)
to average net assets 5.09 5.29(3)

(1) Hamilton Shares commenced operations on 4/1/97.
(2) Not annualized.

(3) Annualized.

BNY Hamilton Treasury Money Fund 11
<PAGE>

SERVICES PROVIDED

SHAREHOLDER SERVICING PLANS

The adviser has entered into servicing agreements with certain institutions
(shareholder organizations) that invest in Hamilton Classic Shares of these
funds for their customers. Under these agreements, the institutions provide
support services to their customers, and the funds, in turn, pay the
institutions 0.25% (annualized) of the average daily NAV of their customers'
Hamilton Classic Shares.

Services that the shareholder organizations are responsible for providing to
their customers include the following:

o aggregating and processing customer purchase and redemption orders, then
placing net purchase and redemption orders with the distributor

o providing automatic reinvestment of customers' other investment accounts in
Hamilton Classic Shares, if requested

o processing customers' dividend payments

o providing periodic statements to their customers

o arranging for bank wires

o providing adequate customer support facilities

o performing all necessary sub-accounting

o forwarding shareholder communications from the funds

Wire Order Processing

Wire order processing services for direct investors will be provided by the
transfer agent. Shareholder organizations will provide similar services for
their customers.

Monthly Statements

Sweep Facility for Automatic Reinvestment

Accounts are automatically "swept" each day, and amounts above a pre-arranged
minimum balance are invested in Hamilton Classic Shares of the funds. Further
information on the sweep facility is available from the adviser or from your
shareholder organization.

12 Services Provided
<PAGE>

ACCOUNT POLICIES

DAILY NAV CALCULATION

The funds calculate their net asset value per share (NAV) at 4:30 p.m eastern
time each business day that the New York Stock Exchange is open, though it may
not do so on a day when no purchase or redemption orders are received. The funds
use the amortized cost method to value their securities; dividends and expenses
accrue daily.

Purchase orders received before the regular close of the New York Stock Exchange
will be executed at the offering price calculated at that day's close.

The BNY Hamilton Money Fund may invest in securities that are traded on foreign
exchanges, which may be open when the New York Stock Exchange is closed. The
value of your investment in the fund may change on days when you will be unable
to purchase or redeem shares.

Distribution (12b-1) Plan

The directors have adopted 12b-1 distribution plans with respect to the Hamilton
Classic Shares of each of the funds in this prospectus. The plans permit the
funds to reimburse the Distributor for distribution expenses in an amount up to
0.25% of the annual average daily net assets of Hamilton Classic Shares.

These fees are paid out of fund assets on an ongoing basis, and over time, they
could cost you more than paying other types of sales charges.

Opening an Account
Minimum investment requirements

Minimum initial Minimum continuing

Account Type investment investments Minimum balance

- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
IRA $250 $25 N/A

Regular Account $2,000 $100 $500

Automatic Investment Program $500 $50 N/A

Government Direct $250 minimum $100;
Deposit Program* maximum $50,000
</TABLE>

Note: Employees and retirees of The Bank of the New York and its affiliates, and
employees of the administrator, distributor and their affiliates may open a
regular account with $100 and make continuing investments of $25. Employees and
retirees of The Bank of New York and its affiliates may also invest through
payroll deduction. Call 800-4BNY-FND (800-426-9363) for details.

* For federal employees and investors who receive Social Security or certain
other payments from the federal government.

Account Policies 13

<PAGE>

OPENING AN ACCOUNT/PURCHASE SHARES

Open an account Add to your investment

Mail

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

Send completed new account application Send a check payable directly to your fund to:
and a check payable directly to each
fund you want to invest in. BNY Hamilton Funds, Inc.

P.O. Box 806

BNY Hamilton Funds Newark, NJ 07101-0806
P.O. Box 163310

Columbus, OH 43216-3310

For all enrollment forms, call
800-426-9363. If possible,
include a tear-off payment
stub from one of your
transaction confirmation
statements.

Wire

- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
The funds do not charge a fee for wire

transactions, but your bank may.

Mail your completed new account application
to the Ohio address above. Call the
transfer agent at 800-952-6276 for
an account number.

Instruct your bank to wire funds to a Instruct your bank to wire funds to:
new account at:

The Bank of New York

The Bank of New York New York, NY 10286
New York, NY 10286 ABA: 021000018
ABA: 021000018 BNY Hamilton Funds
BNY Hamilton Fund DDA 8900275847
DDA 8900275847 Attn: [your fund]

Attn: [your fund]

Ref: [your name, account number and taxpayer ID] Ref: [your name, account number and taxpayer ID]

Phone

- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
- ------------- Call 800-426-9363.

You must provide the required
information about your bank on
your new account application,
or in a signature guaranteed
letter. Your bank must be a
member of the ACH (Automated
Clearing House) system.

Dealer

- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Note: a broker-dealer may charge a fee.

Contact your broker-dealer. Contact your broker-dealer.

</TABLE>

14 Account Policies
<PAGE>

OPENING AN ACCOUNT/PURCHASE SHARES, continued

Open an account Add to your investment

Automatic Investment Program

- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Automatic investments are withdrawn from

your bank account on a monthly or
biweekly basis.

Make an initial investment of at least Once you specify a dollar amount (minimum $50), investments
$500 by whatever method you choose. Be are automatic.

sure to fill in the information required

in section 7 of your new account You can modify or terminate this service at any time by
application. mailing a notice to:

Your bank must be a member of the ACH BNY Hamilton Funds
(Automated Clearing House) system. P.O. Box 163310

Columbus, OH 43216-3310

Government Direct Deposit Program

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

<S> <C> For federal employees and investors who receive social security or
certain other payments from the federal government.

Call 800-426-9363 for instructions on Once you are enrolled, investments
how to enroll. are automatic.

You can terminate the service
at any time by contacting the
appropriate federal agency.

Purchases by personal check Checks or Wire Transactions The adviser does not charge a
money orders should be in U.S. dollars and fee for wire transfers from your bank to the funds.
payable to the specific fund you wish to However, your bank may charge a service fee for
invest in. The funds do not accept wiring funds.

third-party checks. In addition, you may
not redeem shares purchased by check until
your original purchase clears, which may
take up to ten business days.
</TABLE>

Account Policies 15

<PAGE>

MAKING EXCHANGES/REDEEMING SHARES

To exchange shares between mutual (minimum $500) To redeem shares

Phone

- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Call 800-426-9363. Call 800-426-9363.

The proceeds can be
wired to your bank
account two business
days after your
redemption request,
or a check can be
mailed to you at the
address of record on
the following
business day.

Mail

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

<S> <C>
The funds do not charge a fee for wire transactions,

but your bank may.

Your instructions should include: Your instructions should include:

o your account number o your account number

o names of the funds and number of shares or o names of the funds and number of shares or
dollar amount you want to exchange. dollar amount you want to exchange

A signature
guarantee is required whenever:

o you redeem more than $50,000

o you want to send proceeds to a different address

o you have changed
your account address within the last 60 days

Dealer

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

Contact your broker-dealer. Contact your broker-dealer.

Systematic Withdrawal

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

Requires $10,000 minimum fund balance You can choose from several options for monthly,
annual withdrawals: quarterly, semi-annual or

o declining balance

o fixed dollar amount

o fixed share quantity

o fixed percentage of your account

Call 800-426-9363 for details.

</TABLE>

16 Account Policies

<PAGE>

Exchanging and Redeeming Shares

As with purchase orders, redemption requests received before the regular close
of the New York Stock Exchange will be executed at the NAV calculated at that
day's close.

Minimum account balances If your account balance falls below $500 due to
redemptions, rather than market movements, the fund may give you 60 days to
bring the balance back up. If you do not increase your balance, the fund may
close your account and send you the proceeds.

Exchange minimums You may exchange shares of the same class between funds. From
the perspective of tax liability, an exchange is the same as a redemption from
one fund and purchase of another, meaning that you are likely to generate a
capital gain or loss when you make an exchange. Shares to be exchanged must have
a value of at least $500. If you will be investing in a new fund, you must also
exchange enough shares to meet the minimum balance requirement.

Checkwriting privileges Checkwriting privileges are available by request to
shareholders of these funds. The minimum check amount is $500. There is no fee
for writing checks, but the funds will charge for stop payments or overdrafts.

You cannot close your account by writing a check.

The funds reserve the right to impose a fee or terminate this service upon
notice to shareholders.

Signature guarantees You can get a signature guarantee from many brokers and
from some banks, savings institutions and credit unions. A notary public cannot
provide a signature guarantee.

Distributions and Tax Considerations

Each fund pays dividends and distributions approximately 10 calendar days before
month end. Distributions are automatically paid in the form of additional fund
shares. Notify the transfer agent in writing to:

o choose to receive dividends or distributions (or both) in cash

o change the way you currently receive distributions

Your taxable income is the same regardless of which option you choose.

Type of Distribution Federal Tax Status

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

Dividends from net ordinary income
investment income

Short-term capital gains ordinary income

The funds do not expect to realize long-term capital gains or losses.
Distributions from the funds are expected to be primarily ordinary income from
dividends.

You should consult your tax adviser about your own particular tax situation.

Account Policies 17

<PAGE>

Investment Adviser

Adviser compensation The adviser is responsible for all business activities and
investment decisions for the funds. Each fund pays the adviser an annual fee.
The adviser's fee accrues daily and is payable monthly at an annual rate of
0.10% of average daily net assets.

Portfolio Manager

Year 2000 (y2k) Compliance

18 Account Policies

<PAGE>

NOTES

Notes 19

<PAGE>

For More Information

You can obtain these documents free of charge, make inquiries or request other
information about the funds by contacting your dealer or:

BNY Hamilton Funds
P.O. Box 163310
Columbus, OH 43216-3310

800-426-9363 (800-4BNY-FND)

Information is also available from the SEC:

Securities and Exchange Commission
Public Reference Section
Washington, DC 20549-6009
www.sec.gov

For information on the operation of the SEC's public reference room, where
documents may be viewed and copied, call:

1-800-SEC-0330

Note: The SEC requires a duplicating fee for
paper copies.

SEC File Number: 811-6654

BNY
HAMILTON

FUNDS

BNY-0089 4/99

<PAGE>

BNY
HAMILTON

[GRAPHIC]

PROSPECTUS

EQUITY INCOME FUND

LARGE CAP GROWTH FUND

SMALL CAP GROWTH FUND

INTERNATIONAL

EQUITY FUND

INTERMEDIATE

GOVERNMENT FUND

INTERMEDIATE INVESTMENT
GRADE FUND

INTERMEDIATE NEW YORK
TAX-EXEMPT FUND

INTERMEDIATE

TAX-EXEMPT FUND

APRIL 30, 1999

BNY
HAMILTON

FUNDS

<PAGE>

ABOUT THE FUNDS

4 BNY Hamilton Equity Income Fund

8 BNY Hamilton Large Cap Growth Fund

12 BNY Hamilton Small Cap Growth Fund

16 BNY Hamilton International Equity Fund

20 BNY Hamilton Intermediate
Government Fund

24 BNY Hamilton Intermediate Investment
Grade Fund

28 BNY Hamilton Intermediate New York
Tax-Exempt Fund

32 BNY Hamilton Intermediate
Tax-Exempt Fund

ACCOUNT POLICIES

36 Daily NAV Calculation

36 Distribution (12b-1) Plan

37 Opening an Account/Purchasing Shares

38 Exchanging and Redeeming Shares

39 Distributions and Tax Considerations

40 Investment Adviser

40 Portfolio Managers

41 Year 2000 (Y2K) Compliance

For More Information
Back Cover

<PAGE>

AN INTRODUCTION TO BNY HAMILTON FUNDS

The BNY Hamilton Funds aim for high investment returns with consistent
performance over many market cycles.

The equity funds are presented in order from most conservative to most
aggressive and invest primarily in common stocks of companies. The BNY
International Equity Fund invests primarily in companies outside the U.S. These
funds are best suited for long-term investment.

The fixed-income funds, also presented in order from most conservative to most
aggressive, seek to provide current income and stability of principal to varying
degrees. The tax-exempt funds further aim to generate income that is free from
federal and/or state income tax.

Both types of funds are valuable components in most investors' overall
portfolios. The percentage of your portfolio you allocate to each would depend
on your time horizon, tax bracket, investment goals and tolerance for risk,
among other factors.

RISKS OF MUTUAL FUND INVESTING

<PAGE>

BNY HAMILTON
EQUITY INCOME FUND

CUSIP Numbers:

Institutional Shares 05561M770 [GRAPHIC]
Investor Shares 05561M408

INVESTMENT OBJECTIVE

The Fund seeks to provide long-term capital appreciation with a yield greater
than the yield of the Standard & Poor's 500 Index.

MANAGEMENT STRATEGY

The Fund pursues its objective by investing primarily in the common stock, and
securities convertible into common stock, of U.S. and foreign companies. At
least 65% of the Fund's assets will normally be invested in equity securities
that pay dividends or interest. The portfolio is diversified broadly across
market sectors, while focusing on interest rate-sensitive industries, such as
financial services, utilities and real estate investment trusts (REITs). The
Fund may emphasize different sectors in the future.

The portfolio manager evaluates current economic conditions and the relative
merits of growth and yield in deciding how to allocate the Fund's investments
between common stock and convertible securities. Convertible securities can
temper losses in a declining stock market by providing steady income while still
offering opportunities for capital growth.

Fundamental financial analysis is used to identify companies with reasonable
valuations that pay above-average dividends and have a history of consistent
growth with stable, predictable cash flows. While such companies are generally
large, the Fund may invest in companies of any size. Once these companies have
been identified, the Fund may invest in their common stocks or convertible
securities based on their relative attractiveness. The Fund's portfolio
generally includes holdings of 80 to 100 companies.

Under normal circumstances, the Fund intends to be fully invested in common
stock and convertible securities, although it is permitted to invest in
virtually any type of security. Most of the Fund's investments have been
domestic, but it may also invest without limit in foreign securities, including
those of emerging markets.

Within limits, the Fund may also use certain derivatives, which are investments
whose value is determined by underlying securities or indices. As a temporary
defensive measure, the Fund may invest more than 35% of its assets in cash or
cash equivalents. Under such circumstances, the Fund would not be pursuing its
investment objective.

4 BNY Hamilton Equity Income Fund

<PAGE>

MAIN INVESTMENT RISKS

The value of your investment in the Fund generally will fluctuate with stock
market movements. As a group, the large-capitalization stocks emphasized by the
Fund could fall out of favor with the market, particularly in comparison with
small- or medium-capitalization stocks.

In a strong market, convertible securities that pay above-average dividends
generally lag other types of equity securities . If stocks in the portfolio
reduce or eliminate their dividend payments, the fund will generate less income.

The portfolio manager's investment strategies may not work out as planned, and
the Fund's performance could suffer.

The value of debt securities, including convertible securities, is most affected
by interest rates. When interest rates rise, bond prices generally fall in
proportion to their maturity . Any debt securities held by the Fund could be
downgraded in credit rating or go into default.

Investments in foreign securities involve additional risks, including
potentially unfavorable currency exchange rates, limited or misleading financial
information, generally higher transaction costs and political and economic
disturbances ranging from tax legislation to military coups. These risks are
magnified in emerging markets.

EQUITY INVESTING AND CONVERTIBLES

Convertibles are fixed-income corporate securities that pay regular interest and
may be converted into shares of a company's common stock. The number of shares a
convertible will turn into, its conversion ratio, is established when the
security is issued. Thus, a convertible security's value can rise along with the
company's common stock while providing the current income and lower volatility
of a bond investment.

At the same time, convertible securities are subject to many of the risks of
both stock and bond investing. Their value is influenced primarily by stock
market movements but also by changes in interest rates. Convertibles are usually
callable, meaning that the company can prepay its obligation, and the call terms
can affect the security's value significantly.

BNY Hamilton Equity Income Fund 5

<PAGE>

PAST PERFORMANCE

93 94 95 96 97 98
- -------------------------------------------------------------------------------
11.94 -2.58 25.78 19.58 25.85 12.82

Best quarter: Q2 '97 +13.42 Worst quarter: Q3 '98 -9.76 The table below
presents the Fund's average annual returns over various periods along with those
of widely recognized indices.

Since

1 Year 5 Years 8/10/92

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

Institutional Shares(2) 13.18 15.89 15.24

Investor Shares(1) 12.82 15.77 15.15

S&P 500(3) 28.75 24.07 21.53

Lipper Equity Income

Funds Index(4) 11.78 16.62 16.29

* Assumptions: $1,000 initial investment with all dividends and distributions
reinvested.

FEES AND EXPENSES

Fee table (% of average net assets)

Institutional Investor
Shares Shares

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

Shareholder Fees None None

Annual Operating Expenses

Management fee 0.60 0.60
Distribution (12b-1) fees -- 0.25
Other expenses 0.29 0.32

Total annual operating expenses 0.89 1.17

Expenses on a $10,000 investment* ($)

1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------------

Institutional Shares 91 285 495 1,100

Investor Shares 120 374 647 1,427

* Assumptions: $10,000 original investment, all dividends and distributions
reinvested, 5% annual returns and no change in operating expenses.

1 Investor Shares commenced operations on 8/10/92.

2 Before 4/1/97, performance figures are based on the performance of Investor
Shares of the Equity Income Fund.

3 The S&P 500 is an unmanaged index of 500 large U.S. companies. 4 The Lipper
Equity Income Funds Index tracks the returns (after fees) of the

largest growth and income mutual funds. This index is included to show how the
fund's performance compares with its peers.

6 BNY Hamilton Equity Income Fund

<PAGE>

FINANCIAL HIGHLIGHTS

Institutional Shares - Year Ended December 31, 1998 1997(1)
- --------------------------------------------------------------------------------

Per-Share Data ($)

- --------------------------------------------------------------------------------
Net asset value at beginning of period 15.54 14.21
- --------------------------------------------------------------------------------
Income from investment operations:

Net investment income 0.28 0.25
Net realized and unrealized gain on investments 1.73 3.25

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

Total income from investment operations 2.01 3.50
Less distributions:
Dividends from net investment income (0.27) (0.24)
Distributions from capital gains (0.71) (1.93)

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

Total dividends and distributions (0.98) (2.17)
Net asset value at end of period 16.57 15.54

- --------------------------------------------------------------------------------
Total return (%) 13.18 24.73(2)
Ratios/Supplemental Data (%)

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

Net assets, end of period ($ x 1,000) 528,233 522,524
Ratio of expenses to average net assets 0.89 0.87(3)
Ratio of net investment income to average net assets 1.77 2.07(3)
Portfolio turnover rate 39 65

<TABLE>

<S> <C> <C> <C> <C> <C>
Investment Shares - Year Ended December 31, 1998 1997 1996 1995 1994

---------------------------------------------------------------------
Per-Share Data ($)

- ---------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period 15.53 14.12 12.99 10.70 11.30
---------------------------------------------------------------------
Income from investment operations:

Net investment income 0.25 0.35 0.30 0.32 0.31
Net realized and unrealized gain on investments 1.71 3.27 2.22 2.41 (0.60)

---------------------------------------------------------------------
Total income from investment operations 1.96 3.62 2.52 2.73 (0.29)
Less distributions:
Dividends from net investment income (0.25) (0.28) (0.29) (0.32) (0.31)
Distributions from capital gains (0.71) (1.93) (1.10) (0.12) 0
---------------------------------------------------------------------
Total dividends and distributions (0.96) (2.21) (1.39) (0.44) (0.31)
Net asset value at end of period 16.53 15.53 14.12 12.99 10.70

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

Total return (%) 12.82 25.85 19.58 25.78 (2.58)
Ratios/Supplemental Data (%)

---------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 37,212 34,213 216,363 169,841 135,131
Ratio of expenses to average net assets 1.17 1.01 0.97 1.00 1.04
Ratio of net investment income to average net assets 1.50 1.77 2.17 2.66 2.89
Portfolio turnover rate 39 65 58 58 51

</TABLE>

* KPMG LLP has audited the figures for 1997 and 1998. Previous years' data were
audited by Deloitte & Touche LLP.

- --------------------------------------------------------------------------------
1 Institutional shares commenced operations on 4/1/97.
2 Not annualized.

3 Annualized.

BNY Hamilton Equity Income Fund 7

<PAGE>

BNY HAMILTON

LARGE CAP GROWTH FUND

CUSIP Numbers:

Institutional Shares 05561M887 [GRAPHIC]
Investor Shares 05561M879

INVESTMENT OBJECTIVE

The Fund seeks to provide long-term capital appreciation by investing primarily
in common stocks and securities convertible into common stocks of domestic and
foreign companies; current income is a secondary consideration.

MANAGEMENT STRATEGY

Individual stock selection, rather than industry allocation, is the primary
focus in investing the Fund's assets. Fundamental financial analysis is used to
identify companies that appear to offer the following:

o potential for above-average, accelerating earnings or revenue growth

o dominant market positions

o improving operating efficiency

o increased earnings per share (EPS)

Companies that meet these criteria have tended to cluster in a few sectors
- --healthcare, technology, telecommunications, financial services, and consumer
staples. The Fund's portfolio generally includes large-capitalization stocks of
40 to 60 companies whose market capitalizations are $3 billion or more.

Although most of the Fund's investments have been domestic, it may invest
without limit in foreign securities. Within limits, the Fund also uses certain
derivatives, which are investments whose value is determined by underlying
securities or indices.

Under normal circumstances, the Fund will invest at least 65% of its assets in
large-capitalization stocks. As a temporary defensive measure, the Fund may
invest more than 35% of its assets in cash or cash equivalents. Under such
circumstances, the Fund would not be pursuing its investment objective.

8 BNY Hamilton Large Cap Growth Fund

<PAGE>

MAIN INVESTMENT RISKS

The portfolio manager's investment strategies may not work out as planned, and
the Fund's performance could suffer.

Investments in derivatives could limit profits or increase losses in comparison
with the performance of the underlying securities.

CHARACTERISTICS OF LARGE-CAP COMPANIES

The largest U.S. companies, those with market capitalizations over $3 billion,
are a relatively select group that nonetheless covers all industries and
geographies. These companies are typically well-established businesses with
broad product lines and customers in many markets. Their diversification and
usually substantial cash reserves enable them to weather economic downturns. The
dividends they pay can also cushion the effects of market volatility, since
their stocks generate steady income even while their price may be depressed.

The long-term capital appreciation of large-cap stocks has historically lagged
smaller companies.

BNY Hamilton Large Cap Growth Fund 9

<PAGE>

PAST PERFORMANCE

Institutional Shares annual total returns(1)
(%) as of 12/31/98

- --------------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98

30.21 -2.91 30.97 4.76 10.30 -1.97 31.70 24.17 31.21 23.49

Best quarter: Q4 '98 +18.78% Worst quarter: Q3 '90 -12.44%

The table below presents the Fund's average annual returns over various periods
along with those of widely recognized indices.

Average annual total returns (%) as of 12/31/98*

1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------

Institutional Shares(1) 23.49 21.02 17.38

Investor Shares(1) 23.26 20.94 17.34

S&P 500(2) 28.75 24.07 19.20

Lipper Growth and

Income Funds Index(3) 13.58 17.83 15.54

* Assumptions: $1,000 initial investment with all dividends and distributions
reinvested.

FEES AND EXPENSES

Fee table (% of average net assets)

Institutional Investor
Shares Shares

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

Shareholder Fees None None

Annual Operating Expenses

Management fee 0.60 0.60
Distribution (12b-1) fees None 0.25
Other expenses 0.31 0.36

Total annual operating expenses 0.91 1.21

Expenses on a $10,000 investment* ($)

1 Year 3 Years 5 Years 10 Years

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

Institutional Shares 93 291 506 1,123

Investor Shares 124 386 669 1,473

* Assumptions: $10,000 original investment, all dividends and distributions
reinvested, 5% annual returns and no change in operating expenses.

- -------------------------------------------------------------------------------
1 For Institutional Shares before 4/1/97 and for Investor Shares before 5/1/97,
performance figures are based on the performance of an unregistered Bank of
New York common trust fund that had objectives and policies materially
equivalent to those of the current mutual fund. Although the figures have been
adjusted to attempt to reflect expenses associated with the mutual fund, they
are only approximations. Many other factors also reduce their reliability. For
example, the common trust fund performance might have been lower if it had
been subject to the extra restrictions imposed on mutual funds.

2 The S&P 500 is an unmanaged index of 500 large U.S. companies.
3 The Lipper Growth and Income Funds Index tracks the returns (after fees) of

the largest growth and income mutual funds. This index is included to show how
the fund's performance compares with its peers.

10 BNY Hamilton Large Cap Growth Fund

<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the Fund's
financial performance over the past five years (or since inception). Certain
information reflects financial results for a single fund share. The total
returns in the table represent the rate that an investor would have earned (or
lost) on an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by KPMG LLP, whose report,
along with the Fund's financial statement, is included in the annual report,
which is available upon request.

Institutional Shares - Year Ended December 31 1998 1997(1)

- -------------------------------------------------------------------------------
<S> <C> <C>
Per-Share Data ($)

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

Net asset value at beginning of period 10.94 10.00
-----------------------------
Income from investment operations:

Net investment income 0.11 0.08
Net realized and unrealized gain on investments 2.46 2.83
-----------------------------

Total income from investment operations 2.57 2.91
Less distributions:

Dividends from net investment income (0.11) (0.08)
Distributions from capital gains (0.69) (1.89)

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

Total dividends and distributions (0.80) (1.97)
Net asset value at end of period 12.71 10.94
-----------------------------

Total return 23.49 29.11(3)

Ratios/Supplemental Data (%)

- -------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 443,997 373,32(6)
Ratio of expenses (after reduction) to

average net assets 0.82 0.82(4)
Ratio of expenses (before reduction) to average
net assets 0.91 0.88(4)
Ratio of net investment income (after reduction)

to average net assets 0.73 0.89(4)
Portfolio turnover rate 26 37

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

Investor Shares - Year Ended December 31, 1998 1997(2)

- -------------------------------------------------------------------------------
<S> <C> <C>
Per-Share Data ($)

- --------------------------------------------------------------------------------
Net asset value at beginning of period 10.92 10.70
-------------------------
Income from investment operations:

Net investment income 0.11 0.06
Net realized and unrealized gain on investments 2.42 2.12

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

Total income from investment operations 2.53 2.18

Less distributions:

Dividends from net investment income (0.11) (0.07)
Distributions from capital gains (0.69) (1.89)
-------------------------
Total dividends and distributions (0.80) (1.96)
Net asset value at end of period 12.65 10.92

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

Total return (%) 23.26 20.37(3)

Ratios/Supplemental Data (%)

- -------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 11,047 6,46(4)
Ratio of expenses (after reduction) to

average net assets 1.07 1.16(4)
Ratio of expenses (before reduction) to
average net assets 1.21 1.07(4)
Ratio of net investment income (after reduction)

to average net assets 0.50 0.54(4)
Portfolio turnover rate 26 37

</TABLE>

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

1 Institutional Shares commenced operations on 4/1/97. 2 Investor Shares
commenced operations on 5/1/97.

3 Not annualized.
4 Annualized.

BNY Hamilton Large Cap Growth Fund 11

<PAGE>

BNY HAMILTON
SMALL CAP GROWTH FUND

CUSIP Numbers:

Institutional Shares 05561M861 [GRAPHIC]
Investor Shares 05561M853

INVESTMENT OBJECTIVE

The Fund seeks to provide long-term capital appreciation by investing primarily
in equity securities of small domestic and foreign companies.

MANAGEMENT STRATEGY

Individual security selection is the primary investment focus, rather than
industry allocation. Within the universe of small-capitalization companies whose
market capitalizations are between $100 million and $1.5 billion, the Fund
targets those with above-average earnings growth that have exceeded market
expectations. Among this group, the Fund emphasizes companies that dominate
niche markets, and thus exert more control over the pricing and supply in their
markets. The Fund expects the companies it invests in to achieve sustained
growth in earnings or revenues over the next two to three years.

Specific factors that may suggest growth include:

o expanded operations

o new products or technologies

o new distribution channels

o generally favorable industry conditions

o revitalized company management

To complement these core investments, the portfolio manager looks for
opportunities to take advantage of industry cycles, and thus may overweight
different sectors as economic conditions change. The Fund may continue to invest
in companies in its portfolio even after their market capitalizations exceed
$1.5 billion.

Although most of the Fund's investments have been domestic, it may invest
without limit in foreign securities. Under normal circumstances, the Fund will
invest at least 65% of its assets in small capitalization stocks. As a temporary
defensive measure, the Fund may invest more than 35% of its assets in cash or
cash equivalents. Under such circumstances, the Fund would not be pursuing its
investment objective.

12 BNY Hamilton Small Cap Growth Fund

<PAGE>

MAIN INVESTMENT RISKS

The value of your investment in the Fund generally will fluctuate with stock
market movements. Since the prices of the small-capitalization stocks emphasized
by the Fund have historically been more volatile than those of larger companies,
the ups and downs of your investment in the Fund may be more extreme than the
market as a whole.

As a group, small companies are usually relatively young, and their short track
records make it difficult to build a case for sustainable long-term growth.
Limited product lines, niche markets, and small capital reserves may not allow
small companies to survive temporary setbacks. In a declining market, these
stocks can also be hard to sell at a price that is beneficial to the Fund.

The portfolio manager's investment strategies may not work out as planned, and
the Fund's performance could suffer.

Small-Cap Companies and Growth Investing

Small companies tend to grow or fade quickly by their nature. Their market
valuations are often based more on investors' belief in their future potential
than on their current balance sheets. Since market sentiment can change from one
day or week to the next, small-cap stock prices have historically been more
volatile than those of large-cap stocks. Growth investors are often attracted to
small companies for their specialization and innovation.

Specialization: Small companies often occupy niche markets, catering to a
specific geography or industry. They can grow to dominate such markets rapidly,
but are also threatened by even temporary downturns.

Innovation: Bold ideas for products or services are the basis of many small
companies. A company's ability to sustain its innovative culture and broaden
its markets, however, is difficult to predict.

BNY Hamilton Small Cap Growth Fund 13

<PAGE>

PAST PERFORMANCE

Institutional Shares annual total returns (1)
(%) as of 12/31/98

91 92 93 94 95 96 97 98

- -------------------------------------------------------------------------------
52.45 5.88 19.12 -0.33 20.92 29.97 9.39 7.89

Best quarter: Q2 '97 +22.30% Worst quarter: Q3 '98 -16.98%

The table below presents the Fund's average annual returns over various periods
along with those of widely recognized indices.

Average total returns (%) as of 12/31/98*

Since
1 Year 5 years 12/31/90

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

Institutional Shares(1) 7.89 13.07 17.17

Investor Shares(1) 7.55 13.01 17.13

Russell 2000(2) -2.54 11.87 17.37

Lipper Small Cap Funds

Index(3) -0.85 11.30 16.09

* Assumptions: $1,000 initial investment with all dividends and distributions
reinvested.

FEES AND EXPENSES

Fee table (% of average net assets)

Institutional Investor
Shares Shares

- --------------------------------------------------------------------------------
Shareholder Fees None None

Annual Operating Expenses

Management fee 0.75 0.75
Distribution (12b-1) fees None 0.25
Other expenses 0.38 0.44

Total annual operating expenses* 1.13 1.44

* This year, the adviser voluntarily reduced the Fund's operating expenses for
Institutional Shares by 0.02% and for Investor Shares by 0.08%, resulting in
net operating expenses of 1.11% and 1.36% respectively based on average daily
net assets.

Expenses on a $10,000 investment* ($)

1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------

Institutional Shares 116 361 625 1,380

Investor Shares 148 459 792 1,733

* Assumptions: $10,000 original investment, all dividends and distributions

reinvested, 5% annual returns, no voluntary expense reductions and no change
in operating expenses.

2 The Russell 2000 is an unmanaged index of small U.S. companies.
3 The Lipper Small Cap Funds Index tracks the returns (after fees) of the

largest small-cap equity mutual funds. This index is included to show how the
fund's performance compares with its peers.

14 BNY Hamilton Small Cap Growth Fund

<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the Fund's
financial performance over the past five years (or since inception). Certain
information reflects financial results for a single fund share. The total
returns in the table represent the rate that an investor would have earned (or
lost) on an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by KPMG LLP, whose report,
along with the Fund's financial statement, is included in the annual report,
which is available upon request.

Institutional Shares -- Year Ended December 31, 1998 1997(1)

Per-Share Data ($)

Net asset value at beginning of period 11.93 10.00

---------------------------
Income from investment operations:

Net investment income (0.02)(5) (0.02)
Net realized and unrealized gain on investments 0.91 2.80

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

Total income from investment operations 0.89 2.78
Less distributions:
Distributions from capital gains (0.36) (0.85)
---------------------------
Net asset value at end of period 12.46 11.93
---------------------------
---------------------------

Total return (%) 7.89 27.80(3)
Ratios/Supplemental Data (%)
Net assets, end of period ($ x 1,000) 188,402 133,74(1)
Ratio of expenses (after reduction) to
average net assets 0.97 0.97(4)
Ratio of expenses (before reduction) to
average net assets 1.13 1.104
Ratio of net investment income (after reduction)
to average net assets (0.19) (0.26)(4)
Portfolio turnover rate 84 68

Investor Shares -- Year Ended December 31, 1998 1997(1)
Per-Share Data ($)
Net asset value at beginning of period 11.94 10.03

---------------------------
Income from investment operations:

Net investment income (0.04)(5) (0.02)
Net realized and unrealized gain on investments 0.90 2.78

---------------------------
Total income from investment operations 0.86 2.76
Less distributions:
Distributions from capital gains (0.36) (0.85)
---------------------------
Net asset value at end of period 12.44 11.94
---------------------------

---------------------------
Total return 7.55 27.52(3)
Ratios/Supplemental Data (%)
Net assets, end of period ($ x 1,000) 6,763 1,162
Ratio of expenses (after reduction) to
average net assets 1.22 1.22(4)
Ratio of expenses (before reduction) to
average net assets 1.46 1.40(4)
Ratio of net investment income (after reduction)
to average net assets (0.43) (0.54)(4)
Portfolio turnover rate 84 68

- -------------------------------------------------------------------------------
1 Institutional Shares commenced operations on 4/1/97.
2 Investor Shares commenced operations on 5/1/97.

3 Not annualized.
4 Annualized.

5 Based on average shares outstanding.

BNY Hamilton Small Cap Growth Fund 15

<PAGE>

BNY HAMILTON

INTERNATIONAL

EQUITY FUND

CUSIP Numbers:

Institutional Shares 05561M846 [GRAPHIC]
Investor Shares 05561M838

INVESTMENT OBJECTIVE

The Fund seeks to provide long-term capital appreciation by investing primarily
in equity securities of non-U.S. issuers.

MANAGEMENT STRATEGY

The Fund's country allocation normally reflects, within a range of 5%, that of
the Morgan Stanley Capital International Europe, Australia and Far East (MSCI
EAFE) Index. Economic conditions within regions may determine the types of
industries and securities the fund will favor. In a recovering economy, for
instance, the Fund might emphasize exporters over financial services companies.
The Fund emphasizes investments in dynamic industries that are experiencing
changes, whether through growth or restructuring.

In selecting individual stocks, the Fund emphasizes large companies but
considers companies of all sizes with the following characteristics:

o high-quality earnings

o significant long-term growth

o strong management

o reasonable valuation

Investment research includes fundamental financial analysis and on-site visits.
The Fund generally diversifies its investments across many countries, but it may
concentrate up to 50% of its assets in a single country. The Fund may not invest
in certain developing countries, including Russia, but it may invest in other
more stable emerging markets.

Under normal circumstances, the Fund intends to be fully invested in common
stocks. As a temporary defensive measure, the Fund may invest more than 35% of
its assets in U.S. cash or cash equivalents. Under such circumstances, the Fund
would not be pursuing its investment objective.

16 BNY Hamilton International Equity Fund

<PAGE>

MAIN INVESTMENT RISKS

The value of your investment in the Fund will generally fluctuate with stock
market movements in the countries in which the Fund is invested. Since the
prices of many non-U.S. stocks emphasized by the Fund have historically been
more volatile than those of U.S. stocks, the ups and downs of your investment in
this Fund may be more extreme.

As a group, the large-capitalization stocks emphasized by this Fund could fall
out of favor with the market, particularly in comparison with small- or
medium-capitalization stocks.

Investments in smaller companies, on the other hand, have historically been more
volatile than those of larger companies. And to the extent that the Fund invests
in them, the volatility of your investment may increase.

Investments in foreign securities involve additional risks. Unfavorable currency
exchange rates could decrease the value of your investment in terms of U.S.
dollars. Transaction expenses are generally higher on foreign exchanges than in
the U.S., which could affect performance. Furthermore, foreign taxes could also
detract from performance. Some foreign companies do not adhere to uniform
accounting principles, so publicly available financial information may be
limited or misleading. Political and social unrest could also affect the
performance of this fund. These risks are magnified in emerging markets.

The portfolio manager's asset allocation strategy or choice of specific
securities may not work out as planned, and the Fund could underperform its
peers or lose money.

In periods of market uncertainty, some of the portfolio's securities could prove
difficult to sell at a price that is beneficial to the Fund.

Globalization and International Investing

With more than half of the world's market opportunities outside the U.S.,
international funds offer investors greater diversification than a purely
domestic portfolio. International markets are experiencing many of the same
dynamics that drove U.S. stock growth in the 1990s:

o corporate restructuring

o increased emphasis on shareholder value

o growing pool of investors through retirement and other savings plans

Meanwhile, global competition is spurring companies worldwide, and particularly
in developed economies, to increase their efficiency by cutting costs,
relocating production facilities, outsourcing non-essential processes and
focusing on their core businesses.

Businesses in emerging markets may benefit substantially from free-market
reforms, reduced barriers to trade and rising standards of living.

BNY Hamilton International Equity Fund 17

<PAGE>

PAST PERFORMANCE

Institutional Shares annual total returns(1)
(%) as of 12/31/98

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

20.84

Best quarter: Q4 '98 +19.72% Worst quarter: Q3 '98 -13.40%

The table below presents the Fund's average annual returns over various periods
along with those of widely recognized indices.

Average annual total returns (%) as of 12/31/98*

Life
1 Year of fund

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

Institutional Shares(1) 20.84 15.72

Investor Shares(2) 20.61 15.41

MSCI EAFE(3) 20.33 13.40

Lipper International Funds

Index(4) 12.66 9.87

* Assumptions: $1,000 initial investment with all dividends and distributions
reinvested.

FEES AND EXPENSES

Fee table (% of average net assets)

Institutional Investor
Shares Shares

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

Shareholder Fees None None

Annual Operating Expenses

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

Management fee 0.85 0.85
Distribution (12b-1) fees -- 0.25
Other expenses 0.47 0.55

Total annual operating expenses 1.32 1.65

Expenses on a $10,000 investment* ($)

1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------

Institutional Shares 135 421 728 1,598

Investor Shares 169 524 903 1,967

* Assumptions: $10,000 original investment, all dividends and distributions
reinvested, 5% annual returns and no change in operating expenses.

- -------------------------------------------------------------------------------
1 Institutional Shares commenced operations on 4/1/97.
2 Investor Shares commenced operations on 5/1/97.

3 The MSCI EAFE is an unmanaged index of stocks of companies in Europe,
Australia, Asia and the Far East.

4 The Lipper International Funds Index tracks the returns (after fees) of the
largest international equity mutual funds. This index is included to show how
the fund's performance compares with its peers.

18 BNY Hamilton International Equity Fund
<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the Fund's
financial performance over the past five years (or since inception). Certain
information reflects financial results for a single fund share. The total
returns in the table represent the rate that an investor would have earned (or
lost) on an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by KPMG LLP, whose report,
along with the Fund's financial statement, is included in the annual report,
which is available upon request.

Institutional Shares -- Year Ended December 31, 1998 1997(1)

Per-Share Data ($)

Net asset valueat beginning of period 10.69 10.00

---------------------------
Income from investment operations:

Net investment income 0.03 0.02
Net realized and unrealized gain on investments 2.20 0.67

---------------------------
Total income from investment operations 2.23 0.69
Less distributions:
Dividends from net investment income (0.02) --
---------------------------
Net asset value at end of period 12.90 10.69
---------------------------

---------------------------
Total return (%) 20.84 6.90(3)
Ratios/Supplemental Data (%)
Net assets, end of period ($ x 1,000) 177,363 94,806
Ratio of expenses (after reduction) to
average net assets 1.27 1.26(4)
Ratio of expenses (before reduction) to
average net assets 1.32 1.49(4)
Ratio of net investment income (after reduction)
to average net assets 0.54 0.26(4)
Portfolio turnover rate 75 36

Investor Shares -- Year Ended December 31, 1998 1997(2)

Per-Share Data ($)

Net asset value at beginning of period 10.66 10.19

---------------------------
Income from investment operations:

Net investment income 0.03 0.02
Net realized and unrealized gain on investments 2.17 0.45

---------------------------
Total income from investment operations 2.20 0.47
Less distributions:
Dividends from net investment income (0.02) --
---------------------------
Net asset value at end of period 12.84 10.66
---------------------------

---------------------------
Total return (%) 20.61 4.61(3)

Ratios/Supplemental Data (%)

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

Net assets, end of period ($ x 1,000) 5,391 2,560
Ratio of expenses (after reduction) to

average net assets 1.52 1.52(4)
Ratio of expenses (before reduction) to
average net assets 1.65 1.75(4)
Ratio of net investment income (after reduction)
to average net assets 0.32 0.33(4)
Portfolio turnover rate 75 36

- -------------------------------------------------------------------------------
1 Institutional Shares commenced operations on 4/1/97.
2 Investor Shares commenced operations on 5/1/97.

3 Not annualized.
4 Annualized.

BNY Hamilton International Equity Fund 19

<PAGE>

BNY HAMILTON

INTERMEDIATE

GOVERNMENT FUND

CUSIP Numbers:

Institutional Shares 05561M762 [GRAPHIC]
Investor Shares 05561M200

INVESTMENT OBJECTIVE

The Fund seeks to provide as high a level of current income as is consistent
with preservation of capital, moderate stability in net asset value and minimal
credit risk.

MANAGEMENT STRATEGY

The Fund pursues its objective by investing primarily in debt obligations issued
or guaranteed by the U.S. government or its agencies. Under normal market
conditions, the Fund maintains a dollar-weighted average maturity between three
years and ten years.

In investing the Fund's assets, an analysis of economic trends, particularly
interest rate movements and yield spreads, is used to determine which types of
securities offer the best investment opportunities. This analysis takes place on
several levels. First, the Fund allocates broadly between direct agency debt
obligations, agency mortgage-backed securities, and U.S. Treasuries.

The Fund invests in the various types of mortgage-backed securities based on an
evaluation of relative yields and prepayment risk, among other factors. In a
period of declining interest rates, for example, the Fund might favor discount
mortgage securities over higher-yielding premium mortgage securities because of
their lower prepayment risk.

The Fund also invests in collateralized mortgage obligations, or CMOs, which are
backed by pools of mortgages and are organized so that different classes of
securities with different maturities and coupons are available.

In selecting individual securities, the portfolio manager uses models to
evaluate probable yields over time and prepayment risk, among other factors. The
Fund attempts to manage interest rate risk by adjusting its duration. Duration
is measured in years, like maturity, and it is a more accurate gauge of a bond's
sensitivity to interest rate change because it takes additional significant
factors, including prepayment risk, into account.

Under normal circumstances, the Fund intends to be fully invested in government
and agency securities. As a temporary defensive measure, the Fund may invest
more than 35% of its assets in cash or cash equivalents. Under such
circumstances, the Fund would not be pursuing its investment objective.

20 BNY Hamilton Intermediate Government Fund

<PAGE>

MAIN INVESTMENT RISKS

The value of your investment in the Fund generally will fluctuate with interest
rate movements. As interest rates rise, bond prices go down. The longer the
duration of a bond, the more sharply its value will rise or fall in response to
an interest rate change.

When interest rates drop, holders of the mortgages represented by CMOs and other
mortgage-backed securities are more likely to refinance, thus forcing the Fund
to find new investments, which could have lower yields.

When interest rates rise, on the other hand, mortgage holders tend not to
prepay, and then the Fund can miss opportunities to reinvest in more profitable
securities.

In periods of market uncertainty, some of the portfolio's securities could be
difficult to sell at a price that is beneficial to the Fund.

The portfolio manager's asset allocation strategy or choice of specific
securities may not work out as planned, and the Fund could underperform its
peers or lose money.

The Fund has low exposure to credit risk because all of its securities are
backed by the full faith and credit of the U.S. government or guaranteed by one
of its agencies. These guarantees, however, do not prevent shares of the Fund
from falling in value.

Though not likely, it is possible that issuers of bonds in the Fund's portfolio
could be downgraded in credit rating or default on their payments.

Mortgage-backed Securities and CMOs

Pass-through mortgage-backed securities represent a direct ownership interest in
a pool of mortgage loans.

Collateralized mortgage obligations (CMOs) are backed by pools of pass-throughs
or mortgage loans. CMO issuers organize the cash flow from the underlying
securities into classes, or tranches, with widely different maturities and
payment schedules. These securities are often fully collateralized by U.S.
government agency securities such as Fannie Mae (FNMA) and GinnieMae (GNMA),
though they may be issued by private firms.

BNY Hamilton Intermediate Government Fund 21

<PAGE>

PAST PERFORMANCE

Investor Shares annual total returns(1) (%) as of 12/31/98

93 94 95 96 97 98
- -------------------------------------------------------------------------------
8.03 -5.17 15.40 3.16 7.54 7.33

Best quarter: Q2 '95 +5.48 Worst quarter: Q1 '94 -3.54

The table below presents the Fund's average annual returns over various periods
along with those of widely recognized indices.

Average annual total returns (%) AS OF 12/31/98*

Since
1 Year 5 Years 8/10/92

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

Institutional Shares(2) 7.49 5.53 5.65

Investor Shares(1) 7.33 5.44 5.57

Lehman Intermediate

Government Index(3) 8.47 6.45 6.54

Lipper Intermediate
U.S. Gov't Funds

Index(4) 8.17 6.12 6.34

* Assumptions: $1,000 initial investment with all dividends and distributions
reinvested.

FEES AND EXPENSES

The table below outlines the fees and expenses you could

expect as an investor in the Fund. "Annual Operating Expenses" come out of Fund
assets, and are reflected in the total return. Since these funds are "no-load,"
shareholders pay no fees or out-of-pocket expenses.

Fee table (% of average net assets)

Institutional Investor
Shares Shares

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

Shareholder Fees None None

Annual Operating Expenses

Management fee 0.50 0.50
Distribution (12b-1) fees -- 0.25
Other expenses 0.46 0.51

Total annual operating expenses* 0.96 1.26

* This year, the adviser voluntarily reduced the Fund's operating expenses for
Institutional Shares by 0.17% and for Investor Shares by 0.22%, resulting in
net operating expenses of 0.79% and 1.04% respectively based on average daily
net assets.

Expenses on a $10,000 investment* ($)

1 Year 3 Years 5 Years 10 Years

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

Institutional Shares 98 307 533 1,182

Investor Shares 129 402 695 1,530

* Assumptions: $10,000 original investment, all dividends and distributions
reinvested, 5% annual returns, no voluntary expense reductions and no change
in operating expenses.

- -------------------------------------------------------------------------------
1 Investor Shares commenced operations on 8/10/92.

2 Before 4/1/97, performance figures are based on the performance of Investor
Shares of the Intermediate Government Fund.

3 The Lehman Brothers Intermediate Government Index is an unmanaged index of
intermediate-term government bonds.

4 The Lipper Intermediate U.S. Government Funds Index tracks the returns (after
fees) of the largest intermediate U.S. government mutual funds. This index is
included to show how the fund's performance compares with its peers.

22 BNY Hamilton Intermediate Government Fund

<PAGE>

FINANCIAL HIGHLIGHTS

Institutional Shares - Year Ended December 31, 1998 1997(1)

- -------------------------------------------------------------------------------
Per-Share Data ($)

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

Net asset value at beginning of period 9.88 9.53
-------------------------
Income from investment operations:

Net investment income 0.56 0.42
Net realized and unrealized gain on investments 0.16 0.35

-------------------------
Total income from investment operations 0.72 0.77
Less distributions:
Dividends from net investment income (0.56) (0.42)
-------------------------
Net asset value at end of period 10.04 9.88
-------------------------

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

Total return (%) 7.49 8.27(2)

Ratios/Supplemental Data (%)

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

Net assets, end of period ($ x 1,000) 64,944 64,128
Ratio of expenses (after reduction) to

average net assets 0.90 0.90(3)
Ratio of expenses (before reduction) to
average net assets 0.96 0.99(3)
Ratio of net investment income (after reduction)
to average net assets 5.63 5.79(3)
Portfolio turnover rate 61 41

Investor Shares - Year Ended December 31, 1998 1997 1996 1995 1994

- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per-Share Data ($)

Net asset value at beginning of period 9.87 9.70 9.94 9.10 10.12

-----------------------------------------------
Income from investment operations:

Net investment income 0.54 0.54 0.54 0.53 0.50
Net realized and unrealized gain on investments 0.17 0.17 (0.24) 0.84 (1.02)

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

Total income from investment operations 0.71 0.71 0.30 1.37 (0.62)
Less distributions:
Dividends from net investment income (0.54) (0.54) (0.54) (0.53) (0.50)
Net asset value at end of period 10.04 9.87 9.70 9.94 9.10
-----------------------------------------------

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

Total return (%) 7.33 7.54 3.16 15.40 (5.17)

<CAPTION>
Ratios/Supplemental Data (%)

- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net assets, end of period ($ x 1,000) 12,525 10,458 64,117 60,659 59,328
Ratio of expenses (after reduction) to

average net assets 1.15 1.08 1.02 1.06 1.07
Ratio of expenses (before reduction) to
average net assets 1.26 1.11 1.02 1.06 1.10
Ratio of net investment income (after reduction)
to average net assets 5.38 5.57 5.54 5.52 5.30
Portfolio turnover rate 61 41 57 48 49

</TABLE>

* KPMG LLP has audited the figures for 1997 and 1998. Previous years' data were
audited by Deloitte & Touche LLP.

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

1 Institutional shares commenced operations on 4/1/97.
2 Not annualized.

3 Annualized.

BNY Hamilton Intermediate Government Fund 23

<PAGE>

BNY HAMILTON
INTERMEDIATE INVESTMENT

GRADE FUND

CUSIP Numbers:

Institutional Shares 05561M796 [GRAPHIC]
Investor Shares 05561M788

INVESTMENT OBJECTIVE

The Fund seeks to provide as high a level of current income as is consistent
with preservation of capital, moderate stability in net asset value and
maintenance of liquidity.

MANAGEMENT STRATEGY

The Fund pursues its objective by investing primarily in investment-grade debt
obligations, which are securities rated Baa/BBB and above, as well as their
unrated equivalents. The Fund may invest in securities issued or guaranteed by:

o U.S. and foreign corporations

o the U.S. government or its agencies

Under normal market conditions, the Fund maintains an average maturity between
three years and ten years. The remaining maturity of any single security in the
Fund's portfolio cannot exceed 15 years.

In investing the Fund's assets, an analysis of economic trends -- including rate
projections, inflation trends, and corporate profit outlook -- is used to
determine how the Fund should allocate its investments among the sectors above.

The Fund has tended to emphasize corporate bonds.

In the corporate bond portion of the portfolio, the Fund is diversified across
market sectors but may emphasize different sectors. In selecting individual
corporate bonds, the portfolio manager considers the bond's structure, maturity
and yield in light of the company's current financial health, competitive
position and future prospects. The Fund may achieve its average maturity by
investing primarily in intermediate-term bonds, or it may use a "barbell"
strategy and invest in short-term and longer-term bonds.

In the U.S. government portion of the portfolio, the Fund allocates broadly
between U.S. Treasury obligations and agency issuers based on an evaluation of
relative yields .

The Fund attempts to manage interest rate risk by adjusting its duration.
Duration is measured in years, like maturity, and it is a more accurate gauge of
a bond's sensitivity to interest rate change because it takes additional
significant factors, including prepayment risk, into account. As a temporary
defensive measure, the Fund may invest more than 35% of its assets in cash or
cash equivalents. Under such circumstances, the Fund would not be pursuing its
investment objective.

24 BNY Hamilton Intermediate Investment Grade Fund

<PAGE>

MAIN INVESTMENT RISKS

Issuers of corporate bonds in the Fund's portfolio could be downgraded in credit
rating or default on their payments. This risk is magnified with lower-rated
bonds.

When interest rates rise, on the other hand, mortgage holders tend not to
prepay, and then the Fund can miss opportunities to reinvest in more profitable
securities.

The portfolio manager's asset allocation strategy or choice of specific
securities may not work out as planned, and the Fund could underperform its
peers or lose money.

In periods of market uncertainty, some of the portfolio's securities could prove
difficult to sell for a price that is beneficial to the Fund.

Understanding Intermediate-Term Bonds

The market value of a bond is influenced by two variables: maturity and interest
rates. The relationship between these variables can be described as a risk
curve. The risk curve for bonds typically has a positive slope, meaning that
short maturities provide the greatest price stability and longer maturities
carry increasingly higher risks of price volatility in response to interest rate
changes.

The Fund invests in intermediate-term bonds with maturities between 3 and 10
years, which occupy a middle ground, offering moderate price stability and
current income .

BNY Hamilton Intermediate Government Fund 25

<PAGE>

PAST PERFORMANCE

Institutional Shares annual total returns(1)
(%) as of 12/31/98

13.74 3.97 14.83 6.21 9.62 -5.06 18.69 1.82 8.18 8.56

- --------------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98

Best quarter: Q4 '89+6.86% Worst quarter: Q1 '94-3.82%

The table below presents the Fund's average annual returns over various periods
along with those of widely recognized indices.

Average annual total returns(%) as of 12/31/98*

1 Year 5 years 10 years
- --------------------------------------------------------------------------------

Institutional Shares(1) 8.56 6.14 7.86

Investor Shares(1) 8.22 6.04 7.81

Lehman Intermediate Gov't/

Corporate Index(2) 8.42 6.60 8.51

Lipper Intermediate Investment

Grade Funds Index(3) 7.87 6.59 8.30

* Assumptions: $1,000 initial investment with all dividends and distributions
reinvested.

FEES AND EXPENSES

Fee table (% of average net assets)

Institutional Investor
Shares Shares

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

Shareholder Fees None None

Annual Operating Expenses

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

Management fee 0.50 0.50
Distribution (12b-1) fees -- 0.25
Other expenses 0.31 0.38

Total annual operating expenses* 0.81 1.13

* This year, the adviser voluntarily reduced the Fund's operating expenses for
Institutional Shares by 0.02% and for Investor Shares by 0.09%, resulting in
net operating expenses of 0.79% and 1.04% respectively based on average daily
net assets.

Exepenses on a $10,000 investment* ($)

1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Institutional Shares 83 260 451 1,005

Investor Shares 116 361 625 1,380

* Assumptions: $10,000 original investment, all dividends and distributions
reinvested, 5% annual returns, no voluntary expense reductions and no change
in operating expenenses.

1 For Institutional Shares before 4/1/97 and for Investor Shares before 5/1/97,
performance figures are based on the performance of an unregistered Bank of
New York common trust fund that had objectives and policies materially
equivalent to those of the current mutual fund. Although the figures have been
adjusted to attempt to reflect expenses associated with the mutual fund, they
are only approximations. Many other factors also reduce their reliability. For
example, the common trust fund performance might have been lower if it had
been subject to the extra restrictions imposed on mutual funds.

2 The Lehman Brothers Intermediate Government/Corporate Index is an unmanaged
index of intermediate-term U.S. government and corporate bonds.

3 The Lipper Intermediate Investment Grade Funds Index tracks the returns (after
fees) of the largest intermediate-term, investment-grade bond mutual funds.
This index is included to show how the fund's performance compares with its
peers.

26 BNY Hamilton Intermediate Investment Grade Fund

<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the Fund's
financial performance over the past five years (or since inception). Certain
information reflects financial results for a single fund share. The total
returns in the table represent the rate that an investor would have earned (or
lost) on an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by KPMG LLP, whose report,
along with the Fund's financial statement, is included in the annual report,
which is available upon request.

Institutional Shares - Year Ended December 31, 1998 1997(1)

Per-Share Data ($)

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

Net asset valueat beginning of period 10.45 10.00

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

Income from investment operations:

Net investment income 0.61 0.47
Net realized and unrealized gain on investments 0.26 0.45

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

Total income from investment operations 0.87 0.92
Dividends and distributions:
Dividends from net investment income (0.61) (0.47)
Distributions from capital gains (0.10) --

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

Total dividends and distributions (0.71) (0.47)
Net asset value at end of period 10.61 10.45

----------------------------
Total return (%) 8.56 9.34(3)

Ratios/Supplemental Data (%)

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

Net assets, end of period ($ x 1,000) 392,522 350,330
Ratio of expenses to average net assets 0.81 0.80(4)
Ratio of net investment income to average net assets 5.79 6.14(4)
Portfolio turnover rate 53 81

Per-Share Data ($)

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

Net asset value at beginning of period 10.45 10.08
----------------------------
Income from investment operations:

Net investment income 0.58 0.40
Net realized and unrealized gain on investments 0.26 0.37

----------------------------
Total income from investment operations 0.84 0.77
Less distributions:

Dividends from net investment income (0.58) (0.40)
Distributions from capital gains (0.10) --
----------------------------
Total dividends and distribution (0.68) (0.40)
Net asset value at end of period 10.61 10.45

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

Total return (%) 8.22 7.76(3)

Ratios/Supplemental Data (%)

- --------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 3,981 1,891
Ratio of expenses to average net assets 1.13 1.06(4)
Ratio of net investment income to average net assets 5.51 5.74(4)
Portfolio turnover rate 53 81

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

1 Institutional Shares commenced operations on 4/1/97. 2 Investor Shares
commenced operations on 5/1/97.

3 Not annualized.
4 Annualized.

BNY Hamilton Intermediate Investment Grade Fund 27

<PAGE>

BNY HAMILTON
INTERMEDIATE NEW YORK
TAX-EXEMPT FUND

CUSIP Numbers:

Institutional Shares 05561M754 [GRAPHIC]
Investor Shares 05561M309

INVESTMENT OBJECTIVE

The Fund seeks to provide income that is exempt from federal, New York State and
New York City income taxes while maintaining relative stability of principal.

MANAGEMENT STRATEGY

In pursuing its objective, the Fund normally invests at least 80% of its net
assets in investment-grade municipal debt obligations, which are securities
rated Baa/BBB and above, as well as their unrated equivalents. The Fund may
invest in securities issued by New York State and the Commonwealth of Puerto
Rico, including all of their municipalities and agencies. Under normal market
conditions, the Fund maintains a dollar-weighted average maturity between three
years and eight years.

The Fund invests in a diversified portfolio of investment-grade municipal
obligations. Before any security is added to the fund, it is thoroughly
evaluated for both quality and potential return. The portfolio manager relies on
internal credit research to evaluate specific municipal issuers' ability and
willingness to pay principal and interest to bondholders. Bonds are chosen based
on this analysis rather than on any private insurance features. The Fund invests
in general obligation bonds, which are secured by their issuers' full faith and
credit, and revenue bonds, which are secured by specific revenue streams such as
toll collections or proceeds of a special tax.

The Fund may invest in bonds of any maturity. Within the intermediate-term
range, the maturity length of the portfolio and structure of the individual
bonds held are based on the adviser's views on the direction of interest rates.

The Fund normally expects to be fully invested in tax-exempt securities, but it
is permitted to invest up to 20% of its net assets in fixed-income securities
that are subject to federal, state and local taxes. In abnormal market
conditions, the Fund may temporarily invest more than 20% of its net assets in
taxable investment-grade short-term securities such as U.S. Treasury
obligations. In these cases, the Fund would not be pursuing its investment
objective.

28 BNY Hamilton Intermediate New York Tax-Exempt Fund

<PAGE>

MAIN INVESTMENT RISKS

The value of your investment in the Fund generally will fluctuate with interest
rate movements. As interest rates rise, bond prices go down. The longer the
maturity of a bond, the more sharply its value is likely to rise or fall in
response to an interest rate change.

Because the Fund invests primarily in New York issuers, its performance is
affected by local, state and regional factors. These may include economic or
policy changes, erosion of the tax base, the legacy of the grave financial
difficulties experienced by New York City and the state as a whole in the 1970s.
State legislative changes, especially those regarding taxes, could also affect
performance.

Any debt securities held by the Fund could be downgraded in credit rating or go
into default. A revenue bond in the Fund's portfolio could default if its
underlying revenue stream fails. This could happen even while the issuer remains
solvent.

The Fund is non-diversified and may invest more than 5% of its assets in
securities of a single issuer. If the Fund invests heavily in a single issuer,
its overall performance could be linked more closely to the performance of that
issuer than to the municipal bond market as a whole.

The portfolio manager's strategies may not work out as planned, and the Fund's
performance could suffer.

In periods of market uncertainty, some of the portfolio's securities could
prove difficult to sell at a price that is beneficial to the Fund.

BNY Hamilton Intermediate New York Tax-Exempt Fund 29

<PAGE>

PAST PERFORMANCE

Investor Share annual total returns(1) (%) as of 12/31/98

93 94 95 96 97 98
- -------------------------------------------------------------------------------

7.99 -3.81 12.08 3.47 6.19 5.04

Best quarter: Q1 '95 +5.00 Worst quarter: Q1 '94 -3.24

Average annual total returns (%) as of 12/31/98*

The table below presents the Fund's average annual returns over various periods
along with those of widely recognized indices.

Average annual total returns (%) as of 12/31/98*

Since

1 Year 5 Years 8/10/92

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

Institutional Shares(2) 5.30 4.56 4.99

Investor Shares(1) 5.04 4.47 4.92

Lehman 5 Year G.O.

Municipal Bond Index(3) 5.85 5.36 5.93

Lipper New York Intermediate

Municipal Debt Funds Average(4) 5.62 4.85 5.70

* Assumptions: $1,000 initial investment with all dividends and distributions
reinvested.

FEES AND EXPENSES

Fee table (% of average net assets)

Institutional Investor
Shares Shares

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

Shareholder Fees None None

Annual Operating Expenses

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

Management fee 0.50 0.50
Distribution (12b-1) fees -- 0.25
Other expenses 0.57 0.57

Total annual operating expenses* 1.07 1.32

* This year, the adviser voluntarily reduced the Fund's operating expenses for
Institutional Shares by 0.28% and for Investor Shares by 0.28%, resulting in
net operating expenses of 0.79% and 1.04% respectively based on average daily
net assets.

Expenses on a $10,000 investment* ($)

1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------

Institutional Shares 110 342 593 1,311

Investor Shares 135 421 728 1,598

* Assumptions: $10,000 original investment, all dividends and distributions
reinvested, 5% annual returns, no voluntary expense reductions and no change
in operating expenses.

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

1 Investor Shares commenced operations on 8/10/92.

2 Before 4/1/97, performance figures are based on the performance of Investor
Shares of the Intermediate New York Tax-Exempt Fund.

3 The Lehman Brothers 5 Year General Obligation Municipal Bond Index is an
unmanaged index of intermediate-term general obligation municipal bonds.

4 The Lipper New York Intermediate Municipal Debt Funds Average tracks the
returns (after fees) of New York intermediate-term municipal bond mutual
funds. This index is included to show how the fund's performance compares with
its peers.

30 BNY Hamilton Intermediate New York Tax-Exempt Fund

<PAGE>

FINANCIAL HIGHLIGHTS

Institutional Shares - Year Ended December 31 1998 1997(1)

Per-Share Data ($)

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

Net asset valueat beginning of period 10.52 10.16

---------------------------
Income from investment operations:

Net investment income 0.41 0.31
Net realized and unrealized gain on investments 0.14 0.36

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

Total income from investment operations 0.55 0.67
Dividends and distributions:
Dividends from net investment income (0.41) (0.31)
Distributions from capital gains (0.01) --

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

Total dividends and distributions (0.42) (0.31)
Net asset value at end of period 10.65 10.52

Total return (%) 5.30 6.69(2)
Ratios/Supplemental Data (%)
- --------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 31,519 30,915
Ratio of expenses (after reduction) to

average net assets 0.90 0.90(3)
Ratio of expenses (before reduction) to
average net assets 1.07 1.15(3)
Ratio of net investment income (after reduction)
to average net assets 3.85 3.98(3)
Portfolio turnover rate 24 21

Investor Shares -- Year Ended December 31, 1998 1997 1996 1995 1994

Per-Share Data ($)

- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period 10.52 10.29 10.34 9.59 10.37
--------------------------------------------------------------------
Income from investment operations:

Net investment income 0.38 0.39 0.40 0.39 0.39
Net realized and unrealized gain on investments 0.14 0.23 (0.05) 0.75 (0.78)
--------------------------------------------------------------------
Total income from investment operations 0.52 0.62 0.35 1.14 (0.39)
Dividends and distribution:

Dividends from net investment income (0.38) (0.39) (0.40) (0.39) (0.39)
Distributions from capital gains (0.01) -- -- -- --

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

Total dividends and distribution (0.39) (0.39) (0.40) (0.39) (0.39)
Net asset value at end of period 10.65 10.52 10.29 10.34 9.59
--------------------------------------------------------------------
Total return (%) 5.04 6.19 3.47 12.08 (3.81)

<CAPTION>
Ratios/Supplemental Data (%)

- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 11,580 10,368 36,737 40,931 43,213
Ratio of expenses (after reduction) to

average net assets 1.15 1.02 0.90 0.90 0.85
Ratio of expenses (before reduction) to
average net assets 1.32 1.32 1.18 1.20 1.20
Ratio of net investment income (after reduction)
to average net assets 3.61 3.88 3.91 3.89 3.92
Portfolio turnover rate 24 21 22 4 18
</TABLE>

* KPMG LLP has audited the figures for 1997 and 1998. Previous years' data were
audited by Deloitte & Touche LLP.

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

1 Institutional shares commenced operations on 4/1/97.
2 Not annualized.

3 Annualized.

BNY Hamilton Intermediate New York Tax-Exempt Fund 31

<PAGE>

BNY HAMILTON

INTERMEDIATE

TAX-EXEMPT FUND

CUSIP Numbers:

Institutional Shares 05561M820 [GRAPHIC]
Investor Shares 05561M812

INVESTMENT OBJECTIVE

The Fund seeks to provide income that is exempt from federal income taxes while
maintaining relative stability of principal.

MANAGEMENT STRATEGY

In pursuing its objective, the Fund normally invests at least 80% of its net
assets in investment-grade municipal debt obligations issued by U.S. states,
territories and municipalities. Under normal market conditions, the Fund
maintains a dollar-weighted average maturity between three years and ten years.

32 BNY Hamilton Intermediate Tax-Exempt Fund

<PAGE>

MAIN INVESTMENT RISKS

This Fund's performance is affected by a variety of factors in the cities,
states and regions in which it invests. These may include economic or policy
changes, erosion of the tax base, state legislative changes, especially those
regarding taxes.

The portfolio manager's investment strategies may not work out as planned, and
the Fund's performance could suffer. Any debt securities held by the Fund could
be downgraded in credit rating or go into default.

A revenue bond in the Fund's portfolio could default if its underlying revenue
stream fails. This could happen even while the bond issuer remains solvent.

In periods of market uncertainty, some of the portfolio's securities could prove
difficult to sell for a price that is beneficial to the Fund.

About Municipal Securities

The Fund invests in state and local governments and their agencies, which have
collectively issued $1.3 trillion worth of bonds for schools, roads, hospitals,
utilities and major public works such as airports. New York is the largest state
issuer with approximately 10% of the outstanding debt.

Interest on municipal bonds was exempted from federal income tax when the code
was first adopted in 1913.

BNY Hamilton Intermediate Tax-Exempt Fund 33

<PAGE>

PAST PERFORMANCE

Institutional Shares annual total returns(1)

(%) as of 12/31/98

89 90 91 92 93 94 95 96 97 98
- -------------------------------------------------------------------------------

9.78 6.02 9.73 7.03 8.46 -3.62 11.45 3.69 6.09 5.37

Best quarter: Q2 '89 +5.40 Worst quarter: Q1 '94 -3.78 The table below presents
the Fund's average annual returns over various periods along with those of
widely recognized indices.

Average annual total returns (%) as of 12/31/98*

1 Year 5 Years 10 Years

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

Institutional Shares(1) 5.37 4.48 6.32

Investor Shares(1) 4.95 4.37 6.26

Lehman 5 Year G.O.

Municipal Bond Index(2) 5.85 5.36 6.98

Lipper Intermediate Municipal

Debt Funds Index(3) 5.62 5.13 6.91

* Assumptions: $1,000 initial investment with all dividends and distributions
reinvested.

FEES AND EXPENSES

Fee table (% of average net assets)

Institutional Investor
Shares Shares

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

Shareholder Fees None None

Annual Operating Expenses

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

Management fee 0.50 0.50
Distribution (12b-1) fees -- 0.25
Other expenses 0.33 0.38

Total annual operating expenses* 0.83 1.13

* This year, the adviser voluntarily reduced the Fund's operating expenses for
Institutional Shares by 0.04% and for Investor Shares by 0.09%, resulting in
net operating expenses of 0.79% and 1.04% respectively based on average daily
net assets.

Expenses on a $10,000 investment* ($)

1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------------

Institutional Shares 85 266 462 1,029

Investor Shares 116 361 625 1,380

* Assumptions: $10,000 original investment, all dividends and distributions
reinvested, 5% annual returns, no voluntary expense reductions and no change
in operating expenses.

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

2 The Lehman Brothers 5 Year General Obligation Municipal Bond Index is an
unmanaged-index of intermediate-term general obligation municipal bonds.

3 The Lipper Intermediate Municipal Debt Funds Index tracks the returns (after
fees) of the largest tax-free intermediate municipal bond mutual funds. This
index is included to show how the fund's performance compares with its peers.

34 BNY Hamilton Intermediate Tax-Exempt Fund

<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the Fund's
financial performance over the past five years (or since inception). Certain
information reflects financial results for a single fund share. The total
returns in the table represent the rate that an investor would have earned (or
lost) on an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by KPMG LLP, whose report,
along with the Fund's financial statement, is included in the annual report,
which is available upon request.

Institutional Shares - Year Ended December 31, 1998 1997(1)

Per-Share Data ($)

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

Net asset value at beginning of period 10.27 10.00
--------------------------
Income from investment operations:

Net investment income 0.41 0.33
Net realized and unrealized gain on investments 0.13 0.31

--------------------------
Total income from investment operations 0.54 0.64
Less distributions:

Dividends from net investment income (0.41) (0.33)
Distributions from capital gains (0.21) (0.04)

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

Total dividends and distributions (0.62) (0.37)
Net asset value at end of period 10.19 10.27
--------------------------

Total return (%) 5.37 6.50(3)
Ratios/Supplemental Data (%)

- -------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 270,065 269,085(4)
Ratio of expenses to average net assets 0.83 0.81(4)
Ratio of net investment income to average net assets 4.03 4.36(4)
Portfolio turnover rate 37 30

Investor Shares - Year Ended December 31, 1998 1997(2)

Per-Share Data ($)

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

Net asset value at beginning of period 10.28 9.99
--------------------------
Income from investment operations:

Net investment income 0.38 0.27
Net realized and unrealized gain on investments 0.12 0.33

--------------------------
Total income from investment operations 0.50 0.60
Less distributions:

Dividends from net investment income (0.38) (0.27)
Distributions from capital gains (0.21) (0.04)

--------------------------
Total dividends and distribution (0.59) (0.31)
Net asset value at end of period 10.19 10.28
--------------------------
Total return (%) 4.95 6.08(3)
Ratios/Supplemental Data (%)
- -------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 473 194
Ratio of expenses to average net assets 1.13 1.15(4)
Ratio of net investment income to average net assets 3.74 3.98(4)
Portfolio turnover rate 37 30

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

1 Institutional shares commenced operations on 4/1/97. 2 Investor shares
commenced operations on 5/1/97.

3 Not annualized.
4 Annualized.

BNY Hamilton Intermediate Tax-Exempt Fund 35

<PAGE>

ACCOUNT POLICIES

The funds in this prospectus are offered in two share classes -- Institutional
and Investor. Institutional Shares do not have 12b-1 fees and have generally
lower operating expenses, which improves investment performance. Institutional
Shares are available only to direct investments over $100,000 or to investors
who have specific asset management relationships with the adviser.

All other investors may purchase Investor Shares. The information below on Daily
NAV Calculation and Distributions and Tax Considerations applies to both share
classes. The other account policies apply to Investor Shares only. If you want
to purchase, exchange or redeem Institutional Shares, contact your Bank of New
York representative.

DAILY NAV CALCULATION

Each fund calculates its net asset value per share (NAV) at the close of regular
trading on the New York Stock Exchange (normally 4:00 p.m. eastern time) each
day that the exchange is open. When market prices are not available, the funds
will use fair value prices as determined by the board of directors.

Purchase orders received before the regular close of the New York Stock Exchange
will be executed at the NAV calculated at that day's close.

Certain funds invest in securities that are traded on foreign exchanges, which
may be open when the New York Stock Exchange is closed. The value of your
investment in these funds may change on days when you will be unable to purchase
or redeem shares.

DISTRIBUTION (12B-1) PLAN

The directors have adopted 12b-1 distribution plans with respect to the Investor
Shares of each of the funds in this prospectus. The plans permit the funds to
reimburse the Distributor for distribution expenses in an amount up to 0.25% of
the annual average daily net assets of Investor Shares. These fees are paid out
of fund assets on an ongoing basis, and over time, they could cost you more than
paying other types of sales charges.

OPENING AN ACCOUNT

Minimum investment requirements

Minimum initial Minimum continuing

Account Type investment investments Minimum balance

- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
IRA $250 $25 N/A

Regular Account $2,000* $100* $500

Automatic Investment

Program $500 $50 N/A
</TABLE>

36 Account Policies

<PAGE>

OPENING AN ACCOUNT/PURCHASING SHARES

Open an account Add to your investment

Mail

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

Send completed new account application and a Send a check payable directly to your fund to:
check payable directly to each fund you want
to invest in to: BNY Hamilton Funds, Inc.

P.O. Box 806

BNY Hamilton Fund Newark, NJ 07101-0806
P.O. Box 163310

Columbus, OH 43216-3310 If
possible, include a
tear-off payment
stub from one of
your transaction
confirmation
statements.

For all enrollment forms, call 800-426-9363.

Wire

- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
The funds do not charge a fee for wire

transactions, but your bank may.

Mail your completed new account application to the Ohio address above. Call the
transfer agent at 800-426-9363 for an account number.

Instruct your bank to wire funds to a new account at: Instruct your bank to wire
funds to:

The Bank of New York The Bank of New York
New York, NY 10286 New York, NY 10286
ABA: 021000018 ABA: 021000018
BNY Hamilton Funds BNY Hamilton Funds
DDA 8900275847 DDA 8900275847
Attn: [your fund] Attn: [your fund]

Ref: [your name, account number and taxpayer ID] Ref: [your name, account number and taxpayer ID]

Dealer

- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Note: a broker-dealer may charge a fee.

Contact your broker-dealer. Contact your broker-dealer.

Automatic Investment Program

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

<S> <C> Automatic investments are withdrawn from your bank account on a monthly
or biweekly basis.

Make an initial investment of at least $500 by Once you specify a dollar amount
(minimum $50), whatever method you choose. Be sure to fill in investments are
automatic.

the information required in section 7 of your new

account application. You can modify or terminate this service at any
time by mailing a notice to:

Your bank must be a member of the ACH (Automated

Clearing House) system. BNY Hamilton Funds
P.O. Box 163310
Columbus, OH 43216-3310

</TABLE>

Purchases by personal check Checks or money orders should be in U.S. dollars and
payable to the specific fund you wish to invest in. The funds do not accept
third-party checks. In addition, you may not redeem shares purchased by check
until your original purchase clears, which may take up to ten business days.

Wire transactions The adviser does not charge a fee for wire transfers from your
bank to the funds. However, your bank may charge a service fee for wiring funds.

Account Policies 37

<PAGE>

MAKING EXCHANGES/REDEEMING SHARES

To exchange shares between mutual funds (minimum $500) To redeem shares

Phone

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

<S> <C>
Call 800-426-9363. Call 800-426-9363.

The proceeds can be
wired to your bank
account two business
days after your
redemption request,
or a check can be
mailed to you at the
address of record on
the following
business day.

Mail

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

<S> <C>

Your instructions should include: Your instructions should include:
o your account number
o names of the funds and number of shares or o your account number

dollar amount you want to exchange. o names of the funds and number of shares or
dollar amount you want to exchange.

A signature
guarantee is
required whenever: o
you redeem more than
$50,000 o you want
to send the proceeds
to a different
address o you have
changed your account
address within the
last 60 days

Dealer

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

<S> <C>

Contact your broker-dealer. Contact your broker-dealer.

Systematic Withdrawal

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

Requires $10,000 minimum fund
balance You can
choose from several
options for monthly,
quarterly,
semi-annual or
annual withdrawals:

o declining balance
o fixed dollar
amount o fixed share
quantity o fixed
percentage of your
account

Call 800-426-9363 for details.

</TABLE>

38 Account Policies

<PAGE>

MAKING EXCHANGES/ REDEEMING SHARES

As with purchase orders, redemption requests received before the regular close
of the New York Stock Exchange will be executed at the offering price calculated
at that day's close.

Signature guarantees You can get a signature guarantee from many brokers and
from some banks, savings institutions and credit unions. A notary public cannot
provide a signature guarantee.

DISTRIBUTIONS AND TAX CONSIDERATIONS

Each fund pays monthly dividends, if any, and capital gains distribution, if
any, approximately 10 calendar days before month end. Distributions are
automatically paid in the form of additional fund shares. Notify the transfer
agent in writing to:

o choose to receive dividends or distributions (or both) in cash

o change the way you currently receive distributions

Your taxable income is the same regardless of which option you choose.

Type of Distribution Federal Tax Status

- ----------------------------------------------
Dividends from net ordinary income
investment income

Short-term capital gains ordinary income

Long-term capital gains capital gain

Tax-free dividends tax-free

None of the tax-exempt funds in this prospectus intends to invest in securities
whose income is subject to the alternative minimum tax. These dividends may,
however, be subject to state or local income taxes.

Distributions from the fixed-income funds are expected to be primarily ordinary
income from dividends, while distributions from the equity funds are expected to
be primarily capital gains.

The funds issue detailed annual tax information statements for each investor,
recording all distributions and redemptions for the preceding year. Any investor
who does not provide a valid Social Security or taxpayer identification number
to the funds may be subject to federal backup withholding tax.

Whenever you redeem or exchange shares, you are likely to generate a capital
gain or loss, which will be short- or long-term depending on how long you held
the shares.

If you invest in a fund shortly before an expected taxable dividend or capital
gain distribution, you may end up getting part of your investment back right
away in the form of taxable income.

You should consult your tax adviser about your own particular tax situation.

Account Policies 39

<PAGE>

INVESTMENT ADVISER

Indocam, located at 90, boulevard Pasteur- 75730 Paris Cedex 15- France, is the
subadviser for the BNY Hamilton International Equity Fund. Indocam, the asset
management arm of Credit Agricole, manages $130 billion of non-U.S. assets.

Adviser compensation The adviser is responsible for all business activities and
investment decisions for the funds. In return for these services, each fund pays
the adviser an annual fee.

Fund Fee
as a % of
average daily
net assets

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

BNY Hamilton Equity Income Fund 0.60

BNY Hamilton Large Cap Growth Fund 0.60

BNY Hamilton Small Cap Growth Fund 0.75

BNY Hamilton International Equity Fund 0.85*

BNY Hamilton Intermediate Government Fund 0.50

BNY Hamilton Intermediate Investment
Grade Fund 0.50

BNY Hamilton Intermediate New York Tax-
Exempt Fund 0.50

BNY Hamilton Intermediate Tax-Exempt Fund 0.50

* The adviser pays Indocam, the subadviser of the BNY Hamilton International
Equity Fund, a fee equal to 0.425% of the Fund's average daily net assets.

PORTFOLIO MANAGERS

The day-to-day management of the funds is handled by teams of investment
professionals under the leadership of the portfolio managers, who are described
below.

BNY Hamilton Equity Income Fund is managed by Robert G. Knott, Jr. and Charles
D. Ryan. Mr. Knott is senior portfolio manager of the Fund and a vice president
of the adviser. He has managed the Fund since its inception in 1992. He joined
the adviser in 1966 and has been managing assets since 1969. Mr. Ryan is a vice
president of the adviser . He has been a portfolio manager of the Fund since
1999 and a member of the management team since 1994. Before joining the adviser
in 1994, he was a portfolio manager and mutual fund manager at First Fidelity
Bank.

BNY Hamilton Large Cap Growth Fund is managed by Charles Goodfellow and
Christopher G. Dienno. Mr. Goodfellow is senior portfolio manager of the Fund
and a vice president of the adviser. He has managed the Fund since its inception
in 1997 and has been managing common trust funds since he joined the adviser in
1989. Mr. DiEnno has been a portfolio manager of the Fund since 1999 and has
been a member of the management team since 1997. Before joining the adviser in
1996, he was a portfolio manager and analyst with PNC Asset Management.

BNY Hamilton Small Cap Growth Fund John C. Lui is a vice president of the
adviser and has managed the Fund since its inception in 1997. He joined the
adviser in 1995 and has been managing assets since 1987. Before joining the
adviser, Mr. Lui managed global equity and bond portfolios for Barclays Global
Asset Management.

40 Account Policies

<PAGE>

BNY Hamilton International Equity Fund

Indocam, a subsidiary of Credit Agricole, is the subadviser for this Fund. Mary
Clare Bland is a vice president of the adviser and has managed the Fund since
1998, when she joined the adviser. Before that, Ms. Bland was a loan markets
analyst for Loan Pricing Corporation, taught economics at the University of
Gdansk in Poland and completed her doctorate in economics at Indiana University.

BNY Hamilton Intermediate Government Fund

William D. Baird is a vice president of the adviser, specializing in government,
mortgage-backed and asset-backed security analysis. He has managed the Fund
since 1997. He joined the adviser in 1993 and has been managing assets since
1981.

BNY Hamilton Intermediate Investment Grade Fund

The Fund is co-managed by Terence M. McCormick and Paul J. Pertusi. Mr.
McCormick is a vice president of the adviser and has managed the Fund since
1999. He joined the adviser in 1985 and has worked in the fixed income
management division since 1992. Mr. Pertusi is an assistant treasurer of the
adviser and has managed the Fund since 1999. Before joining the adviser in 1997,
he was an assistant portfolio manager at Merrill Lynch and managed portfolios
for high net worth individuals at Citibank.

BNY Hamilton Intermediate New York Tax-Exempt Fund

Colleen M. Frey is a vice president of the adviser and group head of the
tax-exempt bond management division. She has managed the Fund since its
inception in 1992 and joined the adviser in 1967.

BNY Hamilton Intermediate Tax-Exempt Fund

Jeffrey B. Noss is a vice president of the adviser and has managed the Fund
since its inception in 1997. He has managed other tax-exempt portfolios for the
adviser's tax-exempt bond management division since 1987.

YEAR 2000 (Y2K) COMPLIANCE

Account Policies 41

<PAGE>

NOTES

42 Notes

<PAGE>

BNY
HAMILTON

FUNDS

<PAGE>

FOR MORE INFORMATION

Annual and Semi-Annual Reports

These include commentary from the fund managers on the market conditions and
investment strategies that significantly affected the fund's performance,
detailed performance data, a complete inventory of the funds' securities and a
report from the funds' auditor.

Statement of Additional Information (SAI)

The SAI contains more detailed disclosure on features and policies of the funds.
A current SAI has been filed with the Securities and Exchange Commission and is
incorporated by reference into this document (that is, it is legally a part of
this prospectus).

You can obtain these documents free of charge, make inquiries or request other
information about the funds by contacting your dealer or:

BNY Hamilton Funds
P.O. Box 163310
Columbus, OH 43216-3310

800-426-9363 (800-4BNY-FND)

Information is also available from the SEC:

Securities and Exchange Commission
Public Reference Section
Washington, DC 20549-6009
www.sec.gov

For information on the operation of the SEC's public reference room, where
documents may be viewed and copied, call:

1-800-SEC-0330

Note: The SEC requires a duplicating fee for
paper copies.

SEC File Number: 811-6654

BNY
HAMILTON

FUNDS

BNY-0090 4/99

<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

April 30, 1999

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 APRIL 30,
1999, 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

Page

Money Market Funds
-------------------------------------------------------
Hamilton Hamilton
Hamilton Premier Classic
Shares Shares Shares
Prospectus Prospectus Prospectus
--------------- --------------- --------------

<S> <C> <C> <C> <C>
General................................... 3
Investment Objectives and Policies........ 3 5 5 3
Investment Restrictions................... 28 10 10 8
Directors and Officers.................... 36 11 11 9
Investment Adviser........................ 40 11 11 10
Administrator............................. 43 11 11 10
Distributor............................... 44 12 12 11
Fee Waivers............................... 13 14 13
Fund, Shareholder and Other Services...... 46 12 12 11
Purchase of Shares........................ 46 13 15 18
Redemption of Shares...................... 47 15 16 19
Exchange of Shares........................ 48 16 17 20
Dividends and Distributions............... 48 17 18 21
Net Asset Value........................... 49 18 19 21
Performance Data.......................... 51
Portfolio Transactions and Brokerage...... 55
Description of Shares..................... 58 18 20 22
Taxes..................................... 61 19 20 22
Special Considerations Relating to
Investments in New York Municipal
Obligations............................ 66
Additional Information.................... 83 20 21 23
Financial Statements...................... 84
Appendix A--Description of Securities
Ratings................................ 85
</TABLE>

<PAGE>

Table of Contents

Page

Tax-
Taxable Exempt
Fixed Fixed
Equity Income Income
Funds Funds Funds
Prospectus Prospectus Prospectus
-------------- --------------- ---------------
<S> <C> <C> <C> <C>
General................................... 3
Investment Objectives and Policies........ 3 9 5 5
Investment Restrictions................... 28 20 14 17
Directors and Officers.................... 36 21 15 18
Investment Adviser........................ 40 21 15 18
Administrator............................. 43 22 15 18
Distributor............................... 44 23 16 19
Fee Waivers............................... 25 19 21
Fund, Shareholder and Other Services...... 46 24 17 20
Purchase of Shares........................ 46 26 19 22
Redemption of Shares...................... 47 30 23 26
Exchange of Shares........................ 48 32 26 28
Dividends and Distributions............... 48 32 26 29
Net Asset Value........................... 49 33 27 29
Performance Data.......................... 51
Portfolio Transactions and Brokerage...... 55
Description of Shares..................... 58 34 28 30
Taxes..................................... 61 35 28 31
Special Considerations Relating to Investments 7
in New York Municipal Obligations...... 66
Additional Information.................... 83 36 29 32
Financial Statements...................... 84
Appendix A--Description of Securities
Ratings................................ 85
</TABLE>

<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 each Prospectus for each class of shares of BNY Hamilton
Money Fund 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".

3
<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 objective is to
provide long-term capital appreciation with a yield greater than the
yield of the Standard & Poor's 500 Index. 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. The Fund currently
considers large cap corporations to be those with market capitalization
of $3 billion or greater. 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 provide long-term capital appreciation by
investing primarily in equity securities of small 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 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;

4
<PAGE>

American Depository Receipts are traded in U.S. dollars on national exchanges
and in over-the-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 total 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,

<PAGE>

New York State or New York City income taxes. Such investments would be
considered temporary. The Adviser will invest a portion of the Fund's assets in
short-term investments to provide liquidity. Investments in short-term
investments may be increased for defensive purposes if, in the opinion of the
Adviser, market conditions so warrant. The Fund seeks to maintain a current
yield that is greater than that obtainable from a portfolio of short-term
tax-exempt obligations, subject to certain quality restrictions. See "Quality
and Diversification Requirements". The Fund may seek to moderate market risk and
minimize fluctuations in its net asset value per share through the use of
financial futures contracts and options. See "Hedging Activities".

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 is 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
"Taxable 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 Fixed Income 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".

6
<PAGE>

United States Government Obligations. Each of the Funds may invest in
obligations issued or guaranteed by the United States Government or by its
agencies or instrumentalities. Obligations issued or guaranteed by federal
agencies or instrumentalities may or may not be backed by the "full faith and
credit" of the United States. Securities that are backed by the full faith and
credit of the United States include Treasury bills, Treasury notes, Treasury
bonds, and obligations of the Government National Mortgage Association, the
Farmers Home Administration, and the Export-Import Bank. In the case of
securities not backed by the full faith and credit of the United States, each
Fund must look principally to the agency issuing or guaranteeing the
obligation for ultimate repayment and may not be able to assert a claim
against the United States itself in the event the agency or instrumentality
does not meet its commitments. Securities in which each Fund may invest that
are not backed by the full faith and credit of the United States include, but
are not limited to, obligations of the Tennessee Valley Authority, the Federal
National Mortgage Association and the United States Postal Service, each of
which has the right to borrow from the United States Treasury to meet its
obligations, and obligations of the Federal Farm Credit System and the Federal
Home Loan Banks, both of whose obligations may be satisfied only by the
individual credits of each issuing agency.

Foreign Government Obligations. 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 Fixed Income 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.

7
<PAGE>

The Adviser, acting as a fiduciary on behalf of its clients, has the right to
increase or decrease the amount provided to the borrower under an obligation.
The borrower has the right to pay without penalty all or any part of the
principal amount then outstanding on an obligation together with interest to
the date of payment.

Since these obligations typically provide that the interest rate is tied to
the Treasury bill auction rate, the rate on Master Notes is subject to change.
Repayment of Master Notes to participating accounts depends on the ability of
the borrower to pay the accrued interest and principal of the obligation on
demand which is continuously monitored by the Adviser. Since Master Notes
typically are not rated by credit rating agencies, the Funds may invest in
such unrated obligations only if at the time of an investment the obligation
is determined by the Adviser to have a credit quality that satisfies such
Fund's quality restrictions. See "Quality and Diversification Requirements".
Although there is no secondary market for Master Notes, such obligations are
considered by the Funds to be liquid because they are payable immediately upon
demand. The Funds do not have any specific percentage limitation on
investments in Master Notes.

Repurchase Agreements. Each of the Funds may enter into repurchase
agreements with brokers, dealers or banks that meet the credit guidelines
approved by the Board of Directors of BNY Hamilton Funds, Inc. (the
"Directors"). In a repurchase agreement, a Fund buys a security from a
seller that has agreed to repurchase the same security at a mutually
agreed upon date and price. The resale price is normally in excess of the
purchase price, reflecting an agreed upon interest rate. This interest
rate is effective for the period of time the Fund is invested in the
agreement and is not related to the coupon rate on the underlying
security. A repurchase agreement may also be viewed as a fully
collateralized loan of money by a Fund to the seller. The period of these
repurchase agreements will usually be short, from overnight to one week,
and at no time will the Funds invest in repurchase agreements for more
than one year. The securities that are subject to repurchase agreements,
however, may have maturity dates in excess of one year from the effective
date of the repurchase agreement. The Funds will always receive
securities as collateral whose market value is, and during the entire
term of the agreement remains, at least equal to 100% of the dollar
amount invested by the Funds in each agreement plus accrued interest, and
the Funds will make payment for such securities only upon physical
delivery or upon evidence of book entry transfer to the account of the
Funds' custodian. If the seller defaults, a Fund might incur a loss if
the value of the collateral securing the repurchase agreement declines
and might incur disposition costs in connection with liquidating the
collateral. In addition, if bankruptcy proceedings are commenced with
respect to the seller of the security, realization upon the collateral by
a fund may be delayed or limited. See "Investment Restrictions" in this
Statement of Additional Information.

Corporate Bonds and Other Debt Securities

As discussed in the Prospectus for the Taxable 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
Taxable Fixed

8
<PAGE>

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 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 Fixed Income 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 Fixed Income
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

9
<PAGE>

facilities, such as housing and pollution control facilities, for industrial
facilities and for water supply, gas, electricity and waste disposal
facilities.

Municipal bonds may be general obligation or revenue bonds. General
obligation bonds are secured by the issuer's pledge of its full faith,
credit and taxing power for the payment of principal and interest.
Revenue bonds are payable from revenues derived from particular
facilities, from the proceeds of a special excise tax or from other
specific revenue sources. They are not usually payable from the general
taxing power of a municipality.

Municipal Notes. Municipal notes are subdivided into three categories of
short-term obligations: municipal notes, municipal commercial paper and
municipal demand obligations.

Municipal notes are short-term obligations with a maturity at the time of
issuance normally ranging up to one year. The principal types of
municipal notes include tax anticipation notes, bond anticipation notes,
revenue anticipation notes, grant anticipation notes and project notes.
Notes sold in anticipation of collection of taxes, a bond sale, or
receipt of other revenues are usually general obligations of the issuing
municipality or agency.

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

10
<PAGE>

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 Fixed Income 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
Taxable 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
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 Fixed Income 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 Fixed Income Fund or a Taxable
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 Fixed Income Funds and the Taxable 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.

11
<PAGE>

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
Fixed Income Funds and the Taxable 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 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 Fixed Income 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

12
<PAGE>

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 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.

13
<PAGE>

To the extent that the Tax-Exempt Fixed Income 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 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 Taxable Fixed Income
Funds, and the Tax-Exempt Fixed Income 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

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<PAGE>

security and agrees to repurchase the same security at a mutually agreed upon
date and price. This may also be viewed as the borrowing of money by a Fund.
The Funds will invest the proceeds of borrowings under reverse repurchase
agreements. In addition, the Funds will enter into a reverse repurchase
agreement only when the interest income to be earned from the investment of
the proceeds is greater than the interest expense of the transaction. The
Funds will not invest the proceeds of a reverse repurchase agreement for a
period which exceeds the duration of the reverse repurchase agreement. A Fund
may not enter into reverse repurchase agreements exceeding in the aggregate
one-third of the market value of its total assets, less liabilities other than
the obligations created by reverse repurchase agreements. Each Fund will
establish and maintain with the Custodian a separate account with a segregated
portfolio of securities in an amount at least equal to its purchase
obligations under its reverse repurchase agreements. If interest rates rise
during the term of a reverse repurchase agreement, entering into the reverse
repurchase agreement may have a negative impact on the Money Fund's ability to
maintain a net asset value of $1.00 per share. See "Investment Restrictions".

Loans of Portfolio Securities. The Equity Funds, the Taxable Fixed Income
Funds and the Tax-Exempt Fixed Income 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. All Funds except the
Treasury Money Fund 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
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

15
<PAGE>

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 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

16
<PAGE>

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.

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.

Taxable Fixed Income Funds. During normal market conditions, each of the
Taxable 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 Fixed Income Funds. The Intermediate New York Tax-Exempt Fund
invests principally in a portfolio of "high quality" and "investment
grade" New York municipal bonds.

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<PAGE>

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 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
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.

Taxable Fixed Income Funds and Tax-Exempt Fixed Income Funds. The Taxable
Fixed Income Funds and the Tax-Exempt Fixed Income 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 Fixed Income
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 Taxable Fixed Income Funds and the
Tax-Exempt Fixed Income 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 Taxable Fixed
Income Funds and Tax-Exempt Fixed Income 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

18
<PAGE>

total assets. In addition, the Taxable Fixed Income Funds and the Tax-Exempt
Fixed Income 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
Taxable Fixed Income Funds and the Tax-Exempt Fixed Income 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 Fixed Income Funds based upon non-municipal debt securities or
indexes may not correlate as closely to a Tax-Exempt Fixed Income Fund's
portfolio as hedging activities based upon municipal debt securities or
indexes. Nevertheless, hedging activities may be useful to the Tax-Exempt
Fixed Income 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".

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<PAGE>

Financial Futures Contracts. Financial futures obligate the seller to
deliver a specific type of security called for in the contract, at a
specified future time, and for a specified price. Financial futures may
be satisfied by actual delivery of the securities or by entering into an
offsetting transaction. In offsetting or closing out an existing futures
position, the seller of the original contract enters into a futures
contract to take delivery of the same security at the same time as
specified in the original futures contract.

Although financial futures contracts, by their terms, call for actual
delivery or acceptance of securities, in most cases the contracts are
closed out before the settlement date without making or taking delivery
of the securities. Closing out is accomplished by an offsetting
transaction as described above. If the price in the offsetting
transaction (purchase) varies from the price in the original futures
contract (sale), the seller will realize a gain or loss on the
transaction. That gain or loss will tend to offset in whole or in part
the unrealized loss or gain that the securities held in the Funds'
portfolio have experienced, but may not always do so.

A public market exists in financial futures covering a number of debt
securities, including long-term United States Treasury bonds, ten-year
United States Treasury notes, Government National Mortgage Association
modified pass-through mortgage-backed certificates, three-month United
States Treasury bills, three-month domestic bank certificates of deposit
and three-month Eurodollar certificates of deposit. A public market also
exists for futures contracts on The Bond Buyer Index of forty long-term
municipal bonds. In addition, other financial futures contracts may be
developed and traded. The Funds may utilize any such contracts and
associated put and call options for which there is an active trading
market. Financial futures are traded on contract markets such as the
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

20
<PAGE>

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 Taxable Fixed Income Funds and the
Tax-Exempt Fixed Income Funds may also purchase put options and write
call options on futures contracts that are traded on a United States
exchange or board of trade and enter into closing transactions with
respect to such options to terminate an existing position. The Funds may
use their options on futures contracts in connection with hedging
strategies. Generally, these strategies would be employed under the same
market and market sector conditions in which the Funds use put and call
options on debt securities. See "Options" below. The purchase of put
options on futures contracts is analogous to the purchase of puts on debt
securities so as to hedge a Fund's portfolio of debt securities against
the risk of rising interest rates.

The writing of a call option on a futures contract constitutes a partial
hedge against declining prices of the debt securities that are
deliverable upon exercise of the futures contract. If the futures price
at expiration is below the exercise price, the Funds will retain the full
amount of the option premium, which provides a partial hedge against any
decline that may have occurred in the Funds' holdings of debt securities.

Risks Associated with Futures Contracts. There are risks associated with
the use of futures contracts for hedging purposes. The price of a futures
contract will vary from day to day and should parallel (but not
necessarily equal) the changes in price of the underlying deliverable
securities. The difference between these two price movements is called
"basis". There are occasions when basis becomes distorted. For instance,
in a rising interest rate environment, the increase in value of the
hedging instruments may not completely offset the decline in value of the
securities in the portfolio. Conversely, when interest rates decline, the
loss in the hedged position may be greater than the capital appreciation
that a Fund experiences in its securities positions. Distortions in basis
are more likely 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.

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<PAGE>

All investors in the futures market are subject to initial margin and
variation margin requirements. Rather than providing additional variation
margin, an investor may close out a futures position. Changes in the
initial and variation margin requirements may influence an investor's
decision to close out the position. The normal relationship between the
securities and futures markets may become distorted if changing margin
requirements do not reflect changes in value of the securities. The
liquidity of the futures market depends on participants entering into
offsetting transactions rather than making or taking delivery of the
underlying securities. In the event investors decide to make or take
delivery (which is unlikely), liquidity in the futures market could be
reduced, thus producing temporary basis distortion. Finally, the margin
requirements in the futures market are substantially lower than margin
requirements in the securities market. Therefore, increased participation
by speculators in the futures market may cause temporary basis
distortion.

In the futures market, it may not always be possible to execute a buy or
sell order at the desired price, or to close out an open position due to
market conditions, limits on open positions, and/or daily price
fluctuation limits. Each market establishes a limit on the amount by
which the daily market price of a futures contract may fluctuate. Once
the market price of a futures contract reaches its daily price
fluctuation limit, positions in the commodity can be neither taken nor
liquidated unless traders are willing to effect trades at or within the
limit. The holder of a futures contract (including a Fund) may therefore
be locked into its position by an adverse price movement for several days
or more, which may be to its detriment. If a Fund could not close its
open position during this period it would continue to be required to make
daily cash payments of variation margin. The risk of loss to a Fund is
theoretically unlimited when the Fund writes (sells) an uncovered futures
contract because the Fund is obligated to make delivery unless the
contract is closed out, regardless of fluctuations in the price of the
underlying security. When a Fund purchases a put option or call option,
however, the maximum risk of loss to the Fund is the price of the put
option or call option purchased. See "Options".

Options. In connection with their hedging activities, the Taxable Fixed
Income Funds and the Tax-Exempt Fixed Income Funds may purchase put
options or write (sell) call options on financial futures and debt
securities.

The Taxable Fixed Income Funds and the Tax-Exempt Fixed Income 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 Taxable Fixed Income Fund or Tax-Exempt Fixed
Income 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 Taxable Fixed Income
Funds or the Tax-Exempt Fixed Income 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.

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<PAGE>

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 Taxable
Fixed Income Funds or the Tax-Exempt Fixed Income 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 Taxable Fixed Income Funds or
the Tax Exempt Fixed Income 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
holding of a security which might otherwise have been sold to protect
against depreciation in the market price of the security.

The Taxable Fixed Income Funds and the Tax-Exempt Fixed Income Funds will
purchase call options to close out open positions. In order to close out
a position, the Taxable Fixed Income Funds and the Tax-Exempt Fixed
Income 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 Taxable Fixed Income Funds and the Tax-Exempt
Fixed Income 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 Taxable Fixed Income Funds and
the Tax-Exempt Fixed Income Funds may purchase an underlying security in
the cash market for delivery in

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<PAGE>

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 Taxable Fixed Income Funds and the Tax-Exempt
Fixed Income 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 Taxable Fixed Income
Funds and the Tax-Exempt Fixed Income 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 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 Taxable Fixed Income Funds and the Tax-Exempt Fixed Income 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 Taxable Fixed Income Funds and the Tax-Exempt Fixed Income 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 Taxable Fixed Income Funds and the Tax-Exempt Fixed Income Funds will
not invest more than 5% of their respective net assets in premiums on put
options. See "Portfolio Transactions and Brokerage".

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<PAGE>

Index Transactions. The Taxable Fixed Income Funds and the Tax-Exempt Fixed
Income Funds may utilize futures contracts on bond indexes (municipal bond
indexes in the case of the Tax-Exempt Fixed Income 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 Taxable Fixed Income Funds and the Tax-Exempt Fixed Income Funds may
also buy put options and sell call options on applicable bond, or
municipal bond, index futures or on applicable bond, or municipal bond
indexes. Options on index futures are similar to options on debt
instruments except that an option on an index future gives the purchaser
the right, in return for the premium paid, to assume a position in an
index contract rather than to purchase or sell a debt instrument at a
specified exercise price at any time during the period of the option.
Upon exercise of the option, the delivery of the futures position by the
writer of the option to the holder of the option will be accompanied by
delivery of the accumulated balance of the writer's futures margin
account which represents the amount by which the market price of the
index futures contract, at exercise, exceeds, in the case of a call, or
is less than, in the case of a put, the exercise price of the option on
the index future.

Options on indexes are also similar to options on debt instruments,
except that rather than the right to take or make delivery of a debt
instrument at a specified price, an option on an index gives the holder
the right to receive, upon exercise of the option, an amount of cash if
the closing level of the index upon which the option is based is greater
than, in the case of a call, or less than, in the case of a put, the
exercise price of the option. Unlike options on debt instruments, gain or
loss depends on the price movements in the securities included in the
index rather than price movements in individual debt instruments.

Equity 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

25
<PAGE>

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.
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

26
<PAGE>

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 -- Taxable Fixed Income Funds and Tax-Exempt
Fixed Income 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
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.

27
<PAGE>

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.

- ------------------------------------------------------------------------------
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 (except that the
Money Fund may enter into securities as described in "Privately
Placed and certain Unregistered Securities");

28
<PAGE>

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;

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

29
<PAGE>

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;

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, except that the Treasury Money
Fund may invest in zero coupon bonds issued by the United
States Government provided that the bonds mature within 397
days from the date of purchase, and that the Treasury Money
Fund may include zero coupon bonds issued by the United States
Government as collateral for repurchase agreements.

The Equity Funds may not:

30
<PAGE>

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;

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;

31
<PAGE>

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 Taxable Fixed Income 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 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;

32
<PAGE>

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;

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 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;

33
<PAGE>

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 Fixed Income 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 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

34
<PAGE>

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);

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;

35
<PAGE>

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, however, a fundamental
policy and may be changed by the Directors at any time without the
approval of the shareholders of the Equity Income Fund.

- ------------------------------------------------------------------------------
DIRECTORS AND OFFICERS

The directors and executive officers of BNY Hamilton Funds, Inc., their
business addresses and their principal occupations during the past five
years are:

36
<PAGE>

<TABLE>
<CAPTION>
Principal Occupations
Name and Address Position with Funds During Past Five Years
- ---------------- ------------------- ----------------------
<S> <C> <C>
Edward L. Gardner Director and Chairman Chairman of the Board, President and
411 Theodore Fremd Ave. of the Board Chief Executive Officer, Industrial
Rye, NY 10580 Solvents Corporation, 1981 to Present;
Age 64 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 Trustee, HRE Properties, 1990 to
42 Sunnybrook Road Present; Member, New York State Banking
Bronxville, NY 10708 Board, 1990-1993.
Age 72
</TABLE>

<PAGE>

<TABLE>
<S> <C> <C>
Mr. Stephen Stamas Director Chairman, New York Philharmonic, 1989 to
Windcrest Partners Present.
122 E. 42nd Street
49th Floor
New York, NY 10168
Age 68

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 47 March 1992 to Present.

Karen Osar Director Vice President & Treasurer, Tenneco Inc.,
1725 King Street January 1994-Present; Managing Director of
Greenwich, CT 06831 Corporate Finance Group, J.P. Morgan & Co.,
Age 50 Inc.; held various other positions at J.P.
Morgan & Co., Inc. from 1975-1994.

J. David Huber Chief Executive Officer Employee, BISYS Fund Services, Inc.,
3435 Stelzer Road June 1987 to Present
Columbus, OH 43219
Age 52

William J. Tomko President Vice President, BISYS Fund Services,
3435 Stelzer Road Inc., 1989 to Present
Columbus, OH 43219
Age 40

Richard Baxt Vice President Senior Vice President, Client Services, BISYS
125 West 55th Street Fund Services, Inc., 1997 to Present; General
New York, NY 10019 Manager of Investment and Insurance, First
Age 45 Fidelity Bank; President, First Fidelity
Brokers; President, Citicorp Investment
Services.

Michael A. Grunewald Vice President Manager, Client Services, BISYS Fund Services,
3435 Stelzer Road Inc., 1993 to Present.
Columbus, OH 43219
Age 29

</TABLE>

38
<PAGE>

<TABLE>
<S> <C> <C>
Nimish Bhatt Treasurer Vice President, Tax and Financial
3435 Stelzer Road Services, BISYS Fund Services, Inc.,
Columbus, OH 43219 June 1996-Present; Assistant Vice
Age 36 President, Evergreen Funds/First Union
Bank, 1995 to July 1996; Senior Tax
Consultant, Price Waterhouse LLP, 1990
to December 1994.

Ellen Stoutamire Secretary Vice President, Legal Services,
3435 Stelzer Road BISYS Fund Services, Inc., 1995
Columbus, OH 43219 -Present; Attorney, private practice,
Age 50 1990 to 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 31 Supervisor of Mutual Fund Legal
Department, Alliance Capital Management,
May 1989 to June 1995.

- ------------------------------------------------------------------------------------------------------------------
*Interested person
</TABLE>

In 1999, the Directors will be paid an annual fee of $15,000 and an
additional $1,200 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.

The following chart describes the compensation paid to Directors by BNY
Hamilton Funds, Inc. for the fiscal year ended December 31, 1998:

39
<PAGE>

<TABLE>
<CAPTION>
Pension or
Aggregate Retirement Total
Compensation Benefits Accrued Estimated Annual Compensation Paid
Name of Person, Paid by the as Part of Fund Benefits Upon by the Funds
Position Funds Expenses Retirement to Directors
-------- ----- -------- ---------- ------------

<S> <C> <C> <C> <C>
Edward L. Gardner $21,000 $0 $0 $21,000
--------- -------
Director and Chairman of the
Board

Peter Herrick $19,800 $0 $0 $19,800
--------- -------
Director

Leif H. Olsen $19,800 $0 $0 $19,800
--------- -------
Director

Stephen Stamas $19,800 $0 $0 $19,800
--------- -------
Director

James E. Quinn $19,800 $0 $0 $19,800
--------- -------
Director

Karen Osar $14,850 $0 $0 $14,850
--------- -------
Director
</TABLE>

The above compensation, which is expected to total approximately $99,000
plus out-of-pocket costs for 1999, will be allocated to all series of BNY
Hamilton Funds, Inc.

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 One 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 Indocam, a subsidiary of
Banque Indosuez. The Bank of New York will pay Indocam a fee equal to
.425% of the average daily net assets of the International Equity Fund.

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

40
<PAGE>

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".

As of April 1, 1999, The Bank of New York has voluntarily agreed to limit the
expenses of the Funds listed in the chart below. 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.

INSTITUTIONAL INVESTOR
SHARES SHARES
--------------------- -----------------------------
<S> <C> <C>
Small Cap Growth Fund................................ 1.11% 1.36%
----- -----
Intermediate Government Fund......................... .79% 1.04%
---- -----
Intermediate Investment Grade Fund................... .79% 1.04%
---- -----
Intermediate New York Tax-Exempt Fund................ .79% 1.04%
---- -----
Intermediate Tax-Exempt Fund......................... .79% 1.04%
---- -----
</TABLE>

For the fiscal years ended December 31, 1996, 1996, 1997, and 1998, The Bank
of New York received advisory fees from the Funds as follows:

1996 1997 1998
------ ---- ----
<S> <C> <C> <C>
Money Fund $1,128,699 $1,364,166 $2,007,951
---------- ----------
Treasury Money Fund N/A $28,637 $460,338
- ------------------- --- ------- ----------
Intermediate Government Fund $321,787 $290,842 $329,433
-------- -------- ----------
Intermediate Investment Grade Fund N/A $1,326,324 $1,873,230
- ---------------------------------- --- ---------- ----------
Intermediate New York Tax-Exempt Fund $193,702 $117,747 $140,654
-------- -------- ----------
Intermediate Tax-Exempt Fund N/A $1,013,662 $1,359,116
- ---------------------------- --- ---------- ----------
Equity Income Fund $1,211,813 $2,765,841 $3,339,410
---------- ---------- ----------
Large Cap Growth Fund N/A $1,419,944 $2,096,762
- --------------------- --- ---------- ----------
Small Cap Growth Fund N/A $547,464 $948,526
- --------------------- --- -------- ----------
International Equity Fund N/A $329,170 $537,436
- ------------------------- --- -------- ----------
</TABLE>

41
<PAGE>

The above chart reflects advisory fee waivers by The Bank of New York as
follows:

1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Treasury Money Fund N/A $61,996 $48,202
- ------------------- --- ------- -------
Intermediate Government Fund $0 $47,715 $47,060
- ---------------------------- -- ------- -------
Intermediate New York Tax-Exempt Fund $0 $75,480 $72,704
- ------------------------------------- -- ------- -------
Large Cap Growth Fund N/A $177,856 $383,778
- --------------------- --- -------- --------
Small Cap Growth Fund N/A $116,936 $249,498
- --------------------- --- -------- --------
International Equity Fund N/A $116,797 $79,747
- ------------------------- --- -------- --------
</TABLE>

The Advisory Agreement for each Fund must be specifically approved at
least annually (i) by a vote of the holders of a majority of the Fund's
outstanding shares or by its Directors and (ii) by a vote of a majority
of the Directors of the Fund who are not "interested persons" as defined
by the 1940 Act cast in person at a meeting called for the purpose of
voting on such approval. See "Directors and Officers". Each of the
Advisory Agreements will terminate automatically if assigned and is
terminable at any time without penalty by a vote of a majority of the
Directors or by a vote of the holders of a majority of a Fund's
outstanding shares on 60 days' written notice to the Adviser and by the
Adviser on 90 days' written notice to BNY Hamilton Funds, Inc. See
"Additional Information".

The Bank Holding Company Act of 1956 and the Glass-Steagall Act, as
interpreted by the Board of Governors of the Federal Reserve System,
generally prohibit The Bank of New York Company, Inc. and its
subsidiaries, including The Bank of New York, from sponsoring, organizing
or controlling a registered open-end investment company continuously
engaged in the issuance of its shares, such as the Corporation. This
prohibition does not extend to providing investment advice, custodial and
certain other services. The Bank of New York believes that it may perform
the services for the Funds contemplated by the Advisory Agreement without
violating the Glass-Steagall Act or other applicable banking laws or
regulations. It is, however, possible that future changes in either
federal or state statutes and regulations concerning the permissible
activities of banks or trust companies, as well as further judicial or
administrative decisions and interpretations of present and future
statutes and regulations, might prevent The Bank of New York from
continuing to perform such services for the Funds.

If The Bank of New York were prohibited from acting as investment adviser
to the Funds, it is expected that the Directors would recommend to the
Funds' shareholders that they approve the Funds' entering into new
investment advisory agreements with another qualified adviser selected by
the Directors.

<PAGE>

- ------------------------------------------------------------------------------
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 Market Funds will pay the Administrator an annual fee, accrued
daily and payable monthly, of .10% of their respective average daily net
assets. All other Funds will each pay the Administrator an annual fee,
accrued daily and payable monthly, of .20% of their respective average
daily net assets.

For the fiscal years ended December 31, 1996, 1997, and 1998 the Funds
paid administration fees as follows:

<PAGE>

<TABLE>
<CAPTION>
1996 1997 1998
------ ---- ----
<S> <C> <C> <C>
Money Fund $1,128,699 $1,364,166 $2,007,951
---------- ---------- ----------
Treasury Money Fund N/A $90,633 $508,540
- ------------------- --- ------- ---------
Intermediate Government Fund $128,631 $135,423 $150,597
-------- -------- ---------
Intermediate Investment Grade Fund N/A $530,532 $749,295
- ---------------------------------- --- -------- ---------
Intermediate New York Tax-Exempt Fund $49,111 $64,296 $85,343
------- ------- ---------
Intermediate Tax-Exempt Fund N/A $405,467 $543,649
- ---------------------------- --- -------- ---------
Equity Income Fund $403,939 $871,405 $1,084,161
-------- -------- ----------
Large Cap Growth Fund N/A $532,600 $826,847
- --------------------- --- -------- ---------
Small Cap Growth Fund N/A $177,174 $319,474
- --------------------- --- -------- ---------
International Equity Fund N/A $104,935 $290,440
- ------------------------- --- -------- ---------
</TABLE>

The above chart reflects administration fee waivers from the Intermediate
New York Tax-Exempt Fund of $28,176 and $12,990 for the fiscal years ended
December 31, 1996 and 1997, respectively. There were no waivers of
administration fees from this Fund during fiscal year 1998, nor were there
any 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 Taxable Fixed Income Funds, and
the Tax-Exempt Fixed Income 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

44
<PAGE>

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.

For the fiscal year ended December 31, 1998, the Funds paid the following
amounts for services related to their respective 12b-1 Plans. In each
Fund, approximately 60% of the amount shown represents compensation to
dealers and 40% represents payments to banks.

Money Fund $48,077
---------- -------
Intermediate Government Fund $29,270
---------------------------- -------
Intermediate Investment Grade Fund $9,122
---------------------------------- ------
Intermediate New York Tax-Exempt Fund $25,330
------------------------------------- -------
Intermediate Tax-Exempt Fund $819
---------------------------- ----
Equity Income Fund $88,873
------------------ -------
Large Cap Growth Fund $25,886
--------------------- -------
Small Cap Growth Fund $11,861
--------------------- -------
International Equity Fund $10,675
------------------------- -------

There was no 12b-1 Plan in effect for the Treasury Money Fund as of December 31,
1998.

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.

45
<PAGE>

- --------------------------------------------------------------------------------
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
and Hamilton Classic Shares of each 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.

The Bank of New York, 90 Washington Street, New York, New York 10286,
serves as the custodian and fund accounting agent for each Fund.

KPMG LLP, 345 Park Avenue, New York, New York 10154, are the independent
auditors of the Funds and must be approved at least annually by the Directors to
continue in such capacity. They will 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

46
<PAGE>

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. An Equity 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 Funds".

- --------------------------------------------------------------------------------
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, 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

47
<PAGE>

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 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 Taxable Fixed Income
Funds and the Tax-Exempt Fixed Income 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

48
<PAGE>

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".

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

49
<PAGE>

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.

Taxable Fixed Income and Tax-Exempt Fixed Income Funds. In the case of
the Taxable Fixed Income Funds and the Tax-Exempt Fixed Income Funds,
portfolio securities with a maturity of 60 days or more, including
securities listed on an exchange or traded over the counter, will be
valued using prices supplied daily by an independent pricing service or
services that (i) are based on the last sale price on a national
securities exchange, or in the absence of recorded sales, at the readily
available closing bid price on such exchange or at the quoted bid price
in the over-the-counter market, if such exchange or market constitutes
the broadest and most representative market for the security, and (ii) in
other cases, take into account various factors affecting market value,
including yields and prices of comparable securities, indication as to
value from dealers and general market conditions. If such prices are not
supplied by the Funds' independent pricing service, such securities will
be priced in accordance with procedures adopted by the Directors. All
portfolio securities with a remaining maturity of less than 60 days are
valued by the amortized cost method, because the Directors have
determined that this method will approximate market value. Because of the
large number of municipal bond issues outstanding and the varying
maturity dates, coupons and risk factors applicable to each issuer's
books, no readily available market quotations exist for most municipal
securities.

Equity Funds . 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

50
<PAGE>

readily available market quotations exist is based on a decision as to the
broadest and most representative market for such security.

Equity Funds and Intermediate Investment Grade Fund. 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.

All Funds (except Money Market Funds). 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.

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

51
<PAGE>

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 Money Market Funds as
of December 31, 1998 were as follows:

<TABLE>
<CAPTION>
Current 7 Effective 7
Day Yield Day Yield
-------------------- ----------------------

<S> <C> <C>
Money Fund - Hamilton Shares 4.95% 5.07%
- ------------------------------ ----- -----
Money Fund - Hamilton Premier Shares 4.70% 4.81%
- -------------------------------------- ----- -----
Money Fund - Hamilton Classic Shares 4.39% 4.48%
- -------------------------------------- ----- -----
Treasury Money Fund - Hamilton Shares 4.64% 4.75%
- --------------------------------------- ----- -----
Treasury Money Fund - Hamilton Premier Shares 4.39% 4.49%
- ----------------------------------------------- ----- -----
</TABLE>

As required by regulations of the Securities and Exchange Commission, the
annualized yield for each of the Taxable Fixed Income Funds, the
Tax-Exempt Fixed Income 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 Taxable Fixed Income Funds and
the Tax-Exempt Fixed Income Funds.

The 30-day yields for the Taxable Fixed Income Funds and the Tax-Exempt
Fixed Income Funds are as follows:

52
<PAGE>

<TABLE>
<CAPTION>
With Without
Reimbursement Reimbursement
---------------------- -----------------------
<S> <C> <C>
Intermediate Government Fund - Institutional Shares......... 5.04% 5.00%
- -------------------------------------------------------------- ----- -----
Intermediate Government Fund - Investor Shares.............. 4.79% 4.69%
- -------------------------------------------------------------- ----- -----
Intermediate Investment Grade Fund - Institutional Shares... 5.06% 5.06%
- -------------------------------------------------------------- ----- -----
Intermediate Investment Grade Fund - Investor Shares........ 4.74% 4.74%
- -------------------------------------------------------------- ----- -----
Intermediate New York Tax-Exempt Fund - Institutional Shares 3.16% 3.05%
- -------------------------------------------------------------- ----- -----
Intermediate New York Tax-Exempt Fund - Investor Shares..... 2.92% 2.82%
- -------------------------------------------------------------- ----- -----
Intermediate Tax-Exempt Fund - Institutional Shares......... 3.39% 3.39%
- -------------------------------------------------------------- ----- -----
Intermediate Tax-Exempt Fund - Investor Shares.............. 3.10% 3.10%
- -------------------------------------------------------------- ----- -----
</TABLE>

Total Return Quotations. As required by regulations of the Securities and
Exchange Commission, the annualized total return of each of the Equity
Funds, the Taxable Fixed Income Funds and the Tax-Exempt Fixed Income
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 total returns for the Funds are as follows:

53
<PAGE>

Average Average
Annual Annual
for the For the
One-Year Five-Year
Period Period
Aggregate Ended Ended
Inception Since December 31, December 31,
Date Inception 1998 1998
---- --------- ---- ----
---------- ---------- ------------- --------------
<S> <C> <C> <C> <C>
Intermediate Government Fund - Institutional 04/01/97 16.39% 7.49% N/A
- -------------------------------------------------- -------- ----- ----- ---
Shares..........................................
------------------------------------------------
Intermediate Government Fund - Investor Shares. 08/10/92 41.49% 7.33% 5.44%
- -------------------------------------------------- -------- ------ ----- -----
Intermediate Investment Grade Fund - 04/01/97 18.70% 8.56% N/A
- -------------------------------------------------- -------- ------ ----- ---
Institutional Shares.............................
- --------------------------------------------------
Intermediate Investment Grade Fund - Investor 05/01/97 18.14% 8.22% N/A
- -------------------------------------------------- -------- ------ ----- ---
Shares..........................................
------------------------------------------------
Intermediate New York Tax-Exempt Fund -
- --------------------------------------------------
Institutional Shares.......................... 04/01/97 12.34% 5.30% N/A
- -------------------------------------------------- -------- ------ ----- ---
Intermediate New York Tax-Exempt Fund - Investor 08/10/92 35.95% 5.04% 4.47%
- -------------------------------------------------- -------- ------ ----- -----
Shares..........................................
------------------------------------------------
Intermediate Tax-Exempt Fund - Institutional 04/01/97 12.22% 5.37% N/A
- -------------------------------------------------- -------- ------ ----- ---
Shares..........................................
------------------------------------------------
Intermediate Tax-Exempt Fund - Investor Shares. 05/01/97 11.63% 4.95% N/A
- -------------------------------------------------- -------- ------ ----- ---
Equity Income Fund - Institutional Shares...... 04/01/97 41.17% 13.18% N/A
- -------------------------------------------------- -------- ------ ------ ---
Equity Income Fund - Investor Shares........... 08/10/92 146.56% 12.82% 15.77%
- -------------------------------------------------- -------- ------- ------ ------
Large Cap Growth Fund - Institutional Shares... 04/01/97 59.45% 23.49% N/A
- -------------------------------------------------- -------- ------ ------ ---
Large Cap Growth Fund - Investor Shares........ 05/01/97 58.90% 23.26% N/A
- -------------------------------------------------- -------- ------ ------ ---
Small Cap Growth Fund - Institutional Shares... 04/01/97 37.89% 7.89% N/A
- -------------------------------------------------- -------- ------ ----- ---
Small Cap Growth Fund - Investor Shares........ 05/01/97 37.56% 7.55% N/A
- -------------------------------------------------- -------- ------ ----- ---
International Equity Fund - Institutional Shares 04/01/97 29.17% 20.84% N/A
- -------------------------------------------------- -------- ------ ------ ---
International Equity Fund - Investor Shares.... 05/01/97 28.57% 20.61% N/A
- -------------------------------------------------- -------- ------ ------ ---
</TABLE>

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
communications to shareholders may summarize the substance of

54
<PAGE>

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

55
<PAGE>

securities, as well as on the reinvestment of the proceeds in other
securities. A Fund's portfolio turnover rate is calculated by dividing the
lesser of purchases or sales of portfolio securities for the fiscal year by
the monthly average of the value of the portfolio securities owned during the
year. Securities whose maturity or expiration date at the time of acquisition
were one year or less are excluded from the calculation. For the fiscal years
ended December 31, 1996, 1997, and 1998, the portfolio turnover rates for the
Intermediate New York Tax-Exempt Fund and the Equity Income Fund were 22%,
21% and 24%; 58%, 65%, and 39%, respectively. It is anticipated that the
Intermediate New York Tax-Exempt Fund and the Equity Income Fund will continue
to have a portfolio turnover rate of less than 100%.

For the period April 1, 1997 (commencement of operations) to December 31, 1997,
and for the fiscal year ended December 31, 1998, the portfolio turnover rates
for the Intermediate Investment Grade Fund, Intermediate Tax-Exempt Fund, Large
Cap Growth Fund, Small Cap Growth Fund and International Equity Fund were 81%
and 53%; 30% and 37%; 37% and 26%; 68% and 84%; and 36% and 75%; respectively.
It is anticipated that the Intermediate Investment Grade Fund, Intermediate
Tax-Exempt Fund, Large Cap Growth Fund, Small Cap Growth Fund and International
Equity Fund will continue to have a portfolio turnover rate of less than 100%.

For the fiscal years ended December 31, 1996, 1997, and 1998, the portfolio
turnover rates for the Intermediate Government Fund were 57%, 41%, and 61%,
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, Taxable Fixed Income Funds and Tax-Exempt Fixed
Income Funds. Portfolio transactions for each of the Money Market Funds,
the Taxable Fixed Income Funds and the Tax-Exempt Fixed Income 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 Taxable Fixed Income Funds and the Tax-Exempt
Fixed Income 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

56
<PAGE>

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 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, 1996, 1997, and 1998, the Equity
Income Fund paid aggregate broker commissions of $129,028, $481,922, and
$500,347, respectively.

For the period April 1, 1997 (commencement of operations) to December 31, 1997,
and for the fiscal year ended December 31, 1998, the Large Cap Growth Fund
paid aggregate broker commissions of $177,684 and $226,702, respectively. Of the
aggregate commissions paid during the fiscal year ended December 31, 1998, the
Large Cap Growth Fund paid broker commissions of $5,295 to BNY ESI & Co., Inc.,
a wholly owned non-bank subsidiary of The Bank of New York Company, Inc., a
separate brokerage affiliate of The Bank of New York, and a member of the
New York Stock Exchange and other principal exchanges, and SIPC. This amounted
to 2.3% of the aggregate commissions paid by the Fund and 4.8% of the aggregate
dollar amount of principal transactions.

For the period April 1, 1997 (commencement of operations) to December 31, 1997,
and for the fiscal year ended December 31, 1998, the Small Cap Growth Fund
paid aggregate broker commissions of $120,938 and $279,344, respectively.

For the period April 1, 1997 (commencement of operations) to December 31, 1997,
and for the fiscal year ended December 31, 1998, the International Equity Fund
paid aggregate broker commissions of $530,331 and $876,134, 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

57
<PAGE>

be most equitable and consistent with the Adviser's fiduciary obligations to
the Fund. In some instances, this procedure might adversely affect a Fund.

If a Fund effects a closing purchase transaction with respect to an
option written by it, normally such transaction will be executed by the
same broker-dealer who executed the sale of the option. The writing of
options by a Fund will be subject to limitations established by each of
the exchanges governing the maximum number of options in each class which
may be written by a single investor or group of investors acting in
concert, regardless of whether the options are written on the same or
different exchanges or are held or written in one or more accounts or
through one or more brokers. The number of options which a Fund may write
may be affected by options written by the Adviser for other investment
advisory clients. An exchange may order the liquidation of positions
found to be in excess of these limits, and it may impose certain other
sanctions.

- --------------------------------------------------------------------------------
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
Name of Series and Classes Thereof Common 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
- Hamilton Classic 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
</TABLE>

58
<PAGE>

<TABLE>
<S> <C>
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>

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

59
<PAGE>

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 March 31, 1999:

<TABLE>
<CAPTION>
Fund Of Record % Beneficial Owner %
- ---- --------- - ---------------- -
<S> <C> <C> <C> <C>

Money Hare & Co. 9.5% Beneficial Owner 9.5%
One Wall Street The Keyspan Foundation
New York, NY 10286 One Metrotech Center

Brooklyn, NY 11201
------------------
Intermidate Government Wendel & Co. The Bank of New York
One Wall Street 37.7% Profit Sharing Plan B 31.9%
New York, NY 10286 ----- One Wall Street -----
New York, NY 10286

The Bank of New York
Long-Term Disability Plan 5.8%
One Wall Street -----
New York, NY 10286

Equity Income Wendel & Co. The Bank of New York
One Wall Street 21.6% Profit Sharing Plan A
New York, NY 10286 ----- One Wall Street 21.6%
New York, NY 10286 -----

Small Cap Growth Wendel & Co. The Bank of New York
One Wall Street 11.8% Profit Sharing Plan A 5.9%
New York, NY 10286 ----- One Wall Street -----
New York, NY 10286

Trust Company of America 5.9%
AAM -----
7103 South Revere Parkway
Englewood, NJ 80112

Treasury Money Hare & Co. 10.3% F W Olin Foundation
- -------------- One Wall Street ----- 780 Third Avenue 5.3%
New York, NY 10286 New York, NY 10017 -----

PYSCA Panama-1997 Project Acctt.
Reforma 10 Torre Caballito, Piso 30 5.0%
Co Tabacalera 06030 Mexico Dist Fed -----
</TABLE>

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<PAGE>

The Corporation's officers and directors, taken as a group, own less than
1% of the shares of each of the Funds.

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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; and (b) diversify its holdings so that, at the end of
each fiscal quarter, (i) at least 50% of the value of the Fund's assets
is represented by cash, United States Government securities and other
securities, with such other securities limited, in respect of any one
issuer, to an amount not greater than 5% of the Fund's assets, and 10% of
the outstanding voting securities of such issuer and (ii) not more than
25% of the value of its assets is invested in the securities of any one
issuer (other than United States Government securities). 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 Fixed
Income 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

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shares. Each of the Equity Funds (other than the International Equity Fund)
expects that a portion of these distributions to their respective corporate
shareholders will be eligible for the 70% dividends-received deduction. 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. Individual
shareholders will be subject to federal income tax on distributions of net
long-term capital gains at a maximum rate of 28% if designated as derived from
a Fund's capital gains from property held for more than one year and at a
maximum rate of 20% if designated as derived from property held for more than
eighteen months.

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. Individual
shareholders will be subject to federal income tax on long-term capital
gain at a maximum rate of 28% in respect of shares held for more than one
year and at a maximum rate of 20% in respect of shares held for more than
eighteen months. Capital gain of a corporate shareholder is taxed at the
same rate as ordinary income. 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 Fixed Income Funds. See "Tax-Exempt Fixed Income 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 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 Taxable Fixed
Income Funds and the Tax-Exempt Fixed Income 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

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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.

Certain options, futures and foreign currency contracts held by a Fund at
the end of each fiscal year will be required to be "marked-to-market" for
federal income tax purposes -- i.e., treated as having been sold at
market value. For options and futures contracts, sixty percent of any
gain or loss recognized on these deemed sales and on actual dispositions
will be treated as long-term capital gain or loss, and the remainder will
be treated as short-term capital gain or loss, regardless of how long the
Fund has held such options or futures. Any gain or loss recognized on
foreign currency contracts will be treated as ordinary income, unless an
election under Section 988 (a) (1) (B) of the 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, known as "passive foreign investment
companies", they may be subject to federal income tax on a portion of an
"excess distribution" from such passive 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 the foreign investment company's
income, whether or not distributed to the Fund. For taxable years
beginning after 1997, the Equity Funds will be permitted to
"mark-to-market" any marketable stock held by a Fund in a passive foreign
investment company. If a Fund made such an election, each investor in the
Fund would include in income in each year an amount equal to its share of
the excess, if any, of the fair market value of the stock in such passive
foreign investment company as of the close of the taxable year over the
adjusted basis of such

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stock. The investor would be allowed a deduction for its share of the excess,
if any, of the adjusted basis of the stock in such passive foreign investment
company over the fair market value of such stock as of the close of the
taxable year, but only to the extent of any net mark-to-market gains with
respect to the stock included by the investor for prior taxable years.

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 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, with certain exceptions,
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. In addition, effective for dividends paid after September
5, 1997, shareholders will not be eligible to claim a foreign tax credit
with respect to foreign income taxes paid by the Fund unless certain
holding period requirements are met.

Each Fund may be subject to state or local taxes in jurisdictions in
which the Fund is deemed to be doing business. In addition, the treatment
of a Fund and its shareholders in those states that have income tax laws
might differ from treatment under the federal income tax laws.
Shareholders should consult their own tax advisors with respect to any
state or local taxes.

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.

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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 Fixed Income Funds. Both of the Tax-Exempt Fixed Income 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 Fixed Income 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 Fixed Income Fund. In
view of each Tax-Exempt Fixed Income Fund's investment policies, it is
expected that substantially all dividends will be exempt-interest
dividends, although each Tax-Exempt Fixed Income 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 Fixed Income 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 Fixed Income Fund and distributed to
shareholders will be so treated for purposes of any alternative minimum
tax liability of shareholders. The Tax-Exempt Fixed Income Funds are
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 Fixed Income 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 Fixed Income 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 Fixed Income Fund to the extent that

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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 Fixed Income 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 Fixed Income 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
Fixed Income 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.

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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.

Economic Outlook

New York (the "State") is the third most populous state in the nation and has a
relatively high level of personal wealth. The State's economy is diverse with a
comparatively large share of the nation's finance, insurance, transportation,
communications and services employment, and a very small share of the nation's
farming and mining activity. The State's location, air transport facilities and
natural harbors have made it an important link in international commerce. Travel
and tourism constitute an important part of the economy. Like the rest of the
nation, New York has a declining proportion of its workforce engaged in
manufacturing and an increasing proportion engaged in service industries.

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 at times failed to
predict precisely 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, the extent of
corporate and governmental restructuring, federal fiscal and monetary policies,
the level of interest rates, and the condition of the world economy, which could
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.

The national economy has maintained a robust rate of growth during the past six
quarters, as its seven-year expansion continues. Approximately 16 1/2 million
jobs have been added nationally since early 1992. The State economy has
continued to expand, but growth remains somewhat slower than in the nation.
Although the State has added over 400,000 jobs since late 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. Government downsizing has also moderated these job gains.

Nationally, the annual growth rate is expected to be significantly lower in 1999
than had been predicted, and it is expected to be slower than during 1997. U.S.
trade balances are expected to continue to be negatively affected in 1999 by the
financial and economic turmoil that began in Asia and spread to other parts of
the world. Growth in domestic consumption, which has helped fuel the nation's
strong economic performance in recent years, is also expected to ebb in 1999, as
there likely will be a drop in consumer confidence from recent historic highs
and the stock market may cease to provide consumers with large amounts of
disposable income. Lower short-term interest rates, however, which are expected
to continue through 1999, should help prevent a national recession. Real GDP
grew roughly 3.4 percent in 1998, which was moderately below the

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1997 rate. It is expected to fall further to 1.6 percent in 1999. Growth of
nominal GDP fell from 5.9 percent in 1997 to 4.6 percent in 1998, and is
expected to drop to 3.7 percent in 1999. Inflation, which fell to 1.7 percent in
1998, is predicted to rise to 2.7 percent in 1999. The annual rate of job growth
was approximately 2.5 percent in 1998, but it is forecasted to slow to 1.9
percent in 1999. Growth in personal income and wages is expected to continue to
slow in 1999.

At the State level, continued growth is projected in 1999 for employment, wages
and personal income, although a significant slowdown in the growth rates of
personal income and wages is expected. Personal income growth is expected to
fall from roughly 5.0 percent in 1998 to 3.4 percent in 1999, partly because
growth in bonus payments is expected to slow significantly, which would be a
marked shift from the unusually high increases of the past few years. Overall
employment growth is expected to drop from approximately 2.0 percent in 1998 to
1.0 percent in 1999 because of the slow growth of the national economy,
continued spending restraint in government, lower profitability in the financial
sector and continued restructuring in the manufacturing, health care and banking
sectors.

Current Fiscal Year

Overview

The State's current fiscal year commenced on April 1, 1998, and ends on March
31, 1999, and is referred to herein as the State's 1998-99 fiscal year. The
Legislature adopted the debt service component of the State budget for the
1998-99 fiscal year on March 30, 1998 and the remainder of the budget on April
18, 1998. For the period before adoption of the budget for the current fiscal
year, the Legislature enacted appropriations to permit the State to continue its
operations and provide for other purposes. On April 25, 1998, the Governor
vetoed certain items that the Legislature added to the Executive Budget, which
the Legislature had not overridden by the start of the legislative recess on
June 19, 1998.

General Fund disbursements in 1998-99 are now projected to grow by $2.43 billion
over 1997-98 levels, or $690 million more than proposed in the Governor's
Executive Budget, as amended. The change in General Fund disbursements from the
Executive Budget to the enacted budget reflects legislative additions (net of
the value of the Governor's vetoes), actions taken at the end of the regular
legislative session, and spending that was originally anticipated to occur in
1997-98 but is now expected to occur in 1998-99. The State projects that the
1998-99 State Financial Plan is balanced on a cash basis, with an estimated
reserve for future needs of $761 million.

The State's enacted budget includes several new multi-year tax reduction
initiatives, including acceleration of State-funded property and local income
tax relief for senior citizens under the School Tax Relief Program (STAR),
expansion of the child care income-tax credit for middle-income families, a
phased-in reduction of the general business tax, and reduction of several other
taxes and fees, including an accelerated phase-out of assessments on medical
providers. The enacted budget also provides for significant increases in
spending for public schools, special education programs, and for the State and
City university systems. It also allocates $50 million for a new Debt Reduction
Reserve Fund (DRRF) that may eventually be used to pay debt service costs on or
to prepay outstanding State-supported bonds.

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The 1998-99 State Financial Plan projects a closing balance in the General Fund
of $1.7 billion, which is comprised of a reserve of $1.04 billion available for
future needs, a balance of $400 million in the Tax Stabilization Reserve Fund
(TSRF), a balance of $158 million in the Community Projects Fund (CPF), and a
balance of $100 million in the Contingency Reserve Fund (CRF). The TSRF can be
used in the event of an unanticipated General Fund cash operating deficit, as
provided under the State Constitution and State Financial Law. The CPF is used
to finance various legislative and executive initiatives. The CRF provides
resources to help finance any extraordinary litigation costs during the fiscal
year.

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. The General Fund is expected to account
for approximately 47.6 percent of all Governmental Funds disbursements and 70.1
percent of total State Funds disbursements in the State's 1998-99 fiscal year.
General Fund moneys are also transferred to other funds, primarily to support
certain capital projects and debt service payments in other fund types.

General Fund Receipts

Total General Fund receipts and transfers from other funds in the 1998-99 fiscal
year are projected to reach $37.84 billion, an increase of over $3 billion from
the 1997-98 fiscal year. This total includes $34.50 billion in tax receipts,
$1.47 billion in miscellaneous receipts and $1.86 billion in transfers from
other funds. The transfer of a portion of the surplus recorded in 1997-98 to
1998-99 exaggerates the "real" growth in State receipts from year to year by
depressing reported 1997-98 figures and inflating 1998-99 projections.
Conversely, the incremental cost of tax reductions newly effective in 1998-99
and the impact of statutes earmarking certain tax receipts to other funds
depress apparent growth below the underlying growth in receipts attributable to
expansion of the State's economy. On an adjusted basis, State tax revenues in
the 1998-99 fiscal year are projected to grow approximately 7.5 percent,
following an adjusted growth of roughly 9.0 percent in the 1997-98 fiscal year.

The Personal Income Tax is imposed on the income of individuals, estates and
trusts and is based, with certain modifications, on federal definitions of
income and deductions. This tax continues to account for over half of the
State's General Fund receipts base. Net personal income tax collections are
projected to reach $21.44 billion, nearly $3.7 billion above the reported
1997-98 collection total. Since 1997 represented the completion of the 20
percent income tax reduction program enacted in 1995, growth from 1998 to 1999
will be unaffected by major income tax reductions. Adding to the projected
annual growth is the net impact of the transfer of the surplus from 1997-98 to
the current year, which affects reported collections by over $2.4 billion on a
year-over-year basis, as partially offset by the diversion of slightly over $700
million in income tax receipts to the STAR fund to finance the initial year of
the school tax reduction program.

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 the Local
Government Assistance Corporation (LGAC)

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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 from user taxes and fees in 1998-99 are projected to be $7.21 billion,
an increase of $170 million from the prior year. The sales tax component of this
category accounts for all of the 1998-99 growth, as receipts for all other
sources declined by $100 million. The growth in yield of the sales tax in
1998-99, after adjusting for tax law and other changes, is projected at 4.7
percent. The yields of most of the excise taxes in this category show a
long-term declining trend, particularly cigarette and alcoholic beverage taxes.
These General Fund declines are exacerbated in 1998-99 by revenue losses from
scheduled and newly enacted tax reductions, and by an increase in earmarking of
motor vehicle registration fees to the Dedicated Highway and Bridge Trust Fund.

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. Beginning in 1994, a
15 percent surcharge on these levies began to be phased out and, for most
taxpayers, there is no surcharge liability for taxable periods ending in 1997
and thereafter.

Total business tax collections in 1998-99 are projected at $4.79 billion, $257
million less than the prior fiscal year. The year-over-year decline in projected
receipts in this category is a function of statutory changes between the two
years. These include the first year of utility-tax rate cuts and the Power for
Jobs tax reduction program for energy providers, and the scheduled additional
diversion of General Fund petroleum business and utility tax receipts to other
funds.

Other taxes include estate, gift and real estate transfer taxes, a pari-mutuel
tax and other minor levies. They are now projected to total $1.02 billion -- $75
million below last year's amount. Two factors account for a significant part of
the expected decline in collections from this category: (i) the effects of the
elimination of the real property gains tax collections and (ii) a decline in
estate tax receipts, which follows the explosive growth recorded in 1997-98,
when receipts expanded by over 16 percent.

Miscellaneous receipts include investment income, abandoned property receipts,
medical provider assessments, minor federal grants, receipts from public
authorities and certain other license and fee revenues. Total miscellaneous
receipts are projected to reach $147 billion, down almost $200 million from the
prior year. 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. Miscellaneous receipts and
transfers from other funds are projected to reach $3.33 billion for the fiscal
year.

General Fund Disbursements

General Fund disbursements and transfers to capital, debt service and other
funds are projected at $36.78 billion, an increase of $2.43 billion (7.1
percent) from 1997-98. Nearly one-half of the growth is for educational
purposes, reflecting increased support for public schools, special education
programs and the State and City university systems. The remaining increase is
primarily for Medicaid, mental hygiene, and other health and social welfare
programs, including

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children and family services. The 1998-99 Financial Plan also includes funds for
negotiated salary increases for State employees and increased transfers for debt
service.

Grants to Local Governments, which is the largest category of General Fund
disbursements, includes financial assistance to local governments and
not-for-profit corporations and entitlement benefits to individuals. The 1998-99
Financial Plan projects spending of $25.14 billion in this category, an increase
of $1.88 billion, or 8.1, percent over the prior year. The largest annual
increases are for educational programs, Medicaid, other health and social
welfare programs and community projects grants.

The 1998-99 budget provides $9.7 billion in support for public schools. The
year-to-year increase of $769 million is comprised of partial funding for a
1998-99 school year increase of $847 million and the remainder of the 1997-98
school year increase that occurs in State fiscal year 1998-99. Spending for all
other educational programs, including the State and City university systems, the
Tuition Assistance Program and handicapped programs, is estimated at $3.00
billion, an increase of $270 million over 1997-98 levels.

Medicaid costs are estimated at $5.60 billion, an increase of $144 million from
the prior year. After adjusting 1997-98 for the $116 million prepayment of an
additional Medicaid cycle, Medicaid spending is projected to increase $260
million, or 4.9 percent. Disbursements for all other health and social welfare
programs are projected to total $3.63 billion, an increase of $131 million from
1997-98. This includes an increase in support for children and families and
local public health programs, offset by a decline in welfare spending of $75
million that reflects continuing State and local efforts to reduce welfare
fraud, declining caseloads, and the impact of State and federal welfare reform
legislation.

Remaining disbursements primarily support community based mental hygiene
programs, community and public health programs, local transportation programs
and revenue sharing payments to local governments. Revenue sharing and other
general purpose aid is projected at $837 million, an increase of approximately
$37 million from 1996-97.

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 73 percent of this category.
Disbursements for State operations are projected at $6.7 billion, an increase of
$511 million, or 8.3 percent, over the 1997-98 fiscal year. This year-to-year
growth reflects the continuing phase-in of wage increases under existing
collective bargaining agreements, the impact of binding arbitration settlements
and the costs of funding an additional payroll cycle in 1998-99.

General State charges account primarily for 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.

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Disbursements in this category are estimated at $2.22 billion, a decrease of $50
million from the prior year. This decline reflects projected decreases in
pension costs and Court of Claims payments, offset by modest projected increases
for health insurance contributions, social security costs and the loss of
reimbursements due to a reduction in the fringe benefit rate charged to
positions financed by non-General Fund sources.

Debt service paid from the General Fund reflects debt service on short-term
obligations of the State and includes only the interest cost of the State's
commercial paper program. The 1998-99 debt service estimate is $11 million,
which reflects relative stability in short-term interest rates. The State's
annual tax and revenue anticipation note (TRAN) 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 in support
of debt service are projected at $2.14 billion in 1998-99, an increase of $111
million from 1997-98. The increase reflects the impact of certain prior year
bond sales (net of refunding savings) and certain bond sales planned to occur
during the 1998-99 fiscal year. The State Financial Plan also establishes a
transfer of $50 million to the new Debt Reduction Reserve Fund. The Fund may be
used, subject to enactment of new appropriations, to pay the debt service costs
on or to prepay State-supported bonds. Transfers in support of capital projects
provide General Fund support for projects not otherwise financed through bond
proceeds, dedicated taxes and other revenues or federal grants. These transfers
are projected at $200 million for 1998-99, comparable to last year. Remaining
transfers from the General Fund to other funds are estimated to decline $59
million in 1998-99 to $327 million. This decline is primarily the net impact of
one-time transfers in 1997-98 to the State University Tuition Stabilization Fund
and to the Lottery Fund to support school aid, offset by a 1998-99 increase in
the State subsidy to the Roswell Park Cancer Research Institute.

General Fund Balance

The Financial Plan projects a closing balance in the General Fund of $1.7
billion. The balance is comprised of the $1.04 billion reserve for future needs,
$400 million in the Tax Stabilization Reserve Fund, $100 million in the
Contingency Reserve Fund (after a planned deposit of $32 million in 1998-99) and
$158 million in the Community Projects Fund.

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 41 percent of
total government funds receipts in the 1998-99 fiscal year, three-quarters of
that activity relates to federally-funded programs. Projected disbursements in
this fund type total $29.98 billion, an increase of $2.33 billion (8.4 percent)
over 1997-98 levels. Disbursements from federal funds, primarily the federal
share of Medicaid and other social services programs, are projected to total
$21.78 billion in the 1998-99 fiscal year. Remaining growth in federal funds is
primarily due to the new Child Health Plus program, estimated at $197 million.
This program will expand health insurance coverage to children of indigent
families.

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State special revenue spending is projected to be $8.19 billion, an increase of
$1.20 billion from last year's levels.

Capital Project Funds

Capital Projects Funds 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 various other
capital funds established to distinguish specific capital construction purposes
supported by other revenues. In the 1998-99 fiscal year, activity in these funds
is expected to comprise 5.5 percent of total governmental receipts.

Capital Projects Funds spending in fiscal year 1998-99 is projected to be $4.14
billion, an increase of $575 million, or 16.1 percent, from last year. The major
components of this expected growth are transportation and environmental
programs, including continued increased spending for 1996 Clean Water/Clean Air
Bond Act projects and higher projected disbursements from the Environmental
Protection Fund (EPF). Another significant component of this projected increase
is in the area of public protection, primarily for facility rehabilitation and
construction of additional prison capacity.

Debt Service Funds

Debt Service Funds are used to account for the payment of principal 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 3.8 percent of total governmental fund receipts in the 1998-99
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.

Total disbursements from the Debt Service Fund type are estimated at $3.36
billion in 1998-99, an increase of $275 million or 8.9 percent from 1997-98
levels. Of the increase, $102 million is for transportation purposes, including
debt service on bonds issued for State and local highway and bridge programs
financed through the New York State Thruway Authority and supported by the
Dedicated Highway and Bridge Trust Fund. Another $45 million is for education
purposes, including State and City University programs financed through the
Dormitory Authority of the State of New York (DASNY). The remainder is for a
variety of programs in such areas as mental health and corrections, and for
general obligation financings.

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Out-Year Projections of Receipts and Disbursements

State law requires the Governor to propose a balanced budget each year. In
recent years, the State has closed projected budget gaps of $5.0 billion
(1996-97), $2.3 billion (1997-98) and less than $1 billion (1998-99). The State,
as part of the 1998-99 Executive Budget projections submitted to the Legislature
in February 1998, projected a 1999-00 General Fund budget gap of approximately
$1.7 billion and a 2000-01 gap of $3.7 billion. As a result of changes made in
the 1998-99 enacted budget, the 1999-00 gap is now expected to be roughly $1.3
billion, or about $400 million less than previously projected, after application
of reserves created as part of the 1998-99 budget process. Such reserves would
not be available against subsequent year imbalances.

Sustained growth in the State's economy could contribute to closing projected
budget gaps over the next several years, both in terms of higher-than-projected
tax receipts and in lower-than-expected entitlement spending. However, the
State's projections in 1999-00 currently assume actions to achieve $600 million
in lower disbursements and $250 million in additional receipts from the
settlement of State claims against the tobacco industry. Consistent with past
practice, the projections do not include any costs associated with new
collective bargaining agreements after the expiration of the current round of
contracts at the end of the 1998-99 fiscal year. The State expects that the
1999-00 Financial Plan will achieve savings from initiatives by State agencies
to deliver services more efficiently, workforce management efforts, maximization
of federal and non-general Fund spending offsets and other actions necessary to
bring projected disbursements and receipts into balance.

The State will formally update its outyear projections of receipts and
disbursements for the 2000-01 and 2001-02 fiscal years as a part of the 1999-00
Executive Budget process, as required by law. The revised expectations for years
2000-01 and 2001-02 will reflect the cumulative impact of tax reductions and
spending commitments enacted over the last several years, as well as new 1999-00
Executive Budget recommendations. The STAR program, which dedicates a portion of
personal income tax receipts to fund school tax reductions, has a significant
impact on General Fund receipts. STAR is projected to reduce personal income tax
revenues available to the General Fund by an estimated $1.3 billion in 2000-01.
Measured from the 1998-99 base, scheduled reductions to estate and gift, sales
and other taxes, reflecting tax cuts enacted in 1997-98 and 1998-99, will lower
General Fund taxes and fees by an estimated $1.8 billion in 2000-01.
Disbursement projections for the outyears currently assume additional outlays
for school aid, Medicaid, welfare reform, mental health community reinvestment
and other multi-year spending commitments in law.

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 TRANs. A
national recession, followed by the lingering economic slowdown in the New York
and the regional economy, resulted in repeated shortfalls in receipts and three
budget deficits during those years. During its last six fiscal years, the State
has recorded balanced budgets on a cash basis, with positive fund balances as
described below.

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1997-98 Fiscal Year

The State ended its 1997-98 fiscal year in balance on a cash basis, with a
General Fund operating surplus of $1.56 billion. As a result, the State reported
an accumulated surplus of $567 million in the General Fund for the first time
since it began reporting its operations on a generally accepted accounting
principals (GAAP) basis. The 1997-98 fiscal year operating surplus resulted in
part from higher-than-anticipated personal income tax receipts, an increase in
taxes receivable of $681 million, an increase in other assets of $195 million
and a decrease in pension liabilities of $144 million. These gains were
partially offset by an increase in payables to local governments of $270 million
and tax refunds payable of $147 million.

The General Fund had a closing balance of $638 million, an increase of $205
million from the prior fiscal year. The balance is held in three accounts within
the General Fund: the Tax Stabilization Reserve Fund (TSRF), the Contingency
Reserve Fund (CRF) and the Community Projects Fund (CPF). The TSRF closing
balance was $400 million, following a required deposit of $15 million (repaying
a transfer made in 1991-92) and an extraordinary deposit of $68 million made
from the 1997-98 surplus. The CRF closing balance was $68 million, following a
$27 million deposit from the surplus. The CPF, which finances legislative
initiatives, closed the fiscal year with a balance of $170 million, an increase
of $95 million. The General Fund closing balance did not include $2.39 billion
in the tax refund reserve account, of which $521 million was made available as a
result of the Local Government Assistance Corporation (LGAC) financing program
and was required to be on deposit on March 31, 1998.

General Fund receipts and transfers from other funds for the 1997-98 fiscal year
(including net tax refund reserve account activity) totaled $34.55 billion, an
annual increase of $1.51 billion, or 4.57 percent, over 1996-97. General Fund
disbursements and transfers to other funds were $34.35 billion, an annual
increase of $1.45 billion or 4.41 percent.

1996-97 Fiscal Year

The State ended its 1996-97 fiscal year on March 31, 1997 in balance on a cash
basis, with a General Fund cash surplus as reported by DOB of approximately
$1.42 billion. The cash surplus was derived primarily from higher-than-expected
receipts and lower-than-expected spending for social services programs.

The General Fund closing balance was $433 million, an increase of $146 million
from the 1995-96 fiscal year. The balance included $317 million in the TSRF,
after a required deposit of $15 million and an additional deposit of $65 million
in 1996-97. In addition, $41 million remained on deposit in the CRF. The
remaining $75 million reflected amounts then on deposit in the Community
Projects Fund. The General Fund closing balance did not include $1.86 billion in
the tax refund reserve account, of which $521 million was made available as a
result of the LGAC financing program and was required to be on deposit as of
March 31, 1997.

General Fund receipts and transfers from other funds for the 1996-97 fiscal year
totaled $33.04 billion, an increase of 0.7 percent from the previous fiscal year
(including net tax refund reserve

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account activity). General Fund disbursements and transfers to other funds
totaled $32.90 billion for the 1996-97 fiscal year, an increase of 0.7 percent
from the 1995-96 fiscal year.

1995-96 Fiscal Year

The State ended its 1995-96 fiscal year on March 31, 1996 with a General Fund
cash surplus, as reported by DOB, of $445 million. The cash surplus was derived
from higher-than-expected receipts, savings generated through agency cost
controls, and lower-than-expected welfare spending.

The General Fund closing fund balance was $287 million, an increase of $129
million from 1994-95 levels. The 129 million change in fund balance is
attributable to a $65 million voluntary deposit to the TSRF, a $15 million
required deposit to the TSRF, a $40 million deposit to the CRF, and a $9 million
deposit to the Revenue Accumulation Fund. The closing fund balance included $237
million on deposit in the TSRF. In addition, $41 million was on deposit in the
CRF. The remaining $9 million reflected amounts then on deposit in the Revenue
Accumulation Fund. The General Fund closing balance did not include $678 million
in the tax refund reserve account, of which $521 million was made available as a
result of the LGAC financing program and was required to be on deposit as of
March 31, 1996.

General Fund receipts and transfers from other funds (including net refund
reserve account activity) totaled $32.81 billion, a decrease of 1.1 percent from
1994-95 levels. General Fund disbursements and transfers to other funds totaled
$32.68 billion for the 1995-96 fiscal year, a decrease of 2.2 percent from
1994-95 levels.

Year 2000 Compliance

New York State is currently addressing "Year 2000" data processing compliance
issues. The Year 2000 compliance issue ("Y2K") arises because most computer
software programs allocate two digits to the data field for "year" on the
assumption that the first two digits will be "19". Absent reprogramming, such
programs will interpret the year 2000 as the year 1900. Y2K could impact both
the entering of data into computer programs and the ability of such programs to
correctly process data.

The State created the Office for Technology (OFT) in 1996 to help address
statewide technology issues, including Y2K. OFT has estimated that investments
of at least $140 million will be required to bring approximately 350 State
mission-critical and high-priority computer systems not otherwise scheduled for
replacement into Year 2000 compliance, and the State is planning to spend $100
million in the 1998-99 fiscal year for this purpose. Mission-critical computer
applications are those which impact the health, safety and welfare of the State
and its citizens, and for which failure to be in Y2K compliance could have a
material and adverse impact upon State operations. High-priority computer
applications are those that are critical for a State agency to fulfill its
mission and deliver services, but for which there are manual alternatives. Work
has been completed on roughly 20 percent of these systems. All remaining
unfinished mission-critical and high-priority systems have at least 40 percent
or more of the work completed. Contingency planning is underway for those
systems which may be non-compliant prior to failure dates. The enacted budget
also continues funding for major systems scheduled for replacement,

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including the State payroll, civil service, tax and finance and welfare
management systems, for which Year 2000 compliance is included as a part of the
Project.

OTF is monitoring compliance on a quarterly basis and is providing assistance
and assigning resources to accelerate compliance for mission-critical systems,
with most compliance testing expected to be completed by mid-1999. There can be
no guarantee, however, that all of the State's mission-critical and
high-priority computer systems will be Year 2000 complaint, or that there will
not be an adverse impact upon State operations or State Finances as a result.

Certain Litigation

The legal proceedings noted below involve State finances and programs and
miscellaneous civil rights, real property, contract and other tort claims in
which the State is a defendant and the potential monetary claims sought against
the State are substantial, generally in excess of $100 million. These
proceedings could adversely affect the financial condition of the State in the
1998-99 fiscal year or thereafter.

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-d of the
Public Health Law, which impose a tax on the gross receipts hospitals and
residential health care facilities receive from all patient care services; (iv)
alleged responsibility of New York officials to assist in remedying racial
segregation in the City of Yonkers; (v) challenges to the regulations
promulgated by the Superintendent of Insurance that established excess medical
malpractice premium rates; (vi) a case challenging the shelter allowance granted
to recipients of public assistance as insufficient for proper housing; (vii) an
action against the Governor of the State of New York challenging the Governor's
application of his constitutional line item veto authority to certain portions
of budget bills; and (viii) a case calling for the enforcement of the provisions
of Articles 12-A, 20 and 28 as applicable to taxation on motor fuel and tobacco
products sold to non-Indian consumers on Indian reservations. In addition,
aspects of petroleum business taxes are the subject of administrative claims and
litigation.

The City of New York

The fiscal health of the State may be affected by the fiscal health of New York
City ("the City"), which continues to receive significant financial assistance
from the State. The City depends on State aid both to enable the City to balance
its budget and to meet its cash requirements. The State may also be affected by
the ability of the City and certain entities issuing debt for the benefit of the
City to market their securities successfully in the public credit markets.

The City has achieved balanced operating results for each of its fiscal years
since 1981 as measured by the GAAP standards in force at that time. The City
prepares a four-year financial plan ("Financial Plan") annually and updates it
periodically, and prepares a comprehensive annual financial report each October
describing its most recent fiscal year. For current information on the City's
Financial Plan and its most recent financial disclosure, contact the

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Office of the Comptroller, Municipal Building, Room 517, One Centre Street, New
York, NY 10007, Attention: Deputy Comptroller for Public Finance.

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.

Currently, the City and its Covered Organizations (i.e., those organizations
which receive or may receive moneys from the City directly, indirectly or
contingently) operate under the Financial Plan. The City's Financial Plan
summarizes its capital, revenue and expense projections and outlines proposed
gap-closing programs for years with projected budget gaps. The City's
projections set forth in the Financial Plan are based on various assumptions and
contingencies, some of which are uncertain and may not materialize. Unforseen
developments and changes in major assumptions could significantly affect the
City's ability to balance its budget as required by State law and meet its
annual cash flow and financing requirements.

Implementation of the Financial Plan is also 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. In 1997, the
State created the New York City Transitional Finance Authority (TFA) to finance
a portion of he City's capital program because the City was approaching its
State Constitutional general debt limit. Without the additional financing
capacity of the TFA, projected contracts for City capital projects would have
exceeded the City's debt limit during City fiscal year 1997-98. Despite this
additional financing mechanism, the City currently projects that it will reach
its debt limit in City fiscal year 1999-2000 if no further action is taken. On
June 2, 1997, an action was commenced seeking a declaratory judgment declaring
the legislation establishing the TFA to be unconstitutional. On November 25,
1997 the State Supreme Court found the legislation establishing the TFA to be
constitutional and granted the defendants' motion for summary judgment. The
plaintiffs have appealed that decision. Future developments concerning the City
or entities issuing debt for the benefit of the City, public discussion of such
developments and prevailing market conditions and securities credit ratings may
affect the ability or cost to sell securities issued by the City or such
entities and may also affect the market for their outstanding securities.

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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 cities of Yonkers and Troy continue to operate under
State-ordered control agencies. The potential impact on the State of any future
requests by localities for additional oversight or financial assistance is not
included in the projections of the State's receipts and disbursements for the
State's 1998-99 fiscal year.

Eighteen municipalities received extraordinary assistance during the 1996
legislative session through $50 million in special appropriations targeted for
distressed cities, and twenty-eight municipalities received more than $32
million in targeted unrestricted aid in the 1997-98 budget. Both of these
emergency aid packages were largely continued through the 1998-99 budget. The
State also dispersed an additional $21 million among all cities, towns and
villages after enacting a 3.9 percent increase in General Purpose State Aid in
1997-98, and continued this increase in 1998-99.

The 1998-99 budget includes an additional $29.4 million in unrestricted aid
targeted to 57 municipalities across the State. Other assistance for
municipalities with special needs totals more than $25.6 million. Twelve upstate
cities will receive $24.2 million in one-time assistance from a cash flow
acceleration of State aid.

The appropriation and allocation of general purpose local government aid among
localities, including New York City, is currently the subject of investigation
by a State commission. While the distribution of general purpose local
government aid was originally based on a statutory formula, in recent years both
the total amount appropriated and the amounts appropriated to localities have
been determined by the Legislature. A State commission was established to study
the distribution and amounts of general purpose local government aid and
recommend a new formula by June 30, 1999, which may change the way aid is
allocated.

Municipalities and school districts have engaged in substantial short-term and
long-term borrowings. In 1996, the total indebtedness of all localities in the
State other than New York City was approximately $20.0 billion. A small portion
(approximately $77.2 million) of that indebtedness represented borrowing to
finance budgetary deficits and was issued pursuant to State enabling
legislation. State law requires the Comptroller to review and make
recommendations concerning the budgets of those local government units other
than New York City that are authorized by State law to issue debt to finance
deficits during the period that such deficit financing is outstanding.
Twenty-one localities had outstanding indebtedness for deficit financing at the
close of their fiscal year ending in 1996.

Like the State, local governments must respond to changing political, economic
and financial influences over which they have little or no control. Such changes
may adversely affect the financial condition of certain local governments. For
example, the federal government may reduce (or in some cases eliminate) federal
funding of some local programs which, in turn, may require local governments to
fund these expenditures from their own resources. It is also possible that the
State, New York City, or any of their respective public authorities may suffer
serious

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financial difficulties that could jeopardize local access to the public credit
markets, which may adversely affect the marketability of notes and bonds issued
by localities within the State. Localities may also face unanticipated problems
resulting from certain pending litigation, judicial decisions and long-range
economic trends. Other large-scale potential problems, such as declining urban
populations, increasing expenditures, and the loss of skilled manufacturing
jobs, may also adversely affect localities and necessitate State assistance.

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 that apply to the State itself and may
issue bonds and notes within the amounts and restrictions set forth in
legislative authorization. The State's access to the public credit markets could
be impaired and the market price of its outstanding debt may be materially and
adversely affected if any of its public authorities default on their respective
obligations, particularly those using the financing techniques referred to as
State-supported or State-related debt. As of December 31, 1997, there were 17
public authorities that had outstanding debt of $100 million or more, and the
aggregate outstanding debt, including refunding bonds, of all State Public
Authorities was $84 billion, only a portion of which constitutes State-supported
or State-related debt.

Beginning in 1998, the Long Island Power Authority (the "LIPA") assumed
responsibility for the provision of electric utility services previously
provided by Long Island Lighting Company for Nassau, Suffolk and a portion of
Queen Counties, as part of an estimated $7 billion financing plan. As of the
date of this AIS, LIPA has issued over $5 billion in bonds secured solely by
ratepayer charges. LIPA's debt is not considered either State-supported or
State-related debt.

The Metropolitan Transit Authority (the "MTA") oversees the operation of subway
and bus lines in New York City 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 on, and will continue to
depend on, operating support from the State, local governments and TBTA,
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
revenue for mass transit purposes, including assistance to the MTA. Since 1987,
State law 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

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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 1998-99
State fiscal year, total State assistance to the MTA is projected to total
approximately $1.3 billion, an increase of $133 million over the 1997-98 fiscal
year.

State legislation accompanying the 1996-97 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 $12.17 billion MTA capital plan for the 1995 through 1999 calendar years
(the "1995-99 Capital Program"). In July 1997, the Capital Program Review Board
(the "CPRB") approved the 1995-99 Capital Program (subsequently amended in
August 1997), which supercedes 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 $5.2 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 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
causes fare revenues to decline, the MTA's ability to meet its operating
expenses without additional assistance could be impaired.

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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.

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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.

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

FINANCIAL STATEMENTS

The following financial information is hereby incorporated by reference
to the indicated pages of the Funds' Annual Report to shareholders dated
December 31, 1998.

<TABLE>
<S> <C> <C> <C> <C> <C>
QUESTIONS & ANSWERS Page 1 BNY HAMILTON INTERMEDIATE
INVESTMENT GRADE FUND
BNY HAMILTON EQUITY INCOME FUND Schedule of Investments....... Page 59
Schedule of Investments....... 19 Statement of Assets and
Liabilities................... 64
Statement of Assets and Statement of Operations....... 64
Liabilities................... 23
Statement of Operations....... 23 Statement of Changes in Net
Assets........................ 65
Statements of Changes in Net Financial Highlights.......... 66
Assets........................ 24
Financial Highlights.......... 25
BNY HAMILTON INTERMEDIATE NEW
BNY HAMILTON LARGE CAP GROWTH YORK TAX-EXEMPT FUND
FUND Schedule of Investments....... 67
Schedule of Investments....... 27 Statement of Assets and
Liabilities................... 73
Statement of Assets and Statement of Operations....... 73
Liabilities................... 31
Statement of Operations....... 31 Statements of Changes in Net
Assets........................ 74
Statement of Changes in Net Assets 32 Financial Highlights.......... 75
Financial Highlights.......... 33
BNY HAMILTON INTERMEDIATE TAX-
BNY HAMILTON SMALL CAP GROWTH EXEMPT FUND
FUND Schedule of Investments....... 77
</TABLE>

83
<PAGE>

<TABLE>
<S> <C> <C> <C>
Schedule of Investments....... 34 Diversification by State...... 86
Statement of Assets and Statement of Assets and
Liabilities................... 38 Liabilities................... 87
Statement of Operations....... 38 Statement of Operations....... 87
Statement of Changes in Net Assets 39 Statement of Changes in Net
Assets........................ 88
Financial Highlights.......... 40 Financial Highlights.......... 89

BNY HAMILTON INTERNATIONAL EQUITY BNY HAMILTON MONEY FUND
FUND Schedule of Investments....... 90
Schedule of Investments....... 41 Statement of Assets and
Liabilities................... 98
Industry Diversification...... 46 Statement of Operations....... 98
Statement of Assets and Statements of Changes in Net
Liabilities................... 48 Assets........................ 99
Statement of Operations....... 48 Financial Highlights.......... 100
Statement of Changes in Net Assets 49
Financial Highlights.......... 50 BNY HAMILTON TREASURY MONEY
FUND
BNY HAMILTON INTERMEDIATE Schedule of Investments....... 103
GOVERNMENT FUND Statement of Assets and
Liabilities................... 105
Schedule of Investments....... 51 Statement of Operations....... 105
Statement of Assets and Statement of Changes in Net
Liabilities................... 55 Assets........................ 106
Statement of Operations....... 55 Financial Highlights.......... 107
Statements of Changes in Net
Assets........................ 56
Financial Highlights.......... 57 NOTES TO FINANCIAL STATEMENTS.... 108

REPORT OF INDEPENDENT AUDITORS... 117

FEDERAL INCOME TAX INFORMATION... 118

DIRECTORS AND OFFICERS........... 119
</TABLE>

<PAGE>

APPENDIX A

Description of Security Ratings

S&P
Corporate and Municipal Bonds

AAA Debt obligations rated AAA have the highest ratings assigned
by S&P to a debt obligation. Capacity to pay interest and
repay principal is extremely strong.

AA Debt obligations rated AA have a very strong capacity to pay
interest and repay principal and differ from the highest
rated issues only in a small degree.

A Debt obligations rated A have a strong capacity to pay
interest and repay principal although they are somewhat more
susceptible to the adverse effects of changes in
circumstances and economic conditions than debts in higher
rated categories.

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

BB Debt rated BB has less near-term vulnerability to default
than other speculative issues. However, it faces major
ongoing uncertainties or exposure to adverse business,
financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal
payments.

B Debt rated B has greater vulnerability to default but
currently has the capacity to meet interest payments and
principal repayments. Adverse business, financial, or
economic conditions will likely impair capacity or
willingness to pay interest and repay principal.

CCC Debt rated CCC has a currently indefinable vulnerability to
default, and is dependent upon favorable business, financial
and economic conditions to meet timely payment of interest
and repayment of principal. In the event of adverse
business, financial or economic conditions, it is not likely
to have the capacity to pay interest and repay principal.

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

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

85
<PAGE>

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.

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.

86
<PAGE>

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.
- 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.

89
<PAGE>

MIG-2 MIG-2 rated notes are of high quality but with margins of
protection not as large as MIG-1.

<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 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, BNY Hamilton Money Fund and
BNY Hamilton Treasury Money Fund as of December 31, 1998

- 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> <C> <C>
(1) (a) Articles of Incorporation of Registrant.*
(b) Articles of Amendment, dated June 29, 1992.*
(c) Articles of Supplementary, dated June 29, 1994.*
(d) Articles of Supplementary, dated August 15, 1995.*
(e) Articles of Amendment, dated January 22, 1997*
(f) Articles Supplementary, dated January 22, 1997.*
(g) Form of Articles Supplementary, dated
April 28, 1999.

(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.*
(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 Distribution Agreements between Registrant and BNY Hamilton
Distributors, Inc.*

(7) Not Applicable.

(8) (a) Custody Agreement between Registrant and The Bank of New York.*
(b) Cash Management and Related Services Agreement between each series of Registrant
and The Bank of New York.*
(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.
(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.*

(p) Revised Fund Accounting Services Agreement between BNY Hamilton
International Equity Fund and The Bank of New York.*

(q) Form of Shareholder Servicing Plan of BNY Hamilton Treasury Money Fund (Classic Shares).
(r) Form of Revised Rule 18f-3 Plan of BNY Hamilton Funds, Inc.

(10) Opinion of Sullivan & Cromwell.*

(11) Consent of KPMG 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.*

(j) Form of Rule 12b-1 Plan of BNY Hamilton Treasury Money Fund - Classic 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 April 1, 1999.

Number
Title of Class of record holders
-------------- -----------------
<S> <C>
Equity Income Fund - Institutional Shares 3,129
Equity Income Fund - Investor Shares 1,415
Large Cap Growth Fund - Institutional Shares 2,609
Large Cap Growth Fund - Investor Shares 241
Small Cap Growth Fund - Institutional Shares 2,535
Small Cap Growth Fund - Investor Shares 178
International Equity Fund - Institutional Shares 2,565
International Equity Fund - Investor Shares 133
Intermediate Government Fund - Institutional Shares 364
Intermediate Government Fund - Investor Shares 349
Intermediate Investment Grade Fund - Institutional Shares 2,743
Intermediate Investment Grade Fund - Investor Shares 33
Intermediate New York Tax-Exempt Fund - Institutional Shares 220
Intermediate New York Tax-Exempt Fund - Investor Shares 357
Intermediate Tax-Exempt Fund - Institutional Shares 1,279
Intermediate Tax-Exempt Fund - Investor Shares 11
Money Fund - Hamilton Shares 194
Money Fund - Hamilton Premier Shares 1,509
Money Fund - Hamilton Classic Shares 2,115
Treasury Money Fund - Hamilton Shares 44
Treasury Money Fund - Hamilton Premier Shares 603
</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, 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
---- -------------
<S> <C>
Richard Barth..................................... Retired; Formerly Chairman and Chief Executive
Officer of Ciba-Geigy Corporation (diversified
chemical products)

Frank J. Biondi, Jr............................... Chairman and Chief Executive Office of Universal
Studios (diversified entertainment operator)

Harold E. Sells................................... Retired; Formerly Chairman and Chief Executive
Office of Woolworth Corporation (retailing)

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)

Richard J. Kogan.................................. President and Chief Executive Officer of
Schering-Plough Corporation (manufacturer of
pharmaceutical and consumer products)

John A. Luke, Jr.................................. Chairman, President and Chief Executive Officer of
Westvaco Corporation (manufacturer of paper,
packaging, and specialty chemicals)

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)

H. Barclay Morley............................... Retired; Formerly Chairman and Chief Executive
Officer of Stauffer Chemical Company (chemicals)

Catherine A. Rein................................. Senior Executive Vice President of Metropolitan
Life Insurance Company (insurance and financial
services)
</TABLE>

Item 29. Principal Underwriter.

(a) BNY Hamilton Distributors, Inc., which is located at 125
West 55th Street, New York, New York 10019, will act as
exclusive distributor for the Registrant. The distributor is
registered with the Securities and Exchange Commission as a
broker-dealer and is a member of the National Association of
Securities Dealers.

(b) The information required by this Item 29 with respect to
each director, officer or partner of the Distributor is
incorporated by reference to Schedule A of Form BD filed by
the Distributor pursuant to the Securities Exchange Act of
1934.

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 and BNY Hamilton
Treasury Money Fund), the Registrant will furnish each person to
whom a prospectus is delivered with a copy of the Registrant's
latest annual report to shareholders, upon request and without
charge.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the registrant certifies that it meets all of the
requirements for effectiveness of this registration statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereto
duly authorized in the City of New York, and the State of New York on the
28th day of April, 1999.

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 28th day of April, 1999.

Name Title

/s/ Edward L. Gardner Director and Chairman of
-------------------------------- the Board of Directors
(Edward L. Gardner)

/s/ Peter Herrick Director
--------------------------------
(Peter Herrick)

/s/ Stephen Stamas Director
--------------------------------
(Stephen Stamas)

/s/ James E. Quinn Director
--------------------------------
(James E. Quinn)

/s/ Karen Osar Director
--------------------------------
(Karen Osar)

/s/ J. David Huber Chief Executive Officer
--------------------------------
(J. David Huber)

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT INDEX

Exhibit Number Description Page
<S> <C> <C> <C> <C>
(1) (a) Articles of Incorporation of Registrant.*

(b) Articles of Amendment, dated June 29, 1992.*

(d) Articles of Supplementary, dated August 15, 1995.*

(e) Articles of Amendment, dated January 22, 1997*

(f) Articles Supplementary, dated January 22, 1997.*

(g) Form of Articles Supplementary, dated April 28, 1999.

(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.*

(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.*

(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 Indosuez Asset
Management.*

(6) (a) Distribution Agreements between Registrant and BNY Hamilton Distributors, Inc.*

(b) Supplement to Distribution Agreements between Registrant and BNY Hamilton Distributors, Inc.*

(7) Not Applicable.

(8) (a) Custody Agreement between Registrant and The Bank of New York.*

(b) Cash Management and Related Services Agreement between each series of Registrant and The Bank of New
York.*

(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.*

(d) Form of Shareholder Servicing Agreement.*

(e) Form of Sub-Administration Agreement between BNY Hamilton Distributors, Inc. and The Bank of New
York.*

(f) Shareholder Servicing Plan of BNY Hamilton Money Fund (Hamilton Premier Shares).*

(g) No longer applicable.

(h) Shareholder Servicing Plan of BNY Hamilton Money Fund (Hamilton Classic Shares).*

(i) Rule 18f-3 Plan of BNY Hamilton Money Fund.*

(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.*

(p) Revised Fund Accounting Services Agreement between BNY Hamilton International Equity Fund and The Bank
of New York.

(q) Form of Shareholder Servicing Plan of BNY Hamilton Treasury Money Fund (Classic Shares).

(r) Form of Revised Rule 18f-3 Plan of BNY Hamilton Funds, Inc.

(10) Opinion of Sullivan & Cromwell.*

(11) Consent of KPMG 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.*

(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.*

(j) Form of Rule 12b-1 Plan of BNY Hamilton Treasury Money Fund - Classic Shares.

(16) Schedule for computation of performance quotations.*

(17) Financial Data Schedule.
</TABLE>

- ------------------------------
* Previously filed.

<PAGE>

B N Y
H A M I L T O N

ANNUAL REPORT
BNY HAMILTON FUNDS

EQUITY INCOME FUND INTERMEDIATE
NEW YORK
LARGE CAP GROWTH FUND TAX-EXEMPT FUND

SMALL CAP GROWTH FUND INTERMEDIATE
TAX-EXEMPT FUND
INTERNATIONAL
EQUITY FUND MONEY FUND

INTERMEDIATE TREASURY
GOVERNMENT FUND MONEY FUND

INTERMEDIATE DECEMBER 31, 1998
INVESTMENT
GRADE FUND
B N Y
H A M I L T O N
F U N D S

<PAGE>

[LOGO]

<PAGE>

<PAGE>
[LOGO] CHAIRMAN'S LETTER

Dear Shareholder:

We are pleased to provide you with the BNY Hamilton Funds Annual Report for the
year ended December 31, 1998.

The past year was a period of significant growth and achievement for the BNY
Hamilton Funds. Successful sales initiatives and strong investment performance
combined to boost total assets from $3.97 billion to $5.43 billion, an increase
of 37%. All of the BNY Hamilton Funds equity portfolios outperformed their peer
groups for the year, as measured by Lipper Analytical Services, an independent
mutual fund rating service. All of the BNY Hamilton Funds fixed-income
portfolios continued to provide solid returns, while maintaining their emphasis
on high-quality securities. Complete details can be found in the fund
performance pages contained in this annual report. Please read this report
carefully and retain it for future reference.

At BNY Hamilton Funds, we recognize that you have a choice of thousands of
investment alternatives today. However, we believe there are few that offer the
portfolio management expertise and consistent investment approach of the BNY
Hamilton Funds. With an array of ten well-diversified funds, representing all
three major asset classes, the Funds are designed to provide sound investment
strategies to help you reach your important financial goals.

Please contact your BNY Hamilton Funds representative with any questions you may
have about the Funds. If you would like a prospectus for any of the Funds, call
1-800-4BNY-FND (1-800-426-9363). Please read the prospectus carefully before you
invest.

Thank you for the confidence you have placed in our Funds.

Sincerely,

/s/ Edward L. Gardner
Edward L. Gardner
Chairman of the Board
<PAGE>
[LOGO] INVESTMENT ADVISOR'S LETTER

Dear Shareholder:

For the U.S. financial markets, 1998 was an extraordinary year in many respects.
In the end, it turned out to be another very rewarding year for investors in the
continuing great bull market of the 1990s. During the course of the year,
however, markets took investors on a wild ride. The second half of the year, in
particular, showed investors both the best of times and the worst of times as
rapidly changing political, economic and financial developments around the world
caused volatility within the markets to soar to levels not seen in many years.

In our mid-year report to investors, we noted that the crisis in Southeast Asia,
which had not exerted much of a negative impact on either the U.S. economy or
financial markets up to that point, was beginning to seem less remote. In fact,
Southeast Asia's problems proved very shortly to have an extremely dramatic
impact on U.S. financial markets. Southeast Asia's problems launched a global
chain reaction of events which included default by Russia, currency crises in
Latin America and spectacular collapses among hedge funds. This turmoil rocked
the largest financial institutions around the world, prompting fears of a very
dangerous potential credit crunch. The solid gains posted by U.S. stocks during
the first half of the year evaporated quickly during the summer as the Dow
Industrials plunged from a high of over 9300 in late July to a low of almost
7500 in early September, a decline of nearly 20%. Bad news for stocks, however,
was good news for high grade bonds, particularly U.S. Treasury issues, as
investors sought a safe haven in uncertain times. Bond prices surged as the
yield on the 30-year Treasury Bond declined to 4.73% in early October, its
lowest level in over 25 years.

During this period most investors were acting on the expectation that the crisis
in financial markets would inevitably lead to a recession in the real economy.
Contrary to these expectations, however, the U.S. economy displayed surprising
resilience. The sharpest setback in the stock market in a decade did not, as
many feared, cause consumers to retrench. The fall-out from the emerging markets
crisis--lower interest rates, lower oil prices and lower prices for imported
goods--actually served as a source of stimulus to domestic economic activity.
Most importantly, the Federal Reserve's three prompt reductions in short term
interest rates served to boost business, consumer and investor confidence. Real
GDP expanded by a surprisingly strong 3.9% in 1998 while inflation in consumer
prices declined to a surprisingly low 1.6%.

Buoyed by the Federal Reserve's aggressive action, the stock market reversed
course in October and rallied strongly into the end of the year. After declining
9.86% in the third quarter, the S&P 500 roared back in the fourth quarter
posting a gain of 21.32%. For all of 1998, the S&P 500, which is representative
of large-capitalization U.S. equities, returned 28.75%, its fourth consecutive
year of returns in excess of 20%. Small capitalization U.S. stocks, as
represented by the Russell 2000 Index, also rallied strongly in the fourth
quarter, posting a 16.31% gain. Reflecting their lagging performance earlier in
the year, however, the full year return for small capitalization stocks was a
disappointing -2.54%. International stocks participated in the fourth quarter
rally as well, with the MSCI-EAFE (Morgan Stanley Capital International Europe,
Australia and Far East) Index recording a 20.33% gain. The full year return for
international stocks was 22.28%. Within this index, European stocks were by far
the strongest performers as investors looked forward to the benefits of the
introduction of the Euro on January 1st.

Bond prices moved in the opposite direction from stock prices in the fourth
quarter as fears of a looming deflationary slump in global economic activity
abated. The 30-year Treasury Bond closed the year at a yield of 5.09%, well
above
<PAGE>
[LOGO]
its October low but down from 5.92% at the beginning of the year. The Lehman
Government/Corporate Index of fixed income securities returned only 0.12% in the
fourth quarter, but provided a solid full year return of 9.47%. In much the same
way that high quality large capitalization stocks were the stand-out performers
in the equity market last year, high grade bonds were the best performers in the
fixed income markets as investors shied away from credit risk. Yield spreads
between high grade and lower quality bonds narrowed during the fourth quarter,
but ended the year at much wider levels than at the start.

Inflows of new money into mutual funds slowed dramatically during the second
half of last year as many individual investors adopted a wait and see attitude.
Corporations, however, stepped up to take advantage of the stock market's
sell-off to accelerate both share repurchase activity and merger and acquisition
activity. In effect, this corporate buying served to reduce the supply of shares
outstanding, offsetting the temporary weakness in the demand for shares from
individual investors. In similar fashion, the federal government's first budget
surplus in almost 30 years allowed the Treasury Department to shrink the supply
of government bonds outstanding as well. Looking ahead, we anticipate that both
corporations and the government will continue to be buyers of their own
securities. We also foresee individual investors returning to the markets and
stepping up their purchases of mutual funds to the levels seen in 1997 and last
year's first half. Rising demand for financial assets combined with a shrinking
supply represents a very powerful bullish development for the markets, in our
judgment.

While economic distress in many emerging market nations remains a source of
potential negative shocks, we expect 1999 to be another year of moderate growth
and low inflation for the U.S. economy. We also expect interest rates to
continue to fall and corporate profits to continue to rise, albeit at a more
moderate pace in both instances. This forecast represents a very supportive
backdrop for the financial markets. In our judgment, the bull market of the
1990s remains alive and well and has the staying power to carry into and beyond
the year 2000.

Sincerely,

/s/ Kevin J. Bannon
Kevin J. Bannon
Executive Vice President and
Chief Investment Officer
<PAGE>
TABLE OF CONTENTS

<TABLE>
<S> <C>
QUESTIONS & ANSWERS................................................... PAGE 1

BNY HAMILTON EQUITY INCOME FUND
Schedule of Investments............................................. 19
Statement of Assets and Liabilities................................. 23
Statement of Operations............................................. 23
Statements of Changes in Net Assets................................. 24
Financial Highlights................................................ 25

BNY HAMILTON LARGE CAP GROWTH FUND
Schedule of Investments............................................. 27
Statement of Assets and Liabilities................................. 31
Statement of Operations............................................. 31
Statements of Changes in Net Assets................................. 32
Financial Highlights................................................ 33

BNY HAMILTON SMALL CAP GROWTH FUND
Schedule of Investments............................................. 34
Statement of Assets and Liabilities................................. 38
Statement of Operations............................................. 38
Statements of Changes in Net Assets................................. 39
Financial Highlights................................................ 40

BNY HAMILTON INTERNATIONAL EQUITY FUND
Schedule of Investments............................................. 41
Industry Diversification............................................ 46
Statement of Assets and Liabilities................................. 48
Statement of Operations............................................. 48
Statements of Changes in Net Assets................................. 49
Financial Highlights................................................ 50

BNY HAMILTON INTERMEDIATE GOVERNMENT FUND
Schedule of Investments............................................. 51
Statement of Assets and Liabilities................................. 55
Statement of Operations............................................. 55
Statements of Changes in Net Assets................................. 56
Financial Highlights................................................ 57

BNY HAMILTON INTERMEDIATE INVESTMENT GRADE FUND
Schedule of Investments............................................. PAGE 59
Statement of Assets and Liabilities................................. 64
Statement of Operations............................................. 64
Statements of Changes in Net Assets................................. 65
Financial Highlights................................................ 66

BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND
Schedule of Investments............................................. 67
Statement of Assets and Liabilities................................. 73
Statement of Operations............................................. 73
Statements of Changes in Net Assets................................. 74
Financial Highlights................................................ 75

BNY HAMILTON INTERMEDIATE TAX-EXEMPT FUND
Schedule of Investments............................................. 77
Diversification by State............................................ 86
Statement of Assets and Liabilities................................. 87
Statement of Operations............................................. 87
Statements of Changes in Net Assets................................. 88
Financial Highlights................................................ 89

BNY HAMILTON MONEY FUND
Schedule of Investments............................................. 90
Statement of Assets and Liabilities................................. 98
Statement of Operations............................................. 98
Statements of Changes in Net Assets................................. 99
Financial Highlights................................................ 100

BNY HAMILTON TREASURY MONEY FUND
Schedule of Investments............................................. 103
Statement of Assets and Liabilities................................. 105
Statement of Operations............................................. 105
Statements of Changes in Net Assets................................. 106
Financial Highlights................................................ 107
NOTES TO FINANCIAL STATEMENTS......................................... 108
REPORT OF INDEPENDENT AUDITORS........................................ 117
FEDERAL INCOME TAX INFORMATION........................................ 118
DIRECTORS AND OFFICERS................................................ 119
</TABLE>
<PAGE>
[LOGO] BNY HAMILTON EQUITY INCOME FUND
AN INTERVIEW WITH ROBERT G. KNOTT, VICE PRESIDENT AND PORTFOLIO MANAGER

Q. WHAT FACTORS INFLUENCED THE INVESTMENT ENVIRONMENT FOR EQUITY INCOME FUNDS IN
1998?
A. After climbing through the first half of the year largely on the strength of
a relatively few large-capitalization growth stocks, the market tumbled in
the third quarter on both domestic and international news. Lower corporate
profits and expectations of slower growth in the U.S. and continuing
financial woes in Asia, Russia and Latin America sent the S&P
500-Registered Trademark- Index spiraling downward as fears of a global
recession rocked investor confidence. The Federal Reserve Board stepped in to
calm the markets with a long-awaited series of interest rate reductions
beginning in September. The market rebounded quickly and decisively, ending
the year with the strongest fourth quarter returns in twenty years.
While large-cap stocks led, some sectors traditionally associated with
income-producing equities faced difficulties that caused them to lag the
overall market. For example, oil and energy-related stocks suffered from
declining oil prices caused in part by reduced demand from Asian
manufacturing companies. Stocks in the real estate investment trust (REIT)
sector also lagged as financing virtually dried up and investors became
concerned over the prospects for the real estate market.

Q. GIVEN THIS CONTEXT, HOW DID THE FUND PERFORM IN 1998?
A. 1998 was a rewarding year for investors. The Fund returned 13.18% and 12.82%
for Institutional and Investor Class Shares for the one-year period ended
12/31/98, respectively(1). The Fund outperformed the Lipper Equity Income
Fund Index(2), which returned 11.78% for the same period. The Fund trailed
the S&P 500-Registered Trademark- Index(3), which returned 28.75% for the
period.

Q. WHAT STRATEGIES ACCOUNTED FOR THE FUND'S STRONG PERFORMANCE?
A. Several factors contributed to the Fund's outperformance over other equity
income funds during the year. First, we were aided by our focus on
high-quality, large capitalization, dividend-paying stocks. These stocks once
again led the market and provided a powerful boost to the Fund's performance.
We also benefited from our stake in utilities--one of the market's better
performers during 1998. Utility stocks, which tend to provide relatively high
dividend yields, typically get a boost from falling interest rates, a factor
that helped the group to outperform the overall market. The decision in
August to lighten our exposure to the financial services was timely given
fears that unexpected losses resulting from loans to hedge funds would
adversely impact companies in this sector. We also trimmed back our exposure
to consumer stocks in the third quarter as valuations became stretched and
concerns mounted that financial turmoil overseas might negatively impact
growth prospects for U.S. companies.

Q. WHICH OF THE FUND'S HOLDINGS WERE THE BEST PERFORMERS?
A. Lucent Technologies, a telecommunications equipment giant, was the Fund's
best performer in 1998, jumping 175% for the year as a result of explosive
growth in the technology sector. Other stocks that contributed significantly
to the Fund's performance were MCI WorldCom, up 137%; American Power
Conversion, up 105%; CVS, up 72%; Pfizer, up 69%, and Xerox, which increased
in value 62% in 1998.

Q. WHAT DO YOU FORESEE FOR 1999?
A. As we enter the new year, stocks are at record highs. In our opinion,
income-producing stocks provide investors with an attractive way to
participate in stock market gains, while at the same time offering a measure
of downside protection in the event that equities suffer a setback.

1
<PAGE>
[LOGO]

We believe the Fund is well positioned to take advantage of opportunities
in the market. However, as last year once again proved, investor sentiment
can turn quickly at the hint of bad news, including the prospect of
disappointing corporate profits. Given the degree of economic and political
uncertainty in the world, we plan to increase the defensive position of the
portfolio slightly by seeking to expand the Fund's exposure to convertible
issues across various sectors of the economy.

<TABLE>
<CAPTION>
INSTITUTIONAL SHARES
--------------------------------
CUMULATIVE AVERAGE ANNUAL
PERIOD TOTAL RETURN TOTAL RETURN
- --------------------------------------------------------- ------------- -----------------
<S> <C> <C>
1 Year................................................... 13.18% 13.18%
5 Years(4)............................................... 109.12% 15.89%
Since Inception (8/10/92)(4)............................. 147.82% 15.24%
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BNY HAMILTON EQUITY

<S> <C> <C> <C>
Income Fund Institutional Lipper Equity Income Fund
Shares S&P 500 Index Index
08/10/92 $10,000.00 $10,000.00 $10,000.00
07/31/93 11,465 10,868 11,370
07/31/94 11,565 11,434 11,935
07/31/95 13,555 14,416 13,944
07/31/96 15,282 16,805 15,858
07/31/97 20,988 25,546 22,093
07/31/98 23,902 30,489 24,571
12/31/98 24,782 33,700 25,721
</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. FOR
COMPARATIVE PURPOSES, THE INDEX'S JULY 31, 1992 VALUE IS USED AS THE AUGUST 10,
1992 VALUE.

(1) TOTAL RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE AND REINVESTMENT OF
DIVIDENDS AND CAPITAL GAINS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THE ORIGINAL COSTS. PAST PERFORMANCE IS NO GUARANTEE OF
FUTURE RESULTS. The quoted performance for the Institutional Shares prior
to their inception on 4/1/97 is based on the performance of the Fund's
Investor Shares. The inception date for the Equity Income Fund Investor
Shares was 8/10/92.
(2) Lipper indexes are based on the performance of the largest funds within a
given investment objective and do not include multiple share classes of
similar funds. Returns for these indexes are net of fees. Source: Lipper
Analytical Services, Inc., 1998.
(3) The S&P 500 is considered representative of the broad U.S market of
large-capitalization stocks.
(4) Total return figures are shown at net asset value for all periods. These
figures do not consider the effect of the sales load in effect from July
11, 1994-July 12, 1996. Had the sales load been factored in to the above
figures, cumulative total return and average annual total return for 5
years and since inception would have been lower.

2
<PAGE>
[LOGO] BNY HAMILTON LARGE CAP GROWTH FUND
AN INTERVIEW WITH CHARLES GOODFELLOW, VICE PRESIDENT AND PORTFOLIO MANAGER

Q. WHAT FACTORS INFLUENCED THE INVESTMENT ENVIRONMENT FOR LARGE-CAP STOCKS IN
1998?
A. The market for large capitalization stocks posted its fourth consecutive
annual gain in excess of 20% in 1998, against a backdrop of solid U.S.
corporate earnings growth, extraordinarily tame inflation and falling
interest rates. Still, the year was marked by periods of extreme volatility,
particularly in the third quarter. In August, concerns over financial
instability in Asia, Russia and Latin America coupled with fears of a
liquidity crunch created by the collapse of Long Term Capital Management, a
high profile hedge fund, moved the S&P 500-Registered Trademark- in a major
market correction.
The U.S. stock market quickly roared back in the fourth quarter and
investor confidence returned, buoyed by better-than-expected U.S. corporate
earnings reports and a long-awaited series of interest rate reductions by the
Federal Reserve Board. The year ended with the strongest fourth quarter
returns in twenty years for most major U.S. large-cap equity indices and
staggering gains in many of the technology-related stocks.

Q. GIVEN THIS CONTEXT, HOW DID THE FUND PERFORM IN 1998?
A. 1998 was a very good year. The Fund returned 23.49% and 23.26% for
Institutional and Investor Class Shares for the one-year period ended
12/31/98, respectively.(1) The Fund significantly outperformed the Lipper
Growth and Income Fund Index(2), which returned 13.58% for the same period
and trailed the S&P 500-Registered Trademark-Index's(3) 28.75% return over
the same period.

Q. WHAT STRATEGIES ACCOUNTED FOR THE FUND'S PERFORMANCE?
A. One of the most significant decisions we made for the Fund was to stay fully
invested throughout the market's ups and downs. This enabled us to snap back
along with the market after each dip, taking advantage of lower stock prices
when the market corrected and rising prices as the market sharply advanced
toward the end of 1998. The Fund's relative performance was helped by our
decision to increase our technology holdings and to emphasize selected
financial services stocks, which outperformed the market in the wake of lower
interest rates and continuing consolidation within the industry.

Q. WHAT RISKS DO YOU SEE GOING FORWARD?
A. It is likely that financial instability in markets around the world will
continue to be a concern. We will remain on the lookout for the impact that
this may have on the U.S. financial markets and individual company earnings.
We manage market risk for the Fund through careful portfolio diversification
and by monitoring valuations in an effort to avoid paying too much for any
individual holding. Earnings risk is managed through fundamental research, as
we closely monitor earnings prospects for each of our holdings through direct
contact with each company and outside analysts.

Q. WHAT DO YOU FORESEE FOR 1999?
A. We anticipate that inflation will remain subdued for the foreseeable future.
In our opinion, the Federal Reserve Board has room to drop interest rates
further, particularly if international financial problems cause U.S. economic
growth to slow. We believe corporate profits should grow at a modest rate and
we expect that the very positive inflow of funds into stocks will continue.
Amid expectations that large capitalization growth stocks will

3
<PAGE>
[LOGO]
continue to propel the market higher, we will remain focused on industry
leaders in the Technology, Communications Services and Health Care sectors.
Any slowdown in the economy will cause us to re-evaluate our outlook with
respect to Consumer Staples and Consumer Cyclicals.

<TABLE>
<CAPTION>
INSTITUTIONAL SHARES
--------------------------------
CUMULATIVE AVERAGE ANNUAL
PERIOD TOTAL RETURN TOTAL RETURN
- --------------------------------------------------------- ------------- -----------------
<S> <C> <C>
1 Year................................................... 23.49% 23.49%
5 Years.................................................. 159.76% 21.02%
10 Years................................................. 396.96% 17.38%
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BNY HAMILTON LARGE CAP

<S> <C> <C> <C>
Growth Fund Institutional
Shares S&P 500 Index Lipper Growth & Income Fund Index
12/31/88 $10,000 $10,000 $10,000
12/31/89 $13,021 $13,151 $12,374
12/31/90 $12,642 $12,733 $11,632
12/31/91 $16,557 $16,624 $14,860
12/31/92 $17,345 $17,901 $16,292
12/31/93 $19,132 $19,691 $18,675
12/31/94 $18,754 $19,951 $18,597
12/31/95 $24,699 $27,426 $24,395
12/31/96 $30,669 $33,754 $29,443
12/31/97 $40,242 $44,976 $37,379
12/31/98 $52,229 $57,910 $42,456
</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.
(1) TOTAL RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE AND REINVESTMENT OF
DIVIDENDS AND CAPITAL GAINS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THE ORIGINAL COSTS. PAST PERFORMANCE IS NO GUARANTEE OF
FUTURE RESULTS. The quoted performance includes performance of common and
collective trust fund ("Commingled") accounts advised by The Bank of New
York dating back to 12/31/88 and prior to the Fund's commencement of
operations on 4/1/97, adjusted to reflect the expenses associated with
mutual funds. The Commingled accounts were not registered with the
Securities and Exchange Commission and, therefore, were not subject to
the investment restrictions imposed by law on registered mutual funds. If
the Commingled accounts had been registered, the Commingled accounts'
performance may have been adversely affected. The adviser has agreed to
assume a portion of the expenses of this Fund. Had expenses not been
assumed, total return and the average annual return would have been
lower. This voluntary waiver and assumption of expenses may be modified
or terminated at any time, which would reduce the Fund's performance.
(2) Lipper indexes are based on the performance of the largest funds within a
given investment objective and do not include multiple share classes of
similar funds. Returns for these indexes are net of fees. Source: Lipper
Analytical Services, Inc., 1998. This Fund was previously compared to the
Lipper Growth Fund Index. Going forward, it will be compared to the
Lipper Growth & Income Fund Index. This change is being made to more
accurately reflect the typical composition of the Fund's portfolio. The
value of a $10,000 investment in the Lipper Growth Fund Index at 12/31/88
would be $48,914 at 12/31/98.
(3) The S&P 500 is considered representative of the broad U.S market of
large-capitalization stocks.

4
<PAGE>
[LOGO] BNY HAMILTON SMALL CAP GROWTH FUND*
AN INTERVIEW WITH JOHN LUI, VICE PRESIDENT AND PORTFOLIO MANAGER

Q. WHAT FACTORS INFLUENCED THE INVESTMENT ENVIRONMENT FOR SMALL-CAP STOCKS IN
1998?
A. 1998 continued to be a challenging year for small-capitalization stocks.
Concerns over the impact on the U.S. economy of financial instability in
Asia, Russia and Latin America and a renewed focus on slower growth in U.S.
corporate earnings contributed to market volatility during the second and
third quarters and caused investors to favor large-capitalization, blue-chip
companies.
After a major market correction that rocked all of the markets in August,
the Federal Reserve Board stepped in to calm investor fears by lowering
interest rates in a series of three rapid reductions of 0.25% each, beginning
in September. Investor confidence returned and the equity markets bounced
back strongly. Small-cap stocks finished the year in an explosive rally that
was fueled primarily by a surge in technology, healthcare and consumer
related stocks. Overall, however, the market's stunning rebound was not
enough to pull the Russell 2000 Index into positive territory for the year.

Q. GIVEN THIS CONTEXT, HOW DID THE FUND PERFORM IN 1998?
A. The Fund performed very well in light of the market for small cap stocks. For
the one-year period ended December 31, 1998, the Fund delivered a total
return of 7.89% for Institutional Shares and 7.55% for Investor Shares(1).
That placed the Fund significantly ahead of its benchmarks, the Russell 2000
Index(2) and the Lipper Small-Cap Fund Index(3), which declined in value
-2.54% and -0.85% over the same period, respectively.

Q. WHAT STRATEGIES DID YOU USE TO ACHIEVE THIS PERFORMANCE?
A. Our strategy is to invest in small companies that are growing faster than
their peers and whose long-term growth rate we believe is being
underestimated. As a result, we focus on what we call
"mini-gorillas"--companies that are best-in-their-niche and offer
predictable, sustainable earnings growth. This emphasis helped us to weather
extreme market volatility during the third quarter and allowed us to
significantly outperform both of our benchmarks for the year.

Q. HOW DID THE FUND'S PORTFOLIO COMPOSITION CHANGE DURING THE YEAR?
A. Throughout the year, we de-emphasized component manufacturers in our
technology exposure due to our concerns over pricing and profit margin
issues. Instead we focused our holdings on software developers and companies
that make entire electronic systems, as their business fundamentals actually
benefit from lower component pricing.
We added extensively to our healthcare positions, particularly to
companies that are entering profit up cycles as a result of new product
launches. In addition, we maintained our historic overweighting in the
consumer sector, where we have found a lot of our "mini-gorillas." This
positioning helped the Fund to weather the steep drop in small caps from
April to October and greatly contributed to the outperformance for the year
relative to the Russell 2000 and the Lipper Small-Cap Index.

Q. WHAT DO YOU FORESEE FOR 1999?
A. 1998 was the fifth straight year that large-cap stocks outperformed
small-caps. Over the last 70 years, the average cycle for small-cap
underperformance has averaged six years, which means a resurgence in small
cap stocks may be sooner rather than later.
Some of the signs for a turnaround in the small cap market are already in
place. Valuations are at low levels relative to large-cap stocks, just as
they were in late 1990 when we saw the start of the last "up" cycle for small
caps. For the past five quarters, small-cap companies have delivered higher
earnings growth than large-caps,

5
<PAGE>
[LOGO]
which is another positive sign. In our opinion, it is just a matter of time
until investors start looking beyond large, blue-chip companies to small-cap
companies for attractive growth potential. In the meantime, given the strong
earnings profile of our holdings and their attractive valuations, we remain
confident that the Fund is well positioned to outperform in the coming
months.

<TABLE>
<CAPTION>
INSTITUTIONAL SHARES
--------------------------------
CUMULATIVE AVERAGE ANNUAL
PERIOD TOTAL RETURN TOTAL RETURN
- --------------------------------------------------------- ------------- -----------------
<S> <C> <C>
1 Year................................................... 7.89% 7.89%
5 Years.................................................. 84.87% 13.07%
Since Inception (12/31/90)............................... 255.44% 17.17%
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BNY HAMILTON SMALL CAP

<S> <C> <C> <C>
Growth Fund Institutional Russell 2000
Shares Index Lipper Small Cap Fund Index
12/31/90 $10,000 $10,000 $10,000
12/31/91 $15,245 $14,603 $14,850
12/31/92 $16,141 $17,293 $16,510
12/31/93 $19,227 $20,561 $19,300
12/31/94 $19,163 $20,186 $19,206
12/31/95 $23,172 $25,928 $25,279
12/31/96 $30,117 $30,208 $28,912
12/31/97 $32,944 $36,966 $33,264
12/31/98 $35,544 $36,022 $32,976
</TABLE>

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.
* Small-capitalization funds typically carry additional risks, since smaller
companies historically have experienced a greater degree of market
volatility.
(1) TOTAL RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE AND REINVESTMENT OF
DIVIDENDS AND CAPITAL GAINS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THE ORIGINAL COSTS. PAST PERFORMANCE IS NO GUARANTEE OF
FUTURE RESULTS. The quoted performance includes performance of common and
collective trust fund ("Commingled") accounts advised by The Bank of New
York dating back to 12/31/90 and prior to the Fund's commencement of
operations on 4/1/97, as adjusted to reflect the expenses associated with
mutual funds. The Commingled accounts were not registered with the
Securities and Exchange Commission and, therefore, were not subject to
the investment restrictions imposed by law on registered mutual funds. If
the Commingled accounts had been registered, the Commingled accounts'
performance may have been adversely affected. The adviser has agreed to
assume a portion of the expenses for this Fund. Had expenses not been
assumed, total return and the average annual return would have been
lower. This voluntary waiver and assumption of expenses may be modified
or terminated at any time, which would reduce the Fund's performance.
(2) The Russell 2000 Index is considered representative of the broad U.S
market of small-capitalization stocks.
(3) Lipper indexes are based on the performance of the largest funds within a
given investment objective and do not include multiple share classes of
similar funds. Returns for these indexes are net of fees. Source: Lipper
Analytical Services, Inc., 1998.

6
<PAGE>
[LOGO] BNY HAMILTON INTERNATIONAL EQUITY FUND*
AN INTERVIEW WITH MARY CLARE BLAND, VICE PRESIDENT AND PORTFOLIO MANAGER

Q. WHAT FACTORS INFLUENCED THE INVESTMENT ENVIRONMENT FOR INTERNATIONAL STOCKS
IN 1998?
A. 1998 was marked by periods of extreme volatility in the global markets that
were caused by a number of factors including continued economic distress in
Asia, Russia's domestic debt default, and mounting financial instability in
Latin America. Nonetheless, 15 out of 20 markets in the EAFE Index had
positive performance for the year and five EAFE markets boasted double-digit
gains.
Markets around the globe fell sharply in the third quarter, with the EAFE
Index dropping 12.5% for the month of August. However, optimism returned
quickly in September. Historic changes relating to the European Monetary
Union, including a surge in corporate restructuring, merger and acquisition
activity, privatization of government-run businesses and ongoing efforts to
forge economic alliances across national borders, helped to push markets
higher in the region. By year-end, European equity markets as a whole rose
28.5% in U.S. dollar terms. Asian markets also finished the year higher. The
notable exception was Japan, which faltered after a brief rally to end the
year as the worst performing EAFE market in December.

Q. GIVEN THIS CONTEXT, HOW DID THE FUND PERFORM IN 1998?
A. The BNY Hamilton International Equity Fund performed extremely well in 1998,
and beat both of its benchmarks. The Fund posted a total return of 20.84% for
Institutional Shares and 20.61% for Investor Shares.(1) The MSCI EAFE
Index(2) returned 20.33% for the year and the Lipper International Fund
Index(3) posted a 12.66% gain.

Q. WHAT STRATEGIES DID YOU USE TO ACHIEVE THIS PERFORMANCE?
A. Stock selection is key to our investment strategy and it played an important
role in the Fund's success in 1998. For example, our decision to sell a
number of Asian and Japanese securities helped to boost the Fund's
performance vis-a-vis its benchmarks when these stocks lagged as a result of
financial instability in their markets.
The Fund also benefited substantially from our decision to overweight its
positions in Europe. As European firms prepared for the onslaught of
competition that is coming as the region transitions to a single currency,
many of them initiated significant restructuring programs. This helped stock
markets across much of Europe during 1998. The Fund took advantage of these
forces by investing in companies such as Siemens, a major restructuring
story.

Q. WHAT WERE SOME OF YOUR MOST SIGNIFICANT PURCHASES THIS YEAR?
A. The Fund purchased a number of Italian banking stocks in 1998, a timely
decision since the Italian financial system is in the midst of a major
restructuring. By purchasing these issues, we are hoping to capitalize on the
competitive advantages and expanding profits these companies will hopefully
bring.

Q. WHAT WERE SOME OF THE FUND'S BEST PERFORMING STOCKS IN 1998?
A. Nokia and Vodafone, European wireless companies, were two of the best
performing stocks during 1998. Both are core portfolio holdings. Vodaphone,
which has consistently been one of our top 10 holdings, posted a 122% return
for the year. Nokia's performance was even more striking, returning a
staggering 216% for 1998.

Q. WHAT DO YOU FORESEE FOR 1999?
A. We remain positive about the European equity markets, especially as strong
consumer confidence, lower interest rates, favorable inflation prospects and
the recent introduction of the new European currency, the Euro, all bode well
for continued growth in that region.
In Asia, investors are gradually edging back into the equity markets, a
positive that may further signal the region's recovery. We do not see much
light at the end of the tunnel for Japan, however. Despite a great deal of
talk, little progress has been made on banking reform and the Japanese
government has not taken strong enough

7
<PAGE>
[LOGO]
measures to stimulate the economy. These factors, combined with a strong yen,
make meaningful recovery in the Japanese economy unlikely in the near future.
In Latin America, the recent floatation of the Brazilian real has local
markets on edge. We plan to eliminate our small exposure to Latin America, a
move we consider prudent given the expected recession in Brazil.

<TABLE>
<CAPTION>
INSTITUTIONAL SHARES
----------------------------------------
CUMULATIVE TOTAL AVERAGE ANNUAL
PERIOD RETURN TOTAL RETURN
- ------------------------------------------------- --------------------- -----------------
<S> <C> <C>
1 Year........................................... 20.84% 20.84%
Since Inception (4/1/97)......................... 29.17% 15.72%
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
LIPPER EQUITY
BNY HAMILTON INTERNATIONAL INTERNATIONAL

<S> <C> <C> <C>
Equity Fund Institutional
Shares MSCI EAFE Gross Index Fund Index
4/1/97 $10,000 $10,000 $10,000
6/30/97 11,330 11,306 11,119
9/30/97 11,550 11,233 11,329
12/31/97 10,690 10,359 10,464
3/31/98 12,170 11,891 12,022
6/30/98 12,460 12,025 12,125
9/30/98 10,790 10,324 10,212
12/31/98 12,917 12,466 11,794
</TABLE>

THE MSCI EAFE GROSS INDEX IS AN UNMANAGED INDEX CONSIDERED REPRESENTATIVE OF THE
INTERNATIONAL EQUITY MARKET. THE INDEX DOES NOT TAKE INTO ACCOUNT FEES AND
EXPENSES.
* International investing involves increased risk and volatility.
(1) TOTAL RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE AND REINVESTMENT OF
DIVIDENDS AND CAPITAL GAINS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THE ORIGINAL COSTS. PAST PERFORMANCE IS NO GUARANTEE OF
FUTURE RESULTS. The inception date for the International Equity Fund
Institutional Shares was 4/1/97. The adviser has agreed to assume a
portion of the expenses for this Fund. Had expenses not been assumed,
total return and the average annual return would have been lower. This
voluntary waiver and assumption of expenses may be modified or terminated
at any time, which would reduce the Fund's performance.
(2) The MSCI EAFE Index is considered representative of the equity markets in
Europe, Australia, Asia and the Far East.
(3) Lipper indexes are based on the performance of the largest funds within a
given investment objective and do not include multiple share classes of
similar funds. Returns for these indexes are net of fees. Source: Lipper
Analytical Services, Inc., 1998.

8
<PAGE>
[LOGO] BNY HAMILTON INTERMEDIATE GOVERNMENT FUND
AN INTERVIEW WITH WILLIAM BAIRD, VICE PRESIDENT AND PORTFOLIO MANAGER

Q. WHAT FACTORS INFLUENCED THE INVESTMENT ENVIRONMENT FOR U.S. GOVERNMENT BONDS
IN 1998?
A. Solid economic growth combined with low inflation in the first half of 1998,
allowing the Federal Reserve Board to keep the Federal Funds rate steady at
5.5%. This helped support the U.S. bond market's strong performance. However,
optimism turned to worry in early summer as concerns mounted that economic
woes in Asia, Russia and Latin America would ultimately stall U.S. economic
growth. The bailout by a consortium of Wall Street firms of the highly
leveraged hedge fund, Long Term Capital Management, also weighed heavily on
investors' minds and confidence.
In a classic "flight-to-quality," investors flocked to the U.S. bond
market virtually ignoring higher-yielding but riskier bonds in favor of the
perceived safety of U.S. Treasury securities. As fevered demand drove the
yield on the benchmark 30-year Treasury bond to historic lows of less than
5%, existing fixed-rate bonds rose in value. Corporate bonds and
mortgage-backed securities lagged during this rally as credit quality spreads
reached their widest levels in years. The Federal Reserve Board stepped in to
calm the markets by lowering interest rates in a series of three rapid bursts
of 0.25% each, beginning in September. This helped to ease volatility,
allowing the bond market to finish the year with some of its best returns
since 1995.

Q. GIVEN THIS CONTEXT, HOW DID THE FUND PERFORM IN 1998?
A. The Fund returned 7.49% and 7.33% for Institutional Shares and Investor
Shares for the one-year period ended December 31, 1998, respectively.(1) In
comparison, the Lipper Intermediate U.S. Government Fund Index(2) returned
8.17% and the Lehman Intermediate Government Index(3) returned 8.47% for the
same period. The Fund, which emphasizes mortgage-backed securities,
significantly outperformed the Lehman Mortgage Index, which returned -6.96%
for the year.

Q. WHAT FACTORS ACCOUNTED FOR THE FUND'S PERFORMANCE?
A. The Fund is invested in three specific areas of the Government bond
market--U.S. Treasury securities, U.S. agency securities and mortgage-backed
securities. The U.S. Treasury market was the star performer for the year, due
to the attractiveness of its liquidity and safe-haven status. Neither U.S.
agency securities nor mortgage-backed securities could keep pace as Treasury
prices rocketed upward in the face of growing concerns over the market's
liquidity in the second half of the year. As a result, the yield advantage of
agencies and mortgage-backed securities vis-a-vis Treasuries was not enough
to compensate for its relatively poor price performance, even as the Federal
Reserve lowered interest rates late in the year. Ultimately, this held back
Fund performance.

Q. WHAT WERE YOUR PRIMARY STRATEGIES DURING THE PERIOD?
A. The Fund's broad investment strategy during the year was to build and
maintain a significant percentage of its holdings in the mortgage sector of
the market, which has historically outperformed U.S. Treasuries and other
investment-grade fixed income sectors over a market cycle. Specifically, we
emphasized CMOs (collateralized mortgage obligations) and lower coupon
pass-through securities because we believe these offer better protection
against prepayments and typically provide strong price appreciation as
longer-term interest rates decline.
We took advantage of the opportunity that falling prices in mortgage and
agency securities provided and added to the Fund's positions. In particular,
we purchased a 5% position in a benchmark agency issue and added to the
Fund's mortgage holdings in October and November as credit spreads reached
their widest positions. Both purchases contributed positively to Fund
performance toward the end of the year.

9
<PAGE>
[LOGO]

Q. WHAT DO YOU FORESEE FOR 1999?
A. Our outlook for the government bond market is generally positive. Inflation
remains extremely low and economic growth, while not robust, appears to be
solid and sustainable. This should set the stage for a moderate-growth,
low-inflation environment and a quieting of the U.S. Treasury market. We
expect the 10-year Treasury bond to trade in a range of 50 basis points on
either side of 4.75% as interest rates continue to fall during the year. We
remain confident that the BNY Hamilton Intermediate Government Fund is well
positioned to benefit in this type of market environment.

<TABLE>
<CAPTION>
INSTITUTIONAL SHARES
----------------------------------
CUMULATIVE AVERAGE ANNUAL
PERIOD TOTAL RETURN TOTAL RETURN
- ------------------------------------------------------------ --------------- -----------------
<S> <C> <C>
1 Year...................................................... 7.49% 7.49%
5 Years(4).................................................. 30.88% 5.53%
Since Inception (8/10/92)(4)................................ 42.10% 5.65%
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
LEHMAN BROTHERS LIPPER INTERMEDIATE
BNY HAMILTON INTERMEDIATE INTERMEDIATE U.S.

<S> <C> <C> <C>
Government Fund Institutional
Shares Government Index Government Fund Index
8/10/1992 $10,000 $10,000 $10,000
7/31/1993 $10,679 $10,818 $10,867
7/31/1994 $10,430 $10,918 $10,785
7/31/1995 $11,308 $11,834 $11,660
7/31/1996 $11,831 $12,450 $12,194
7/31/1997 $12,813 $13,517 $13,322
7/31/1998 $13,734 $14,439 $14,230
12/31/1998 $14,210 $15,092 $14,828
</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. FOR
COMPARATIVE PURPOSES, THE INDEX'S JULY 31, 1992 VALUE IS USED AS THE AUGUST 10,
1992 VALUE.
(1) TOTAL RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE AND REINVESTMENT OF
DIVIDENDS AND CAPITAL GAINS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THE ORIGINAL COSTS. PAST PERFORMANCE IS NO GUARANTEE OF
FUTURE RESULTS. The quoted performance for Institutional Shares prior to
4/1/97 is based on the performance of Investor Shares. The adviser has
agreed to assume a portion of the expenses of this Fund. Had expenses not
been assumed, total return and the average annual return would have been
lower. This voluntary waiver and assumption of expenses may be modified
or terminated at any time, which would reduce the Fund's performance.
(2) Lipper indexes are based on the performance of the largest funds within a
given investment objective and do not include multiple share classes of
similar funds. Returns for these indexes are net of fees. Source: Lipper
Analytical Services, Inc., 1998.
(3) Lehman Brothers indexes represent broad market averages for fixed-income
securities.
(4) Total return figures are shown at net asset value for all periods. These
figures do not consider the effect of the sales load in effect from July
11, 1994-July 12, 1996. Had the sales load been factored in to the above
figures, cumulative total return and average annual total return for 5
years and since inception would have been lower.

10
<PAGE>
[LOGO] BNY HAMILTON INTERMEDIATE INVESTMENT GRADE FUND
AN INTERVIEW WITH CHRISTOPHER CAPONE, VICE PRESIDENT AND PORTFOLIO MANAGER

Q. WHAT FACTORS INFLUENCED THE INVESTMENT ENVIRONMENT FOR INVESTMENT-GRADE BONDS
IN 1998?

A. Broad optimism about the domestic economy and the lowest inflation rate in
decades helped to support strong U.S. bond market performance and allowed the
Federal Reserve Board to keep the Federal Funds rate steady at 5.5% during
the first half of 1998. Volatility increased in early summer, however, as
concerns grew over financial instability in Asia, Russia and Latin America
and the collapse of Long Term Capital Management, a highly leveraged hedge
fund, weighed heavily on investors' minds and confidence.
In a classic "flight-to-quality," investors flocked to the safety of U.S.
Treasury securities. As demand drove the yield on the benchmark 30-year
Treasury Bond to historic lows, credit spreads increased to their widest
levels since the last recession. The Federal Reserve Board stepped in to calm
the markets by lowering interest rates in a series of three rapid bursts of
0.25% each, beginning in September. Although this helped to ease volatility,
an oversupply in corporate securities made the corporate bond market
difficult, particularly in the third and fourth quarters.

Q. GIVEN THIS CONTEXT, HOW DID THE FUND PERFORM IN 1998?

A. The Fund performed very well in 1998, providing a total return of 8.56% for
Institutional Shares and 8.22% for Investor Shares(1). These results were
competitive when compared with 7.87% for the Lipper Intermediate
Investment-Grade Fund Index(2) and 8.42% for the Lehman Brothers Intermediate
Government/Corporate Bond Index(3).

Q. WHAT ACCOUNTED FOR THE FUND'S OUTPERFORMANCE?

A. The Fund's focus on quality issuers was a definite boon to performance during
1998, especially during the market volatility in the third and fourth
quarters. As yield spreads widened and prices became more attractive, our
decision to opportunistically add high-quality names to the portfolio also
contributed to the Fund's outperformance relative to its benchmarks. Finally,
our decision to maintain the portfolio's duration in a narrow range, using
the yield curve and sector allocation as our main portfolio tools proved
timely, particularly given our expectation that the Federal Reserve would
ease rates.

Q. WHAT WERE SOME OF THE MOST SIGNIFICANT PURCHASES DURING THE YEAR?

A. Time Warner and Lehman Brothers were two high-yielding investment-grade
issues that helped to boost Fund performance during 1998. The widening credit
spreads between corporate issues and government securities during the summer
provided us with an opportunity to add to the Fund attractive securities such
as these at distressed prices.
Our decision to increase the level of Treasuries also helped the Fund to
significantly outperform its peer group and was timely, particularly given
the run-up in Treasury prices that occurred in the third and fourth quarters.

Q. WHAT IS YOUR STRATEGIC OUTLOOK GOING FORWARD?

A. The global economic crisis continues to loom and with it concerns that there
will be another credit crisis in the corporate market. As a result, we expect
to continue our core strategies going forward: continue to focus on

11
<PAGE>
[LOGO]
high quality corporate issues and possibly accelerate these purchases should
financial instability overseas worsen and negatively impact U.S. economic
growth. We will look for opportunities to lengthen the Fund's duration now
that credit spreads have become more compressed.

<TABLE>
<CAPTION>
INSTITUTIONAL SHARES
--------------------------------
CUMULATIVE AVERAGE ANNUAL
PERIOD TOTAL RETURN TOTAL RETURN
- --------------------------------------------------------- ------------- -----------------
<S> <C> <C>
1 Year................................................... 8.56% 8.56%
5 Years.................................................. 34.75% 6.14%
10 Years................................................. 113.13% 7.86%
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
LEHMAN BROTHERS LIPPER INTERMEDIATE
BNY HAMILTON INTERMEDIATE INTERMEDIATE INVESTMENT

<S> <C> <C> <C>
Investment Grade Institutional
Shares Govt/Corp Index Grade Index
12/31/88 $10,000 $10,000 $10,000
12/31/89 $11,374 $11,277 $11,129
12/31/90 $11,826 $12,309 $11,789
12/31/91 $13,586 $14,107 $13,695
12/31/92 $14,429 $15,119 $14,680
12/31/93 $15,817 $16,446 $16,146
12/31/94 $15,017 $16,129 $15,626
12/31/95 $17,823 $18,597 $18,302
12/31/96 $18,147 $19,351 $18,884
12/31/97 $19,632 $20,874 $20,482
12/31/98 $22,606 $22,631 $22,070
</TABLE>

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.
(1) TOTAL RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE AND REINVESTMENT OF
DIVIDENDS AND CAPITAL GAINS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THE ORIGINAL COSTS. PAST PERFORMANCE IS NO GUARANTEE OF
FUTURE RESULTS. The quoted performance includes performance of common and
collective trust fund ("Commingled") accounts advised by The Bank of New
York dating back to 12/31/88 and prior to the Fund's commencement of
operations on 4/1/97, as adjusted to reflect the expenses associated with
mutual funds. The Commingled accounts were not registered with the
Securities and Exchange Commission and, therefore, were not subject to
the investment restrictions imposed by law on registered mutual funds. If
the Commingled accounts had been registered, the Commingled accounts'
performance may have been adversely affected.
(2) Lipper indexes are based on the performance of the largest funds within a
given investment objective and do not include multiple share classes of
similar funds. Returns for these indexes are net of fees. Source: Lipper
Analytical Services, Inc., 1998.
(3) Lehman Brothers indexes represent broad market averages for fixed-income
securities.

(a)Lipper Analytical Services began tracking this index on December 30, 1988.
For comparative purposes, the starting point for this index is January 31,
1989, which represents its first full month of data. The starting value is
the value of the Intermediate Investment Grade's Institutional Shares at
January 31, 1989, which was $10,141. (This value reflects the value of a
$10,000 investment in the Intermediate Investment Grade Fund at December 31,
1988).

12
<PAGE>
[LOGO] BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND
AN INTERVIEW WITH COLLEEN FREY, VICE PRESIDENT AND PORTFOLIO MANAGER

Q. WHAT FACTORS INFLUENCED THE INVESTMENT ENVIRONMENT FOR MUNICIPAL BONDS IN
1998?

A. Technical factors, including a flood of new issues, contributed to the
municipal market's performance during the year. Fueled by the lowest interest
rates in nearly 25 years, new issue volume reached $284 billion, the second
highest level since 1993's record-setting $292 billion. In contrast to 1993,
however, new money issuance, rather than refunding issuance, represented more
than half of the funds raised in the market.
Also influencing the municipal market was investors' tempered appetite
for municipal bonds, as low yields created sticker shock against a backdrop
of the draw of double-digit returns in the equity market. Credit quality of
municipal issuers continued to improve for the third year in a row. During
1998, the major rating agencies again reported more upgrades than downgrades
in most sectors of the market, with the exception of the healthcare sector.

Q. GIVEN THIS CONTEXT, HOW DID THE FUND PERFORM?

A. Competitively. The Fund's total returns were 5.30% for Institutional Shares
and 5.04% for Investor Shares for the one-year period ended December 31,
1998.(1) This is in line with the Lehman Brothers Five-Year General
Obligation Municipal Bond Index(2), which returned 5.85%, and the Lipper NY
Intermediate Municipal Debt Fund Average(3), which returned 5.62% for the
same period. The majority of the Fund's total return came from tax-exempt
interest generated by the Fund's investments, with modest capital
appreciation making up the balance.

Q. WHAT WERE YOUR PRIMARY STRATEGIES DURING THE PERIOD?

A. Based on our positive outlook for the fixed-income markets, we concentrated
our purchases in the 6-12 year maturity range. Cash needed to cover these
purchases and other cash requirements was raised in the 2-5 year range. When
rates dropped to unsustainably low levels in early October, we took the
opportunity to take profits. At year end, the Fund's average maturity was 6.1
years.
Yield spreads between quality sectors have been narrow for some time now.
Investments throughout the year have favored higher-rated issues. At
year-end, AAA- and AA-rated issues represented 58.2% of bonds in the Fund, up
from 55.8% in the previous year. The Baa/BBB+ category declined to 16.2% from
19.1%.
We continue to overweight the Fund's allocation of revenue bonds
vis-a-vis general obligation bonds. This decision was based upon the fact
that revenue bonds generally provide a higher yield than G.O.'s and represent
a greater proportion of new issue volume and overall outstanding municipal
bond debt.

Q. WHAT DO YOU FORESEE FOR 1999?

A. Our outlook for continued low inflation and moderate economic growth coupled
with high ratios in the municipal market will have us continue the investment
strategy followed in 1998. We expect credit quality of municipal bond issuers
will remain strong in the year ahead, barring an economic downturn or
political pressures to spend accumulated reserves.

13
<PAGE>
[LOGO]

<TABLE>
<CAPTION>
INSTITUTIONAL SHARES
----------------------------------
CUMULATIVE AVERAGE ANNUAL
PERIOD TOTAL RETURN TOTAL RETURN
- --------------------------------------------------------- --------------- -----------------
<S> <C> <C>
1 Year................................................... 5.30% 5.30%
5 Years(4)............................................... 24.97% 4.56%
Since Inception (8/10/92)(4)............................. 36.55% 4.99%
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
LEHMAN BROTHERS FIVE YEAR LIPPER NEW YORK
BNY HAMILTON INTERMEDIATE GENERAL INTERMEDIATE

<S> <C> <C> <C>
New York Tax-Exempt Fund Institutional
Shares Obligation Municipal Bond Index Municipal Debt Fund Average
8/10/1992 $10,000 $10,000 $10,000
7/31/1993 $10,549 $10,657 $10,715
7/31/1994 $10,769 $10,927 $10,935
7/31/1995 $11,426 $11,752 $11,628
7/31/1996 $11,898 $12,296 $12,158
7/31/1997 $12,707 $13,215 $13,117
7/31/1998 $13,248 $13,854 $13,685
12/31/1998 $13,655 $14,297 $14,155
</TABLE>

THE LEHMAN BROTHERS FIVE YEAR GENERAL OBLIGATION MUNICIPAL BOND INDEX IS AN
UNMANAGED INDEX GENERALLY CONSIDERED REPRESENTATIVE OF THE INTERMEDIATE STATE
GENERAL OBLIGATION MUNICIPAL BOND MARKET. THE INDEX DOES NOT TAKE INTO ACCOUNT
FEES AND EXPENSES. SOME INVESTORS MAY BE SUBJECT TO THE ALTERNATIVE MINIMUM TAX
AND/OR STATE AND LOCAL TAXES. FOR COMPARATIVE PURPOSES, THE INDEX'S JULY 31,
1992 VALUE IS USED AS THE AUGUST 10, 1992 VALUE.
(1) TOTAL RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE AND REINVESTMENT OF
DIVIDENDS AND CAPITAL GAINS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THE ORIGINAL COSTS. PAST PERFORMANCE IS NO GUARANTEE OF
FUTURE RESULTS. The quoted performance for Institutional Shares of the
Fund prior to their inception on 4/1/97 is based on the performance of
the Fund's Investor Shares. The inception date for Investor Shares of the
Fund was 8/10/92. The adviser has agreed to assume a portion of the
expenses for this Fund. Had expenses not been assumed, total return and
the average annual return would have been lower. This voluntary waiver
and assumption of expenses may be modified or terminated at any time,
which would reduce the Fund's performance.
(2) Lehman Brothers indexes represent broad market averages for fixed-income
securities.
(3) Lipper averages are composites based on non-weighted average of all funds
and classes within the investment objective. Returns for these indexes
are net of fees. Source: Lipper Analytical Services, Inc., 1998.
(4) Total return figures are shown at net asset value for all periods. These
figures do not consider the effect of the sales load in effect from July
11, 1994-July 12, 1996. Had the sales load been factored in to the above
figures, cumulative total return and average annual total return for 5
years and since inception would have been lower.

14
<PAGE>
[LOGO] BNY HAMILTON INTERMEDIATE TAX-EXEMPT FUND
AN INTERVIEW WITH JEFFREY NOSS, VICE PRESIDENT AND PORTFOLIO MANAGER

Q. WHAT FACTORS INFLUENCED THE INVESTMENT ENVIRONMENT FOR MUNICIPAL BONDS IN
1998?

A. During 1998, the municipal bond market benefited from an environment
characterized by low unemployment, low inflation and declining interest
rates. As many municipalities seized the opportunity to refinance older,
higher-coupon debt and others used increased tax revenues (resulting from
relatively low unemployment and higher personal income rates) to initiate new
capital projects, the municipal market swelled with a significant number of
new issues. The resulting heavy supply served to keep municipal prices
relatively stable even though Treasury yields declined.
When U.S. Treasury yields fell to their lowest levels in decades during
the third quarter, municipal bond yields also declined, but not nearly as
much. The narrowing spread between municipals and Treasuries provided an
attractive opportunity for taxable investors to benefit on an after-tax
basis. By year-end, intermediate-term AAA municipal securities provided
tax-exempt yields that were 88% of their Treasury counterparts' taxable
yields.
As has been the case in recent years, a significant number of new issues
carried insurance or were rated AAA. This provided few opportunities to
benefit from quality differences in 1998. In fact, as credit rating spreads
narrowed and the yield curve remained relatively flat, the market favored
lower quality bonds, which provided stronger price performance vis-a-vis
higher quality issues.

Q. GIVEN THIS CONTEXT, HOW DID THE FUND PERFORM?

A. Competitively. The Fund's total returns for 1998 were 5.37% for Institutional
Shares and 4.95% for Investor Shares.(1) This compares to 5.85% for the
Lehman Brothers Five-Year General Obligation Municipal Bond Index(2). The
Fund's other benchmark, the Lipper Intermediate Municipal Bond Index(3),
returned 5.62% for the period. The Fund's performance placed it in the middle
quartile of Lipper's Intermediate Municipal universe.

Q. WHAT WERE YOUR PRIMARY STRATEGIES DURING THE PERIOD?

A. In anticipation of lower interest rates, we extended the Fund's duration
slightly to take advantage of a steepening yield curve. This decision helped
our relative performance, particularly when the Federal Reserve Board lowered
interest rates in a series of three rapid moves of 0.25% each beginning in
September. We also increased the Fund's non-callable holdings and swapped out
of short call and escrowed/pre-refunded paper, which helped improve price
performance for the Fund as interest rates fell in the third and fourth
quarters.
We also boosted the Fund's weighting in Baa-1 rated bonds. These lower
quality investment-grade bonds offered performance advantages that helped
improve our competitive position in relation to our peer group.

Q. WHAT DO YOU FORESEE FOR 1999?

A. With municipal bond yields trading at relatively high percentages to
comparable maturity Treasury securities, municipal bonds offer unparalleled
value within the context of other fixed-income alternatives. Given this and
expectations for sustained economic growth, we remain positive in our outlook
for the municipal bond market in 1999.

15
<PAGE>
[LOGO]

We plan to maintain the Fund's duration and maturity structure, extending
it only on signs of market weakness. We will continue to position the Fund
among the leaders in its peer group in terms of credit quality and issuer
diversity.

<TABLE>
<CAPTION>
INSTITUTIONAL SHARES
----------------------------------
CUMULATIVE AVERAGE ANNUAL
PERIOD TOTAL RETURN TOTAL RETURN
- --------------------------------------------------------- --------------- -----------------
<S> <C> <C>
1 Year................................................... 5.37% 5.37%
5 Years.................................................. 24.51% 4.48%
10 Years................................................. 84.58% 6.32%
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
LIPPER INTERMEDIATE
BNY HAMILTON INTERMEDIATE LEHMAN BROTHERS FIVE YEAR MUNICIPAL

<S> <C> <C> <C>
Tax-Exempt Fund Institutional General Obligation Municipal Bond
Shares Index Fund Index
12/31/88 $10,000 $10,000 $10,000
12/31/89 $10,978 $10,872 $10,855
12/31/90 $11,638 $11,661 $11,582
12/31/91 $12,771 $12,975 $12,839
12/31/92 $13,669 $13,938 $13,827
12/31/93 $14,825 $15,130 $15,200
12/31/94 $14,288 $14,920 $14,665
12/31/95 $15,924 $16,655 $16,553
12/31/96 $16,511 $17,425 $17,166
12/31/97 $17,516 $18,555 $18,381
12/31/98 $19,298 $19,639 $19,394
</TABLE>

THE LEHMAN BROTHERS FIVE YEAR GENERAL OBLIGATION MUNICIPAL BOND INDEX IS AN
UNMANAGED INDEX GENERALLY CONSIDERED REPRESENTATIVE OF THE INTERMEDIATE STATE
GENERAL OBLIGATION MUNICIPAL BOND MARKET. THE INDEX DOES NOT TAKE INTO ACCOUNT
FEES AND EXPENSES. SOME INVESTORS MAY BE SUBJECT TO THE ALTERNATIVE MINIMUM TAX
AND/OR STATE AND LOCAL TAXES.
(1) TOTAL RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE AND REINVESTMENT OF
DIVIDENDS AND CAPITAL GAINS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THE ORIGINAL COSTS. PAST PERFORMANCE IS NO GUARANTEE OF
FUTURE RESULTS. The quoted performance includes performance of common and
collective trust fund ("Commingled") accounts advised by The Bank of New
York dating back to 12/31/88 and prior to the Fund's commencement of
operations on 4/1/97, adjusted to reflect the expenses associated with
mutual funds. The Commingled accounts were not registered with the
Securities and Exchange Commission and, therefore, were not subject to
the investment restrictions imposed by law on registered mutual funds. If
the Commingled accounts had been registered, the Commingled accounts'
performance may have been adversely affected.
(2) Lehman Brothers indexes represent broad market averages for fixed-income
securities.
(3) Lipper indexes are based on the performance of the largest funds within a
given investment objective and do not include multiple share classes of
similar funds. Returns for these indexes are net of fees. Source: Lipper
Analytical Services, Inc., 1998.

16
<PAGE>
[LOGO] BNY HAMILTON MONEY FUND
AN INTERVIEW WITH RICHARD KLINGMAN, VICE PRESIDENT AND PORTFOLIO MANAGER

Q. WHAT FACTORS INFLUENCED THE MONEY MARKETS IN 1998?
A. The combination of a strong economy and low inflation allowed the Federal
Reserve Board to keep interest rates unchanged at 5.5% through the first half
of the year. However, as economic uncertainty in Asia, Russia and Latin
America grew in the second and third quarters, the expected drag on the US
economy due to these global factors set the stage for lower rate
expectations. Also, the collapse of Long Term Capital Management, a major
leveraged hedge fund, added to concerns about a liquidity crunch and
quality-conscious investors moved significant dollars into the short-term
market, moving money market yields, particularly for high quality issuers,
lower. Investor confidence improved when the Federal Reserve Board lowered
interest rates in an effort to defend the US economy from the global slowdown
in a series of three rapid moves of 0.25% each beginning in September.

Q. GIVEN THIS CONTEXT, HOW DID THE BNY HAMILTON MONEY FUND PERFORM IN 1998?
A. Hamilton Shares of the Fund posted a total return of 5.41%; Hamilton Premier
Shares, 5.14%; and Hamilton Classic Shares, 4.81%.(1) The seven-day current
and 30-day effective yields for the period ended December 31, 1998 were 4.95%
and 4.91%, respectively for Hamilton Shares, 4.70% and 4.66% for Hamilton
Premier Shares and 4.39% and 4.36% for Hamilton Classic Shares.(2) During the
period, the Fund's assets grew significantly, rising 43% from roughly $1.7
billion to more than $2.5 billion.

Q. WHAT ACCOUNTED FOR THE FUND'S PERFORMANCE?
A. In a difficult investment environment, we continued to seek a broad range of
securities that helped to support the stability and return of the Fund. We
handled the global credit crunch and decline in interest rates by maintaining
a steady course of buying high-quality securities. As U.S. Treasury prices
soared in response to increased demand, we broadened our investment activity
into high-quality CDs and corporate exposures. This emphasis on quality
helped earn the Fund both an AAAm rating from Standard & Poor's Corporation
and an Aaa rating from Moody's Investor Services. These ratings signify that
the Fund's safety is excellent and that it has superior capacity to maintain
its $1.00 net asset value per share. Of course, there is no guarantee that it
will do so.

Q. HOW WAS THE FUND WEIGHTED?
A. Our goal is to provide high current income while preserving investors'
capital and maintaining a very high level of liquidity. As a result, the Fund
remained broadly diversified with exposure to various fixed- and
variable-rate money market securities, including top-rated commercial paper
(41%), bank and corporate obligations (22%), repurchase agreements (27%) and
U.S. government and agency securities (10%).

Q. WHAT IS YOUR OUTLOOK FOR THE FUND?
A. Throughout 1998, inflation remained low and economic growth continued at a
solid pace. We expect this scenario to continue into early 1999, although
both economic growth and corporate earnings may weaken later in the year. The
global economic crisis is ongoing. All of this should provide a favorable
environment for the money markets, particularly higher quality issues.
(1) TOTAL RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE AND REINVESTMENT OF
DIVIDENDS AND CAPITAL GAINS. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE
RESULTS.
(2) YIELDS WILL FLUCTUATE WITH CHANGES IN MARKET CONDITIONS. AN INVESTMENT IN
THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE FDIC OR ANY OTHER
GOVERNMENT AGENCY. ALTHOUGH THE FUND STRIVES TO MAINTAIN THE VALUE OF
YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY
INVESTING IN THE FUND.

17
<PAGE>
[LOGO] BNY HAMILTON TREASURY MONEY FUND
AN INTERVIEW WITH RICHARD KLINGMAN, VICE PRESIDENT AND PORTFOLIO MANAGER

Q. WHAT FACTORS INFLUENCED TREASURY SECURITIES IN 1998?
A. During the year, continuing economic uncertainty in Asia, Russia's domestic
debt default and currency problems in Latin America, led to strong
performance by U.S. Government securities, long considered the safest in the
world. As investors flocked to the relative safe haven of U.S. Treasuries,
demand drove prices higher and yields lower. This resulted in a powerful
third quarter rally in Treasuries, which helped push the entire Treasury
yield curve down to near 5% or below, the lowest levels in decades.
In an effort to calm the markets, the Federal Reserve Board stepped in to
lower interest rates in a series of three rapid moves of 0.25% each from
September 29th through November 17th. Overall, the 2 to 30-year U.S. Treasury
yield curve steepened by 0.28% over the twelve months ended December 31,
1998.

Q. GIVEN THIS CONTEXT, HOW DID THE BNY HAMILTON TREASURY MONEY FUND PERFORM IN
1998?
A. For the year ended December 31, 1998, Hamilton Shares posted a total return
of 5.25% and Hamilton Premier Shares gained a total of 4.99%.(1) The
seven-day current and 30-day effective yields for the Hamilton Shares at
December 31, 1998 were 4.64% and 4.61%, respectively. For Hamilton Premier
Shares, they equaled 4.39% and 4.36%, respectively.(2) During the period, the
Fund's assets grew significantly, up 146% from $293 million to $722 million.

Q. WHAT ARE YOUR GOALS IN MANAGING THE FUND?
A. The BNY Hamilton Treasury Money Fund is designed to provide the potential for
high current income while preserving investors' capital and maintaining a
very high level of liquidity. As a result, the Fund invests solely in
securities issued or collateralized by U.S. Treasury obligations.
Our emphasis on quality has earned the Fund an AAAm rating from Standard
& Poor's Corporation and an Aaa rating from Moody's Investors Service, Inc.
These ratings signify that the Fund's safety is excellent and that it has
superior capacity to maintain its $1.00 net asset value per share. Of course,
there is no guarantee that it will do so.

Q. WHAT WAS YOUR INVESTMENT STRATEGY DURING THE YEAR?
A. 1998 was the second year of the Fund's operation and the growing stability of
its asset base allowed us the flexibility to extend the weighted average
maturity of the portfolio from 17 to 37 days. As such, we increased the
Fund's weighting in U.S. Treasury Notes from 4% to 18% and decreased the
allocation of shorter-term U.S. Treasury Bills from 8% to 2%. We also
decreased the weighting of repurchase agreements backed by U.S. Treasury
securities from 88% to 80%. This positioning helped increase the yield and
moderated some of the yield fluctuation in the Fund.

Q. WHAT IS YOUR OUTLOOK FOR 1999?
A. Throughout 1998, inflation remained low and economic growth continued at a
solid pace. We expect this scenario to continue into early 1999, although
both economic growth and corporate earnings may weaken later in the year. The
global economic crisis is ongoing. All of this should provide a favorable
environment for high-quality, highly liquid securities such as U.S. Treasury
securities.
(1) TOTAL RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE AND REINVESTMENT OF
DIVIDENDS AND CAPITAL GAINS. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE
RESULTS. THE ADVISOR AGREED TO ASSUME A PORTION OF THE EXPENSES FOR THIS
FUND UNTIL JUNE 30, 1998. HAD EXPENSES NOT BEEN ASSUMED, TOTAL RETURN
WOULD HAVE BEEN LOWER.
(2) YIELDS WILL FLUCTUATE WITH CHANGES IN MARKET CONDITIONS. AN INVESTMENT IN
THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE FDIC OR ANY OTHER
GOVERNMENT AGENCY. ALTHOUGH THE FUND STRIVES TO MAINTAIN THE VALUE OF
YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY
INVESTING IN THE FUND.

18
<PAGE>
BNY HAMILTON EQUITY INCOME FUND

SCHEDULE OF INVESTMENTS

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ------------
<C> <S> <C>
COMMON STOCKS--72.2%
ADVERTISING & MARKETING
SERVICES--0.4%
90,000 Infinity Broadcasting Corp., Series A... $ 2,463,750
------------
BANKING--6.0%
150,000 First Union Corp. ...................... 9,121,875
190,000 Mellon Bank Corp. ...................... 13,062,500
159,900 National City Corp. .................... 11,592,750
------------
33,777,125
------------
BUSINESS EQUIPMENT &
SERVICES--2.1%
100,000 Xerox Corp. ............................ 11,800,000
------------
CONGLOMERATES--2.2%
122,200 General Electric Co. ................... 12,472,037
------------
ELECTRONICS--1.1%
*130,000 American Power Conversion Corp. ........ 6,296,875
------------
ENTERTAINMENT--0.6%
*100,000 Imax Corp. ............................. 3,162,500
------------
FINANCIAL SERVICES--DIVERSIFIED--1.2%
100,000 Merrill Lynch & Co, Inc. ............... 6,675,000
------------
FINANCIAL SERVICES--MORTGAGE COMPANIES--1.9%
145,000 Federal National Mortgage Association... 10,730,000
------------
FOOD PRODUCTS--2.4%
260,000 Bestfoods............................... 13,845,000
------------

<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
HOUSEHOLD & PERSONAL CARE
PRODUCTS--3.6%
117,600 Clorox Co. ............................. $ 13,737,150
70,000 Procter & Gamble Co. ................... 6,391,875
------------
20,129,025
------------
INSURANCE--HEALTH, LIFE &
MULTI-LINE--2.7%
65,362 American International Group, Inc. ..... 6,315,603
150,000 UNUM Corp. ............................. 8,756,250
------------
15,071,853
------------
MANUFACTURING--CONSUMER
PRODUCTS--1.1%
150,000 Newell Co. ............................. 6,187,500
------------
MEDICAL PRODUCTS & SUPPLIES--3.8%
169,200 Johnson & Johnson....................... 14,191,650
100,000 Medtronic, Inc. ........................ 7,425,000
------------
21,616,650
------------
OIL & GAS--0.8%
100,000 Schlumberger Ltd. ...................... 4,612,500
------------
OIL--INTERNATIONAL--3.4%
162,400 Exxon Corp. ............................ 11,875,500
150,000 Total S.A. (ADR)........................ 7,462,500
------------
19,338,000
------------
PHARMACEUTICALS--3.6%
90,000 Bristol-Myers Squibb Co. ............... 12,043,125
65,000 Pfizer, Inc. ........................... 8,153,437
------------
20,196,562
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

19
<PAGE>
BNY HAMILTON EQUITY INCOME FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
PHARMACEUTICALS, HEALTH CARE, COSMETICS--2.0%
200,000 American Home Products Corp. ........... $ 11,262,500
------------
RAILROADS--1.6%
180,000 Canadian National Railway Co. .......... 9,337,500
------------
REAL ESTATE INVESTMENT TRUSTS--8.2%
125,000 Apartment Investment & Management
Co. .................................... 4,648,437
150,000 Avalonbay Communities, Inc. ............ 5,137,500
320,000 Duke Realty Investments, Inc. .......... 7,440,000
110,000 Equity Residential Properties Trust..... 4,448,125
200,000 General Growth Properties, Inc.......... 7,575,000
200,000 Mack-Cali Realty Corp. ................. 6,175,000
150,000 Post Properties, Inc. .................. 5,765,625
250,000 ProLogis Trust.......................... 5,187,500
------------
46,377,187
------------
RESORTS & ENTERTAINMENT--1.6%
304,800 Walt Disney Co. (The)................... 9,144,000
------------
RETAIL--DISCOUNT STORES--1.6%
125,000 Costco Cos., Inc. ...................... 9,023,438
------------
RETAIL--SPECIALTY STORES--3.2%
325,200 CVS Corp. .............................. 17,886,000
------------
TELECOMMUNICATIONS--7.5%
184,600 Lucent Technologies, Inc. .............. 20,306,000
*150,000 MCI WorldCom, Inc....................... 10,762,500
210,000 SBC Communications, Inc. ............... 11,261,250
------------
42,329,750
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
UTILITIES--GAS & ELECTRIC--8.5%
120,000 Dominion Resources, Inc. ............... $ 5,610,000
155,000 DQE, Inc. .............................. 6,810,313
224,000 Northern States Power Co. .............. 6,216,000
200,000 PECO Energy Co. ........................ 8,325,000
227,150 Texas Utilities Co. .................... 10,605,066
345,000 Williams Cos., Inc. .................... 10,759,688
------------
48,326,067
------------
UTILITIES--WATER--1.1%
192,100 American Water Works Co., Inc. ......... 6,483,375
------------
TOTAL COMMON STOCKS
(Cost $260,891,208)..................... 408,544,194
------------
</TABLE>

<TABLE>
<C> <S> <C>
CONVERTIBLE PREFERRED
STOCKS--12.5%
AUTOMOTIVE PARTS &
EQUIPMENT--0.9%
80,000 Federal-Mogul Financial Trust**......... 5,230,000
------------
BANKING--0.6%
30,000 Jefferson-Pilot Corp. NB (ACES) (a)..... 3,135,000
------------
BUILDING AND BUILDING PRODUCTS--0.4%
225,000 Kaufman & Broad Home Corp. ............. 2,025,000
------------
FINANCIAL SERVICES--0.8%
120,000 Conseco Finance Trust, Series F......... 4,627,500
------------
FOOD PROCESSING--0.6%
70,000 Ralston Purina Co. (b).................. 3,657,500
------------
INSURANCE--0.5%
40,000 PLC Cap Trust II........................ 2,610,000
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

20
<PAGE>
BNY HAMILTON EQUITY INCOME FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ------------
<C> <S> <C>
CONVERTIBLE PREFERRED
STOCKS (CONTINUED)
MANUFACTURING--CONSUMER
PRODUCTS--1.1%
120,000 Newell Financial Trust I................ $ 6,330,000
------------
MEDIA--1.3%
40,000 Evergreen Media Corp.**................. 3,735,000
51,000 MediaOne Group, Inc. ................... 3,391,500
------------
7,126,500
------------
PARKING FACILITIES--0.2%
60,000 Central Parking Financial Trust......... 1,192,500
------------
PHARMACEUTICALS--0.4%
50,000 Monsanto Co. ........................... 2,450,000
------------
RETAIL--GENERAL MERCHANDISE--0.5%
80,000 Merrill Lynch DG STRYPES (c)............ 2,850,000
------------
TELECOMMUNICATIONS--3.6%
115,000 Airtouch Communications, Inc. .......... 11,845,000
30,000 TCI Pacific Communications, Inc., Series
A....................................... 8,460,000
------------
20,305,000
------------
UTILITIES--GAS & ELECTRIC--0.6%
70,000 AES Trust II**.......................... 3,473,750
------------
UTILITIES--TELECOMMUNICATIONS--1.0%
100,000 Texas Utilities Co. .................... 5,637,500
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $56,219,051)...................... 70,650,250
------------
</TABLE>

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ------------
<C> <S> <C>
CONVERTIBLE BONDS--8.3%
COMPUTERS--SOFTWARE &
PERIPHERALS--0.7%
$ 2,500,000 VERITAS Software Corp.,
5.25%, 11/01/04......................... $ 4,040,625
------------
ENTERTAINMENT--0.4%
1,500,000 Imax Corp.
5.75%, 04/01/03**....................... 2,214,375
------------
ENVIRONMENT MANAGEMENT--0.7%
4,000,000 United States Filter Corp.,
4.50%, 12/15/01......................... 3,775,000
------------
HEALTH CARE PRODUCTS &
SERVICES--1.0%
4,100,000 Alza Corp.,
5.00%, 05/01/06......................... 5,929,625
------------
HUMAN RESOURCES--0.6%
1,980,000 Interim Services, Inc.,
4.50%, 06/01/05......................... 1,784,475
1,500,000 Personnel Group of America, Inc.,
5.75%, 07/01/04**....................... 1,728,750
------------
3,513,225
------------
INDUSTRIAL & COMMERCIAL
SERVICES--0.5%
2,250,000 Waste Management, Inc.
4.00%, 02/01/02......................... 2,697,187
------------
MANUFACTURING AND DESIGN TECHNOLOGY--2.0%
3,000,000 EMC Corp.
3.25%, 03/15/02**....................... 11,227,500
------------
MEDIA--0.7%
3,750,000 Clear Channel Communications, Inc.
2.625%, 04/01/03........................ 4,017,188
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

21
<PAGE>
BNY HAMILTON EQUITY INCOME FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ------------
<C> <S> <C>
CONVERTIBLE BONDS (CONTINUED)
MEDICAL PRODUCTS & SUPPLIES--0.7%
$ 4,000,000 Centocor, Inc.
4.75%, 02/15/05**....................... $ 4,235,000
------------
OIL & GAS--0.7%
4,000,000 Diamond Offshore Drilling,
3.75%, 02/15/07......................... 3,725,000
------------
RETAIL--SPECIALTY STORES--0.3%
500,000 Central Garden & Pet Co.
6.00%, 11/15/03......................... 407,500
1,250,000 Central Garden & Pet Co.
6.00%, 11/15/03**....................... 1,018,750
------------
1,426,250
------------
TOTAL CONVERTIBLE BONDS
(Cost $34,923,749)...................... 46,800,975
------------
</TABLE>

<TABLE>
<C> <S> <C>
MONEY MARKET FUNDS--6.9%
19,272,075 ACM Institutional Reserves (Government
Portfolio), 4.88% (d)................... 19,272,075
19,561,725 ACM Institutional Reserves (Prime
Portfolio), 5.03% (d)................... 19,561,725
------------
TOTAL MONEY MARKET FUNDS
(Cost $38,833,800)...................... 38,833,800
------------
TOTAL INVESTMENTS BEFORE OUTSTANDING
WRITTEN CALL OPTIONS
(Cost $390,867,808) (e)-- 99.9%......... 564,829,219
</TABLE>

<TABLE>
<CAPTION>
STRIKE
CONTRACTS PRICE VALUE
- ----------- ------- -------------
<C> <S> <C> <C>
OUTSTANDING WRITTEN CALL OPTIONS-- (0.1%)
*600 Lucent Technologies, Inc., expiration
January 1999 (Premiums received
$163,194)............................... 105 $ (435,000)
-------------
</TABLE>

TOTAL INVESTMENTS NET OF OUTSTANDING
WRITTEN CALL OPTIONS
(Cost $390,704,614)--99.8%.............. 564,394,219
Other assets less liabilities-- 0.2%.... 1,050,613
-------
NET ASSETS--100.0%...................... 56$5,444,832
-------
-------

ACES AUTOMATIC COMMON EXCHANGE SECURITIES.
ADR AMERICAN DEPOSITARY RECEIPT.
STRYPES STRUCTURED YIELD PRODUCT EXCHANGEABLE FOR STOCK.
* NON-INCOME PRODUCING SECURITY.
** SECURITY EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT OF
1933.
(a) CONVERTIBLE TO BANKAMERICA CORP. COMMON STOCK.
(b) CONVERTIBLE TO INTERSTATE BAKERIES COMMON STOCK.
(c) CONVERTIBLE TO DOLLAR GENERAL CORP. COMMON STOCK.
(d) REPRESENTS ANNUALIZED YIELD AT DECEMBER 31, 1998.
(e) THE COST STATED ALSO APPROXIMATES THE AGGREGATE COST FOR FEDERAL INCOME TAX
PURPOSES. AT DECEMBER 31, 1998, NET UNREALIZED APPRECIATION WAS
$173,961,411 BASED ON COST FOR FEDERAL INCOME TAX PURPOSES. THIS CONSISTED
OF AGGREGATE GROSS UNREALIZED APPRECIATION OF $183,903,469 AND AGGREGATE
GROSS UNREALIZED DEPRECIATION OF $9,942,058.

SEE NOTES TO FINANCIAL STATEMENTS.

22
<PAGE>

BNY HAMILTON EQUITY INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES

DECEMBER 31, 1998

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

<TABLE>
<S> <C>
ASSETS:
Investments at value
(Cost $390,867,808)..................................... $564,829,219
Cash...................................................... 36
Receivables:
Dividends............................................... 749,030
Interest................................................ 550,147
Capital stock sold...................................... 291,020
Other assets.............................................. 12,959
------------
TOTAL ASSETS.......................................... 566,432,411
------------
LIABILITIES:
Outstanding call options written
(premium received $163,194)............................. 435,000
Payables:
Services provided by the Bank of New York and
Administrator......................................... 416,440
Capital stock repurchased............................... 63,082
Accrued expenses and other liabilities.................... 73,057
------------
TOTAL LIABILITIES..................................... 987,579
------------
NET ASSETS:................................................. $565,444,832
------------
------------
SOURCES OF NET ASSETS:
Capital stock @ par....................................... $ 34,129
Capital surplus........................................... 384,059,178
Undistributed net investment income....................... 379,218
Accumulated net realized gain on investments.............. 7,282,702
Net unrealized appreciation on investments................ 173,689,605
------------
NET ASSETS.................................................. $565,444,832
------------
------------
INSTITUTIONAL SHARES:
Net assets................................................ $528,233,253
------------
------------
Shares outstanding........................................ 31,878,059
------------
------------
Net asset value, offering price and repurchase price per
share................................................... $ 16.57
------------
------------
INVESTOR SHARES:
Net assets................................................ $ 37,211,579
------------
------------
Shares outstanding........................................ 2,250,860
------------
------------
Net asset value, offering price and repurchase price per
share................................................... $ 16.53
------------
------------
Institutional Shares authorized @ $.001 par value........... 200,000,000
Investor Shares authorized @ $.001 par value................ 200,000,000
</TABLE>

STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1998

<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends................................................. $12,229,551
Interest.................................................. 2,605,621
-----------
TOTAL INCOME............................................ 14,835,172
-----------
EXPENSES:
Advisory.................................................. 3,339,410
Administration............................................ 1,084,161
12b-1 fee--Investor Shares................................ 88,873
Transfer agent............................................ 141,250
Registration and filings.................................. 101,038
Accounting services....................................... 60,000
Custodian................................................. 77,347
Reports to shareholders................................... 65,594
Audit..................................................... 21,664
Insurance................................................. 23,106
Cash management........................................... 17,769
Legal..................................................... 9,644
Directors................................................. 11,825
Other..................................................... 36,566
-----------
TOTAL EXPENSES.......................................... 5,078,247
Earnings credit adjustment (Note 3)..................... (2,381)
-----------
NET EXPENSES............................................ 5,075,866
-----------
NET INVESTMENT INCOME................................... 9,759,306
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on:
Investments............................................. 29,888,651
Written call options.................................... 153,479
-----------
Net realized gain on investments.......................... 30,042,130
-----------
Increase (decrease) in unrealized
appreciation on:
Investments............................................. 30,945,981
Written call options.................................... (298,429)
-----------
Net unrealized gain on investments during the year........ 30,647,552
-----------
Net realized and unrealized gain on investments........... 60,689,682
-----------
Net increase in net assets resulting from operations...... $70,448,988
-----------
-----------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

23
<PAGE>
BNY HAMILTON EQUITY INCOME FUND

STATEMENTS OF CHANGES IN NET ASSETS

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

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1998 1997
---------------- -----------------
<S> <C> <C>
OPERATIONS:
Net investment income............................................... $ 9,759,306 $ 9,312,064
Net realized gain on investments.................................... 30,042,130 61,155,457
Increase in unrealized appreciation on investments during the
year.............................................................. 30,647,552 48,809,919
---------------- -----------------
Net increase in net assets resulting from operations.............. 70,448,988 119,277,440
---------------- -----------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income: Institutional Shares.......... (8,618,820) (7,424,671)
Investor Shares............... (536,948) (1,468,710)
Distributions from capital gains: Institutional Shares.............. (21,865,292) (57,654,267)
Investor Shares................... (1,528,489) (3,788,827)
---------------- -----------------
(32,549,549) (70,336,475)
---------------- -----------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from capital stock sold: Institutional Shares (Note 1)..... 26,979,380 476,447,806
Investor Shares................... 4,116,015 24,850,107
Proceeds from shares issued on reinvestment of dividends
and distributions: Institutional Shares........................... 24,111,829 59,462,345
Investor Shares..................................... 1,987,895 4,429,446
Cost of capital stock repurchased: Institutional Shares............. (81,028,870) (58,544,334)
Investor Shares (Note 1)......... (5,358,164) (215,212,365)
---------------- -----------------
Net increase (decrease) in net assets resulting from capital stock
transactions..................................................... (29,191,915) 291,433,005
---------------- -----------------
INCREASE IN NET ASSETS.......................................... 8,707,524 340,373,970
NET ASSETS:
Beginning of year................................................... 556,737,308 216,363,338
---------------- -----------------
End of year (includes undistributed net investment income of
$379,218 at December 31, 1998 and $154,255 at December 31,
1997)............................................................. $ 565,444,832 $ 556,737,308
---------------- -----------------
---------------- -----------------
CHANGES IN CAPITAL STOCK OUTSTANDING:
Shares sold: Institutional Shares (Note 1).......................... 1,699,962 33,419,974
Investor Shares........................................ 253,791 1,672,509
Shares issued on reinvestment of dividends
and distributions: Institutional Shares........................... 1,487,475 3,823,869
Investor Shares....................................................... 122,592 286,117
Shares repurchased: Institutional Shares............................ (4,940,940) (3,612,281)
Investor Shares (Note 1)........................ (328,881) (15,074,119)
---------------- -----------------
Net increase (decrease)........................................... (1,706,001) 20,516,069
Shares outstanding, beginning of year............................... 35,834,920 15,318,851
---------------- -----------------
Shares outstanding, end of year..................................... 34,128,919 35,834,920
---------------- -----------------
---------------- -----------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.
24
<PAGE>
BNY HAMILTON EQUITY INCOME FUND

FINANCIAL HIGHLIGHTS

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

<TABLE>
<CAPTION>
INSTITUTIONAL SHARES
-------------------------------------------------------------------------
FOR THE PERIOD
YEAR APRIL 1, 1997*
ENDED THROUGH
DECEMBER 31, 1998 DECEMBER 31, 1997
----------------------------------- -----------------------------------
<S> <C> <C>
PER SHARE DATA:
Net asset value at beginning of
period................................ $ 15.54 $ 14.21
-------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income................... 0.28 0.25
Net realized and unrealized gain on
investments........................... 1.73 3.25
-------- --------
Total from investment operations...... 2.01 3.50
-------- --------
DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income.... (0.27) (0.24)
Distributions from capital gains........ (0.71) (1.93)
-------- --------
Total dividends and distributions..... (0.98) (2.17)
-------- --------
Net asset value at end of period........ $ 16.57 $ 15.54
-------- --------
-------- --------
TOTAL RETURN:........................... 13.18% 24.73%**
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's
omitted).............................. $528,233 $522,524
Ratio to average net assets of:
Expenses.............................. 0.89% 0.87%***
Net investment income................. 1.77% 2.07%***
Portfolio turnover rate................. 39% 65%
</TABLE>

* COMMENCEMENT OF INVESTMENT OPERATIONS.
** NOT ANNUALIZED.
*** ANNUALIZED.

SEE NOTES TO FINANCIAL STATEMENTS.
25
<PAGE>
BNY HAMILTON EQUITY INCOME FUND

FINANCIAL HIGHLIGHTS (CONTINUED)

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

<TABLE>
<CAPTION>
INVESTOR SHARES
----------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------
1998 1997 1996 1995 1994
------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value at beginning of year.... $ 15.53 $ 14.12 $ 12.99 $ 10.70 $ 11.30
------- ------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income................... 0.25 0.35 0.30 0.32 0.31
Net realized and unrealized gain (loss)
on investments........................ 1.71 3.27 2.22 2.41 (0.60)
------- ------- -------- -------- --------
Total from investment operations...... 1.96 3.62 2.52 2.73 (0.29)
------- ------- -------- -------- --------
DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income.... (0.25) (0.28) (0.29) (0.32) (0.31)
Distributions from capital gains........ (0.71) (1.93) (1.10) (0.12) -0-
------- ------- -------- -------- --------
Total dividends and distributions..... (0.96) (2.21) (1.39) (0.44) (0.31)
------- ------- -------- -------- --------
Net asset value at end of year.......... $ 16.53 $ 15.53 $ 14.12 $ 12.99 $ 10.70
------- ------- -------- -------- --------
------- ------- -------- -------- --------
TOTAL RETURN:+.......................... 12.82% 25.85% 19.58% 25.78% (2.58)%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's
omitted).............................. $37,212 $34,213 $216,363 $169,841 $135,131
Ratio to average net assets of:
Expenses.............................. 1.17% 1.01% 0.97% 1.00% 1.04%
Net investment income................. 1.50% 1.77% 2.17% 2.66% 2.89%
Portfolio turnover rate................. 39% 65% 58% 58% 51%
</TABLE>

+ TOTAL RETURN DOES NOT CONSIDER THE EFFECT OF THE SALES LOAD FOR THOSE
PERIODS IN WHICH THE SALES LOAD WAS IN EFFECT.

SEE NOTES TO FINANCIAL STATEMENTS.
26
<PAGE>
BNY HAMILTON LARGE CAP GROWTH FUND

SCHEDULE OF INVESTMENTS

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ------------
<C> <S> <C>
COMMON STOCKS--96.7%
BANKING--5.1%
217,000 First Union Corp. ...................... $ 13,196,312
248,932 Wells Fargo & Co. ...................... 9,941,722
------------
23,138,034
------------
BEVERAGES--2.2%
114,467 Coca-Cola Co. .......................... 7,654,981
57,000 PepsiCo, Inc. .......................... 2,333,437
------------
9,988,418
------------
CHEMICALS--DIVERSIFIED--2.0%
160,146 duPont (E.I.) de Nemours & Co. ......... 9,018,222
------------
COMMUNICATIONS & ENTERTAINMENT-- 2.2%
163,158 Time Warner, Inc. ...................... 10,125,993
------------
COMMUNICATIONS EQUIPMENT & SYSTEMS--3.7%
100,000 Nokia Oyj, Class A (ADR)................ 12,043,750
70,000 Tellabs, Inc. .......................... 4,799,375
------------
16,843,125
------------
COMPUTER SERVICES--2.2%
146,660 Hewlett-Packard Co. .................... 10,018,711
------------
COMPUTERS--SOFTWARE & PERIPHERALS-- 8.8%
*192,280 Cisco Systems, Inc. .................... 17,845,987
*113,648 Microsoft Corp. ........................ 15,761,557
186,000 SAP AG (ADR)............................ 6,707,625
------------
40,315,169
------------
CONGLOMERATES--2.5%
113,146 General Electric Co. ................... 11,547,964
------------

<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
COSMETICS & TOILETRIES--1.2%
110,016 Gillette Co. ........................... $ 5,315,148
------------
ENVIRONMENT MANAGMENT--1.0%
200,000 United States Filter Corp. ............. 4,575,000
------------
FINANCIAL SERVICES--1.6%
100,000 Morgan Stanley, Dean Witter & Co. ...... 7,100,000
------------
FINANCIAL SERVICES--DIVERSIFIED--2.4%
218,471 Citigroup, Inc. ........................ 10,814,314
------------
FINANCIAL SERVICES--MORTGAGE COMPANIES--2.6%
161,725 Federal National Mortgage Association... 11,967,650
------------
FOOD PRODUCTS--2.3%
198,018 Bestfoods............................... 10,544,459
------------
HOUSEHOLD & PERSONAL CARE PRODUCTS-- 2.3%
116,938 Procter & Gamble Co. ................... 10,677,901
------------
INSURANCE--1.4%
111,887 Equitable Cos, Inc. .................... 6,475,460
------------
INSURANCE--HEALTH, LIFE & MULTI-LINE--3.3%
154,517 American International Group, Inc. ..... 14,930,205
------------
MANUFACTURING AND DESIGN TECHNOLOGY--1.9%
*100,000 Applied Materials, Inc. ................ 4,268,750
50,000 EMC Corp. .............................. 4,250,000
------------
8,518,750
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

27
<PAGE>
BNY HAMILTON LARGE CAP GROWTH FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
MANUFACTURING--CONSUMER PRODUCTS-- 3.4%
163,000 Corning, Inc. .......................... $ 7,335,000
201,400 Newell Co. ............................. 8,307,750
------------
15,642,750
------------
MEDICAL PRODUCTS & SUPPLIES--5.6%
*40,000 Centocor, Inc........................... 1,805,000
147,455 Johnson & Johnson....................... 12,367,788
151,000 Medtronic, Inc. ........................ 11,211,750
------------
25,384,538
------------
OIL & GAS--3.3%
159,976 Enron Corp. ............................ 9,128,631
129,390 Schlumberger Ltd. ...................... 5,968,114
------------
15,096,745
------------
OIL--INTERNATIONAL--6.2%
176,084 Exxon Corp. ............................ 12,876,143
141,000 Mobil Corp. ............................ 12,284,625
62,992 Royal Dutch Petroleum Co. .............. 3,015,742
------------
28,176,510
------------
PHARMACEUTICALS--8.2%
*25,126 Amgen, Inc. ............................ 2,627,237
25,000 Biogen, Inc............................. 2,075,000
73,269 Merck & Co. ............................ 10,820,915
114,116 Pfizer, Inc. ........................... 14,314,426
105,000 Smithline Beechman PLC (ADR)............ 7,297,500
------------
37,135,078
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
PHARMACEUTICALS, HEALTH CARE, COSMETICS--1.6%
155,565 Monsanto Co. ........................... $ 7,389,338
------------
REAL ESTATE INVESTMENT TRUSTS--2.1%
174,000 Duke Realty Investments, Inc. .......... 4,045,500
140,000 Liberty Property Trust.................. 3,447,500
97,475 New Plan Excel Realty Trust............. 2,162,727
------------
9,655,727
------------
RESORTS & ENTERTAINMENT--2.4%
360,000 Walt Disney Co. (The)................... 10,800,000
------------
RETAIL--SPECIALTY STORES--4.9%
*150,000 Borders Group, Inc. .................... 3,740,625
226,890 CVS Corp. .............................. 12,478,950
150,000 Williams-Sonoma, Inc. .................. 6,046,875
------------
22,266,450
------------
SEMICONDUCTORS--2.7%
102,776 Intel Corp. ............................ 12,185,380
------------
TELECOMMUNICATIONS--6.7%
*110,000 Global Crossing Ltd. ................... 4,963,750
86,802 Lucent Technologies, Inc. .............. 9,548,220
*150,000 MCI WorldCom, Inc....................... 10,762,500
100,000 Qwest Communications International,
Inc..................................... 5,000,000
------------
30,274,470
------------
UTILITIES--GAS & ELECTRIC--0.9%
93,253 Texas Utilities Co. .................... 4,353,749
------------
TOTAL COMMON STOCKS
(Cost $221,935,631)..................... 440,275,258
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

28
<PAGE>
BNY HAMILTON LARGE CAP GROWTH FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

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

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ------------
<C> <S> <C>
U.S. TREASURY BILL--0.2%
$ 750,000 3.84%, 1/21/99
(Amortized cost $748,400)............... $ 748,449
------------
</TABLE>

<TABLE>
<C> <S> <C>
MONEY MARKET FUNDS--3.3%
1,657,100 ACM Institutional Reserves (Government
Portfolio), 4.88% (a)................... 1,657,100
13,341,385 ACM Institutional Reserves (Prime
Portfolio), 5.03% (a)................... 13,341,385
------------
TOTAL MONEY MARKET FUNDS
(Cost $14,998,485)...................... 14,998,485
------------
TOTAL INVESTMENTS BEFORE OUTSTANDING
WRITTEN CALL AND PUT OPTIONS
(Cost $237,682,516) (b)-- 100.2%........ 456,022,192
------------
</TABLE>
<TABLE>
<CAPTION>
STRIKE
CONTRACTS PRICE
- ----------- ------
<C> <S> <C> <C>
OUTSTANDING WRITTEN CALL OPTIONS--(0.5%)
*200 American International Group, Inc.,
expiration January, 1999................ 86 (210,000)
*200 Cisco Systems, Inc., expiration January,
1999.................................... 65 (577,500)

<CAPTION>
STRIKE
CONTRACTS PRICE VALUE
- ----------- ------ ------------
<C> <S> <C> <C>
OUTSTANDING WRITTEN CALL OPTIONS (CONTINUED)
*100 Citigroup, Inc., expiration January,
1999.................................... 40 $ (101,250)
*200 Exxon Corp., expiration January, 1999... 75 (15,000)
*200 Intel Corp., expiration January, 1999... 100 (380,000)
*200 Microsoft Corp., expiration January,
1999.................................... 115 (500,000)
*200 Monsanto Co., expiration January,
1999.................................... 40 (162,500)
*100 Nokia Corp., expiration January, 1999... 115 (76,250)
*200 Wells Fargo Co., expiration January,
1999.................................... 35 (80,000)
------------
TOTAL OUTSTANDING WRITTEN CALL OPTIONS
(Premiums received $521,435).................... (2,102,500)
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

29
<PAGE>
BNY HAMILTON LARGE CAP GROWTH FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CONTRACTS VALUE
- ----------- ------------
OUTSTANDING WRITTEN PUT OPTIONS--0.0%
<C> <S> <C> <C>
*200 Monsanto Co., expiration January, 1999
(Premiums received $69,397)............. 35 $ (1,250)
-------------
TOTAL INVESTMENTS NET OF OUTSTANDING WRITTEN
CALL AND PUT OPTIONS
(Cost $237,091,684)--99.7%...................... 453,918,442
Other assets less liabilities-- 0.3%............ 1,125,464
-------------
NET ASSETS--100.0%.............................. $ 455,043,906
-------------
-------------
</TABLE>

ADR AMERICAN DEPOSITORY RECEIPT.
* NON-INCOME PRODUCING SECURITY.
(a) REPRESENTS ANNUALIZED YIELD AT DECEMBER 31, 1998.
(b) THE COST STATED ALSO APPROXIMATES THE AGGREGATE COST FOR FEDERAL INCOME TAX
PURPOSES. AT DECEMBER 31, 1998, NET UNREALIZED APPRECIATION WAS
$218,339,676 BASED ON COST FOR FEDERAL INCOME TAX PURPOSES. THIS CONSISTED
OF AGGREGATE GROSS UNREALIZED APPRECIATION OF $221,132,413 AND AGGREGATE
GROSS UNREALIZED DEPRECIATION OF $2,792,737.

SEE NOTES TO FINANCIAL STATEMENTS.
30
<PAGE>

BNY HAMILTON LARGE CAP GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES

DECEMBER 31, 1998

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

<TABLE>
<S> <C>
ASSETS:
Investments at value
(Cost $237,682,516)..................................... $456,022,192
Cash...................................................... 48
Receivables:
Investments sold........................................ 13,134,095
Capital stock sold...................................... 2,404,288
Dividends............................................... 356,660
Interest................................................ 61,274
Deferred organization costs and other assets.............. 70,042
------------
TOTAL ASSETS.......................................... 472,048,599
------------
LIABILITIES:
Outstanding call and put options written (premiums
received $590,832)...................................... 2,103,750
Payables:
Investments purchased................................... 14,254,294
Capital stock repurchased............................... 297,399
Services provided by the Bank of New York and
Administrator......................................... 295,277
Accrued expenses and other liabilities.................... 53,973
------------
TOTAL LIABILITIES..................................... 17,004,693
------------
NET ASSETS:................................................. $455,043,906
------------
------------
SOURCES OF NET ASSETS:
Capital stock @ par....................................... $ 35,819
Capital surplus........................................... 232,311,136
Undistributed net investment income....................... 94,689
Accumulated net realized gain on investments.............. 5,775,504
Net unrealized appreciation on investments................ 216,826,758
------------
NET ASSETS.................................................. $455,043,906
------------
------------
INSTITUTIONAL SHARES:
Net assets................................................ $443,997,063
------------
------------
Shares outstanding........................................ 34,946,082
------------
------------
Net asset value, offering price and repurchase price per
share................................................... $ 12.71
------------
------------
INVESTOR SHARES:
Net assets................................................ $ 11,046,843
------------
------------
Shares outstanding........................................ 873,108
------------
------------
Net asset value, offering price and repurchase price per
share................................................... $ 12.65
------------
------------
Institutional Shares authorized @ $.001
par value................................................. 200,000,000
Investor Shares authorized @ $.001 par value................ 200,000,000
</TABLE>

STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1998

<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $23,366)... $ 5,192,580
Interest.................................................. 1,200,748
------------
TOTAL INCOME............................................ 6,393,328
------------
EXPENSES:
Advisory.................................................. 2,480,541
Administration............................................ 826,847
12b-1 fee--Investor Shares................................ 25,886
Registration and filings.................................. 112,855
Transfer agent............................................ 107,708
Accounting services....................................... 60,000
Custodian................................................. 55,580
Reports to shareholders................................... 38,561
Organization.............................................. 17,860
Audit..................................................... 19,967
Cash management........................................... 6,920
Directors................................................. 11,818
Legal..................................................... 6,334
Insurance................................................. 10,900
Other..................................................... 20,510
------------
TOTAL EXPENSES.......................................... 3,802,287
Fees waived by the Bank of New York (Note 3).............. (383,778)
Earnings credit adjustment (Note 3)....................... (2,142)
------------
NET EXPENSES............................................ 3,416,367
------------
NET INVESTMENT INCOME................................... 2,976,961
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on:
Investments............................................. 31,304,509
Written call options.................................... 149,858
------------
Net realized gain on investments.......................... 31,454,367
------------
Increase in unrealized appreciation (depreciation) on:
Investments............................................. 55,894,492
Written call options.................................... (1,523,992)
------------
Net unrealized gain on investments during the year........ 54,370,500
------------
Net realized and unrealized gain on investments........... 85,824,867
------------
Net increase in net assets resulting from operations...... $ 88,801,828
------------
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

31
<PAGE>
BNY HAMILTON LARGE CAP GROWTH FUND

STATEMENTS OF CHANGES IN NET ASSETS

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

<TABLE>
<CAPTION>
YEAR FOR THE PERIOD
ENDED APRIL 1, 1997*
DECEMBER 31, THROUGH
1998 DECEMBER 31, 1997
---------------- -----------------
<S> <C> <C>
OPERATIONS:
Net investment income............................................... $ 2,976,961 $ 2,368,340
Net realized gain on investments.................................... 31,454,367 54,399,001
Increase in unrealized appreciation on investments during the
period............................................................ 54,370,500 28,778,609
---------------- -----------------
Net increase in net assets resulting from operations.............. 88,801,828 85,545,950
---------------- -----------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income: Institutional Shares.......... (2,846,174) (2,318,068)
Investor Shares............... (74,955) (17,933)
Distributions from capital gains: Institutional Shares.............. (23,566,674) (55,015,232)
Investor Shares................... (561,749) (950,886)
---------------- -----------------
(27,049,552) (58,302,119)
---------------- -----------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from capital stock sold: Institutional Shares (Note 1)..... 48,105,075 371,116,638
Investor Shares................... 11,499,724 7,761,628
Proceeds from shares issued on reinvestment of dividends
and distributions: Institutional Shares........................... 22,917,754 54,402,109
Investor Shares................................ 632,192 969,794
Cost of capital stock repurchased: Institutional Shares............. (60,262,412) (80,102,249)
Investor Shares.................. (9,391,039) (1,601,415)
---------------- -----------------
Net increase in net assets resulting from capital stock
transactions.................................................... 13,501,294 352,546,505
---------------- -----------------
INCREASE IN NET ASSETS.......................................... 75,253,570 379,790,336
NET ASSETS:
Beginning of period................................................. 379,790,336 -0-
---------------- -----------------
End of period (includes undistributed net investment income of
$94,689 at December 31, 1998 and $31,634 at December 31, 1997).... $ 455,043,906 $379,790,336
---------------- -----------------
---------------- -----------------
CHANGES IN CAPITAL STOCK OUTSTANDING:
Shares sold: Institutional Shares (Note 1).......................... 3,974,655 35,761,158
Investor Shares........................................ 974,111 632,712
Shares issued on reinvestment of dividends
and distributions: Institutional Shares........................... 1,833,466 4,970,948
Investor Shares................................ 50,958 88,650
Shares repurchased: Institutional Shares............................ (4,996,137) (6,598,008)
Investor Shares................................. (743,808) (129,515)
---------------- -----------------
Net increase...................................................... 1,093,245 34,725,945
Shares outstanding, beginning of period............................. 34,725,945 -0-
---------------- -----------------
Shares outstanding, end of period................................... 35,819,190 34,725,945
---------------- -----------------
---------------- -----------------
* COMMENCEMENT OF INVESTMENT OPERATIONS.
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.
32
<PAGE>
BNY HAMILTON LARGE CAP GROWTH FUND

FINANCIAL HIGHLIGHTS

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

<TABLE>
<CAPTION>
INSTITUTIONAL SHARES INVESTOR SHARES
---------------------------------- ----------------------------------
YEAR FOR THE PERIOD YEAR FOR THE PERIOD
ENDED APRIL 1, 1997* ENDED MAY 1, 1997*
DECEMBER 31, THROUGH DECEMBER 31, THROUGH
1998 DECEMBER 31, 1997 1998 DECEMBER 31, 1997
------------- ------------------ ------------- ------------------
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value at beginning of
period................................ $ 10.94 $ 10.00 $ 10.92 $10.70
------------- -------- ------------- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income................... 0.11 0.08 0.11 0.06
Net realized and unrealized gain on
investments........................... 2.46 2.83 2.42 2.12
------------- -------- ------------- ------
Total from investment operations...... 2.57 2.91 2.53 2.18
------------- -------- ------------- ------
DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment
income................................ (0.11) (0.08) (0.11) (0.07)
Distributions from capital gains........ (0.69) (1.89) (0.69) (1.89)
------------- -------- ------------- ------
Total dividends and distributions..... (0.80) (1.97) (0.80) (1.96)
------------- -------- ------------- ------
Net asset value at end of period........ $ 12.71 $ 10.94 $ 12.65 $10.92
------------- -------- ------------- ------
------------- -------- ------------- ------
TOTAL RETURN:........................... 23.49% 29.11%** 23.26% 20.37%**
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's
omitted).............................. $443,997 $373,326 $11,047 $6,464
Ratio to average net assets of:
Expenses, net of waiver from The Bank
of New York......................... 0.82% 0.82%*** 1.07% 1.07%***
Expenses, prior to waiver from The
Bank of New York.................... 0.91% 0.88%*** 1.21% 1.16%***
Net investment income, net of waiver
from The Bank of New York........... 0.73% 0.89%*** 0.50% 0.54%***
Portfolio turnover rate................. 26% 37% 26% 37%
</TABLE>

* COMMENCEMENT OF INVESTMENT OPERATIONS FOR THE RESPECTIVE CLASS OF SHARES.
** NOT ANNUALIZED.
*** ANNUALIZED.

SEE NOTES TO FINANCIAL STATEMENTS.
33
<PAGE>
BNY HAMILTON SMALL CAP GROWTH FUND

SCHEDULE OF INVESTMENTS

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- ------------
<C> <S> <C>
COMMON STOCKS--98.5%
ADVERTISING & MARKETING
SERVICES--4.4%
*54,625 DoubleClick, Inc. ...................... $ 2,488,852
*162,246 Ha-Lo Industries, Inc. ................. 6,104,506
------------
8,593,358
------------
AIRLINES--0.5%
35,100 ASA Holdings, Inc. ..................... 1,070,550
------------
BANKING--1.9%
94,400 Peoples Heritage Financial Group,
Inc. ................................... 1,888,000
79,900 UST Corp. .............................. 1,882,644
------------
3,770,644
------------
BIOSCIENCES--0.5%
*160,075 Aurora Biosciences Corp. ............... 1,030,483
------------
BUILDING MATERIALS--0.5%
24,100 Lone Star Industries, Inc. ............. 887,181
------------
CABLE TV SYSTEMS--2.5%
*41,500 Adelphia Communications Corp. .......... 1,898,625
*84,450 Jones Intercable, Inc. ................. 3,008,531
------------
4,907,156
------------
COMMERCIAL SERVICES--1.3%
*33,800 Boron, LePore & Associates, Inc. ....... 1,166,100
*57,500 FirstService Corp. ..................... 686,406
*60,625 Mac-Gray Corp. ......................... 689,609
------------
2,542,115
------------

<CAPTION>
NUMBER OF
SHARES VALUE
- --------- ------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
COMPUTER SERVICES--4.1%
*56,600 Mastech Corp. .......................... $ 1,620,175
*141,140 Network Appliance, Inc. ................ 6,351,300
------------
7,971,475
------------
COMPUTERS--SOFTWARE &
PERIPHERALS--8.3%
*27,900 Aspect Development, Inc. ............... 1,236,319
*14,605 Excite, Inc. ........................... 614,323
*91,575 HNC Software, Inc. ..................... 3,703,064
*13,800 Infoseek Corp. ......................... 681,375
*20,600 Legato Systems, Inc. ................... 1,358,312
*12,175 Lycos, Inc. ............................ 676,473
*11,170 Mindspring Enterprises, Inc. ........... 682,068
*132,550 THINK New Ideas, Inc. .................. 1,267,509
*85,627 VERITAS Software Corp. ................. 5,132,268
16,500 Wind River Systems, Inc. ............... 775,500
------------
16,127,211
------------
CONSUMER GOODS AND
SERVICES--0.5%
*20,125 Abacus Direct Corp. .................... 915,687
------------
DATA PROCESSING SYSTEMS--4.9%
*78,400 Applied Graphics Technologies, Inc. .... 1,293,600
*75,750 CSG Systems International, Inc. ........ 5,984,250
*56,000 MedQuist, Inc. ......................... 2,212,000
------------
9,489,850
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

34
<PAGE>
BNY HAMILTON SMALL CAP GROWTH FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- ------------
COMMON STOCKS (CONTINUED)
<C> <S> <C>
EDUCATION--5.4%
*143,156 DeVry, Inc. ............................ $ 4,384,152
*99,160 Education Management Corp. ............. 2,342,655
*113,320 ITT Educational Services, Inc. ......... 3,852,880
------------
10,579,687
------------
ELECTRICAL EQUIPMENT--1.3%
*43,275 Gemstar International Group Ltd. ....... 2,477,494
------------
ELECTRONIC EQUIPMENT &
COMPONENTS--2.5%
*89,625 Cypress Semiconductor Corp. ............ 745,008
*22,700 Etec Systems, Inc. ..................... 908,000
*6,600 Jabil Circuit, Inc. .................... 492,525
*24,725 Lattice Semiconductor Corp. ............ 1,135,032
*30,450 Level One Communications, Inc. ......... 1,080,975
*19,100 Phototronics, Inc. ..................... 457,803
------------
4,819,343
------------
ELECTRONICS--0.4%
*13,600 PMC - Sierra, Inc. ..................... 858,500
------------
ENTERTAINMENT--1.8%
*58,390 Cinar Films, Inc. ...................... 1,481,646
*63,150 Imax Corp. ............................. 1,997,119
------------
3,478,765
------------
FINANCIAL SERVICES--1.8%
87,740 Bank United Corp., Class A.............. 3,443,795
------------
FOOD PROCESSING--2.0%
*76,755 Suiza Foods Corp. ...................... 3,909,708
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- ------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
FOOD WHOLESALING--1.6%
*62,125 U.S. Foodservice........................ $ 3,044,125
------------
FUNERAL SERVICES--CEMETERY--2.4%
*178,742 Equity Corp. International.............. 4,747,834
------------
INSTRUMENTS--0.5%
*24,800 Microchip Technology, Inc. ............. 917,600
------------
INSURANCE--0.5%
*13,700 Reinsurance Group of America, Inc. ..... 959,000
------------
INSURANCE--HEALTH, LIFE &
MULTI-LINE--0.9%
67,100 Annuity and Life Re (Holdings) Ltd. .... 1,811,700
------------
INVESTMENT MANAGEMENT--3.5%
40,600 Legg Mason, Inc. ....................... 1,281,437
70,887 PIMCO Advisors Holdings LP.............. 2,206,358
142,000 Waddell & Reed Financial, Inc. ......... 3,363,625
------------
6,851,420
------------
MANUFACTURING--5.7%
*117,965 Scotts Co. (The), Class A............... 4,534,280
*76,435 Waters Corp. ........................... 6,668,954
------------
11,203,234
------------
MEDIA--2.0%
*22,000 Heftel Broadcasting Corp., Class A...... 1,083,500
*52,050 Scholastic Corp. ....................... 2,791,181
------------
3,874,681
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

35
<PAGE>
BNY HAMILTON SMALL CAP GROWTH FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- ------------
COMMON STOCKS (CONTINUED)
<C> <S> <C>
MEDICAL CARE & PRODUCTS--5.0%
*70,000 Computer Motion, Inc. .................. $ 875,000
*24,600 Express Scripts, Inc., Class A.......... 1,651,275
*56,350 Patterson Dental Co. ................... 2,451,225
*72,000 PSS World Medical, Inc. ................ 1,656,000
*107,400 Renal Care Group, Inc. ................. 3,094,462
------------
9,727,962
------------
OIL & GAS--2.4%
*135,550 BJ Services Co. ........................ 2,117,969
*134,425 Global Industries Ltd. ................. 823,353
*78,860 National-Oilwell Inc. .................. 882,246
*95,835 R&B Falcon Corp. ....................... 730,742
*31,900 Stolt Comex Seaway, SA (ADR)............ 179,437
------------
4,733,747
------------
OIL FIELD SERVICES &
EQUIPMENT--0.3%
*64,750 Tuboscope Vetco International Corp. .... 526,094
------------
OIL--INTERNATIONAL--0.2%
*63,800 Stolt Comex Seaway SA................... 430,650
------------
PARKING FACILITIES--1.6%
97,010 Central Parking Corp. .................. 3,146,762
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- ------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
PHARMACEUTICALS--10.2%
*60,300 Agouron Pharmaceuticals, Inc. .......... $ 3,542,625
21,350 Andrix Corp. ........................... 1,094,188
*32,100 Coulter Pharmaceutical, Inc. ........... 963,000
*56,400 Covance, Inc. .......................... 1,642,650
53,200 Jones Pharma, Inc. ..................... 1,941,800
*57,425 MedImmune, Inc. ........................ 5,710,198
*52,850 PathoGenesis Corp. ..................... 3,065,300
*23,100 Sepracor, Inc........................... 2,035,688
------------
19,995,449
------------
PUBLISHING--1.5%
61,100 Houghton Mifflin Co. ................... 2,886,975
------------
REAL ESTATE INVESTMENT
TRUSTS--2.9%
45,483 Avalonbay Communities, Inc. ............ 1,557,793
44,800 General Growth Properties, Inc.......... 1,696,800
62,300 Liberty Property Trust.................. 1,534,138
20,550 Post Properties, Inc. .................. 789,891
------------
5,578,622
------------
RECORDS STORAGE--2.8%
*153,345 Iron Mountain, Inc. .................... 5,530,004
------------
RESORTS & ENTERTAINMENT--1.1%
*96,315 Vail Resorts, Inc. ..................... 2,118,930
------------
RETAIL--SPECIALTY STORES--2.0%
*76,825 Duane Reade, Inc. ...................... 2,957,763
18,975 Tiffany & Co. .......................... 984,328
------------
3,942,091
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

36
<PAGE>
BNY HAMILTON SMALL CAP GROWTH FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- ------------
COMMON STOCKS (CONTINUED)
<C> <S> <C>
RETAILING--2.9%
42,300 BJ's Wholesale Club, Inc. .............. $ 1,959,019
*92,350 Linens 'N Things, Inc. ................. 3,659,369
------------
5,618,388
------------
TELECOMMUNICATIONS--1.2%
*96,700 Access Worldwide, Inc. ................. 809,863
*92,650 Clearnet Communications, Inc.,
Class A................................. 752,781
*16,540 Pacific Gataway Exchange, Inc. ......... 794,954
------------
2,357,598
------------
TEXTILE--2.7%
221,425 Shaw Industries, Inc. .................. 5,369,556
------------
TOTAL COMMON STOCKS
(Cost $159,848,898)..................... 192,245,424
------------
</TABLE>

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------
<C> <S> <C>
MONEY MARKET FUNDS--1.4%
$ 673,650 ACM Institutional Reserves (Government
Portfolio), 4.88% (a)................... $ 673,650
2,012,175 ACM Institutional Reserves (Prime
Portfolio), 5.03% (a)................... 2,012,175
------------
TOTAL MONEY MARKET FUNDS
(Cost $2,685,825)....................... 2,685,825
------------
TOTAL INVESTMENTS
(Cost $162,534,723) (b)-- 99.9%......... 194,931,249
Other assets less liabilities-- 0.1%.... 233,628
------------
NET ASSETS--100.0%...................... $195,164,877
------------
------------
</TABLE>

ADR AMERICAN DEPOSITORY RECEIPT.
* NON-INCOME PRODUCING SECURITY.
(a) REPRESENTS ANNUALIZED YIELD AT DECEMBER 31, 1998.
(b) THE COST STATED ALSO APPROXIMATES THE AGGREGATE COST FOR FEDERAL INCOME TAX
PURPOSES. AT DECEMBER 31, 1998, NET UNREALIZED APPRECIATION WAS $32,396,526
BASED ON COST FOR FEDERAL INCOME TAX PURPOSES. THIS CONSISTED OF AGGREGATE
GROSS UNREALIZED APPRECIATION OF $48,086,726 AND AGGREGATE GROSS UNREALIZED
DEPRECIATION OF $15,690,200.

SEE NOTES TO FINANCIAL STATEMENTS.

37
<PAGE>

BNY HAMILTON SMALL CAP GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES

DECEMBER 31, 1998

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

<TABLE>
<S> <C>
ASSETS:
Investments at value
(Cost $162,534,723)..................................... $194,931,249
Cash...................................................... 196,342
Receivables:
Capital stock sold...................................... 246,059
Dividends............................................... 124,377
Interest................................................ 25,292
Deferred organization costs and other assets.............. 31,443
------------
TOTAL ASSETS.......................................... 195,554,762
------------
LIABILITIES:
Payables:
Investments purchased................................... 196,300
Services provided by the Bank of New York and
Administrator......................................... 135,432
Capital stock repurchased............................... 33,300
Accrued expenses and other liabilities.................... 24,853
------------
TOTAL LIABILITIES..................................... 389,885
------------
NET ASSETS:................................................. $195,164,877
------------
------------
SOURCES OF NET ASSETS:
Capital stock @ par....................................... $ 15,663
Capital surplus........................................... 162,272,379
Undistributed net investment income....................... 7,115
Accumulated net realized gain on investments.............. 473,194
Net unrealized appreciation on investments................ 32,396,526
------------
NET ASSETS.................................................. $195,164,877
------------
------------
INSTITUTIONAL SHARES:
Net assets................................................ $188,402,044
------------
------------
Shares outstanding........................................ 15,119,087
------------
------------
Net asset value, offering price and repurchase price per
share................................................... $ 12.46
------------
------------
INVESTOR SHARES:
Net assets................................................ $ 6,762,833
------------
------------
Shares outstanding........................................ 543,720
------------
------------
Net asset value, offering price and repurchase price per
share................................................... $ 12.44
------------
------------
Institutional Shares authorized @ $.001 par value........... 200,000,000
Investor Shares authorized at @ $.001 par value............. 200,000,000
</TABLE>

STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends................................................. $ 792,427
Interest.................................................. 451,992
-----------
TOTAL INCOME............................................ 1,244,419
-----------
EXPENSES:
Advisory.................................................. 1,198,024
Administration............................................ 319,474
12b-1 fee--Investor Shares................................ 11,861
Transfer agent............................................ 79,052
Accounting services....................................... 60,000
Registration and filings.................................. 42,849
Custodian................................................. 33,331
Reports to shareholders................................... 15,553
Directors................................................. 11,818
Organization.............................................. 7,683
Audit..................................................... 6,582
Cash management........................................... 4,571
Insurance................................................. 4,135
Legal..................................................... 2,275
Other..................................................... 18,231
-----------
TOTAL EXPENSES.......................................... 1,815,439
Fees waived by the Bank of New York (Note 3).............. (249,498)
Earnings credit adjustment (Note 3)....................... (2,485)
-----------
NET EXPENSES............................................ 1,563,456
-----------
NET INVESTMENT LOSS..................................... (319,037)
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on:
Investments............................................. 3,848,790
Written call options.................................... 41,696
-----------
Net realized gain on investments.......................... 3,890,486
Increase in unrealized appreciation on
Investments during the year............................. 9,835,596
-----------
Net realized and unrealized gain on investments........... 13,726,082
-----------
Net increase in net assets resulting from operations...... $13,407,045
-----------
-----------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

38
<PAGE>
BNY HAMILTON SMALL CAP GROWTH FUND

STATEMENTS OF CHANGES IN NET ASSETS

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

<TABLE>
<CAPTION>
YEAR FOR THE PERIOD
ENDED APRIL 1, 1997*
DECEMBER 31, THROUGH
1998 DECEMBER 31, 1997
---------------- -----------------
<S> <C> <C>
OPERATIONS:
Net investment loss..................................................................... $ (319,037) $ (230,091)
Net realized gain on investments........................................................ 3,890,486 11,291,266
Increase in unrealized appreciation on investments during the period.................... 9,835,596 12,899,933
---------------- -----------------
Net increase in net assets resulting from operations.................................. 13,407,045 23,961,108
---------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from capital gains: Institutional Shares.................................. (5,305,891) (8,963,629)
Investor Shares....................................... (153,674) (77,069)
---------------- -----------------
(5,459,565) (9,040,698)
---------------- -----------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from capital stock sold: Institutional Shares (Note 1)......................... 75,070,569 128,542,581
Investor Shares....................................... 34,034,055 1,180,363
Proceeds from shares issued on reinvestment
of distributions: Institutional Shares................................................ 4,771,812 8,181,980
Investor Shares................................................... 153,324 76,934
Cost of capital stock repurchased: Institutional Shares................................. (32,750,019) (17,984,055)
Investor Shares...................................... (28,964,378) (16,179)
---------------- -----------------
Net increase in net assets resulting from capital stock transactions.................. 52,315,363 119,981,624
---------------- -----------------
INCREASE IN NET ASSETS.............................................................. 60,262,843 134,902,034
NET ASSETS:
Beginning of period..................................................................... 134,902,034 -0-
---------------- -----------------
End of period (includes undistributed net investment income of $7,115 at December 31,
1998 and $2,445 at December 31, 1997)................................................. $ 195,164,877 $134,902,034
---------------- -----------------
---------------- -----------------
CHANGES IN CAPITAL STOCK OUTSTANDING:
Shares sold: Institutional Shares (Note 1).............................................. 6,284,220 11,960,101
Investor Shares............................................................ 2,851,784 92,035
Shares issued on reinvestment of distributions: Institutional Shares.................... 429,488 685,832
Investor Shares......................... 13,800 6,443
Shares repurchased: Institutional Shares................................................ (2,801,386) (1,439,168)
Investor Shares..................................................... (2,419,110) (1,232)
---------------- -----------------
Net increase.......................................................................... 4,358,796 11,304,011
Shares outstanding, beginning of period................................................. 11,304,011 -0-
---------------- -----------------
Shares outstanding, end of period....................................................... 15,662,807 11,304,011
---------------- -----------------
---------------- -----------------
</TABLE>

* COMMENCEMENT OF INVESTMENT OPERATIONS.

SEE NOTES TO FINANCIAL STATEMENTS.
39
<PAGE>
BNY HAMILTON SMALL CAP GROWTH FUND

FINANCIAL HIGHLIGHTS

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

<TABLE>
<CAPTION>
INSTITUTIONAL SHARES INVESTOR SHARES
---------------------------------- ----------------------------------
YEAR FOR THE PERIOD YEAR FOR THE PERIOD
ENDED APRIL 1, 1997* ENDED MAY 1, 1997*
DECEMBER 31, THROUGH DECEMBER 31, THROUGH
1998 DECEMBER 31, 1997 1998 DECEMBER 31, 1997
------------- ------------------ ------------- ------------------
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value at beginning of
period................................ $ 11.93 $ 10.00 $11.94 $10.03
------------- -------- ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss..................... (0.02)(a) (0.02) (0.04)(a) (0.02)
Net realized and unrealized gain on
investments........................... 0.91 2.80 0.90 2.78
------------- -------- ------ ------
Total from investment operations...... 0.89 2.78 0.86 2.76
------------- -------- ------ ------
DISTRIBUTIONS
Distributions from capital gains........ (0.36) (0.85) (0.36) (0.85)
------------- -------- ------ ------
Net asset value at end of period........ $ 12.46 $ 11.93 $12.44 $11.94
------------- -------- ------ ------
------------- -------- ------ ------
TOTAL RETURN:........................... 7.89% 27.80%** 7.55% 27.52%**
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's
omitted).............................. $188,402 $133,741 $6,763 $1,162
Ratio to average net assets of:
Expenses, net of waiver from The Bank
of New York......................... 0.97% 0.97%*** 1.22% 1.22%***
Expenses, prior to waiver from The
Bank of New York.................... 1.13% 1.10%*** 1.46% 1.40%***
Net investment loss, net of waiver
from The Bank of New York........... (0.19)% (0.26)%*** (0.43)% (0.54)%***
Portfolio turnover rate................. 84% 68% 84% 68%
</TABLE>

* COMMENCEMENT OF INVESTMENT OPERATIONS FOR THE RESPECTIVE CLASS OF SHARES.
** NOT ANNUALIZED.
*** ANNUALIZED.
(a) BASED ON AVERAGE SHARES OUTSTANDING.

SEE NOTES TO FINANCIAL STATEMENTS.
40
<PAGE>
BNY HAMILTON INTERNATIONAL EQUITY FUND

SCHEDULE OF INVESTMENTS

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES US$ VALUE
- --------- ------------
<C> <S> <C>
COMMON STOCKS--97.7%
AUSTRALIA--2.5%
36,660 Australia and New Zealand Banking Group
Ltd. ................................... $ 240,150
74,780 Broken Hill Propietary Co. Ltd. ........ 551,281
83,040 Colonial Ltd. .......................... 285,230
45,050 Commonwealth Bank of Australia.......... 640,042
35,600 Foster's Brewing Group Ltd. ............ 96,514
52,500 Hoyts Cinemas Group..................... 44,116
26,700 National Australian Bank Ltd. .......... 402,871
50,500 News Corp. Ltd. (The)................... 333,910
81,500 Publishing & Broadcasting Ltd. ......... 356,423
179,240 Quantas Airways Ltd. ................... 366,099
23,100 Rio Tinto Ltd. ......................... 274,236
*120,690 Telstra Corp. Ltd. ..................... 564,826
41,150 Westpac Banking Corp. .................. 275,621
16,300 Woodside Petroleum Ltd. ................ 72,984
------------
4,504,303
------------
BRAZIL--0.4%
22,037 Companhia Energetica de Minas Gerais
(ADR)................................... 419,510
5,000 Telebras (ADR).......................... 363,437
------------
782,947
------------
FINLAND--2.2%
33,000 Nokia AB, A Shares...................... 4,040,763
------------
FRANCE--11.2%
*4,200 Accor SA................................ 909,742
5,000 Alcatel Alsthom Nouvelles............... 612,223
12,000 AXA SA.................................. 1,740,002

<CAPTION>
NUMBER OF
SHARES US$ VALUE
- --------- ------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
7,550 Cap Gemini SA........................... $ 1,212,336
2,800 Carrefour Supermarche SA................ 2,114,711
16,300 France Telecom SA....................... 1,295,550
2,700 L'OREAL................................. 1,952,669
6,800 Legrand SA.............................. 1,802,800
10,900 Pinault-Printemps-Redoute SA............ 2,083,921
*26,000 Renault SA.............................. 1,168,236
8,740 Rexel SA................................ 830,787
4,100 Synthelabo.............................. 868,265
12,000 Total SA, B Shares...................... 1,215,853
10,600 Vivendi................................. 2,751,423
------------
20,558,518
------------
GERMANY--8.1%
6,227 Allianz AG.............................. 2,317,927
31,300 BASF AG................................. 1,194,233
20,000 Bayerische Vereinsbank AG............... 1,582,613
33,150 Daimlerchrysler AG...................... 3,293,903
23,000 Deutsche Telekom AG..................... 756,034
20,000 Douglas Holdings AG..................... 1,182,757
1,300 Douglas Holdings AG**................... 71,806
22,000 METRO AG................................ 1,730,307
2,700 SAP AG-Vorzug........................... 1,296,019
23,000 VEBA AG................................. 1,362,932
------------
14,788,531
------------
GREECE--0.6%
23,000 Intracom SA............................. 1,047,134
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

41
<PAGE>
BNY HAMILTON INTERNATIONAL EQUITY FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES US$ VALUE
- --------- ------------
COMMON STOCKS (CONTINUED)
<C> <S> <C>
HONG KONG--2.7%
83,000 Cheung Kong Holdings Ltd. .............. $ 597,273
*60,000 China Telecom (Hong Kong) Ltd. ......... 103,778
*3,600 China Telecom (Hong Kong) Ltd. (ADR).... 125,100
39,000 CLP Holdings Ltd. ...................... 194,313
393,000 Dairy Farm International Holdings
Ltd. ................................... 451,950
62,000 Guocco Group Ltd. ...................... 104,436
173,000 Hang Lung Development Co. Ltd. ......... 185,342
14,500 Hang Seng Bank Ltd. .................... 129,610
67,000 Henderson Land Development Co. Ltd. .... 346,792
26,000 Hong Kong Electric Holdings Ltd. ....... 78,866
239,000 Hong Kong Land.......................... 282,020
121,600 Hong Kong Telecommunications Ltd. ...... 212,678
24,000 HSBC Holdings PLC....................... 597,886
51,000 Hutchison Whampoa Ltd. ................. 360,416
137,000 Hysan Development Co. .................. 204,245
170,000 New World Infrastructure Ltd. .......... 249,054
64,000 Sun Hung Kai Properties Ltd. ........... 466,743
38,500 Swire Pacific--Class A.................. 172,441
------------
4,862,943
------------
<CAPTION>
NUMBER OF
SHARES US$ VALUE
- --------- ------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
HUNGARY--0.4%
28,000 MOL Magyar Olaj-es Gazipare, A Shares
(GDR)................................... $ 773,500
------------
IRELAND--1.6%
81,233 Allied Irish Banks PLC.................. 1,446,245
85,000 CRH PLC................................. 1,442,596
------------
2,888,841
------------
ITALY--5.7%
60,500 Assicurazioni Generali.................. 2,531,623
267,000 Banca Commerciale Italiana.............. 1,845,911
242,000 Credito Italiano........................ 1,437,522
350,000 Stet Societa' Finanziaria Telefonica
SpA--RNC................................ 2,207,476
514,000 Telecom Italia Mobile SpA-- RNC......... 2,425,143
------------
10,447,675
------------
JAPAN--17.0%
64,000 Canon, Inc. ............................ 1,370,213
*32,000 Fuji Photo Film......................... 1,191,489
112,000 Fujitsi Ltd. ........................... 1,494,326
21,000 Ito-Yokado Co. Ltd. .................... 1,470,745
51,000 Marui Co. Ltd. ......................... 983,378
19,000 Matsushita Communication Industrial Co.
Ltd. ................................... 897,784
130,000 Minebea Co. Ltd. ....................... 1,491,312
13,500 Nidec Corp. ............................ 1,655,186
120 Nippon Telegraph & Telephone Co.
Ltd. ................................... 927,660
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

42
<PAGE>
BNY HAMILTON INTERNATIONAL EQUITY FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES US$ VALUE
- --------- ------------
COMMON STOCKS (CONTINUED)
<C> <S> <C>
480 NTT Data Corp. ......................... $ 2,387,234
78 NTT Mobile Communication Network,
Inc. ................................... 3,215,426
100,000 Sankyo Co. Ltd. ........................ 2,189,716
20,000 Secom Co. Ltd. ......................... 1,659,574
90,000 Sekisui House Ltd. ..................... 953,457
23,000 Seven-Eleven-Japan...................... 1,855,496
122,000 Sharp Corp. ............................ 1,102,110
64,000 Takeda Chemical Industries.............. 2,468,085
139,000 Terumo Corp. ........................... 3,277,837
17,000 Tokyo Electric Power Co. Ltd. .......... 420,479
------------
31,011,507
------------
MALAYSIA--0.3%
28,000 Kuala Lumpur Kepong Berhad.............. 33,517
19,200 Malayan Banking Berhad.................. 27,227
37,000 Petronas Gas Berhad..................... 58,600
3,000 Rothmans of Pall Mall Berhad............ 12,376
256,000 Sime Darby Berhad....................... 205,554
102,000 Tenaga Nasional Berhad.................. 146,519
------------
483,793
------------
MEXICO--0.7%
548,000 Controladora Commercial Mexicana SA..... 382,326
345,000 Desc SA de CV, Series B................. 289,535
183,000 Organizacion Soriana SA de CV,
Series B................................ 574,535
------------
1,246,396
------------
<CAPTION>
NUMBER OF
SHARES US$ VALUE
- --------- ------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
NETHERLANDS--7.7%
21,090 AEGON NV................................ $ 2,591,439
36,660 CMG PLC................................. 966,947
26,684 Dortsche Petroleum-Industries MIJ NV.... 1,182,985
37,842 Internationale Nederlanden Groep NV..... 2,308,791
22,000 Koninklijke Numic NV.................... 1,049,182
21,015 Oce NV.................................. 755,855
9,500 Philips Electronics NV.................. 637,822
43,000 Royal Dutch Petroleum Co. .............. 2,142,324
16,200 Unilever NV............................. 1,385,464
5,000 Wolters Kluwer-CVA...................... 1,070,496
------------
14,091,305
------------
NEW ZEALAND--0.2%
32,000 Lion Nathan Ltd. ....................... 81,648
41,400 Telecom Corp. of New Zealand............ 180,428
43,000 Telecom Corp. of New Zealand Ltd.
IR***................................... 94,268
------------
356,344
------------
NORWAY--0.5%
25,200 Tomra Systems ASA....................... 826,880
------------
PHILIPPINES--0.0%
1,750,000 Pryce Properties Corp. ................. 44,987
------------
PORTUGAL--0.6%
22,000 Portugal Telecom SA..................... 1,008,692
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

43
<PAGE>
BNY HAMILTON INTERNATIONAL EQUITY FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES US$ VALUE
- --------- ------------
COMMON STOCKS (CONTINUED)
<C> <S> <C>
SINGAPORE--0.7%
74,000 City Developments Ltd. ................. $ 320,667
236,000 DBS Land Ltd. .......................... 347,564
35,000 Keppel Corp. ........................... 93,758
14,000 Oversea-Chinese Banking Corp. Ltd. ..... 95,030
55,000 Overseas Union Bank..................... 240,000
6,000 Singapore International Airlines
Ltd. ................................... 44,000
1,645 Singapore Press Holdings Ltd. .......... 17,447
89,000 Singapore Telecommunications Ltd. ...... 135,927
------------
1,294,393
------------
SOUTH KOREA--0.5%
5,600 Korea Electric Power Corp. ............. 138,778
10,000 L.G. Chemical Ltd. ..................... 108,940
1,908 Samsung Display Devices Co. ............ 94,091
2,881 Samsung Electronics Co. ................ 193,344
55,264 Shinhan Bank............................ 422,810
------------
957,963
------------
SPAIN--3.7%
79,216 Banco Santander......................... 1,576,542
33,000 Centros Comerciales Pryca SA............ 1,024,732
66,500 Empresa Nacional de Electricidad SA..... 1,764,628
54,950 Telefonica SA........................... 2,447,038
54,950 Telefonica SA Rights, expiring
1/30/1999............................... 48,863
------------
6,861,803
------------
<CAPTION>
NUMBER OF
SHARES US$ VALUE
- --------- ------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
SWEDEN--1.0%
76,700 Telefonaktiebolaget LM Ericsson-B
Shares.................................. $ 1,826,236
------------
SWITZERLAND--10.1%
3,700 Adecco SA............................... 1,689,043
7,000 Credit Suisse Group..................... 1,095,741
865 Nestle SA............................... 1,883,036
2,600 Novartis AG............................. 5,111,030
370 Roche Holding AG........................ 4,514,889
5,300 UBS AG.................................. 1,628,395
3,525 Zurich Allied AG........................ 2,610,066
------------
18,532,200
------------
UNITED KINGDOM--19.3%
70,000 Abbey National PLC...................... 1,499,002
100,800 Bank Of Scotland........................ 1,204,233
221,392 British Aerospace PLC................... 1,880,543
222,502 British Petroleum Co. .................. 3,320,870
220,002 British Telecommunications PLC.......... 3,311,012
165,000 Compass Group PLC....................... 1,888,852
125,000 Glaxo Wellcome PLC...................... 4,286,606
201,000 Kingfisher PLC.......................... 2,173,877
194,609 Lloyds TSB Group PLC.................... 2,762,088
96,000 Misys PLC............................... 706,023
70,000 Pearson PLC............................. 1,395,341
200,000 Rentokil Initial PLC.................... 1,507,488
114,000 Sema Group PLC.......................... 1,120,083
224,277 SmithKline Beecham PLC.................. 3,147,715
64,859 Smiths Industries PLC................... 908,673
196,878 Vodafone Group PLC...................... 3,190,668
24,000 Zeneca Group PLC........................ 1,048,253
------------
35,351,327
------------
TOTAL COMMON STOCKS
(Cost $147,806,837)..................... 178,588,981
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

44
<PAGE>
BNY HAMILTON INTERNATIONAL EQUITY FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES US$ VALUE
- --------- ------------
PREFERRED STOCKS--0.7%
<C> <S> <C>
GERMANY--0.7%
5,625 Fresenius AG
(Cost $1,207,997)....................... $ 1,182,007
------------
WARRANTS--0.0%
GERMANY--0.0%
*50 Muenchener Ruecksversich expiring
6/03/2002 (Cost $2,029)................. 2,341
------------
</TABLE>

<TABLE>
<C> <S> <C>
TOTAL INVESTMENTS
(Cost $149,016,863) (a)-- 98.4%......... 179,773,329
Other assets less liabilities-- 1.6%.... 2,980,467
------------
NET ASSETS--100.0%...................... $182,753,796
------------
------------
</TABLE>

ADR AMERICAN DEPOSITARY RECEIPT.
GDR GLOBAL DEPOSITARY RECEIPT.
* NON-INCOME PRODUCING SECURITY.
** ISSUED AS A RESULT OF AN EXERCISE OF RIGHTS.
*** GLOBAL OFFERING BY AMERITECH NEW ZEALAND INVESTMENTS, INC.
(a) THE COST STATED ALSO APPROXIMATES THE AGGREGATE COST FOR THE FEDERAL INCOME
TAX PURPOSES. AT DECEMBER 31, 1998, NET UNREALIZED APPRECIATION WAS
$30,756,466 BASED ON COST FOR FEDERAL INCOME TAX PURPOSES. THIS CONSISTED
OF AGGREGATE GROSS UNREALIZED APPRECIATION OF $35,010,067 AND AGGREGATE
GROSS UNREALIZED DEPRECIATION OF $4,253,601.

SEE NOTES TO FINANCIAL STATEMENTS.

45
<PAGE>
BNY HAMILTON INTERNATIONAL EQUITY FUND

INDUSTRY DIVERSIFICATION

DECEMBER 31, 1998

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

<TABLE>
<CAPTION>
% OF
TOTAL
US$ VALUE NET ASSETS
------------ ----------
<S> <C> <C>
Aerospace and Defense................... $ 1,880,543 1.0%
Agriculture............................. 33,517 0.0
Air Transportation...................... 366,099 0.2
Automotive.............................. 4,462,139 2.4
Banking................................. 20,020,808 11.0
Beverages--Brewers...................... 178,162 0.1
Building Materials...................... 3,526,517 1.9
Buildings and Home Furnishings.......... 953,457 0.5
Business Equipment and Services......... 1,370,213 0.8
Chemicals............................... 2,494,662 1.4
Commercial Services..................... 1,689,043 0.9
Communications Equipment and Systems.... 2,438,459 1.3
Communications and Publishing........... 356,423 0.2
Computer Services....................... 2,885,306 1.6
Computers............................... 6,656,829 3.6
Computers--Software & Peripherals....... 1,296,019 0.7
Conglomerates........................... 1,507,488 0.8
Construction............................ 249,054 0.1
Consumer Goods and Services............. 5,442,377 3.0
Cosmetics and Toiletries................ 1,952,669 1.1
Distribution & Wholesale................ 58,600 0.0
Electronic Equipment & Components....... 10,190,291 5.6
Entertainment........................... 44,116 0.0
Environment Managment................... 826,880 0.5
Finance Companies....................... 389,666 0.2
Financial Services...................... 1,437,522 0.8
Food & Beverages........................ 4,421,155 2.4
Holdings Companies--Diversified......... 1,027,946 0.6
Insurance............................... 1,740,002 1.0
Insurance--Health, Life & Multi-Line.... 10,051,055 5.5
Lodging................................. 909,742 0.5
Manufacturing........................... 908,673 0.5
Media................................... 1,729,251 0.9
Mining.................................. 825,517 0.5
Multi-Industry.......................... 93,758 0.1
Office Equipment........................ 755,855 0.4
Oil & Gas............................... 10,071,448 5.5
Pharmaceuticals......................... 28,094,403 15.4
Publishing.............................. 1,087,943 0.6
Real Estate Development................. 2,610,291 1.4
Real Estate Investment Trusts........... 185,342 0.1
Retail--Department Stores............... 3,288,220 1.8
Retail--Food Stores..................... 451,950 0.2
</TABLE>

46
<PAGE>
BNY HAMILTON INTERNATIONAL EQUITY FUND

INDUSTRY DIVERSIFICATION (CONTINUED)

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF
TOTAL
US$ VALUE NET ASSETS
------------ ----------
<S> <C> <C>

Retail--General Merchandise............. $ 2,497,037 1.4%
Retail--Specialty Stores................ 1,927,302 1.1
Retailing............................... 2,207,489 1.2
Telecommunications...................... 28,550,822 15.6
Transportation: Air..................... 44,000 0.0
Utilities............................... 3,587,269 2.0
------------ -----
Total Value of Investments.............. 179,773,329 98.4
Other Assets, Less Liabilities.......... 2,980,467 1.6
------------ -----
Net Assets.............................. $182,753,796 100.0%
------------ -----
------------ -----
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

47
<PAGE>

BNY HAMILTON INTERNATIONAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES

DECEMBER 31, 1998

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

<TABLE>
<S> <C>
ASSETS:
Investments at value (Cost $149,016,863).................. $179,773,329
Foreign currency, at value (Cost $92,581)................. 92,341
Cash...................................................... 3,705,693
Receivables:
Investments sold........................................ 992,366
Dividends............................................... 332,079
Capital stock sold...................................... 140,773
Deferred organization costs and other assets.............. 20,422
------------
TOTAL ASSETS.......................................... 185,057,003
------------
LIABILITIES:
Payables:
Investments purchased................................... 39,266
Services provided by The Bank of New York and
Administrator......................................... 111,812
Capital stock repurchased............................... 2,061,526
Accrued expenses and other liabilities.................... 90,603
------------
TOTAL LIABILITIES..................................... 2,303,207
------------
NET ASSETS:................................................. $182,753,796
------------
------------
SOURCES OF NET ASSETS:
Capital stock @ par....................................... $ 14,171
Capital surplus........................................... 163,082,656
Undistributed net investment loss......................... (72,322)
Accumulated net realized loss on investments.............. (11,049,931)
Net unrealized appreciation on investments................ 30,756,466
Net unrealized appreciation on foreign currency
denominated assets and liabilities...................... 22,756
------------
NET ASSETS.................................................. $182,753,796
------------
------------
INSTITUTIONAL SHARES:
Net assets................................................ $177,362,462
------------
------------
Shares outstanding........................................ 13,750,589
------------
------------
Net asset value, offering price and repurchase price per
share................................................... $ 12.90
------------
------------
INVESTOR SHARES:
Net assets................................................ $ 5,391,334
------------
------------
Shares outstanding........................................ 419,926
------------
------------
Net asset value, offering price and repurchase price per
share................................................... $ 12.84
------------
------------
Institutional Shares authorized @ $.001 par value........... 200,000,000
Investor Shares authorized @ $.001 par value................ 200,000,000
</TABLE>

STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of
$205,766)............................................... $ 2,622,860
-----------
EXPENSES:
Advisory.................................................. 1,234,365
Administration............................................ 290,440
12b-1 fee--Investor Shares................................ 10,675
Custodian................................................. 125,048
Accounting services....................................... 78,000
Transfer agent............................................ 77,436
Registration and filings.................................. 37,502
Directors................................................. 11,762
Audit..................................................... 5,491
Reports to shareholders................................... 12,935
Organization.............................................. 4,015
Cash management........................................... 4,306
Legal..................................................... 2,497
Insurance................................................. 3,032
Other..................................................... 37,190
-----------
TOTAL EXPENSES.......................................... 1,934,694
Fees waived by the Bank of New York....................... (79,747)
Earnings credit adjustment (Note 3)....................... (100)
-----------
NET EXPENSES............................................ 1,854,847
-----------
NET INVESTMENT INCOME................................... 768,013
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS:
Net realized loss on:
Investments............................................. (6,557,401)
Foreign currency transactions........................... (582,931)
-----------
Net realized loss on investments.......................... (7,140,332)
-----------
Increase in unrealized appreciation on:
Investments............................................. 29,913,565
Foreign currency denominated assets and liabilities..... 25,782
-----------
Net unrealized gain on investments during the year........ 29,939,347
-----------
Net realized and unrealized gain on investments........... 22,799,015
-----------
Net increase in net assets resulting from operations...... $23,567,028
-----------
-----------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

48
<PAGE>
BNY HAMILTON INTERNATIONAL EQUITY FUND

STATEMENTS OF CHANGES IN NET ASSETS

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

<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR APRIL 1, 1997*
ENDED THROUGH
DECEMBER 31, 1998 DECEMBER 31, 1997
-------------------- ---------------------
<S> <C> <C>
OPERATIONS:
Net investment income............................................... $ 768,013 $ 138,617
Net realized loss on investments and foreign currency transactions.. (7,140,332) (4,863,284)
Increase in unrealized appreciation on investments and foreign
currency denominated assets and liabilities during the period..... 29,939,347 839,875
-------------------- ---------------------
Net increase (decrease) in net assets resulting from operations... 23,567,028 (3,884,792)
-------------------- ---------------------
DIVIDENDS TO SHAREHOLDERS:
Dividends from net investment income: Institutional Shares.......... (233,491) -0-
Investor Shares............... (6,904) -0-
-------------------- ---------------------
(240,395) -0-
-------------------- ---------------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from capital stock sold: Institutional Shares.............. 99,585,768 108,400,074
Investor Shares................... 2,506,420 2,786,448
Proceeds from shares issued on reinvestment of dividends and
distributions: Institutional Shares............................... 53,831 -0-
Investor Shares................................. 6,854 -0-
Cost of capital stock repurchased: Institutional Shares............. (39,696,041) (9,914,630)
Investor Shares................... (395,823) (20,946)
-------------------- ---------------------
Increase in net assets resulting from capital stock
transactions.................................................... 62,061,009 101,250,946
-------------------- ---------------------
INCREASE IN NET ASSETS.......................................... 85,387,642 97,366,154
NET ASSETS:
Beginning of period................................................. 97,366,154 -0-
-------------------- ---------------------
End of period....................................................... $ 182,753,796 $ 97,366,154
-------------------- ---------------------
-------------------- ---------------------
CHANGE IN CAPITAL STOCK OUTSTANDING:
Shares sold: Institutional Shares................................... 8,210,790 9,802,001
Investor Shares................................. 212,610 241,976
Shares issued on reinvestment of dividends: Institutional Shares.... 4,273 -0-
Investor Shares......... 546 -0-
Shares repurchased: Institutional Shares............................ (3,331,804) (934,671)
Investor Shares................................. (33,304) (1,902)
-------------------- ---------------------
Net increase...................................................... 5,063,111 9,107,404
Shares outstanding, beginning of period............................. 9,107,404 -0-
-------------------- ---------------------
Shares outstanding, end of period................................... 14,170,515 9,107,404
-------------------- ---------------------
-------------------- ---------------------
</TABLE>

* COMMENCEMENT OF INVESTMENT OPERATIONS.

SEE NOTES TO FINANCIAL STATEMENTS.
49
<PAGE>
BNY HAMILTON INTERNATIONAL EQUITY FUND

FINANCIAL HIGHLIGHTS

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

<TABLE>
<CAPTION>
INSTITUTIONAL SHARES INVESTOR SHARES
---------------------------------- ----------------------------------
YEAR FOR THE PERIOD YEAR FOR THE PERIOD
ENDED APRIL 1, 1997* ENDED MAY 1, 1997*
DECEMBER 31, THROUGH DECEMBER 31, THROUGH
1998 DECEMBER 31, 1997 1998 DECEMBER 31, 1997
------------- ------------------ ------------- ------------------
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value at beginning of
period................................ $ 10.69 $ 10.00 $10.66 $10.19
------------- ------- ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income................... 0.03 0.02 0.03 0.02
Net realized and unrealized gain on
investments and foreign currency
transactions.......................... 2.20 0.67 2.17 0.45
------------- ------- ------ ------
Total from investment operations...... 2.23 0.69 2.20 0.47
------------- ------- ------ ------
DIVIDENDS
Dividends from net investment income.... (0.02) -0- (0.02) -0-
------------- ------- ------ ------
Net asset value at end of period........ $ 12.90 $ 10.69 $12.84 $10.66
------------- ------- ------ ------
------------- ------- ------ ------
TOTAL RETURN:........................... 20.84% 6.90%** 20.61% 4.61%**
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's
omitted).............................. $177,363 $94,806 $5,391 $2,560
Ratio to average net assets of:
Expenses, net of waiver from The Bank
of New York......................... 1.27% 1.26%*** 1.52% 1.52%***
Expenses, prior to waiver from The
Bank of New York.................... 1.32% 1.49%*** 1.65% 1.75%***
Net investment income
net of waiver from The Bank of New
York................................ 0.54% 0.26%*** 0.32% 0.33%***
Portfolio turnover rate................. 75% 36% 75% 36%
</TABLE>

* COMMENCEMENT OF INVESTMENT OPERATIONS FOR THE RESPECTIVE CLASS OF SHARES.
** NOT ANNUALIZED.
*** ANNUALIZED.

SEE NOTES TO FINANCIAL STATEMENTS.
50
<PAGE>
BNY HAMILTON INTERMEDIATE GOVERNMENT FUND

SCHEDULE OF INVESTMENTS

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- -----------
<C> <S> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS--44.4%
COLLATERIZED MORTGAGE SECURITIES CORP.-- 0.7%
$ 499,000 Series 1990-7C, 9.25%, 10/20/20......... $ 499,681
-----------
FEDERAL HOME LOAN MORTGAGE CORP.-- 18.4%
73,428 Series 1292-F, 7.75%, 07/15/05.......... 73,552
48,510 Series 1338-G, 6.75%, 01/15/06.......... 48,437
275,000 Series 1176-H, 8.00%, 12/15/06.......... 290,660
500,000 Series 1338-J, 7.00%, 02/15/07.......... 507,714
133,986 Series 1663-D, 7.00%, 08/15/11.......... 134,799
2,260,000 Series 1371-PI, 6.00%, 04/15/21......... 2,248,860
1,662,000 Series 1407-PK, 7.00%, 08/15/21......... 1,695,229
2,100,000 Series 1494-PJ, 6.85%, 01/15/22......... 2,136,954
375,000 Series 1588-TC, 6.50%, 09/15/23......... 372,385
868,000 Series 1602-H, 6.50%, 10/15/23.......... 856,926
2,046,000 Series 1608-O, 6.50%, 11/15/23.......... 1,991,942
1,115,000 Series 1621-M, 6.50%, 11/15/23.......... 1,122,422
313,000 Series 1633-C, 6.50%, 12/15/23.......... 303,591

<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- -----------
<C> <S> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED)
$ 1,988,000 Series 1669-L, 6.50%, 02/15/24.......... $ 2,005,181
498,000 Series 1672-N, 7.00%, 02/15/24.......... 502,904
-----------
14,291,556
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--25.3%
118,547 Series 1993-47A, 6.65%, 03/25/05........ 118,284
125,972 Series 1992-108G, 7.00%, 08/25/05....... 125,920
1,250,000 Series 1994-86PE, 6.00%, 09/25/06....... 1,256,856
848,581 Series 1988-15A, 9.00%, 06/25/18........ 905,062
47,354 Series 1990-31H, 7.00%, 06/25/19........ 47,429
368,000 Series 1992-129J, 4.00%, 07/25/20....... 351,749
1,040,000 Series 1992-214PK, 7.00%, 09/25/20...... 1,054,788
2,759,887 Series G92-15Z, 7.00%, 01/25/22......... 2,892,498
285,000 Series G93-34PH, 6.35%, 02/25/22........ 285,372
800,000 Series 1993-96PJ, 7.00%, 08/25/22....... 821,585
665,818 Series 1992-172M, 7.00%, 09/25/22....... 681,331
1,088,245 Series 1993-141Z, 7.00%, 08/25/23....... 1,140,195
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

51
<PAGE>
BNY HAMILTON INTERMEDIATE GOVERNMENT FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- -----------
COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED)
<C> <S> <C>
$ 2,664,000 Series 1993-149M, 7.00%, 08/25/23....... $ 2,757,321
1,263,000 Series 1993-252N, 6.50%, 08/25/23....... 1,288,056
2,915,000 Series 1993-178PK, 6.50%, 09/25/23...... 2,920,014
1,339,000 Series 1993-203B, 6.50%, 10/25/23....... 1,345,173
762,000 Series 1993-203PL, 6.50%, 10/25/23...... 777,617
839,000 Series X225C-UB, 6.50%, 12/25/23........ 855,471
-----------
19,624,721
-----------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS
(Cost $33,330,017)...................... 34,415,958
-----------
</TABLE>

<TABLE>
<C> <S> <C>
UNITED STATES GOVERNMENT AGENCIES &
OBLIGATIONS--33.9%
FEDERAL HOME LOAN BANK--1.0%
625,000 9.00%, 03/15/06......................... 765,856
-----------
FEDERAL HOME LOAN MORTGAGE CORP.-- 4.6%
3,450,000 5.75%, 04/15/08......................... 3,551,785
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--1.2%
750,000 6.41%, 05/22/00......................... 764,065
125,000 6.40%, 09/27/05......................... 133,402
-----------
897,467
-----------
TENNESSEE VALLEY AUTHORITY--8.3%
1,350,000 6.00%, 11/01/00......................... 1,375,203
PRINCIPAL
AMOUNT VALUE
- ----------- -----------
UNITED STATES GOVERNMENT AGENCIES & OBLIGATIONS
(CONTINUED)
$ 5,000,000 6.125%, 07/15/03........................ $ 5,085,975
-----------
6,461,178
-----------
UNITED STATES TREASURY NOTES--18.8%
3,000,000 6.75%, 04/30/00......................... 3,078,750
2,000,000 5.75%, 08/15/03......................... 2,087,500
3,250,000 5.875%, 11/15/05........................ 3,467,344
3,000,000 6.875%, 05/15/06........................ 3,390,939
2,250,000 6.625%, 05/15/07........................ 2,531,250
-----------
14,555,783
-----------
TOTAL UNITED STATES GOVERNMENT AGENCIES
& OBLIGATIONS
(Cost $25,615,075)...................... 26,232,069
-----------
</TABLE>

<TABLE>
<C> <S> <C>
MORTGAGE-BACKED SECURITIES-- 17.8%
FEDERAL HOME LOAN MORTGAGE CORP.-- 6.7%
87,309 Pool #218711, 8.00%, 10/01/02........... 88,904
190,436 Pool #251836, 8.50%, 05/01/04........... 195,717
296,943 Pool #182217, 8.00%, 12/01/04........... 304,462
64,717 Pool #502185, 8.50%, 07/01/05........... 66,936
101,904 Pool #184275, 8.25%, 09/01/08........... 106,347
18,276 Pool #160062, 9.50%, 10/01/08........... 19,323
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

52
<PAGE>
BNY HAMILTON INTERMEDIATE GOVERNMENT FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- -----------
MORTGAGE-BACKED SECURITIES (CONTINUED)
<C> <S> <C>
$ 21,761 Pool #160065, 9.50%, 11/01/08........... $ 23,009
23,159 Pool #160066, 9.75%, 11/01/08........... 24,533
285,541 Pool #185743, 8.50%, 12/01/08........... 294,938
327,258 Pool #251974, 8.50%, 04/01/09........... 341,918
343,719 Pool #185964, 8.50%, 02/01/10........... 358,453
350,442 Gold Pool #E20201, 7.50%, 10/01/10...... 360,544
1,715,701 Gold Pool #G10439, 6.50%, 01/01/11...... 1,743,359
354,575 Gold Pool #E00417, 7.00%, 02/01/11...... 362,680
244,787 Pool #555045, 8.00%, 05/01/19........... 251,755
638,274 Gold Pool #A01217, 8.50%, 04/01/20...... 675,209
-----------
5,218,087
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--3.5%
49,480 Pool #34510, 7.25%, 08/01/01............ 49,446
79,173 Pool #168430, 7.00%, 07/01/03........... 79,488
672,905 Pool #195152, 7.00%, 01/01/08........... 687,844
308,816 Pool #81860, 8.00%, 04/01/09............ 319,612
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- -----------
<C> <S> <C>
MORTGAGE-BACKED SECURITIES (CONTINUED)
$ 527,089 Pool #278437, 7.50%, 05/01/09........... $ 542,444
209,999 Pool #6222, 9.00%, 04/01/16............. 225,030
470,366 Pool #124118, 9.00%, 03/01/22........... 500,391
287,513 Pool #320514, 6.50%, 09/01/25........... 289,530
-----------
2,693,785
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION--7.6%
40,134 Pool #6400, 8.00%, 06/15/05............. 41,690
53,585 Pool #7774, 8.00%, 09/15/05............. 55,662
47,121 Pool #7038, 8.00%, 10/15/05............. 48,947
56,209 Pool #11310, 8.00%, 11/15/05............ 58,387
8,866 Pool #9839, 8.00%, 07/15/06............. 9,210
33,562 Pool #10459, 8.00%, 08/15/06............ 34,862
96,388 Pool #10419, 8.00%, 09/15/06............ 100,124
56,733 Pool #12590, 8.00%, 09/15/06............ 58,931
88,228 Pool #14295, 8.00%, 01/15/07............ 91,647
77,486 Pool #204365, 9.00%, 03/15/17........... 83,288
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

53
<PAGE>
BNY HAMILTON INTERMEDIATE GOVERNMENT FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- FIXED RATE SECURITIES--1.6% -----------
<C> <S> <C>
$ 1,200,000 Private Exempt Funding
6.90%, 01/31/03 (Cost $1,279,140)....... $ 1,273,490
-----------
</TABLE>

<TABLE>
<C> <S> <C>
MONEY MARKET FUND--1.5%
1,172,050 ACM Institutional Reserves (Government
Portfolio), 4.88% (a)
(Cost $1,172,050)....................... 1,172,050
-----------
TOTAL INVESTMENTS
(Cost $75,048,933) (b)--99.2%........... 76,880,373
Other assets less
liabilities--0.8%....................... 588,483
-----------
NET ASSETS--100.0%...................... $77,468,856
-----------
-----------
</TABLE>

(a) REPRESENTS ANNUALIZED YIELD AT DECEMBER 31, 1998.
(b) THE COST STATED ALSO APPROXIMATES THE AGGREGATE COST FOR FEDERAL INCOME TAX
PURPOSES. AT DECEMBER 31, 1998, NET REALIZED APPRECIATION WAS $1,831,440
BASED ON COST FOR FEDERAL INCOME TAX PURPOSES. THIS CONSISTED OF AGGREGATE
GROSS UNREALIZED APPRECIATION OF $1,903,439 AND AGGREGATE GROSS UNREALIZED
DEPRECIATION OF $71,999.

SEE NOTES TO FINANCIAL STATEMENTS.

54
<PAGE>

BNY HAMILTON INTERMEDIATE GOVERNMENT FUND
STATEMENT OF ASSETS AND LIABILITIES

DECEMBER 31, 1998

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

<TABLE>
<S> <C>
ASSETS:
Investment at value
(Cost $75,048,933)...................................... $76,880,373
Cash...................................................... 39
Receivables:
Interest................................................ 696,383
Investments sold........................................ 84,054
Capital stock sold...................................... 3,318
Other assets.............................................. 3,241
-----------
TOTAL ASSETS.......................................... 77,667,408
-----------
LIABILITIES:
Payables:
Dividends............................................... 114,234
Services provided by the Bank of New York and
Administrator......................................... 62,245
Accrued expenses and other liabilities.................... 22,073
-----------
TOTAL LIABILITIES..................................... 198,552
-----------
NET ASSETS:................................................. $77,468,856
-----------
-----------
SOURCES OF NET ASSETS:
Capital stock @ par....................................... $ 7,714
Capital surplus........................................... 78,041,413
Accumulated net realized loss on investments.............. (2,411,711)
Net unrealized appreciation on investments................ 1,831,440
-----------
$77,468,856
-----------
-----------
INSTITUTIONAL SHARES:
Net assets................................................ $64,944,370
-----------
-----------
Shares outstanding........................................ 6,466,520
-----------
-----------
Net asset value, offering price and repurchase price per
share................................................... $ 10.04
-----------
-----------
INVESTOR SHARES:
Net assets................................................ $12,524,486
-----------
-----------
Shares outstanding........................................ 1,247,666
-----------
-----------
Net asset value, offering price and repurchase price per
share................................................... $ 10.04
-----------
-----------
Institutional Shares authorized @ $.001 par value........... 200,000,000
Investor Shares authorized @ $.001 par value................ 200,000,000
</TABLE>

STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................. $4,919,727
----------
EXPENSES:
Advisory.................................................. 376,493
Administration............................................ 150,597
12b-1 fee--Investor Shares................................ 29,270
Accounting services....................................... 60,000
Transfer agent............................................ 38,834
Custodian................................................. 35,099
Registration and filings.................................. 19,108
Directors................................................. 11,824
Reports to shareholders................................... 6,542
Audit..................................................... 2,344
Insurance................................................. 2,810
Cash management........................................... 1,203
Legal..................................................... 1,311
Other..................................................... 19,862
----------
TOTAL EXPENSES.......................................... 755,297
Fees waived by The Bank of New York (Note 3).............. (47,060)
Earnings credit adjustment (Note 3)....................... (926)
----------
NET EXPENSES............................................ 707,311
----------
NET INVESTMENT INCOME................................... 4,212,416
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments.......................... 390,562
Increase in unrealized appreciation on investments during
the year................................................ 848,611
----------
Net realized and unrealized gain on investments........... 1,239,173
----------
Net increase in net assets resulting from operations...... $5,451,589
----------
----------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

55
<PAGE>
BNY HAMILTON INTERMEDIATE GOVERNMENT FUND

STATEMENTS OF CHANGES IN NET ASSETS

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

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1998 1997
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income............................................... $ 4,212,416 $ 3,871,834
Net realized gain (loss) on investments............................. 390,562 (473,862)
Increase in unrealized appreciation on investments during the
year.............................................................. 848,611 1,756,995
------------ ------------
Net increase in net assets resulting from operations.............. 5,451,589 5,154,967
------------ ------------
DIVIDENDS TO SHAREHOLDERS:
Dividends from net investment income: Institutional Shares.......... (3,582,992) (2,572,247)
Investor Shares............... (629,424) (1,299,587)
------------ ------------
(4,212,416) (3,871,834)
------------ ------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from capital stock sold: Institutional Shares (Note 1)..... 18,433,862 68,354,492
Investor Shares................... 3,922,671 6,365,101
Proceeds from shares issued on reinvestment of dividends:
Institutional Shares............. 2,226,503 1,858,663
Investor Shares.................. 462,394 723,282
Cost of capital stock repurchased: Institutional Shares............. (20,886,557) (8,174,171)
Investor Shares (Note 1)......... (2,515,264) (59,940,998)
------------ ------------
Net increase in net assets resulting from capital stock
transactions..................................................... 1,643,609 9,186,369
------------ ------------
INCREASE IN NET ASSETS.......................................... 2,882,782 10,469,502
NET ASSETS:
Beginning of year................................................... 74,586,074 64,116,572
------------ ------------
End of year......................................................... $ 77,468,856 $ 74,586,074
------------ ------------
------------ ------------
CHANGE IN CAPITAL STOCK OUTSTANDING:
Shares sold: Institutional Shares (Note 1).......................... 1,849,294 7,141,742
Investor Shares....................................... 393,783 657,553
Shares issued on reinvestment of dividends: Institutional Shares.... 223,193 191,010
Investor Shares......... 46,361 75,288
Shares repurchased: Institutional Shares............................ (2,099,046) (839,673)
Investor Shares (Note 1)........................ (251,939) (6,283,195)
------------ ------------
Net increase...................................................... 161,646 942,725
Shares outstanding, beginning of year............................... 7,552,540 6,609,815
------------ ------------
Shares outstanding, end of year..................................... 7,714,186 7,552,540
------------ ------------
------------ ------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.
56
<PAGE>
BNY HAMILTON INTERMEDIATE GOVERNMENT FUND

FINANCIAL HIGHLIGHTS

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

<TABLE>
<CAPTION>
INSTITUTIONAL SHARES
---------------------------------------
YEAR FOR THE PERIOD
ENDED APRIL 1, 1997*
DECEMBER 31, THROUGH
1998 DECEMBER 31, 1997
------------------ ------------------
<S> <C> <C>
PER SHARE DATA:
Net asset value at beginning of
period................................ $ 9.88 $ 9.53
------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income................... 0.56 0.42
Net realized and unrealized gain on
investments........................... 0.16 0.35
------- -------
Total from investment operations...... 0.72 0.77
------- -------
DIVIDENDS
Dividends from net investment income.... (0.56) (0.42)
------- -------
Net asset value at end of period........ $ 10.04 $ 9.88
------- -------
------- -------
TOTAL RETURN:........................... 7.49% 8.27%**
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's
omitted).............................. $64,944 $64,128
Ratio to average net assets of:
Expenses, net of waiver from The Bank
of New York......................... 0.90% 0.90%***
Expenses, prior to waiver from The
Bank of New York.................... 0.96% 0.99%***
Net investment income, net of waiver
from The Bank of New York........... 5.63% 5.79%***
Portfolio turnover rate................. 61% 41%
</TABLE>

* COMMENCEMENT OF INVESTMENT OPERATIONS.
** NOT ANNUALIZED.
*** ANNUALIZED.

SEE NOTES TO FINANCIAL STATEMENTS.
57
<PAGE>
BNY HAMILTON INTERMEDIATE GOVERNMENT FUND

FINANCIAL HIGHLIGHTS (CONTINUED)

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

<TABLE>
<CAPTION>
INVESTOR SHARES
-------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1998 1997 1996 1995 1994
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value at beginning of
period................................ $ 9.87 $ 9.70 $ 9.94 $ 9.10 $ 10.12
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income................... 0.54 0.54 0.54 0.53 0.50
Net realized and unrealized gain (loss)
on investments........................ 0.17 0.17 (0.24) 0.84 (1.02)
--------- --------- --------- --------- ---------
Total from investment operations...... 0.71 0.71 0.30 1.37 (0.62)
--------- --------- --------- --------- ---------
DIVIDENDS
Dividends from net investment income.... (0.54) (0.54) (0.54) (0.53) (0.50)
--------- --------- --------- --------- ---------
Net asset value at end of period........ $ 10.04 $ 9.87 $ 9.70 $ 9.94 $ 9.10
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
TOTAL RETURN:+.......................... 7.33% 7.54% 3.16% 15.40% (5.17)%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's
omitted).............................. $ 12,525 $ 10,458 $ 64,117 $ 60,659 $ 59,328
Ratio to average net assets of:
Expenses, net of waiver from The Bank
of New York......................... 1.15% 1.08% 1.02% 1.06% 1.07%
Expenses, prior to waiver from The
Bank of New York.................... 1.26% 1.11% 1.02% 1.06% 1.10%
Net investment income, net of waiver
from The Bank of New York........... 5.38% 5.57% 5.54% 5.52% 5.30%
Portfolio turnover rate................. 61% 41% 57% 48% 49%
</TABLE>

+ TOTAL RETURN DOES NOT CONSIDER THE EFFECT OF THE SALES LOAD FOR THOSE
PERIODS IN WHICH THE SALES LOAD WAS IN EFFECT.

SEE NOTES TO FINANCIAL STATEMENTS.
58
<PAGE>
BNY HAMILTON INTERMEDIATE INVESTMENT GRADE FUND

SCHEDULE OF INVESTMENTS

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ------------
<C> <S> <C>
CORPORATE BONDS--58.9%
AEROSPACE AND DEFENSE--1.4%
$ 5,500,000 Raytheon Co. 6.30%, 03/15/05............ $ 5,650,557
------------
BANKING--2.5%
1,000,000 First Union Corp. 7.00%, 03/15/06....... 1,070,652
6,400,000 Interamerican Development Bank 8.50%,
03/15/11................................ 8,157,741
500,000 Norwest Financial, Inc. 6.75%,
06/01/05................................ 528,680
------------
9,757,073
------------
CONGLOMERATES--2.4%
9,075,000 Tenneco, Inc. 6.70%, 12/15/05........... 9,316,177
------------
ENTERTAINMENT--6.1%
4,500,000 PRIMEDIA Inc., Series B 8.50%,
02/01/06................................ 4,635,000
7,250,000 Time Warner, Inc. PATS 6.10%, 12/30/01
(a)..................................... 7,362,136
5,500,000 Time Warner, Inc. 7.75%, 06/15/05....... 6,097,426
5,700,000 Viacom, Inc. 7.75%, 06/01/05............ 6,223,938
------------
24,318,500
------------
FINANCIAL SERVICES--28.2%
125,000 Aetna Services, Inc. 7.125%, 08/15/06... 131,477
7,850,000 Aetna Services, Inc. 6.97%, 08/15/36.... 8,326,071
3,200,000 Ameritech Capital Funding Corp. 6.30%,
10/15/04................................ 3,366,259

<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ------------
<C> <S> <C>
CORPORATE BONDS (CONTINUED)
$ 8,945,000 Associates Corp. N.A 6.875%, 08/01/03... $ 9,423,683
5,000,000 Block Financial Corp. 6.75%, 11/01/04... 5,245,090
7,880,000 Chrysler Financial Corp. 6.03%,
03/12/01................................ 7,993,567
4,750,000 Ford Motor Credit Corp. 7.00%,
09/25/01................................ 4,935,188
3,750,000 General Electric Capital Corp. 7.875%,
12/01/06................................ 4,336,792
2,250,000 General Motors Acceptance Corp. 6.05%,
10/04/99................................ 2,266,450
6,000,000 General Motors Acceptance Corp. 6.70%,
04/18/01................................ 6,160,848
5,000,000 General Motors Acceptance Corp. 8.25%,
02/28/02................................ 5,392,020
665,000 General Motors Acceptance Corp. 8.25%,
02/24/04................................ 742,432
10,000,000 Goldman Sachs Group, L.P. 6.75%,
02/15/06 (a)............................ 10,282,580
6,800,000 Lehman Brothers Holdings, Inc. 7.375%,
05/15/04................................ 7,062,276
8,665,000 Lehman Brothers Holdings, Inc. 7.375%,
05/15/07................................ 8,752,083
4,150,000 Merrill Lynch & Co. 6.07%, 10/15/01..... 4,196,675
1,500,000 Merrill Lynch & Co. 8.30%, 11/01/02..... 1,629,494
7,089,000 Merrill Lynch & Co. 6.55%, 08/01/04..... 7,347,699
4,775,000 Morgan Stanley Dean Witter & Co. 6.70%,
05/01/01................................ 4,887,814
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

59
<PAGE>
BNY HAMILTON INTERMEDIATE INVESTMENT GRADE FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ------------
CORPORATE BONDS (CONTINUED)
<C> <S> <C>
$ 950,000 Salomon, Inc. 7.00%, 06/15/03........... $ 990,011
500,000 Salomon, Inc. 6.875%, 12/15/03.......... 519,943
4,850,000 Salomon Smith Barney 6.25%, 01/15/05.... 4,903,830
3,000,000 Sears Roebuck Acceptance Corp. 6.95%,
05/15/02................................ 3,112,974
------------
112,005,256
------------
FOOD PROCESSING--3.3%
8,075,000 Nabisco, Inc. 6.85%, 06/15/05........... 8,239,447
5,000,000 Nabisco, Inc. 6.125%, 02/01/33.......... 4,928,350
------------
13,167,797
------------
HOTELS AND GAMING--1.1%
4,500,000 Hilton Hotels Corp. 7.375%, 06/01/02.... 4,533,957
------------
INDUSTRIAL & COMMERCIAL
SERVICES--0.8%
3,000,000 WMX Technologies, Inc. 7.70%,
10/01/02................................ 3,178,599
------------
MEDIA--1.3%
1,000,000 Chancellor Media Corp. (a) 9.00%,
10/01/08................................ 1,055,000
901,000 Paramount Communications, Inc. 5.875%,
07/15/00................................ 905,851
3,000,000 USA Networks, Inc. (a) 6.75%,
11/15/05................................ 3,015,309
------------
4,976,160
------------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ------------
<C> <S> <C>
CORPORATE BONDS (CONTINUED)
OIL & GAS--1.3%
$ 5,000,000 Global Marine, Inc. 7.125%, 09/01/07.... $ 5,072,015
------------
RESTAURANTS--2.1%
8,000,000 Tricon Global Restaurants, Inc. 7.45%,
05/15/05................................ 8,245,656
------------
RETAIL--DEPARTMENT STORES--2.2%
3,000,000 Penney (J.C.) & Co., Inc. 7.25%,
04/01/02................................ 3,122,355
5,230,000 Sears Roebuck Co., Series 3, 6.92%,
06/17/04................................ 5,488,017
------------
8,610,372
------------
TELECOMMUNICATIONS--5.4%
3,500,000 Comcast Cellular Holdings 9.50%,
05/01/07................................ 3,710,000
5,000,000 GTE Corp. 7.51%, 04/01/09............... 5,739,780
5,130,000 MCI Worldcom, Inc. 6.40%, 08/15/05...... 5,324,114
5,000,000 Tele-Communications, Inc. 6.58%,
02/15/05 (b)............................ 5,673,535
1,000,000 US West Communications 6.625%,
09/15/05................................ 1,073,899
------------
21,521,328
------------
UTILITIES--ELECTRIC--0.8%
3,000,000 Niagara Mohawk Power Corp. 7.125%,
07/01/01................................ 3,061,611
------------
TOTAL CORPORATE BONDS
(Cost $226,105,328)..................... 233,415,058
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

60
<PAGE>
BNY HAMILTON INTERMEDIATE INVESTMENT GRADE FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

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

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ------------
UNITED STATES GOVERNMENT AGENCIES & OBLIGATIONS--29.7%
<C> <S> <C>
FEDERAL HOME LOAN BANK--1.4%
$ 5,500,000 5.50%, 04/14/00......................... $ 5,534,573
------------
FEDERAL HOME LOAN MORTGAGE
CORP.--1.6%
2,700,000 7.93%, 01/20/05......................... 3,076,890
3,000,000 5.75%, 04/15/08......................... 3,088,509
------------
6,165,399
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--8.1%
2,440,000 0.00%, 08/15/01......................... 2,148,315
3,000,000 6.85%, 04/05/04......................... 3,224,277
9,950,000 7.375%, 03/28/05........................ 11,085,395
5,500,000 5.75%, 06/15/05......................... 5,709,330
5,000,000 5.94%, 12/12/05......................... 5,213,010
3,725,000 5.875%, 02/02/06........................ 3,863,816
1,000,000 6.06%, 02/03/06......................... 1,025,645
------------
32,269,788
------------
TENNESSEE VALLEY AUTHORITY--0.1%
275,000 6.00%, 11/01/00......................... 280,134
------------
UNITED STATES TREASURY NOTES--18.5%
17,000,000 5.75%, 08/15/03......................... 17,743,750
15,400,000 7.00%, 07/15/06......................... 17,536,750
34,475,000 6.50%, 10/15/06......................... 38,267,250
------------
73,547,750
------------
TOTAL UNITED STATES GOVERNMENT AGENCIES
& OBLIGATIONS
(Cost $112,205,705)..................... 117,797,644
------------
</TABLE>

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- COLLATERALIZED MORTGAGE OBLIGATIONS--5.5% ------------
<C> <S> <C>
FEDERAL HOME LOAN MORTGAGE
CORP.--2.1%
$ 1,361,525 Series 1531E, 6.00%, 01/15/06........... $ 1,365,392
1,000,000 Series 1678CA, 6.00%, 02/15/09.......... 986,630
4,864,898 Series 1607ZB, 5.50%, 12/15/10.......... 4,852,574
992,790 Series 1627PJ, 6.00%, 03/15/23.......... 982,385
------------
8,186,981
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--2.4%
43,202 Series 1993-88B, 5.40%, 06/25/00........ 43,056
890,157 Series 1993-212C, 6.00%, 11/25/00....... 889,237
5,300,000 Series 1993-96PJ, 7.00%, 08/25/22....... 5,442,998
3,309,609 Series 1993-199C, 5.80%, 10/25/23....... 3,289,228
------------
9,664,519
------------
FIXED RATE SECURITIES--1.0%
3,946,147 Kidder Peabody Mortgage Assets Trust,
Series 22, Class D, 9.95%, 02/01/19..... 3,972,263
------------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS
(Cost $21,584,621)...................... 21,823,763
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

61
<PAGE>
BNY HAMILTON INTERMEDIATE INVESTMENT GRADE FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- MORTGAGE-BACKED ------------
SECURITIES--2.5%
<C> <S> <C>
FEDERAL HOME LOAN MORTGAGE
CORP.--0.3%
$ 108,727 Pool #180686, 6.00%, 08/01/03........... $ 109,151
177,896 Pool #160074, 10.00%, 04/01/09.......... 189,696
911,088 Pool #180006, 9.25%, 08/01/11........... 963,368
------------
1,262,215
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--0.2%
610,497 Pool #219238, 8.50%, 02/01/09........... 644,245
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION--2.0%
119,698 Pool #13416, 8.00%, 09/15/06............ 124,336
59,171 Pool #13688, 8.00%, 11/15/06............ 61,464
108,311 Pool #12766, 8.00%, 12/15/06............ 112,508
89,160 Pool #16080, 7.50%, 04/15/07............ 91,918
932,320 Pool #21598, 8.00%, 02/15/08............ 968,447
204,109 Pool #27246, 9.00%, 12/15/08............ 217,759
87,019 Pool #31570, 9.50%, 06/15/09............ 93,899

<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ------------
<C> <S> <C>
MORTGAGE-BACKED
SECURITIES (CONTINUED)
$ 76,276 Pool #34366, 9.50%, 09/15/09............ $ 82,307
56,551 Pool #33765, 9.50%, 10/15/09............ 61,022
90,067 Pool #34704, 9.50%, 10/15/09............ 97,459
494,087 Pool #171774, 9.00%, 09/15/16........... 527,129
208,234 Pool #199885, 9.50%, 11/15/17........... 224,698
111,516 Pool #251646, 9.50%, 04/15/18........... 120,333
62,829 Pool #290313, 9.50%, 05/15/20........... 67,796
1,140,782 Pool #319650, 7.00%, 11/15/22........... 1,168,236
1,394,490 Pool #349306, 8.00%, 02/15/23........... 1,450,204
1,337,119 Pool #362262, 7.50%, 04/15/24........... 1,378,489
416,506 Pool #376445, 6.50%, 04/15/24........... 420,739
622,977 Pool #384069, 7.50%, 04/15/24........... 642,252
------------
7,910,995
------------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $9,495,423)....................... 9,817,455
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

62
<PAGE>
BNY HAMILTON INTERMEDIATE INVESTMENT GRADE FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

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

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ASSET-BACKED SECURITIES--0.7% ------------
<C> <S> <C>
ASSET BACKED SECURITIES--CREDIT CARDS--0.7%
$ 2,600,000 Discover Card Master Trust I, Series
1996-3, Class A, 6.05%, 08/18/08........ $ 2,661,802
349,317 Ford Credit Grantor Trust 5.90%,
10/15/00................................ 350,124
------------
TOTAL ASSET-BACKED SECURITIES
(Cost $2,834,339)....................... 3,011,926
------------
</TABLE>

<TABLE>
<C> <S> <C>
MONEY MARKET FUND--0.5%
2,108,850 ACM Institutional Reserves (Prime
Portfolio), 5.03% (c) (Cost
$2,108,850)............................. 2,108,850
------------
</TABLE>

<TABLE>
<C> <S> <C>
TOTAL INVESTMENTS
(Cost $374,334,266) (d)-- 97.8%......... 387,974,696
Other assets less liabilities-- 2.2%.... 8,528,696
------------
NET ASSETS--100.0%...................... $396,503,392
------------
------------
</TABLE>

PATS PASS-THRU ASSET TRUST SECURITY.
(a) ILLIQUID SECURITY, EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE
SECURITIES ACT OF 1933.
(b) INTEREST RATE SCHEDULED TO INCREASE TO 8.35% ON FEBRUARY 14, 1999.
(c) REPRESENTS ANNUALIZED YIELD AT DECEMBER 31, 1998.
(d) THE COST STATED ALSO APPROXIMATES THE AGGREGATE COST FOR FEDERAL INCOME TAX
PURPOSES. AT DECEMBER 31, 1998, NET UNREALIZED APPRECIATION WAS $13,640,430
BASED ON COST FOR FEDERAL INCOME TAX PURPOSES. THIS CONSISTED OF AGGREGATE
GROSS UNREALIZED APPRECIATION OF $14,471,859 AND AGGREGATE GROSS UNREALIZED
DEPRECIATION OF $831,429.

SEE NOTES TO FINANCIAL STATEMENTS.

63
<PAGE>

BNY HAMILTON INTERMEDIATE INVESTMENT GRADE FUND
STATEMENT OF ASSETS AND LIABILITIES

DECEMBER 31, 1998

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

<TABLE>
<S> <C>
ASSETS:
Investment at value
(Cost $374,334,266)..................................... $387,974,696
Cash...................................................... 64,007
Receivables:
Interest................................................ 6,034,923
Investments sold........................................ 2,639,731
Capital stock sold...................................... 640,364
Deferred organization costs and other assets.............. 74,350
------------
TOTAL ASSETS.......................................... 397,428,071
------------
LIABILITIES:
Payables:
Dividends............................................... 603,836
Services provided by the Bank of New York and
Administrator......................................... 257,131
Capital stock repurchased............................... 19,789
Accrued expenses and other liabilities.................... 43,923
------------
TOTAL LIABILITIES..................................... 924,679
------------
NET ASSETS:................................................. $396,503,392
------------
------------
SOURCES OF NET ASSETS:
Capital stock @ par....................................... $ 37,377
Capital surplus........................................... 382,157,447
Undistributed net investment income....................... 6,712
Accumulated net realized gain on investments.............. 661,426
Net unrealized appreciation on investments................ 13,640,430
------------
$396,503,392
------------
------------
INSTITUTIONAL SHARES:
Net assets................................................ $392,521,999
------------
------------
Shares outstanding........................................ 37,001,393
------------
------------
Net asset value, offering price and repurchase price per
share................................................... $ 10.61
------------
------------
INVESTOR SHARES:
Net assets................................................ $ 3,981,393
------------
------------
Shares outstanding........................................ 375,137
------------
------------
Net asset value, offering price and repurchase price per
share................................................... $ 10.61
------------
------------
Institutional Shares authorized @ $.001 par value........... 200,000,000
Investor Shares authorized @ $.001 par value................ 200,000,000
</TABLE>

STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................. $24,747,311
-----------
EXPENSES:
Advisory.................................................. 1,873,230
Administration............................................ 749,295
12b-1 fee--Investor Shares................................ 9,122
Registration and filings.................................. 106,092
Transfer agent............................................ 84,992
Accounting services....................................... 60,000
Custodian................................................. 45,617
Organization.............................................. 20,754
Reports to shareholders................................... 30,039
Audit..................................................... 18,859
Cash management........................................... 8,489
Directors................................................. 11,818
Legal..................................................... 6,902
Insurance................................................. 10,218
Other..................................................... 28,230
-----------
TOTAL EXPENSES.......................................... 3,063,657
Earnings credit adjustment (Note 3)....................... (2,081)
-----------
NET EXPENSES............................................ 3,061,576
-----------
NET INVESTMENT INCOME................................... 21,685,735
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments.......................... 3,931,265
Increase in unrealized appreciation on investments during
the year................................................ 5,372,256
-----------
Net realized and unrealized gain on investments........... 9,303,521
-----------
Net increase in net assets resulting from operations...... $30,989,256
-----------
-----------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

64
<PAGE>
BNY HAMILTON INTERMEDIATE INVESTMENT GRADE FUND

STATEMENTS OF CHANGES IN NET ASSETS

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

<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR APRIL 1, 1997*
ENDED THROUGH
DECEMBER 31, 1998 DECEMBER 31, 1997
------------------- -------------------
<S> <C> <C>
OPERATIONS:
Net investment income............................................... $ 21,685,735 $ 16,285,797
Net realized gain on investments.................................... 3,931,265 352,691
Increase in unrealized appreciation on investments during the
period............................................................ 5,372,256 14,714,273
------------------- -------------------
Net increase in net assets resulting from operations.............. 30,989,256 31,352,761
------------------- -------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income: Institutional Shares.......... (21,443,657) (16,143,287)
Investor Shares............... (199,801) (33,324)
Distributions from capital gains: Institutional Shares.............. (3,622,442) (108,600)
Investor Shares................... (35,655) (586)
------------------- -------------------
(25,301,555) (16,285,797)
------------------- -------------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from capital stock sold: Institutional Shares (Note 1)..... 91,886,282 414,224,302
Investor Shares................... 4,460,994 2,271,045
Proceeds from shares issued on reinvestment
of dividends and distributions: Institutional Shares.............. 5,687,853 1,251,063
Investor Shares................... 229,199 33,546
Cost of capital stock repurchased: Institutional Shares............. (61,019,124) (80,173,329)
Investor Shares.................. (2,650,772) (452,332)
------------------- -------------------
Net increase in net assets resulting from capital stock
transactions.................................................... 38,594,432 337,154,295
------------------- -------------------
INCREASE IN NET ASSETS.......................................... 44,282,133 352,221,259
NET ASSETS:
Beginning of period................................................. 352,221,259 -0-
------------------- -------------------
End of period (includes undistributed net investment income of
$6,712 at December 31, 1998)...................................... $ 396,503,392 $ 352,221,259
------------------- -------------------
------------------- -------------------
CHANGE IN CAPITAL STOCK OUTSTANDING:
Shares sold: Institutional Shares (Note 1).......................... 8,671,169 41,249,130
Investor Shares...................................... 423,701 221,371
Shares issued on reinvestment of dividends: Institutional Shares.... 537,168 121,197
Investor Shares......... 21,682 3,224
Shares repurchased: Institutional Shares............................ (5,746,886) (7,830,385)
Investor Shares................................. (251,187) (43,654)
------------------- -------------------
Net increase...................................................... 3,655,647 33,720,883
Shares outstanding, beginning of period............................. 33,720,883 -0-
------------------- -------------------
Shares outstanding, end of period................................... 37,376,530 33,720,883
------------------- -------------------
------------------- -------------------
</TABLE>

* COMMENCEMENT OF INVESTMENT OPERATIONS.

SEE NOTES TO FINANCIAL STATEMENTS.
65
<PAGE>
BNY HAMILTON INTERMEDIATE INVESTMENT GRADE FUND

FINANCIAL HIGHLIGHTS

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

<TABLE>
<CAPTION>
INSTITUTIONAL SHARES INVESTOR SHARES
----------------------------------- -----------------------------------
YEAR FOR THE PERIOD YEAR FOR THE PERIOD
ENDED APRIL 1, 1997* ENDED MAY 1, 1997*
DECEMBER 31, THROUGH DECEMBER 31, THROUGH
1998 DECEMBER 31, 1997 1998 DECEMBER 31, 1997
-------------- ------------------ -------------- ------------------
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value at beginning of
period................................ $ 10.45 $ 10.00 $10.45 $10.08
-------------- -------- ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income................... 0.61 0.47 0.58 0.40
Net realized and unrealized gain on
investments........................... 0.26 0.45 0.26 0.37
-------------- -------- ------ ------
Total from investment operations...... 0.87 0.92 0.84 0.77
-------------- -------- ------ ------
DIVIDENDS AND DISTRIBUTION
Dividends from net investment
income................................ (0.61) (0.47) (0.58) (0.40)
Distribution from capital gains......... (0.10) -- (0.10) --
-------------- -------- ------ ------
Total dividends and distribution...... (0.71) (0.47) (0.68) (0.40)
-------------- -------- ------ ------
Net asset value at end of period........ $ 10.61 $ 10.45 $10.61 $10.45
-------------- -------- ------ ------
-------------- -------- ------ ------
TOTAL RETURN:........................... 8.56% 9.34%** 8.22% 7.76%**
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's
omitted).............................. $392,522 $350,330 $3,981 $1,891
Ratio to average net assets of:
Expenses.............................. 0.81% 0.80%*** 1.13% 1.06%***
Net investment income................. 5.79% 6.14%*** 5.51% 5.74%***
Portfolio turnover rate................. 53% 81% 53% 81%
</TABLE>

* COMMENCEMENT OF INVESTMENT OPERATIONS FOR THE RESPECTIVE CLASS OF SHARES.
** NOT ANNUALIZED.
*** ANNUALIZED.

SEE NOTES TO FINANCIAL STATEMENTS.
66
<PAGE>
BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND

SCHEDULE OF INVESTMENTS

DECEMBER 31, 1998

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

<TABLE>
<CAPTION>
*MOODY'S
PRINCIPAL /S&P INTEREST MATURITY
AMOUNT RATINGS RATE DATE VALUE
- ---------- --------- --------- ---------- -----------
<C> <S> <C> <C> <C> <C>
MUNICIPAL BONDS--99.7%
EDUCATION--10.3%
$ 250,000 New York State Dormitory Authority,
University of Rochester................. A1/A+ 4.700% 7/1/2000 $ 254,825
250,000 New York State Dormitory Authority,
Columbia University..................... Aaa/AAA 5.000 7/1/2000 256,132
500,000 New York State Dormitory Authority,
Columbia University..................... Aaa/AAA 5.500 7/1/2009 553,235
500,000 New York State Dormitory Authority,
Fordham University...................... Aaa/AAA 4.400 7/1/2006 508,955
1,700,000 New York State Dormitory Authority, New
York University, MBIA Insured+.......... Aaa/AAA 5.500 7/1/2004 1,834,351
1,000,000 New York State Dormitory Authority,
Strong Memorial Hospital (University of
Rochester).............................. A1/A+ 5.000 7/1/2002 1,039,650
-----------
4,447,148
-----------
GENERAL OBLIGATIONS--12.8%
500,000 Monroe County, New York................. Aaa/AAA 4.050 3/1/2007 498,495
500,000 Monroe County, New York, MBIA
Insured+................................ Aaa/AAA 4.800 6/1/2002 517,535
60,000 Monroe County, New York, Series B,
Unrefunded Balance, Callable 6/01/99 @
101.50.................................. Aa2/AA 7.000 6/1/2003 61,808
500,000 New York State Municipal Bond Bank
Agency (City of Rochester).............. NR/A+ 6.400 3/15/2001 530,020
500,000 New York State, General Obligation...... A2/A 4.375 7/15/2005 509,650
500,000 New York State, General Obligation...... A2/A 4.600 3/15/2001 510,750
1,000,000 New York State, General Obligation...... A2/A 5.125 6/15/2004 1,057,700
1,000,000 Orange County, New York, General
Obligation.............................. Aa2/NR 5.000 9/1/2013 1,030,210
300,000 Sands Point New York, General
Obligation.............................. Aa2/NR 3.950 7/15/2001 302,973
500,000 Sands Point New York, General
Obligation.............................. Aa2/NR 4.700 7/15/2011 511,135
-----------
5,530,276
-----------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.
67
<PAGE>
BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

SEE NOTES TO FINANCIAL STATEMENTS.
68
<PAGE>
BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

SEE NOTES TO FINANCIAL STATEMENTS.
69
<PAGE>
BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

SEE NOTES TO FINANCIAL STATEMENTS.
70
<PAGE>
BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

SEE NOTES TO FINANCIAL STATEMENTS.
71
<PAGE>
BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

<TABLE>
<C> <S> <C> <C> <C> <C>
TAX-EXEMPT MONEY MARKET FUND--0.1%
19,303 Dreyfus New York Municipal Cash
Management (Cost $19,303)............... NR/NR 3.560(a) 19,303
-----------
TOTAL INVESTMENTS
(Cost $41,274,004)(b)--99.8%............ 43,003,999
Other Assets less liabilities--0.2%..... 94,959
-----------
NET ASSETS--100%........................ $43,098,958
-----------
-----------
</TABLE>

NR NOT RATED BY MOODY'S OR STANDARD & POOR'S (S&P).
* RATINGS ARE UNAUDITED.
+ INSURED OR GUARANTEED BY THE INDICATED MUNICIPAL BOND INSURANCE
CORPORATION.
(a) REPRESENTS ANNUALIZED YIELD AT DECEMBER 31, 1998.
(b) THE COST STATED ALSO APPROXIMATES THE AGGREGATE COST FOR FEDERAL INCOME TAX
PURPOSES. AT DECEMBER 31, 1998, NET UNREALIZED APPRECIATION WAS $1,729,995
BASED ON COST FOR FEDERAL INCOME TAX PURPOSES. THIS CONSISTED OF AGGREGATE
GROSS UNREALIZED APPRECIATION OF $1,736,578 AND AGGREGATE GROSS UNREALIZED
DEPRECIATION OF $6,583.

SEE NOTES TO FINANCIAL STATEMENTS.
72
<PAGE>

BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND
STATEMENT OF ASSETS AND LIABILITIES

DECEMBER 31, 1998

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

<TABLE>
<S> <C>
ASSETS:
Investment at value
(Cost $41,274,004)...................................... $ 43,003,999
Receivables:
Interest................................................ 716,430
Capital stock sold...................................... 4,460
Other assets.............................................. 72,704
------------
TOTAL ASSETS.......................................... 43,797,593
------------
LIABILITIES:
Due to custodian.......................................... 20,000
Payables:
Dividends............................................... 44,206
Investments purchased................................... 500,000
Capital stock repurchased............................... 8,732
Services provided by The Bank of New York and
Administrator......................................... 101,322
Accrued expenses and other liabilities.................... 24,375
------------
TOTAL LIABILITIES..................................... 698,635
------------
NET ASSETS:................................................. $ 43,098,958
------------
------------
SOURCES OF NET ASSETS:
Capital stock @ par....................................... $ 4,046
Capital surplus........................................... 41,359,379
Accumulated net realized gain on investments.............. 5,538
Net unrealized appreciation on investments................ 1,729,995
------------
$ 43,098,958
------------
------------
INSTITUTIONAL SHARES:
Net assets................................................ $ 31,519,068
------------
------------
Shares outstanding........................................ 2,958,575
------------
------------
Net asset value, offering price and repurchase price per
share................................................... $ 10.65
------------
------------
INVESTOR SHARES:
Net assets................................................ $ 11,579,890
------------
------------
Shares outstanding........................................ 1,087,045
------------
------------
Net asset value, offering price and repurchase price per
share................................................... $ 10.65
------------
------------
Institutional Shares authorized @ $.001 par value........... 200,000,000
Investor Shares authorized @ $.001 par value................ 200,000,000
</TABLE>

STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................. $2,029,374
----------
EXPENSES:
Advisory.................................................. 213,358
Administration............................................ 85,343
12b-1 fee--Investor Shares................................ 26,330
Accounting services....................................... 60,000
Transfer agent............................................ 36,892
Registration and filings.................................. 17,770
Custodian................................................. 10,918
Directors................................................. 11,791
Reports to shareholders................................... 4,787
Insurance................................................. 1,792
Audit..................................................... 1,493
Cash management........................................... 1,347
Legal..................................................... 561
Other..................................................... 10,681
----------
TOTAL EXPENSES.......................................... 483,063
Fees waived by The Bank of New York (Note 3).............. (72,704)
----------
NET EXPENSES............................................ 410,359
----------
NET INVESTMENT INCOME................................... 1,619,015
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS--
Net realized gain on investments.......................... 256,154
Increase in unrealized appreciation on investments during
the year................................................ 325,257
----------
Net realized and unrealized gain on investments........... 581,411
----------
Net increase in net assets resulting from operations...... $2,200,426
----------
----------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

73
<PAGE>
BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND

STATEMENTS OF CHANGES IN NET ASSETS

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

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1998 1997
---------------- -----------------
<S> <C> <C>
OPERATIONS:
Net investment income............................................................ $ 1,619,015 $ 1,522,640
Net realized gain on investments................................................. 256,154 105,649
Increase in unrealized appreciation on investments during the period............. 325,257 785,584
---------------- -----------------
Net increase in net assets resulting from operations........................... 2,200,426 2,413,873
---------------- -----------------
DIVIDENDS AND DISTRIBUTION TO SHAREHOLDERS:
Dividends from net investment income: Institutional Shares....................... (1,239,196) (870,111)
Investor Shares........................... (379,819) (652,529)
Distribution from capital gains: Institutional Shares............................ (29,529) -0-
Investor Shares................................. (9,845) -0-
---------------- -----------------
(1,658,389) (1,522,640)
---------------- -----------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from capital stock sold: Institutional Shares (Note 1).................. 8,283,928 37,610,007
Investor Shares................................ 4,382,746 3,461,199
Proceeds from shares issued on reinvestment
of dividends and distribution: Institutional Shares............................ 209,663 99,174
Investor Shares................................. 299,692 323,282
Cost of capital stock repurchased: Institutional Shares.......................... (8,303,000) (30,067,836)
Investor Shares (Note 1)...................... (3,599,478) (7,770,455)
---------------- -----------------
Net increase in net assets resulting from capital stock transactions........... 1,273,551 3,655,371
---------------- -----------------
INCREASE IN NET ASSETS....................................................... 1,815,588 4,546,604
NET ASSETS:
Beginning of year................................................................ 41,283,370 36,736,766
---------------- -----------------
End of year...................................................................... $43,098,958 $ 41,283,370
---------------- -----------------
---------------- -----------------
CHANGE IN CAPITAL STOCK OUTSTANDING:
Shares sold: Institutional Shares (Note 1)....................................... 786,746 3,676,326
Investor Shares.................................................... 414,391 336,663
Shares issued on reinvestment of dividends: Institutional Shares................. 19,810 9,559
Investor Shares....................... 28,363 31,281
Shares repurchased: Institutional Shares......................................... (786,244) (2,953,489)
Investor Shares (Note 1).................................... (341,124) (747,622)
---------------- -----------------
Net increase................................................................... 121,942 352,718
Shares outstanding, beginning of year............................................ 3,923,678 3,570,960
---------------- -----------------
Shares outstanding, end of year.................................................. 4,045,620 3,923,678
---------------- -----------------
---------------- -----------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.
74
<PAGE>
BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND

FINANCIAL HIGHLIGHTS

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

<TABLE>
<CAPTION>
INSTITUTIONAL SHARES
----------------------------------
YEAR FOR THE PERIOD
ENDED APRIL 1, 1997*
DECEMBER 31, THROUGH
1998 DECEMBER 31, 1997
------------- ------------------
<S> <C> <C>
PER SHARE DATA:
Net asset value at beginning of
period................................ $ 10.52 $ 10.16
------------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income................... 0.41 0.31
Net realized and unrealized gain on
investments........................... 0.14 0.36
------------- -------
Total from investment operations...... 0.55 0.67
------------- -------
DIVIDENDS AND DISTRIBUTION
Dividends from net investment income.... (0.41) (0.31)
Distribution from capital gains......... (0.01) --
------------- -------
Total dividends and distribution...... (0.42) (0.31)
------------- -------
Net asset value at end of period........ $ 10.65 $ 10.52
------------- -------
------------- -------
TOTAL RETURN:........................... 5.30% 6.69%**
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's
omitted).............................. $31,519 $30,915
Ratio to average net assets of:
Expenses, net of waiver from The Bank
of New York......................... 0.90% 0.90%***
Expenses, prior to waiver from The
Bank of New York.................... 1.07% 1.15%***
Net investment income, net of waiver
from The Bank of New York........... 3.85% 3.98%***
Portfolio turnover rate................. 24% 21%
</TABLE>

* COMMENCEMENT OF INVESTMENT OPERATIONS.
** NOT ANNUALIZED.
*** ANNUALIZED.

SEE NOTES TO FINANCIAL STATEMENTS.
75
<PAGE>
BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND

FINANCIAL HIGHLIGHTS (CONTINUED)

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

<TABLE>
<CAPTION>
INVESTOR SHARES
------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1998 1997 1996 1995 1994
------------ -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value at beginning of
period................................ $ 10.52 $ 10.29 $ 10.34 $ 9.59 $ 10.37
------------ -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income................... 0.38 0.39 0.40 0.39 0.39
Net realized and unrealized gain (loss)
on investments........................ 0.14 0.23 (0.05) 0.75 (0.78)
------------ -------- -------- -------- --------
Total from investment operations...... 0.52 0.62 0.35 1.14 (0.39)
------------ -------- -------- -------- --------
DIVIDENDS AND DISTRIBUTION
Dividends from net investment income.... (0.38) (0.39) (0.40) (0.39) (0.39)
Distribution from capital gains......... (0.01) -- -- -- --
------------ -------- -------- -------- --------
Total dividends and distribution...... (0.39) (0.39) (0.40) (0.39) (0.39)
------------ -------- -------- -------- --------
Net asset value at end of period........ $ 10.65 $ 10.52 $ 10.29 $ 10.34 $ 9.59
------------ -------- -------- -------- --------
------------ -------- -------- -------- --------
TOTAL RETURN:+.......................... 5.04% 6.19% 3.47% 12.08% (3.81)%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's
omitted).............................. $ 11,580 $ 10,368 $ 36,737 $ 40,931 $ 43,213
Ratio to average net assets of:
Expenses, net of waiver from The Bank
of New York......................... 1.15% 1.02% 0.90% 0.90% 0.85%
Expenses, prior to waiver from The
Bank of New York.................... 1.32% 1.32% 1.18% 1.20% 1.20%
Net investment income, net of waiver
from The Bank of New York........... 3.61% 3.88% 3.91% 3.89% 3.92%
Portfolio turnover rate................. 24% 21% 22% 4% 18%
</TABLE>

+ TOTAL RETURN DOES NOT CONSIDER THE EFFECT OF THE SALES LOAD FOR THOSE
PERIODS IN WHICH THE SALES LOAD WAS IN EFFECT.

SEE NOTES TO FINANCIAL STATEMENTS.
76
<PAGE>
BNY HAMILTON INTERMEDIATE TAX-EXEMPT FUND

SCHEDULE OF INVESTMENTS

DECEMBER 31, 1998

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

<TABLE>
<CAPTION>
*MOODY'S
PRINCIPAL / S&P INTEREST MATURITY
AMOUNT RATINGS RATE DATE VALUE
- ---------- ---------- -------- ------------ ------------
<C> <S> <C> <C> <C> <C>
MUNICIPAL BONDS--98.4%
EDUCATION--7.9%
$1,000,000 District of Columbia Revenue
(Association of American Medical
Colleges), Series A, Callable 8/15/07
@102.................................... Aaa/AAA 5.150% 2/15/2010 $ 1,044,130
1,000,000 Illinois Educational Facility Authority
Revenue (University of Chicago),
Series A................................ Aa1/AA 5.000 7/1/2008 1,057,320
2,000,000 Illinois Educational Facility Authority
Revenue (University of Chicago),
Series B, Mandatory Put 7/1/04.......... Aa1/AA 4.400 7/1/2025 2,042,140
4,190,000 New England Student Loan Revenue
Series A................................ Aaa/NR 5.800 3/1/2002 4,410,310
1,115,000 New England Student Loan Revenue
Series D................................ Aaa/NR 6.000 9/1/1999 1,134,747
110,000 New Jersey State Educational Facility
Authority Revenue (Jersey City State
College), Series D, MBIA Insured+....... Aaa/AAA 5.400 7/1/2001 114,908
20,000 New York State Dormitory Authority
Revenue, Unrefunded Balance, University
of Rochester; Callable 7/1/99 @101...... A1/A+ 6.200 7/1/2002 20,336
1,600,000 Pennsylvania State Higher Education
Facility Authority Carnegie-Mellon...... NR/AA- 5.000 11/1/2000 1,646,688
2,020,000 Private Colleges & Universities Auth.
(Emory University)...................... Aaa/AA+ 5.500 11/1/2006 2,206,729
1,000,000 Swarthmore Borough Authority
Pennsylvania Swarthmore College......... Aaa/AA+ 5.000 9/15/2007 1,064,220
1,000,000 Swarthmore Borough Authority
Pennsylvania Swarthmore College......... Aaa/AA+ 5.000 9/15/2008 1,066,950
1,000,000 Swarthmore Borough Authority
Pennsylvania Swarthmore College......... Aaa/AA+ 5.250 9/15/2009 1,089,090
2,185,000 Texas A & M University Revenue, Callable
5/15/07 @100............................ Aa2/AA 5.000 5/15/2008 2,306,093
1,000,000 Texas State Public Authority Building
(State Technical College), MBIA
Insured+................................ Aaa/AAA 6.100 8/1/2004 1,109,070
1,000,000 University of Texas..................... Aaa/AAA 6.700 7/1/2005 1,091,780
------------
21,404,511
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.
77
<PAGE>
BNY HAMILTON INTERMEDIATE TAX-EXEMPT FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
*MOODY'S
PRINCIPAL / S&P INTEREST MATURITY
AMOUNT RATINGS RATE DATE VALUE
- ---------- ---------- -------- ------------ ------------
MUNICIPAL BONDS (CONTINUED)
<C> <S> <C> <C> <C> <C>
GENERAL OBLIGATIONS--36.3%
$1,000,000 Aldine Texas Independent School
District, Callable 2/15/07 @100......... Aaa/AAA 5.375 2/15/2009 $ 1,072,920
5,000,000 California State........................ Aa3/A+ 5.000 12/1/2006 5,319,500
4,000,000 California State........................ A1/A+ 5.000% 10/1/2002 4,193,160
2,970,000 Charlotte North Carolina................ Aaa/AAA 5.500 5/1/2003 3,171,901
3,000,000 Chicago Illinois........................ Aaa/AAA 5.50 1/1/2012 3,283,560
3,000,000 Connecticut State Series A.............. Aa3/AA- 5.00 5/15/2004 3,173,760
990,000 Connecticut State Series B,
Callable 7/15/00 @102................... Aa3/AA- 6.60 7/15/2001 1,054,033
2,500,000 Delaware State Series A................. Aa1/AA+ 5.125 4/1/2005 2,661,850
5,000,000 Georgia State Series C.................. Aaa/AA+ 5.250 7/1/2008 5,456,900
4,000,000 Hawaii State............................ A1/A+ 5.750 1/1/2008 4,413,400
500,000 Illinois State.......................... Aa2/AA- 5.500 8/1/2001 522,840
1,585,000 King County Washington, Series A........ Aa1/AA+ 5.000 1/1/2004 1,664,250
1,155,000 Louisville, Kentucky.................... Aa3/AA- 4.200 12/1/2009 1,148,964
2,000,000 Maryland State & Local Facilities
Loan--1st Series, Callable 3/01/07
@101.50................................. Aaa/AAA 5.000 3/1/2011 2,109,260
2,185,000 Maryland State & Local Facilities
Loan--2nd Series........................ Aaa/AAA 5.250 6/15/2005 2,353,289
2,000,000 Maryland State & Local Facilities
Loan--3rd Series, Callable 10/15/06
@100.................................... Aaa/AAA 5.000 10/15/2007 2,127,640
1,485,000 Massachusetts State--Construction Loan
Series A................................ Aa3/AA- 5.100 11/1/2002 1,557,513
2,000,000 Massachusetts State--Construction Loan
Series D, FGIC Insured+................. Aaa/AAA 5.125 11/1/2003 2,115,900
1,065,000 Mesquite Texas Independent School
District #1............................. Aaa/AAA 8.125 8/15/2001 1,181,671
2,000,000 Milwaukee Wisconsin Metropolitan Sewer
District Series A....................... Aa1/AA+ 6.250 10/1/2004 2,237,140
5,070,000 Minnesota State, Callable 11/01/06
@100.................................... Aaa/AAA 5.000 11/1/2008 5,363,401
2,595,000 Monroe County, New York................. AAA/AAA 6.000 6/1/2011 2,907,827
1,290,000 Montana State Series D.................. Aa3/AA- 5.000 8/1/2008 1,379,939
2,760,000 Nevada State............................ Aa2/AA 5.250 5/15/2010 2,944,120
990,000 Nevada State Municipal Bond Bank Project
#4 Series A, Callable 8/01/99 @102...... Aa2/AA 6.700 2/1/2001 1,028,956
3,215,000 Nevada State Municipal Bond Bank Project
#52 Series A............................ Aa2/AA 6.375 5/15/2006 3,666,900
4,470,000 Nevada State Series A................... Aa2/AA 4.375 8/1/2003 4,572,318
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.
78
<PAGE>
BNY HAMILTON INTERMEDIATE TAX-EXEMPT FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
*MOODY'S
PRINCIPAL / S&P INTEREST MATURITY
AMOUNT RATINGS RATE DATE VALUE
- ---------- ---------- -------- ------------ ------------
MUNICIPAL BONDS (CONTINUED)
<C> <S> <C> <C> <C> <C>
$2,000,000 New Jersey State Series E............... Aa1/AA+ 5.000 7/15/2004 $ 2,113,620
2,970,000 Pennsylvania State--1st Series.......... Aa3/AA- 5.000 5/1/2003 3,110,659
3,000,000 Rhode Island, Callable 8/01/07 @101,
MBIA Insured+........................... Aaa/AAA 5.000% 8/1/2009 3,168,780
5,255,000 Texas State Refunding Series C.......... Aa2/AA 5.000 8/1/2009 5,559,895
500,000 Tulsa Oklahoma.......................... Aa2/AA 5.150 6/1/2003 527,670
1,000,000 Washington State Series A............... Aa1/AA+ 6.700 2/1/2005 1,142,040
1,500,000 Washington State Series R............... Aa/AA 5.375 10/1/2008 1,635,960
4,330,000 Washington State Series R-92D (Motor
Vehicle Fuel Tax)....................... Aa1/AA+ 6.250 9/1/2007 4,967,939
3,000,000 Wisconsin State Series B................ Aa2/AA 5.250 5/1/2007 3,233,160
------------
98,142,635
------------
HEALTH CARE--3.3%
1,970,000 Indiana Health Facility Financing
Authority Hospital Revenue--(Charity
Obligation Group), Series D............. Aa2/AA+ 5.000 11/1/2026 2,045,392
1,000,000 North Carolina Medical Care Facility
(Duke University Health Systems
Series A)............................... Aa3/AA 4.600 6/1/2009 1,016,530
620,000 New York State Medical Care Facilities
(St. Lukes Hospital), Series A, Callable
2/15/00 @102............................ Aa2/AA 7.400 2/15/2009 658,496
840,000 New York State Medical Care Facilities
Financial Agency Series D............... Aa2/AA+ 5.100 2/15/2005 881,236
2,000,000 Pennsylvania State Higher Educational
Facilities Authority--(University of
Pennsylvania Health Services),
Series B................................ Aa3/AA 5.000 1/1/2004 2,076,060
2,000,000 Tampa Florida Revenue Health System--
Catholic Health East.................... Aaa/AAA 5.500 11/15/2006 2,180,060
------------
8,857,774
------------
HOUSING--1.5%
1,000,000 Alaska State Housing Finance Corporation
Mortgage Series A-1, Callable 12/01/07
@101.50, MBIA Insured+.................. Aaa/AAA 5.000 12/1/2008 1,031,530
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.
79
<PAGE>
BNY HAMILTON INTERMEDIATE TAX-EXEMPT FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
*MOODY'S
PRINCIPAL / S&P INTEREST MATURITY
AMOUNT RATINGS RATE DATE VALUE
- ---------- ---------- -------- ------------ ------------
MUNICIPAL BONDS (CONTINUED)
<C> <S> <C> <C> <C> <C>
$ 500,000 Connecticut State Housing Financial
Authority--Housing Mortgage Finance
Program Series C-2...................... Aa2/AA 5.300% 11/15/2003 $ 527,405
2,250,000 Housing New York Corporation Revenue.... A1/AA 6.000 11/1/2003 2,411,122
------------
3,970,057
------------
INDUSTRIAL DEVELOPMENT REVENUE--0.4%
1,000,000 Georgetown County South Carolina
Pollution Control Facilities
(International Paper Company Project),
Callable 6/15/02 @102................... A3/A- 6.250 6/15/2005 1,061,460
------------
PRE-REFUNDED ESCROWED--4.4%
85,000 Austin Texas Utility System Revenue
Series B, Unrefunded Balance Callable
5/15/99 @101.50......................... A2/A 7.250 11/15/2003 97,560
2,030,000 Delaware River Port Authority
Pennsylvania & New Jersey River Bridges,
ETM Callable 7/15/99 @100............... Aaa/AAA 6.500 1/15/2011 2,294,225
790,000 Fort Worth Texas General Purpose Series
A, ETM Callable 3/1/99 @100............. Aaa/AAA 4.250 3/1/2001 801,581
1,080,000 Illinois State Toll Highway Authority
Callable 1/1/99 @100.50................. Aaa/AAA 6.750 1/1/2010 1,211,285
1,970,000 Jacksonville Florida Electric Authority
Revenue Second Installment, ETM......... Aaa/AA 5.250 7/1/2001 2,019,605
1,255,000 King County Washington, ETM............. Aa1/AA+ 5.000 1/1/2004 1,316,583
650,000 Manatee County Florida Water Revenue,
ETM Callable 9/1/99 @101................ Aaa/AAA 4.200 3/1/2005 656,766
155,000 Monroe County New York, Callable 6/01/04
@102.................................... Aaa/AAA 6.000 6/1/2011 171,115
875,000 New Jersey State Highway
Authority--Garden State Parkway General
Revenue, ETM Callable 1/1/99 @100....... NR/AAA 6.500 1/1/2011 983,281
565,000 New Jersey State Turnpike Authority
Revenue, ETM............................ NR/AAA 10.375 1/1/2003 641,896
115,000 New Jersey State Turnpike Authority
Revenue Series E, ETM Callable 1/1/99
@100.................................... Aaa/AAA 5.875 1/1/2008 123,423
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.
80
<PAGE>
BNY HAMILTON INTERMEDIATE TAX-EXEMPT FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
*MOODY'S
PRINCIPAL / S&P INTEREST MATURITY
AMOUNT RATINGS RATE DATE VALUE
- ---------- ---------- -------- ------------ ------------
MUNICIPAL BONDS (CONTINUED)
<C> <S> <C> <C> <C> <C>
$ 513,430 New York State Dormitory Authority
Revenue, GNMA Collateralized, Elizabeth
A. Horton Memorial Hospital............. NR/NR 7.000% 9/25/2006 $ 611,617
940,000 Sacramento California Municipal Utility
District Revenue Series A, ETM, Callable
2/1/99 @100............................. Aaa/AAA 5.500 2/1/2011 1,007,201
------------
11,936,138
------------
SPECIAL TAX--9.0%
2,585,000 Chicago Illinois Sales Tax Revenue...... Aaa/AAA 6.000 1/1/2007 2,887,238
510,000 Clark County Nevada--Las Vegas
Convention & Visitors Authority......... Aaa/AA3 5.400 7/1/2003 542,161
1,000,000 Connecticut State Special Obligation
Revenue Series B........................ A/AA- 6.100 9/1/2008 1,155,640
1,000,000 Connecticut State Unemployment
Compensation Advance Fund Revenue Series
A....................................... Aaa/AAA 5.500 11/15/2000 1,039,680
1,100,000 Indiana Bond Bank Revenue Series A...... NR/AAA 5.750 2/1/2006 1,208,295
5,000,000 Indianapolis Industrial Local Public
Improvement Bank........................ Aaa/AAA 5.500 2/1/2008 5,501,550
155,000 Kentucky Infrastructure Authority Series
A, Unrefunded Balance, Callable 8/01/99
@102.................................... NR/A 7.625 8/1/2003 161,702
990,000 Municipal Assistance Corp. for City of
New York Series 68, Callable 7/01/99
@102.................................... Aa2/NR 7.100 7/1/2000 1,029,333
2,000,000 Municipal Assistance Corp. for New York
City Series E........................... Aa2/AA 6.000 7/1/2005 2,223,340
3,805,000 New York State Local Goverment
Assistance Corp. Series A............... A3/A+ 6.000 4/1/2006 4,237,781
1,930,000 New York State Local Government
Assistance Corp. Series A............... A3/A+ 6.700 4/1/2000 2,009,863
1,980,000 New York State Local Government
Assistance Corp. Series C............... A3/A+ 6.000 4/1/2012 2,271,278
------------
24,267,861
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.
81
<PAGE>
BNY HAMILTON INTERMEDIATE TAX-EXEMPT FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
*MOODY'S
PRINCIPAL / S&P INTEREST MATURITY
AMOUNT RATINGS RATE DATE VALUE
- ---------- ---------- -------- ------------ ------------
MUNICIPAL BONDS (CONTINUED)
<C> <S> <C> <C> <C> <C>
STATE APPROPRIATION--13.7%
1,980,000 Kentucky State Turnpike Authority
Economic Development Road Revenue
(Revitalization Projects)............... Aaa/AAA 5.300 7/1/2004 $ 2,118,046
2,000,000 Kentucky State Turnpike Authority
Economic Development Road Revenue,
(Revitalization Projects)............... Aaa/AAA 5.500 7/1/2008 2,208,540
1,000,000 Massachusetts Bay Transportation
Authority Series A...................... Aa3/AA- 5.400 3/1/2008 1,085,700
2,050,000 Metropolitan Transportation Authority
Facility Revenue Series 8............... Baa1/BBB+ 5.500 7/1/2006 2,218,571
2,000,000 New York State CTFS Partnership......... Baa1/BBB+ 4.000 9/1/2002 2,009,400
3,000,000 New York State Dormitory Authority
State................................... A3/A- 6.000 5/15/2007 3,364,296
1,980,000 New York State Dormitory Authority State
University Educational Facilities
Series B................................ A3/A- 5.250 5/15/2010 2,119,333
2,005,000 New York State Thruway Authority Service
Contract Revenue, Callable 1/01/01
@102.................................... Baa1/BBB+ 7.000 1/1/2002 2,164,237
5,000,000 New York State Thruway Service Contract
Revenue, Callable 4/01/07 @102.......... Baa1/BBB+ 5.100 4/1/2008 5,288,600
3,550,000 New York State Urban Development Corp.
Revenue, Callable 1/01/08 @102.......... Baa1/BBB+ 5.000 1/1/2014 3,570,909
2,000,000 New York State Urban Development
Corp. .................................. Baa1/BBB+ 5.000 1/1/2007 2,102,220
2,500,000 New York State Urban Development Corp.
Revenue, Callable 1/01/08 @102.......... Baa1/BBB+ 5.000 1/1/2013 2,527,425
4,705,000 New York State Urban Development Corp.
Revenue, Series A, Callable 1/01/08
@102.................................... Baa1/BBB+ 5.000 1/1/2014 4,732,712
1,500,000 New York State Urban Development Corp.
Series A................................ Baa1/BBB+ 5.450 1/1/2007 1,622,055
------------
37,132,044
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.
82
<PAGE>
BNY HAMILTON INTERMEDIATE TAX-EXEMPT FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
*MOODY'S
PRINCIPAL / S&P INTEREST MATURITY
AMOUNT RATINGS RATE DATE VALUE
- ---------- ---------- -------- ------------ ------------
MUNICIPAL BONDS (CONTINUED)
<C> <S> <C> <C> <C> <C>
TRANSPORTATION--10.1%
1,000,000 Central Puget Sound, Washington Transit
Authority(a)............................ Aaa/AAA 5.250 2/1/2009 1,082,044
1,150,000 Delaware Transportation Authority System
Revenue................................. A1/AA 6.125 7/1/2003 1,234,421
1,500,000 Kansas State Department of
Transportation Highway Revenue
Series A................................ Aa2/AA 5.375 3/1/2007 1,633,350
$ 385,000 Kentucky State Turnpike Authority Toll
Road Revenue Series A, Unrefunded
Balance................................. A/A 8.500% 7/1/2004 $ 386,498
2,000,000 New Jersey State Highway Authority
Garden State Parkway General Revenue.... A1/AA- 5.150 1/1/2007 2,142,000
2,500,000 New Jersey State Transportation
Authority............................... Aaa/AAA 6.250 12/15/2003 2,774,250
1,200,000 New Jersey State Turnpike Authority
Revenue Series C, MBIA Insured+......... Aaa/AAA 6.500 1/1/2008 1,405,080
1,000,000 New York State Bridge Authority
Revenue................................. Aa3/AA- 5.000 1/1/2007 1,060,860
990,000 Pennsylvania State Turnpike Revenue
Series O................................ Aaa/AAA 5.350 12/1/2002 1,047,539
3,630,000 Port Authority New York & New Jersey
52nd Series, Callable 11/01/99 @100..... A1/AA- 9.000 11/1/2014 3,800,429
2,105,000 Port Seattle Washington Revenue
Series A................................ Aa3/AAA 6.000 10/1/2007 2,384,018
1,670,000 Port Tacoma Washington.................. Aaa/AAA 5.500 12/1/2007 1,828,984
2,130,000 Triborough Bridge & Tunnel Authority
Series Q................................ Aa3/A+ 6.750 1/1/2009 2,558,215
1,000,000 Triborough Bridge & Tunnel Authority
Series Q, Callable 1/01/00 @101.50...... Aa3/A+ 6.750 1/1/2003 1,048,590
2,750,000 Triborough Bridge & Tunnel Authority
Series V................................ Aa3/A+ 6.500 1/1/2001 2,908,565
------------
27,294,843
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.
83
<PAGE>
BNY HAMILTON INTERMEDIATE TAX-EXEMPT FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
*MOODY'S
PRINCIPAL / S&P INTEREST MATURITY
AMOUNT RATINGS RATE DATE VALUE
- ---------- ---------- -------- ------------ ------------
MUNICIPAL BONDS (CONTINUED)
<C> <S> <C> <C> <C> <C>
UTILITIES--11.7%
5,000,000 Austin Texas Utility System Revenue
Series A, Callable 11/15/06 @100........ Aaa/A2 5.000 5/15/2007 5,259,700
940,000 Consumers Public Power District--Nuclear
Facility Revenue, Callable 1/1/99
@100.................................... A1/NR 5.100 1/1/2003 940,338
3,150,000 Dade County Florida Water & Sewer System
Revenue................................. Aaa/AAA 6.250 10/1/2007 3,637,242
990,000 Georgia Municipal Electrical Authority
Power Revenue Series Z.................. A3/A 5.000 1/1/2004 1,030,362
1,000,000 Grant County Washington Public Utility
District No. 002........................ Aa3/A+ 5.600 1/1/2005 1,076,320
1,000,000 Houston Texas Water Conveyance System
Contract Series B....................... Aaa/AAA 7.000 12/15/2004 1,150,760
$ 5,000 Jacksonville Florida Electrical
Authority Revenue Series Two 1987A-1,
Callable 4/1/99 @100.................... Aa2/AA 7.500% 10/1/2002 $ 5,042
4,000,000 Long Island New York Power Authority
Electric System Revenue................. Aaa/AAA 5.500 12/1/2009 4,392,960
1,000,000 Long Island Power Authority New York
Electric System Revenue................. Aaa/AAA 5.500 12/1/2010 1,097,330
2,085,000 New York State Environmental Facilities
Corp. Pollution Control Revenue......... Aa2/A+ 5.750 6/15/2008 2,328,278
1,000,000 New York State Enviromental Facilities
Corp. Pollution Control Revenue
Loan--C................................. Aaa/AAA 5.000 7/15/2004 1,055,780
500,000 New York State Environmental Facilities
Corp. Pollution Control Revenue
Series B................................ Aa2/A+ 6.000 6/15/2001 527,880
2,000,000 New York State Power Authority Revenue &
General Purpose......................... Aa3/AA- 4.375 2/15/2005 2,037,360
5,000,000 Omaha Public Power Distribution Nebraska
Electric Revenue........................ Aa2/AA 5.500 2/1/2007 5,469,400
990,000 San Antonio Texas Electrical & Gas
Revenue Series A........................ Aa1/AA 7.000 2/1/1999 993,334
750,000 South Carolina State Public Service
Authority Electrical Revenue &
Electrical System Expansion, Callable
7/1/99 @100............................. Aa/AAA 4.100 7/1/2006 745,215
------------
31,747,301
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.
84
<PAGE>
BNY HAMILTON INTERMEDIATE TAX-EXEMPT FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

<TABLE>
<CAPTION>
*MOODY'S
PRINCIPAL / S&P INTEREST
AMOUNT RATINGS RATE VALUE
- ---------- --------- ---------- ------------
<C> <S> <C> <C> <C>
TAX-EXEMPT MONEY MARKET FUND--0.6%
$1,629,607 Dreyfus Municipal Money Market Fund
(Cost $1,629,607)....................... NR/NR 3.200%(b) $ 1,629,607
------------
TOTAL INVESTMENTS
(Cost $254,900,817)(c)--99.0%........... 267,744,231
Other assets less liabilities--1.0%..... 2,794,244
------------
NET ASSETS--100.0%...................... $270,538,475
------------
------------
</TABLE>

N/R NOT RATED BY MOODY'S OR STANDARD & POOR'S (S&P).
* RATINGS ARE UNAUDITED.
+ INSURED OR GUARANTEED BY THE INDICTED MUNICIPAL BOND INSURANCE CORPORATION.
++ REPRESENTS INTEREST RATE IN EFFECT DECEMBER 31, 1998 FOR FLOATING RATE
NOTES.
(a) WHEN-ISSUED SECURITY, VALUED AT FAIR VALUE.
(b) REPRESENTS ANNUALIZED YIELD AT DECEMBER 31, 1998.
(c) THE COST STATED ALSO APPROXIMATES THE AGGREGATE COST FOR FEDERAL INCOME TAX
PURPOSES. AT DECEMBER 31, 1998, NET UNREALIZED APPRECIATION WAS $12,843,414
BASED ON COST FOR FEDERAL INCOME TAX PURPOSES. THIS CONSISTED OF AGGREGATE
GROSS UNREALIZED APPRECIATION OF $12,918,486 AND AGGREGATE GROSS UNREALIZED
DEPRECIATION OF $75,072.

SEE NOTES TO FINANCIAL STATEMENTS.
85
<PAGE>
BNY HAMILTON INTERMEDIATE TAX-EXEMPT FUND

DIVERSIFICATION BY STATE

DECEMBER 31, 1998

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

<TABLE>
<CAPTION>
% OF
TOTAL
VALUE NET ASSETS
------------ ----------
<S> <C> <C>
Alaska.................................. $ 1,031,530 0.4%
California.............................. 10,519,681 3.9
Connecticut............................. 6,950,518 2.6
Delaware................................ 3,896,272 1.4
District of Columbia.................... 1,044,130 0.4
Florida................................. 8,498,715 3.1
Georgia................................. 8,693,991 3.2
Hawaii.................................. 4,413,400 1.6
Illinois................................ 11,004,383 4.1
Indiana................................. 8,795,237 3.2
Kansas.................................. 1,633,350 0.6
Kentucky................................ 6,023,749 2.2
Maryland................................ 6,590,189 2.4
Massachusetts........................... 10,304,169 3.8
Minnesota............................... 5,363,401 2.0
Montana................................. 1,379,939 0.5
Nebraska................................ 6,409,738 2.4
Nevada.................................. 12,754,455 4.7
New Jersey.............................. 10,298,459 3.8
New York................................ 74,269,350 27.5
North Carolina.......................... 4,188,431 1.6
Oklahoma................................ 527,670 0.2
Pennsylvania............................ 13,395,431 5.0
Rhode Island............................ 3,168,780 1.2
South Carolina.......................... 1,806,675 0.7
Texas................................... 20,624,364 7.6
Washington.............................. 17,098,137 6.3
Wisconsin............................... 5,470,300 2.0
Tax-exempt money market fund (various
states)............................... 1,629,607 0.6
------------ -----
Total value of investments.............. 267,744,231 99.0
Other assets less liabilities........... 2,794,244 1.0
------------ -----
Net Assets.............................. $270,538,475 100.0%
------------ -----
------------ -----
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.
86
<PAGE>

BNY HAMILTON INTERMEDIATE TAX-EXEMPT FUND
STATEMENT OF ASSETS AND LIABILITIES

DECEMBER 31, 1998

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

<TABLE>
<S> <C>
ASSETS:
Investments at value (Cost $254,900,817).................. $267,744,231
Cash...................................................... 529
Receivables:
Interest................................................ 4,332,287
Capital stock sold...................................... 200
Deferred organization costs and other assets.............. 60,129
------------
TOTAL ASSETS.......................................... 272,137,376
------------
LIABILITIES:
Payables:
Investments purchased................................... 1,082,044
Dividends............................................... 284,783
Capital stock repurchased............................... 15,000
Services provided by The Bank of New York and
Administrator......................................... 179,995
Accrued expenses and other liabilities.................... 37,079
------------
TOTAL LIABILITIES..................................... 1,598,901
------------
NET ASSETS: $270,538,475
------------
------------
SOURCES OF NET ASSETS:
Capital stock @ par....................................... $ 26,558
Capital surplus........................................... 257,037,023
Undistributed net investment income....................... 5,355
Accumulated net realized gain on investments.............. 626,125
Net unrealized appreciation on investments................ 12,843,414
------------
NET ASSETS.................................................. $270,538,475
------------
------------
INSTITUTIONAL SHARES:
Net assets................................................ $270,064,931
------------
------------
Shares outstanding........................................ 26,511,075
------------
------------
Net asset value, offering price and repurchase price per
share................................................... $ 10.19
------------
------------
INVESTOR SHARES:
Net assets................................................ $ 473,544
------------
------------
Shares outstanding........................................ 46,449
------------
------------
Net asset value, offering price and repurchase price per
share................................................... $ 10.19
------------
------------
Institutional Shares authorized @ $.001 par value........... 200,000,000
Investor Shares authorized @ $.001 par value................ 200,000,000
</TABLE>

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998

<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................. $13,199,838
-----------
EXPENSES:
Advisory.................................................. 1,359,116
Administration............................................ 543,649
12b-1 fee--Investor Shares................................ 819
Registration and filings.................................. 78,558
Accounting services....................................... 60,000
Transfer agent............................................ 50,678
Custodian................................................. 39,046
Organization.............................................. 16,545
Reports to shareholders................................... 13,211
Audit..................................................... 13,409
Directors................................................. 11,818
Cash management........................................... 3,132
Insurance................................................. 8,092
Legal..................................................... 5,155
Other..................................................... 44,451
-----------
TOTAL EXPENSES.......................................... 2,247,679
Earnings credit adjustment (Note 3)..................... (862)
-----------
NET EXPENSES............................................ 2,246,817
-----------
NET INVESTMENT INCOME................................... 10,953,021
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--
Net realized gain on investments.......................... 5,488,044
Decrease in unrealized appreciation on investments during
the year................................................ (2,389,727)
-----------
Net realized and unrealized gain on investments........... 3,098,317
-----------
Net increase in net assets resulting from operations...... $14,051,338
-----------
-----------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

87
<PAGE>
BNY HAMILTON INTERMEDIATE TAX-EXEMPT FUND

STATEMENTS OF CHANGES IN NET ASSETS

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

<TABLE>
<CAPTION>
FOR THE PERIOD
APRIL 1, 1997*
YEAR ENDED DECEMBER THROUGH
31, 1998 DECEMBER 31, 1997
------------------- -------------------
<S> <C> <C>
OPERATIONS:
Net investment income............................................... $ 10,953,021 $ 8,839,260
Net realized gain on investments.................................... 5,488,044 1,461,550
Increase (decrease) in unrealized appreciation on investments during
the period........................................................ (2,389,727) 6,763,697
------------------- -------------------
Net increase in net assets resulting from operations.............. 14,051,338 17,064,507
------------------- -------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income: Institutional Shares.......... (10,942,579) (8,837,526)
Investor Shares............... (12,153) (1,734)
Distributions from capital gains: Institutional Shares.............. (5,340,052) (966,370)
Investor Shares................... (9,348) (693)
------------------- -------------------
(16,304,072) (9,806,323)
------------------- -------------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from capital stock sold: Institutional Shares (Note 1)..... 33,561,190 290,281,587
Investor Shares................... 627,121 240,225
Proceeds from shares issued on reinvestment
of dividends: Institutional Shares................................ 5,446,616 1,026,353
Investor Shares................................... 16,709 2,234
Cost of capital stock repurchased: Institutional Shares............. (35,781,571) (29,480,055)
Investor Shares.................. (357,246) (50,138)
------------------- -------------------
Net increase in net assets resulting from capital stock
transactions.................................................... 3,512,819 262,020,206
------------------- -------------------
INCREASE IN NET ASSETS.......................................... 1,260,085 269,278,390
NET ASSETS:
Beginning of period................................................. 269,278,390 -0-
------------------- -------------------
End of period (includes undistributed net investment income of
$5,355 at December 31, 1998)...................................... $ 270,538,475 $ 269,278,390
------------------- -------------------
------------------- -------------------
CHANGE IN CAPITAL STOCK OUTSTANDING:
Shares sold: Institutional Shares (Note 1).......................... 3,265,028 28,986,038
Investor Shares...................................... 60,849 23,533
Shares issued on reinvestment of dividends
and distributions: Institutional Shares........................... 534,826 99,981
Investor Shares................................ 1,631 218
Shares repurchased: Institutional Shares............................ (3,478,108) (2,896,690)
Investor Shares................................. (34,862) (4,920)
------------------- -------------------
Net increase...................................................... 349,364 26,208,160
Shares outstanding, beginning of period............................. 26,208,160 -0-
------------------- -------------------
Shares outstanding, end of period................................... 26,557,524 26,208,160
------------------- -------------------
------------------- -------------------
</TABLE>

* COMMENCEMENT OF INVESTMENT OPERATIONS.

SEE NOTES TO FINANCIAL STATEMENTS.
88
<PAGE>
BNY HAMILTON INTERMEDIATE TAX-EXEMPT FUND

FINANCIAL HIGHLIGHTS

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

<TABLE>
<CAPTION>
INSTITUTIONAL SHARES INVESTOR SHARES
---------------------------------- ----------------------------------
YEAR FOR THE PERIOD YEAR FOR THE PERIOD
ENDED APRIL 1, 1997* ENDED MAY 1, 1997*
DECEMBER 31, THROUGH DECEMBER 31, THROUGH
1998 DECEMBER 31, 1997 1998 DECEMBER 31, 1997
------------- ------------------ ------------- ------------------
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value at beginning of
period................................ $ 10.27 $ 10.00 $10.28 $ 9.99
------------- -------- ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income................... 0.41 0.33 0.38 0.27
Net realized and unrealized gain on
investments........................... 0.13 0.31 0.12 0.33
------------- -------- ------ ------
Total from investment operations...... 0.54 0.64 0.50 0.60
------------- -------- ------ ------
DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment
income................................ (0.41) (0.33) (0.38) (0.27)
Distributions from capital gains........ (0.21) (0.04) (0.21) (0.04)
------------- -------- ------ ------
Total dividends and distributions..... (0.62) (0.37) (0.59) (0.31)
------------- -------- ------ ------
Net asset value at end of period........ $ 10.19 $ 10.27 $10.19 $10.28
------------- -------- ------ ------
------------- -------- ------ ------
TOTAL RETURN:........................... 5.37% 6.50%** 4.95% 6.08%**
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's
omitted).............................. $270,065 $269,085 $ 473 $ 194
Ratio to average net assets of:
Expenses.............................. 0.83% 0.81%*** 1.13% 1.15%***
Net investment income................. 4.03% 4.36%*** 3.74% 3.98%***
Portfolio turnover rate................. 37% 30% 37% 30%
</TABLE>

* COMMENCEMENT OF OPERATIONS FOR THE RESPECTIVE CLASS OF SHARES.
** NOT ANNUALIZED.
*** ANNUALIZED.

SEE NOTES TO FINANCIAL STATEMENTS.
89
<PAGE>
BNY HAMILTON MONEY FUND

SCHEDULE OF INVESTMENTS

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- --------------
<C> <S> <C>
COMMERCIAL PAPER+--41.3%
ASSET BACKED SECURITIES--CREDIT CARDS--1.2%
$15,000,000 Riverwoods Funding Corp., 5.36%,
01/14/99................................ $ 14,970,967
15,000,000 Riverwoods Funding Corp., 5.44%,
01/15/99................................ 14,968,267
--------------
29,939,234
--------------
ASSET BACKED SECURITIES--TRADE & LEASE RECEIVABLES
(PARTIAL SUPPORT)-- 3.3%
15,000,000 Barton, 5.50%, 01/08/99................. 14,983,958
20,000,000 Cafco, 5.15%, 02/24/99.................. 19,845,500
15,000,000 Ciesco, 5.15%, 01/14/99................. 14,972,104
20,000,000 Ciesco, 5.22%, 02/10/99................. 19,884,000
15,000,000 Sheffield Receivables Corp., 5.46%,
01/15/99................................ 14,968,150
--------------
84,653,712
--------------
BANKS--FOREIGN INSTITUTIONS--0.8%
20,000,000 Lloyds Bank, 4.85%, 06/01/99............ 19,593,139
--------------
CHEMICALS--3.3%
20,600,000 duPont (E.I.) de Nemoures & Co., 5.14%,
01/12/99................................ 20,567,646
25,000,000 duPont (E.I.) de Nemoures & Co., 5.09%,
02/04/99................................ 24,879,819
15,000,000 Minnesota Mining & Manufacturing, 4.95%,
03/19/99................................ 14,841,187
24,500,000 Minnesota Mining & Manufacturing, 4.95%,
03/19/99................................ 24,338,266
--------------
84,626,918
--------------

<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- --------------
<C> <S> <C>
COMMERCIAL PAPER+ (CONTINUED)
COMMUNICATIONS & ENTERTAINMENT-- 0.8%
$20,000,000 Gannett Co.,5.20 %, 01/15/99............ $ 19,959,556
--------------
COMPUTERS--1.6%
20,000,000 International Business Machines, 5.23%,
01/08/99................................ 19,979,389
20,000,000 International Business Machines, 5.30%,
02/11/99................................ 19,880,872
--------------
39,860,261
--------------
CONGLOMERATES--0.4%
10,000,000 General Electric Co., 5.12%, 01/19/99... 9,974,400
--------------
COSMETICS & TOILETRIES--1.9%
19,200,000 Colgate--Palmolive Co., 5.07%,
03/22/99................................ 18,983,680
30,000,000 Gillette Co., 5.14%, 01/08/99........... 29,970,017
--------------
48,953,697
--------------
EQUIPMENT LEASING--1.2%
15,000,000 FCAR Owner Trust, 5.11% 01/08/99........ 14,985,096
15,000,000 FCAR Owner Trust, 5.10% 02/05/99........ 14,925,625
--------------
29,910,721
--------------
FINANCE COMPANIES--CAPTIVE--0.9%
23,000,000 Pitney Bowes Credit Co., 5.58%,
01/14/99................................ 22,953,655
--------------
FINANCE COMPANIES--NON-CAPTIVE AND INDEPENDENT--0.6%
15,000,000 Associates Corp. of North America 4.90%,
05/28/99................................ 14,699,875
--------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

90
<PAGE>
BNY HAMILTON MONEY FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- --------------
COMMERCIAL PAPER+ (CONTINUED)
<C> <S> <C>
FINANCIAL SERVICES--1.1%,
$28,000,000 SBC Warburg, 5.44%, 01/19/99............ $ 27,923,840
--------------
FINANCIAL SERVICES--DIVERSIFIED--1.0%
25,000,000 ABB Treasury, 5.05%, 02/23/99........... 24,814,132
--------------
FINANCIAL SERVICES--NON-CAPTIVE AND INDEPENDENT--1.4%
15,000,000 General Electric Capital Corp., 5.22%,
02/17/99................................ 14,897,775
20,000,000 General Electric Capital Corp., 5.12%,
03/11/99................................ 19,803,733
--------------
34,701,508
--------------
FOOD & BEVERAGES--2.0%
15,000,000 Campbell, 5.44%, 01/29/99............... 14,936,533
35,000,000 Coca-Cola, 5.09%, 02/05/99.............. 34,826,799
--------------
49,763,332
--------------
FOOD PROCESSING--0.8%
20,000,000 Archer-Daniels-Midland Co., 5.17%,
01/28/99................................ 19,922,450
--------------
FOREIGN GOVERNMENT AND RELATED ISSUES--1.0%
25,000,000 Canadian Wheat Board, 4.72%, 04/28/99... 24,616,500
--------------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- --------------
<C> <S> <C>
COMMERCIAL PAPER+ (CONTINUED)
FOREIGN--RETAIL SPECIALTY--0.6%
$ 6,344,000 St. Michael Finance Ltd., 5.16%,
02/05/99................................ $ 6,312,174
10,000,000 St. Michael Finance Ltd., 5.05%,
03/12/99................................ 9,901,806
--------------
16,213,980
--------------
INSURANCE--1.4%
20,000,000 American General, 5.32%, 01/19/99....... 19,946,800
15,000,000 American General, 5.21%, 02/05/99....... 14,924,021
--------------
34,870,821
--------------
INSURANCE--NON-HEALTH & LIFE--2.4%
30,000,000 General RE Corp., 5.21%, 01/29/99....... 29,878,433
30,000,000 Prudential Funding Corp., 5.30%,
01/20/99................................ 29,916,083
--------------
59,794,516
--------------
LEASING--0.8%
20,000,000 International Lease Finance, 5.46%,
01/14/99................................ 19,960,567
--------------
MEDIA--0.4%
10,000,000 New York Times, 5.30%, 01/07/99......... 9,991,167
--------------
MEDICAL CARE & PRODUCTS--0.8%
20,000,000 Glaxo-Wellcome Co., 5.16%, 02/05/99..... 19,899,667
--------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

91
<PAGE>
BNY HAMILTON MONEY FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- --------------
COMMERCIAL PAPER+ (CONTINUED)
<C> <S> <C>
MEDICAL PRODUCTS & SUPPLIES--2.2%
$12,000,000 Becton Dickinson & Co., 5.15%,
02/10/99................................ $ 11,931,333
25,000,000 Johnson & Johnson, 4.92%, 02/26/99...... 24,808,667
20,000,000 Johnson & Johnson, 4.76%, 06/25/99...... 19,534,305
--------------
56,274,305
--------------
NON-BANK HOLDING COMPANIES--1.2%
15,000,000 USAA Capital Corp., 5.20%, 02/17/99..... 14,898,167
15,000,000 USAA Capital Corp., 5.12%, 02/25/99..... 14,882,667
--------------
29,780,834
--------------
OIL PRODUCTION--1.6%
20,000,000 Statoil, 6.07%, 01/08/99................ 19,976,394
20,000,000 Statoil, 5.32%, 01/28/99................ 19,920,200
--------------
39,896,594
--------------
PHARMACEUTICALS--1.7%
23,000,000 Pfizer, 5.20%, 01/11/99................. 22,966,778
20,000,000 Warner Lambert, 5.35%, 02/11/99......... 19,878,139
--------------
42,844,917
--------------
PIPELINE--NON-NATURAL GAS--0.3%
7,000,000 Colonial Pipeline Co., 5.45%,
02/12/99................................ 6,955,492
--------------
RESORTS & ENTERTAINMENT--0.8%
20,000,000 Walt Disney Co. (The), 4.97%,
03/02/99................................ 19,834,333
--------------
TECHNOLOGY INDUSTRIES--1.7%
44,595,000 Motorola Corp. 5.16%, 02/25/99.......... 44,247,644
--------------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- --------------
<C> <S> <C>
COMMERCIAL PAPER+ (CONTINUED)
TELECOMMUNICATIONS--0.9%
$ 9,500,000 BellSouth Telecommunications, Inc.,
5.07% 02/08/99.......................... $ 9,449,159
15,000,000 France Telecom, 5.06%, 03/05/99......... 14,867,175
--------------
24,316,334
--------------
UTILITIES--ELECTRIC--1.2%
20,000,000 National Rural Utilities Cooperative
Finance Corp., 5.33%, 01/14/99.......... 19,961,506
10,200,000 National Rural Utilities Cooperative
Finance Corp., 5.06%, 03/26/99.......... 10,079,572
--------------
30,041,078
--------------
TOTAL COMMERCIAL PAPER
(Cost $1,041,789,179)................... 1,041,789,179
--------------
</TABLE>

<TABLE>
<C> <S> <C>
UNITED STATES GOVERNMENT AGENCIES & OBLIGATIONS--9.8%
FEDERAL FARM CREDIT BANK--0.3%
7,350,000 4.76%, 01/18/00......................... 7,334,381
------------
FEDERAL HOME LOAN BANK--2.9%
10,000,000 5.40%, 01/15/99......................... 9,999,622
9,000,000 5.47%, 02/24/99......................... 8,997,697
5,000,000 5.63%, 05/05/99......................... 4,999,257
5,000,000 5.63%, 06/15/99......................... 4,999,453
10,000,000 5.536%, 07/15/99........................ 9,996,688
15,000,000 5.30%, 10/08/99......................... 14,994,606
10,000,000 5.08%, 11/09/99......................... 9,995,993
9,575,000 5.825%, 11/19/99........................ 9,684,354
------------
73,667,670
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

92
<PAGE>
BNY HAMILTON MONEY FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ------------
UNITED STATES GOVERNMENT AGENCIES & OBLIGATIONS
(CONTINUED)
<C> <S> <C>
FEDERAL HOME LOAN MORTGAGE CORP.--3.1%
$ 25,000,000 5.09% +, 01/08/99....................... $ 24,975,257
20,000,000 5.035%, 02/18/99........................ 19,865,733
15,000,000 4.885% +, 03/05/99...................... 14,871,769
7,500,000 5.60%, 04/21/99......................... 7,498,576
10,000,000 4.75% +, 06/11/99....................... 9,787,570
------------
76,998,905
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--2.1%
10,000,000 5.36%, 02/19/99......................... 9,998,577
20,000,000 5.60% 04/22/99.......................... 20,024,862
10,000,000 5.56%, 05/21/99......................... 9,995,106
4,000,000 5.81%, 10/01/99......................... 4,026,620
10,000,000 4.81%, 10/05/99......................... 9,992,633
------------
54,037,798
------------
STUDENT LOAN MARKETING ASSOCIATION--0.4%
10,000,000 5.52%, 06/10/99......................... 9,993,469
------------
UNITED STATES TREASURY NOTES--1.0%
5,000,000 6.375%, 01/15/99........................ 5,001,739
5,000,000 6.375%, 04/30/99........................ 5,012,159
5,000,000 5.625%, 10/31/99........................ 5,039,567
5,000,000 5.875%, 11/15/99........................ 5,044,506
5,000,000 5.625%, 12/31/99........................ 5,044,942
------------
25,142,913
------------
TOTAL UNITED STATES GOVERNMENT AGENCIES
& OBLIGATIONS
(Cost $247,175,136)..................... 247,175,136
------------
</TABLE>

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ CERTIFICATES OF DEPOSIT--9.7% ------------
<C> <S> <C>
BANK HOLDING COMPANIES--3.6%
$ 20,000,000 American Express Centurion Bank, 5.50%,
01/06/99................................ $ 20,000,000
10,000,000 American Express Centurion Bank, 5.27%,
01/07/99................................ 10,000,000
5,000,000 Bank of America, 5.51%, 02/17/99........ 4,999,535
15,000,000 Bank of America, 5.00%, 05/04/99........ 15,000,000
10,000,000 Chase Manhattan Bank, 4.93%, 03/31/99... 10,000,000
5,000,000 Chase Manhattan Bank, 5.745%,
05/10/99................................ 4,999,070
5,000,000 Michigan National Bank, 4.94%,
09/15/99................................ 5,000,688
10,000,000 Wilmington Trust Co., 5.73%, 02/16/99... 10,000,000
10,000,000 Wilmington Trust Co., 5.66%, 04/09/99... 10,000,000
------------
89,999,293
------------
BANKS--FOREIGN INSTITUTIONS--6.1%
15,000,000 Bank of Austria, 5.60%, 08/13/99........ 14,995,038
10,000,000 Bank of Nova Scotia, 5.14%, 02/08/99.... 10,000,000
10,000,000 Bank of Nova Scotia, 5.15%, 04/01/99.... 10,002,665
10,000,000 Canadian Imperial Bank, 5.74%,
03/31/99................................ 9,998,832
15,000,000 Commerzbank NY, 5.41%, 03/11/99......... 15,002,862
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

93
<PAGE>
BNY HAMILTON MONEY FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ------------
CERTIFICATES OF DEPOSIT (CONTINUED)
<C> <S> <C>
$ 10,000,000 Credit Suisse, 5.75%, 03/31/99.......... $ 10,000,000
25,000,000 Dresdner, 6.25%, 01/05/99............... 25,000,000
10,000,000 Dresdner, 5.50%, 01/06/99............... 10,000,000
10,000,000 Rabobank Nederland NV, 5.77%,
05/05/99................................ 9,998,699
10,000,000 Rabobank Nederland NV, 5.65%,
07/08/99................................ 9,997,625
15,000,000 Royal Bank of Scotland, 5.14%,
01/27/99................................ 15,000,000
15,000,000 Toronto Dominion, 5.62%, 02/10/99....... 15,000,634
------------
154,996,355
------------
TOTAL CERTIFICATES OF DEPOSIT
(Cost $244,995,648)..................... 244,995,648
------------
</TABLE>

<TABLE>
<C> <S> <C>
TIME DEPOSITS--4.6 %
BANK HOLDING COMPANIES--2.6%
30,000,000 National City, 4.75%, 01/04/99.......... 30,000,000
35,000,000 SunTrust Banks, Inc., 5.00%, 01/04/99... 35,000,000
------------
65,000,000
------------
BANKS--FOREIGN INSTITUTIONS--2.0%
25,312,000 CIBC/Oppenheimer, 5.00%, 01/04/99....... 25,312,000
25,000,000 Westdeutsche Landesbank, 8.50%,
01/04/99................................ 25,000,000
------------
50,312,000
------------
TOTAL TIME DEPOSITS
(Cost $115,312,000)..................... 115,312,000
------------
</TABLE>

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ CORPORATE BONDS--3.4% ------------
<C> <S> <C>
BANKING--2.1%
$ 8,000,000 Chase Manhattan Bank, 5.875%,
08/04/99................................ $ 8,028,985
15,000,000 FCC National Bank, 5.10%, 01/21/99...... 15,000,000
5,000,000 First National Bank of Chicago, 5.75%,
05/10/99................................ 5,004,541
10,000,000 Lasalle National Bank, 4.97%,
08/12/99................................ 10,000,000
6,250,000 Norwest Financial Inc., 6.25%,
04/15/99................................ 6,275,562
8,000,000 Norwest Financial Inc., 6.68%,
09/15/99................................ 8,075,819
------------
52,384,907
------------
FINANCE COMPANIES--1.0%
15,000,000 Associates Corp. of North America,
6.00%, 03/15/99......................... 15,007,379
2,000,000 Associates Corp. of North America,
7.50%, 05/15/99......................... 2,011,928
7,291,000 Associates Corp. of North America,
7.25%, 09/01/99......................... 7,365,144
------------
24,384,451
------------
FOOD PROCESSING--0.2%
5,000,000 Sara Lee Corp., 6.70%, 09/09/99......... 5,034,447
------------
TELECOMMUNICATIONS--0.1%
4,200,000 British Telecom Finance, Inc. 9.375%,
02/15/99................................ 4,218,705
------------
TOTAL CORPORATE BONDS
(Cost $86,022,510)...................... 86,022,510
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

94
<PAGE>
BNY HAMILTON MONEY FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ FLOATING RATE NOTES +--3.2% ------------
<C> <S> <C>
BANK HOLDING COMPANIES--1.6%
$ 10,000,000 Morgan Guaranty Trust Co., 5.57%,
payable monthly, interest rate resets
monthly, next interest rate reset date
01/27/99, final maturity date
09/27/99................................ $ 9,996,423
10,000,000 Morgan (J.P.) & Co., Inc., 5.48%,
payable monthly, interest rate resets
monthly, next interest rate reset date
01/07/99, final maturity date
07/07/99................................ 9,997,011
20,000,000 Northern Trust Co., 5.45%, payable
monthly, interest rate resets monthly,
next interest rate reset date 01/08/99,
final maturity date 09/08/99............ 19,991,781
------------
39,985,215
------------
BROKERAGE SERVICES--1.6%
5,000,000 Bear Stearns Cos. Inc., 5.53%, payable
monthly interest rate resets monthly,
next interest rate reset date 01/11/99,
final maturity date 03/09/99............ 5,000,000
5,000,000 Bear Stearns Cos. Inc., 5.60%, payable
monthly, interest rate rests monthly,
next interest rate reset date 01/29/99,
final maturity date 03/30/99............ 5,000,000

<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ------------
<C> <S> <C>
FLOATING RATE NOTES + (CONTINUED)

$ 10,000,000 Merrill Lynch & Co., Inc., 5.49%,
payable monthly, interest rate resets
monthly, next interest rate reset date
01/13/99, final maturity date
04/13/99................................ $ 10,000,000
20,000,000 Merrill Lynch & Co., Inc., 5.49%,
payable monthly, interest rate resets
monthly, next interest rate reset date
01/13/99, final maturity date
08/13/99................................ 19,998,773
------------
39,998,773
------------
TOTAL FLOATING RATE NOTES
(Cost $79,983,988)...................... 79,983,988
------------
</TABLE>

<TABLE>
<C> <S> <C>
ASSET BACKED SECURITIES-- 1.3%
6,030,413 Arcadia Automoblie Receivables Trust,
Series 1998-C, Class A-1, 5.47%,
09/15/99................................ 6,030,413
6,604,793 Caterpillar Financial Asset Trust,
Series 1998-A, Class A1, 5.6375%,
07/26/99................................ 6,604,792
8,259,770 Case Equipment Loan Trust, Series
1998-B, Class A1, 5.6075%, 09/15/99..... 8,259,770
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

95
<PAGE>
BNY HAMILTON MONEY FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ------------
ASSET BACKED SECURITIES (CONTINUED)
<C> <S> <C>
$ 2,915,268 Case Equipment Loan Trust, Series
1998-C, Class A1, 5.42%, 12/15/99....... $ 2,915,268
8,970,346 Newcourt Equipment Trust Securities,
Series 1998-1, Class A1, 5.007%,
11/20/99................................ 8,970,285
------------
TOTAL ASSET BACKED SECURITIES
(Cost $32,780,528)...................... 32,780,528
------------
</TABLE>
<TABLE>
<C> <S> <C>
REPURCHASE AGREEMENTS-- 27.1%
REPURCHASE AGREEMENTS WITH BARCLAYS CAPITAL,
INC.--2.8%
70,000,000 4.70%, due 01/04/99, repurchase price
$70,036,556 (Collateral-FFCB Note, 6.43%
4/24/01; FNMA Notes, 5.75%-6.51%,
6/15/05-5/06/08; aggregate market value
plus accrued interest $71,400,025)...... 70,000,000
------------

<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ------------
<C> <S> <C>
REPURCHASE AGREEMENTS (CONTINUED)
REPURCHASE AGREEMENT WITH DEUTSCHE BANK SECURITIES
INC.--6.9%
$175,000,000 4.90% due 01/04/99, repurchase price
$175,095,278 (Collateral-FNMA Notes
0.00%-5.75% 6/30/99-2/15/08; aggregate
market value plus accrued interest
$178,500,372)........................... $175,000,000
------------
REPURCHASE AGREEMENT WITH GOLDMAN, SACHS & CO.,--6.3%
160,000,000 4.80%, due 01/04/99, repurchase price
$160,085,333 (Collateral-- FHLMC Note,
5.125%, 10/15/08; FNMA Note, 6.00%,
5/15/08; aggregate market value plus
accrued interest $163,201,459).......... 160,000,000
------------
REPURCHASE AGREEMENT WITH J.P. MORGAN SECURITIES,
INC.--6.1%
155,000,000 4.90%, due 01/04/99, repurchase price
$155,084,389 (Collateral-- FHLB Discount
Note, 0.00%, 3/12/99; IADB Bond, 6.80%,
10/15/25; WLDB Bond, 8.875%, 3/01/26;
aggreagte market value plus accrued
interest $158,101,311).................. 155,000,000
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

96
<PAGE>
BNY HAMILTON MONEY FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

<TABLE>
<C> <S> <C>
TOTAL INVESTMENTS
(Cost $2,533,058,989) (a)-- 100.4%...... 2,533,058,989
Other assets less liabilities--(0.4%)... (8,894,236)
--------------
NET ASSETS--100%........................ $2,524,164,753
--------------
--------------
</TABLE>

+ 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 DECEMBER 31, 1998 FOR FLOATING RATE NOTES.
FFCB FEDERAL FARM CREDIT BANK.
FMLMC FEDERAL HOME LOAN MORTGAGE CORPORATION.
FNMA FEDERAL NATIONAL MORTGAGE ASSOCIATION.
IADB INTERAMERICAN DEVELOPMENT BANK.
WLBD WORLD DEVELOPMENT BANK.
(a) THE COST STATED ALSO APPROXIMATES THE AGGREGATE COST FOR FEDERAL INCOME TAX
PURPOSES.

SEE NOTES TO FINANCIAL STATEMENTS.
97
<PAGE>

BNY HAMILTON MONEY FUND
STATEMENT OF ASSETS AND LIABILITIES

DECEMBER 31, 1998

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

<TABLE>
<S> <C>
ASSETS:
Investments at value, including repurchase agreements of
$685,000,000 (Cost $2,533,058,989)...................... $2,533,058,989
Cash...................................................... 1,095,098
Interest receivable....................................... 8,478,825
Other assets.............................................. 38,038
--------------
TOTAL ASSETS.......................................... 2,542,670,950
--------------
LIABILITIES:
Payables:
Dividends............................................... 10,344,643
Investments purchased................................... 7,334,381
Services provided by The Bank of New York and
Administrator......................................... 731,805
Accrued expenses and other liabilities.................... 95,368
--------------
TOTAL LIABILITIES..................................... 18,506,197
--------------
NET ASSETS:................................................. $2,524,164,753
--------------
--------------
SOURCES OF NET ASSETS:......................................
Capital stock @ par....................................... $ 2,524,166
Capital surplus........................................... 2,521,642,155
Distributions in excess of net investment income.......... (1,568)
--------------
NET ASSETS.................................................. $2,524,164,753
--------------
--------------
HAMILTON SHARES:
Net assets................................................ $1,439,525,216
--------------
--------------
Shares outstanding........................................ 1,439,526,110
--------------
--------------
Net asset value, offering price and repurchase price per
share................................................... $ 1.00
--------------
--------------
HAMILTON PREMIER SHARES:
Net assets................................................ $1,064,645,030
--------------
--------------
Shares outstanding........................................ 1,064,645,691
--------------
--------------
Net asset value, offering price and repurchase price per
share................................................... $ 1.00
--------------
--------------
HAMILTON CLASSIC SHARES:
Net assets................................................ $ 19,994,507
--------------
--------------
Shares outstanding........................................ 19,994,520
--------------
--------------
Net asset value, offering price and repurchase price per
share................................................... $ 1.00
--------------
--------------
Hamilton Shares authorized @ $.001 par value................ 3,000,000,000
Hamilton Premier Shares authorized @ $.001 par value........ 3,000,000,000
Hamilton Classic Shares authorized @ $.001 par value........ 3,000,000,000
</TABLE>

STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1998

<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................. $110,681,854
------------
EXPENSES:
Advisory.................................................. 2,007,951
Administration............................................ 2,007,951
12b-1 fee--Hamilton Classic Shares........................ 48,077
Servicing fee: Hamilton Premier Shares.................... 2,179,686
Hamilton Classic Shares..................... 48,077
Registration and filings.................................. 228,134
Custodian................................................. 205,796
Reports to shareholders................................... 184,086
Transfer agent............................................ 123,792
Audit..................................................... 73,813
Accounting services....................................... 60,000
Cash management........................................... 53,881
Insurance................................................. 55,153
Legal..................................................... 28,349
Directors................................................. 11,859
Other..................................................... 157,520
------------
TOTAL EXPENSES.......................................... 7,474,125
Earnings credit adjustment (Note 3)....................... (5,763)
------------
NET EXPENSES............................................ 7,468,362
------------
NET INVESTMENT INCOME................................... $103,213,492
------------
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

98
<PAGE>
BNY HAMILTON MONEY FUND

STATEMENTS OF CHANGES IN NET ASSETS

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

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
OPERATIONS:
Net investment income.............................................................. $ 103,213,492 $ 71,340,420
--------------- ---------------
Net increase in net assets resulting from operations............................... 103,213,492 71,340,420
--------------- ---------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income: Hamilton Shares.............................. (58,674,160) (42,331,939)
Hamilton Premier Shares.................... (43,650,908) (28,179,930)
Hamilton Classic Shares.................... (903,654) (801,227)
Distributions from capital gains: Hamilton Shares.................................. -0- (8,151)
Hamilton Premier Shares........................... -0- (5,383)
Hamilton Classic Shares........................... -0- (128)
--------------- ---------------
(103,228,722) (71,326,758)
--------------- ---------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from capital stock sold: Hamilton Shares.................................. 3,662,245,203 3,379,741,425
Hamilton Premier Shares.......................... 9,474,354,796 5,351,767,320
Hamilton Classic Shares.......................... 76,263,435 27,744,272
Proceeds from shares issued on reinvestment
of dividends: Hamilton Shares.................................................... 6,615,671 4,222,183
Hamilton Premier Shares......................................... 27,238,815 14,839,743
Hamilton Classic Shares......................................... 775,787 700,778
Cost of capital stock repurchased: Hamilton Shares................................. (3,292,905,293) (2,929,817,113)
Hamilton Premier Shares......................... (9,125,281,782) (5,142,031,650)
Hamilton Classic Shares......................... (73,769,087) (25,199,060)
--------------- ---------------
Increase in net assets resulting from capital stock transactions................. 755,537,545 681,967,898
--------------- ---------------
INCREASE IN NET ASSETS......................................................... 755,522,315 681,981,560
NET ASSETS:
Beginning of year.................................................................. 1,768,642,438 1,086,660,878
--------------- ---------------
End of year........................................................................ $ 2,524,164,753 $ 1,768,642,438
--------------- ---------------
--------------- ---------------
CHANGE IN CAPITAL STOCK OUTSTANDING:
Shares sold: Hamilton Shares....................................................... 3,662,245,203 3,379,741,425
Hamilton Premier Shares............................................ 9,474,354,796 5,351,767,320
Hamilton Classic Shares............................................ 76,263,435 27,744,272
Shares issued on reinvestment of dividends: Hamilton Shares........................ 6,615,671 4,222,183
Hamilton Premier Shares................. 27,238,815 14,839,743
Hamilton Classic Shares................. 775,787 700,778
Shares repurchased: Hamilton Shares................................................ (3,292,905,293) (2,929,817,113)
Hamilton Premier Shares...................................... (9,125,281,782) (5,142,031,650)
Hamilton Classic Shares...................................... (73,769,087) (25,199,060)
--------------- ---------------
Net increase..................................................................... 755,537,545 681,967,898
Shares outstanding, beginning of year.............................................. 1,768,628,776 1,086,660,878
--------------- ---------------
Shares outstanding, end of year.................................................... 2,524,166,321 1,768,628,776
--------------- ---------------
--------------- ---------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.
99
<PAGE>
BNY HAMILTON MONEY FUND

FINANCIAL HIGHLIGHTS

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

<TABLE>
<CAPTION>
HAMILTON SHARES
----------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value at beginning of year.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income................... 0.053 0.053 0.052 0.057 0.040
---------- ---------- -------- -------- --------
DIVIDENDS
Dividends from net investment income.... (0.053) (0.053) (0.052) (0.057) (0.040)
---------- ---------- -------- -------- --------
Net asset value at end of year.......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- -------- -------- --------
---------- ---------- -------- -------- --------
TOTAL RETURN:........................... 5.41% 5.47% 5.30% 5.84% 4.02%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's
omitted).............................. $1,439,525 $1,063,579 $609,424 $604,053 $235,220
Ratio to average net assets of:
Expenses net of waiver from The Bank
of New York......................... 0.26% 0.25% 0.27% 0.26% 0.30%
Expenses, prior to waiver from The
Bank of New York.................... 0.26% 0.25% 0.27% 0.26% 0.32%
Net investment income, net of waiver
from The Bank of New York........... 5.25% 5.34% 5.17% 5.67% 3.92%
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.
100
<PAGE>
BNY HAMILTON MONEY FUND

FINANCIAL HIGHLIGHTS (CONTINUED)

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

<TABLE>
<CAPTION>
HAMILTON PREMIER SHARES
------------------------------------------------------------
FOR THE PERIOD
YEAR ENDED DECEMBER 31, AUGUST 15, 1994*
---------------------------------------- THROUGH
1998 1997 1996 1995 DECEMBER 31, 1994
---------- -------- -------- -------- ------------------
<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................... (0.050) 0.051 0.049 0.054 0.017
---------- -------- -------- -------- --------
DIVIDENDS
Dividends from net investment income.... (0.050) (0.051) (0.049) (0.054) (0.017)
---------- -------- -------- -------- --------
Net asset value at end of period........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- -------- -------- -------- --------
---------- -------- -------- -------- --------
TOTAL RETURN:........................... 5.14% 5.19% 5.03% 5.54% 1.69%**
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's
omitted).............................. $1,064,645 $688,339 $463,759 $340,163 $107,799
Ratio to average net assets of:
Expenses.............................. 0.51% 0.51% 0.53% 0.54% 0.61%***
Net investment income................. 5.01% 5.09% 4.91% 5.40% 4.40%***
</TABLE>

* COMMENCEMENT OF INVESTMENT OPERATIONS.
** NOT ANNUALIZED.
*** ANNUALIZED.

SEE NOTES TO FINANCIAL STATEMENTS.
101
<PAGE>
BNY HAMILTON MONEY FUND

FINANCIAL HIGHLIGHTS (CONTINUED)

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

<TABLE>
<CAPTION>
HAMILTON CLASSIC SHARES
---------------------------------------------
FOR THE PERIOD
YEAR ENDED DECEMBER 31, DECEMBER 4, 1995*
------------------------- THROUGH
1998 1997 1996 DECEMBER 31, 1995
------- ------- ------- ------------------
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value at beginning of
period................................ $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income................... 0.047 0.047 0.046 0.004
------- ------- ------- ------
DIVIDENDS
Dividends from net investment income.... (0.047) (0.047) (0.046) (0.004)
------- ------- ------- ------
Net asset value at end of period........ $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------
------- ------- ------- ------
TOTAL RETURN:........................... 4.81% 4.80% 4.73% 0.40%**
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's
omitted).............................. $19,995 $16,725 $13,478 $3,098
Ratio to average net assets of:
Expenses.............................. 0.83% 0.88% 0.82% 0.76%***
Net investment income................. 4.70% 4.71% 4.67% 5.18%***
</TABLE>

* COMMENCEMENT OF INVESTMENT OPERATIONS.
** NOT ANNUALIZED.
*** ANNUALIZED.

SEE NOTES TO FINANCIAL STATEMENTS.
102
<PAGE>
BNY HAMILTON TREASURY MONEY FUND

SCHEDULE OF INVESTMENTS

DECEMBER 31, 1998

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

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ------------
<C> <S> <C>
UNITED STATES GOVERNMENT OBLIGATIONS--19.6%
UNITED STATES TREASURY BILLS+--2.0%
$ 5,000,000 4.475%, 11/12/99........................ $ 4,802,031
10,000,000 4.525%, 12/9/99......................... 9,574,875
------------
14,376,906
------------
UNITED STATES TREASURY NOTES--17.6%
6,000,000 6.375%, 1/15/99......................... 6,002,002
9,000,000 5.875%, 1/31/99......................... 9,002,596
7,000,000 5.00%, 2/15/99.......................... 6,995,723
10,000,000 5.50%, 2/28/99.......................... 10,000,513
7,000,000 5.875%, 3/31/99......................... 7,006,657
8,000,000 6.25%, 3/31/99.......................... 8,024,425
4,000,000 7.00%, 4/15/99.......................... 4,016,159
3,000,000 6.375%, 4/30/99......................... 3,007,296
8,000,000 6.375%, 5/15/99......................... 8,022,463
5,000,000 6.25%, 5/31/99.......................... 5,030,707
5,000,000 6.00%, 6/30/99.......................... 5,010,367
10,000,000 5.875%, 7/31/99......................... 10,020,984
5,000,000 6.00%, 8/15/99.......................... 5,030,037
5,000,000 5.875%, 8/31/99......................... 5,033,821
5,000,000 5.75%, 9/30/99.......................... 5,040,462
10,000,000 5.625%, 10/31/99........................ 10,092,331
10,000,000 5.875%, 11/15/99........................ 10,089,012
10,000,000 5.625%, 12/31/99........................ 10,089,884
------------
127,515,439
------------
TOTAL UNITED STATES GOVERNMENT
OBLIGATIONS
(Cost $141,892,345)..................... 141,892,345
------------
</TABLE>

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ REPURCHASE AGREEMENTS-- 80.5% ------------
<C> <S> <C>
REPURCHASE AGREEMENT WITH BARCLAYS CAPITAL,
INC.--13.9%
$100,000,000 4.60%, due 1/04/99, repurchase price
$100,051,111 (Collateral-- UST Notes,
6.875%-7.125%, 8/31/99-9/30/99; UST
Bond, 6.125%, 11/15/27; aggregate market
value plus accrued interest
$102,000,158)........................... $100,000,000
------------
REPURCHASE AGREEMENT WITH DEUTSCHE BANK SECURITIES
INC.--13.9%
100,000,000 4.85%, due 1/04/99, repurchase price
$100,053,889 (Collateral-- UST Notes,
3.625%-5.375%, 6/30/00-7/15/02;
aggregate market value plus accrued
interest $102,000,764).................. 100,000,000
------------
REPURCHASE AGREEMENT WITH GOLDMAN, SACHS & CO.--16.7%
120,835,000 4.70%, due 1/04/99, repurchase price
$120,898,103 (Collateral-- UST Note,
6.50%, 5/15/05; market value plus
accrued interest $123,251,832).......... 120,835,000
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

103
<PAGE>
BNY HAMILTON TREASURY MONEY FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

DECEMBER 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ------------
REPURCHASE AGREEMENTS (CONTINUED)
<C> <S> <C>
REPURCHASE AGREEMENT WITH J.P. MORGAN SECURITIES,
INC.--17.3%
$125,000,000 4.75%, due 1/04/99, repurchase price
$125,065,972 (Collateral-- UST Note,
5.625%, 12/31/99; UST Bond, 9.875%,
11/15/15; aggregate market value plus
accrued interest $127,500,064).......... $125,000,000
------------
REPURCHASE AGREEMENT WITH MORGAN STANLEY DEAN
WITTER--18.7%
135,000,000 4.75%, due 1/04/99, repurchase price
$135,071,250 (Collateral-- UST Notes,
5.625%-6.875%, 12/31/02-5/15/06;
aggregate market value plus accrued
interest $138,344,802).................. 135,000,000
------------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ------------
<C> <S> <C>
REPURCHASE AGREEMENTS (CONTINUED)
TOTAL REPURCHASE AGREEMENTS
(Cost $580,835,000)..................... $580,835,000
------------
</TABLE>

<TABLE>
<C> <S> <C>
TOTAL INVESTMENTS--
(Cost $722,727,345)(a)-- 100.1%......... 722,727,345
Other assets less liabilities--(0.1)%... (871,971)
------------
NET ASSETS--100.0%...................... $721,855,374
------------
------------
</TABLE>

+ COUPON RATE REPRESENTS DISCOUNTED RATE AT TIME OF PURCHASE FOR UNITED
STATES TREASURY BILLS.
UST UNITED STATES TREASURY.
(a) THE COST STATED ALSO APPROXIMATES THE AGGREGATE COST FOR FEDERAL INCOME TAX
PURPOSES.

SEE NOTES TO FINANCIAL STATEMENTS.

104
<PAGE>

BNY HAMILTON TREASURY MONEY FUND
STATEMENT OF ASSETS AND LIABILITIES

DECEMBER 31, 1998

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

<TABLE>
<S> <C>
ASSETS:
Investments at value, including repurchase agreements of
$580,835,000 (Cost $722,727,345)........................ $ 722,727,345
Cash...................................................... 84
Interest receivable....................................... 1,920,078
Deferred organization costs and other assets.............. 40,926
--------------
TOTAL ASSETS.......................................... 724,688,433
--------------
LIABILITIES:
Payables:
Dividends............................................... 2,576,363
Services provided by The Bank of New York and
Administrator........................................... 240,211
Accrued expenses and other liabilities.................... 16,485
--------------
TOTAL LIABILITIES..................................... 2,833,059
--------------
NET ASSETS:................................................. $ 721,855,374
--------------
--------------
SOURCES OF NET ASSETS:
Capital stock @ par....................................... $ 721,855
Capital surplus........................................... 721,136,197
Distributions in excess of net investment income.......... (2,678)
--------------
NET ASSETS.................................................. $ 721,855,374
--------------
--------------
HAMILTON SHARES:
Net assets................................................ $ 201,363,261
--------------
--------------
Shares outstanding........................................ 201,363,048
--------------
--------------
Net asset value, offering price and repurchase price per
share................................................... $ 1.00
--------------
--------------
HAMILTON PREMIER SHARES:
Net assets................................................ $ 520,492,113
--------------
--------------
Shares outstanding........................................ 520,491,965
--------------
--------------
Net asset value, offering price and repurchase price per
share................................................... $ 1.00
--------------
--------------
Hamilton Shares authorized @ $.001 par value................ 2,000,000,000
Hamilton Premier Shares authorized @ $.001 par value........ 2,000,000,000
</TABLE>

STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1998

<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................. $27,195,578
-----------
EXPENSES:
Advisory.................................................. 508,540
Administration............................................ 508,540
Servicing fee--Hamilton Premier Shares.................... 836,436
Registration and filings.................................. 132,612
Custodian................................................. 90,659
Accounting services....................................... 60,000
Transfer agent............................................ 38,155
Audit..................................................... 14,120
Directors................................................. 11,762
Organization.............................................. 6,464
Reports to shareholders................................... 12,849
Legal..................................................... 7,076
Cash management........................................... 11,807
Insurance................................................. 6,858
Other..................................................... 8,051
-----------
TOTAL EXPENSES.......................................... 2,253,929
Fees waived by The Bank of New York....................... (48,202)
Earnings credit adjustment (Note 3)....................... (2,206)
-----------
NET EXPENSES............................................ 2,203,521
-----------
NET INVESTMENT INCOME................................... 24,992,057
Net realized gain on investments.......................... 1,044
-----------
Net increase in net assets resulting from operations...... $24,993,101
-----------
-----------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

105
<PAGE>
BNY HAMILTON TREASURY MONEY FUND

STATEMENTS OF CHANGES IN NET ASSETS

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

<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR APRIL 1, 1997*
ENDED THROUGH
DECEMBER 31, DECEMBER 31,
1998 1997
---------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income............................................... $ 24,992,057 $ 4,641,946
Net realized gain (loss) on investments............................. 1,044 (683)
---------------- --------------
Net increase in net assets resulting from operations.............. 24,993,101 4,641,263
---------------- --------------
DIVIDENDS TO SHAREHOLDERS:
Dividends from net investment income: Hamilton Shares............... (8,862,413) (1,347,411)
Hamilton Premier Shares.... (16,129,644) (3,294,535)
---------------- --------------
(24,992,057) (4,641,946)
---------------- --------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from capital stock sold: Hamilton Shares................... 758,097,192 213,597,568
Hamilton Premier Shares.......... 2,984,119,812 880,125,419
Proceeds from shares issued on reinvestment
of dividends: Hamilton Shares..................................... 3,882,860 1,096,720
Hamilton Premier Shares......................... 7,344,494 1,695,732
Cost of capital stock repurchased: Hamilton Shares.................. (671,336,485) (103,974,807)
Hamilton Premier Shares......... (2,654,867,480) (697,926,012)
---------------- --------------
Increase in net assets resulting from capital stock
transactions.................................................... 427,240,393 294,614,620
---------------- --------------
INCREASE IN NET ASSETS.......................................... 427,241,437 294,613,937
NET ASSETS:
Beginning of period................................................. 294,613,937 -0-
---------------- --------------
End of period....................................................... $ 721,855,374 $ 294,613,937
---------------- --------------
---------------- --------------
CHANGE IN CAPITAL STOCK OUTSTANDING:
Shares sold: Hamilton Shares........................................ 758,097,192 213,597,568
Hamilton Premier Shares............................. 2,984,119,812 880,125,419
Shares issued on reinvestment of dividends: Hamilton Shares......... 3,882,860 1,096,720
Hamilton Premier
Shares........................ 7,344,494 1,695,732
Shares repurchased: Hamilton Shares................................. (671,336,485) (103,974,807)
Hamilton Premier Shares...................... (2,654,867,480) (697,926,012)
---------------- --------------
Net increase...................................................... 427,240,393 294,614,620
Shares outstanding, beginning of period............................. 294,614,620 -0-
---------------- --------------
Shares outstanding, end of period................................... 721,855,013 294,614,620
---------------- --------------
---------------- --------------
</TABLE>

* COMMENCEMENT OF INVESTMENT OPERATIONS.

SEE NOTES TO FINANCIAL STATEMENTS.
106
<PAGE>
BNY HAMILTON TREASURY MONEY FUND

FINANCIAL HIGHLIGHTS

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

<TABLE>
<CAPTION>
HAMILTON SHARES HAMILTON PREMIER SHARES
---------------------------------- ----------------------------------
YEAR FOR THE PERIOD YEAR FOR THE PERIOD
ENDED APRIL 1, 1997* ENDED APRIL 1, 1997*
DECEMBER 31, THROUGH DECEMBER 31, THROUGH
1998 DECEMBER 31, 1997 1998 DECEMBER 31, 1997
------------- ------------------ ------------- ------------------
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value at beginning of
period................................ $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------- -------- ------------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income................... 0.051 0.040 0.049 0.038
------------- -------- ------------- --------
DIVIDENDS
Dividends from net investment income.... (0.051) (0.040) (0.049) (0.038)
------------- -------- ------------- --------
Net asset value at end of period........ $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------- -------- ------------- --------
------------- -------- ------------- --------
TOTAL RETURN:........................... 5.25% 4.02%** 4.99% 3.83%**
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's
omitted).............................. $201,363 $110,719 $520,492 $183,895
Ratio to average net assets of:
Expenses, net of waiver from The Bank
of New York......................... 0.27% 0.25%*** 0.52% 0.50%***
Expenses, prior to waiver from The
Bank of New York.................... 0.28% 0.33%*** 0.53% 0.56%***
Net investment income, net of waiver
from The Bank of New York........... 5.09% 5.29%*** 4.82% 5.06%***
</TABLE>

* COMMENCEMENT OF INVESTMENT OPERATIONS FOR THE RESPECTIVE CLASS OF SHARES.
** NOT ANNUALIZED.
*** ANNUALIZED.

SEE NOTES TO FINANCIAL STATEMENTS.
107
<PAGE>
NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND BUSINESS

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 ten series: BNY Hamilton Equity Income Fund (the "Equity Income
Fund"), BNY Hamilton Large Cap Growth Fund (the "Large Cap Growth Fund"), BNY
Hamilton Small Cap Growth Fund (the "Small Cap Growth Fund"), BNY Hamilton
International Equity Fund (the "International Equity Fund"), BNY Hamilton
Intermediate Government Fund (the "Intermediate Government Fund"), BNY Hamilton
Intermediate Investment Grade Fund (the "Intermediate Investment Grade Fund"),
BNY Hamilton Intermediate New York Tax-Exempt Fund (the "Intermediate New York
Tax-Exempt Fund"), BNY Hamilton Intermediate Tax-Exempt Fund (the "Intermediate
Tax-Exempt Fund"), BNY Hamilton Money Fund (the "Money Fund"), and BNY Hamilton
Treasury Money Fund (the "Treasury Money Fund") (individually, a "Fund" and
collectively, the "Funds"). All the Funds (except the Money Fund and Treasury
Money Fund) consist of two classes of shares: Institutional Shares and Investor
Shares. The Money Fund consists of three classes of shares: Hamilton Shares,
Hamilton Premier Shares, and Hamilton Classic Shares. The Treasury Money Fund
consists of two classes of shares: Hamilton Shares and Hamilton Premier Shares.

Investment income, expenses (other than those specific to the class of
shares), and realized and unrealized gains and losses on investments are
allocated to the separate classes of shares based upon their relative net asset
value on the date income is earned or expensed and realized and unrealized gains
and losses are incurred.

On April 1, 1997, the Equity Income Fund, Large Cap Growth Fund, Small Cap
Growth Fund, Intermediate Investment Grade Fund and Intermediate Tax-Exempt Fund
commenced operations of their respective Institutional Class of Shares as the
result of a conversion of common and collective trust funds managed by the The
Bank of New York. The following chart summarizes pertinent data related to each
Fund on the date of the conversion:
<TABLE>
<CAPTION>
EQUITY LARGE CAP
INCOME GROWTH
FUND FUND
------------- -------------
<S> <C> <C>
Shares issued..................................... 18,189,661 28,808,732
Net assets........................................ $ 258,475,076 $ 288,087,324
Net asset value per share......................... $ 14.21 $ 10.00
Unrealized appreciation of converted Funds........ $ 49,514,077 $ 101,357,786

INTERMEDIATE
SMALL CAP INVESTMENT
GROWTH GRADE
FUND FUND
------------- -------------
<S> <C> <C>
Shares issued..................................... 8,453,791 34,378,123
Net assets........................................ $ 84,537,911 $ 343,781,232
Net asset value per share......................... $ 10.00 $ 10.00
Unrealized appreciation (depreciation) of
converted Funds.................................. $ 9,660,997 $ (6,426,484)
<CAPTION>

INTERMEDIATE
TAX-EXEMPT
FUND
-------------
<S> <C> <C>
Shares issued..................................... 25,934,046
Net assets........................................ $ 259,340,465
Net asset value per share......................... $ 10.00
Unrealized appreciation of converted Fund......... $ 8,399,206
</TABLE>

108
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

On July 1, 1997, an additional conversion of common and collective trust funds
managed by The Bank of New York resulted in an increase in Institutional Shares
of the Large Cap Growth Fund, Intermediate Investment Grade Fund, and
Intermediate Tax-Exempt Fund. The following chart summarizes the pertinent data
related to the July 1, 1997 conversion:
<TABLE>
<CAPTION>
INTERMEDIATE
LARGE CAP INVESTMENT
GROWTH GRADE
FUND FUND
------------- -------------
<S> <C> <C>
Shares issued..................................... 4,510,593 2,674,998
Net assets........................................ $ 53,224,997 $ 27,204,728
Net asset value per share......................... $ 11.80 $ 10.17
Unrealized appreciation (depreciation) of
converted Funds.................................. $ 32,319,863 $ (19,615)

INTERMEDIATE
TAX-EXEMPT
FUND
-------------
<S> <C> <C>
Shares issued..................................... 360,366
Net assets........................................ $ 3,643,301
Net asset value per share......................... $ 10.11
Unrealized appreciation of converted Fund......... $ 70,239
</TABLE>

For financial reporting purposes, the increase in net assets resulting from
these two conversions, including the unrealized appreciation (depreciation) was
reflected as proceeds from capital stock sold--Institutional Shares in each
Fund's Statement of Changes in Net Assets.

In addition, on April 1, 1997, the Equity Income Fund, Intermediate Government
Fund, and Intermediate New York Tax-Exempt Fund transferred shares from their
respective Investor Class of Shares to their respective Institutional Class of
Shares as follows:
<TABLE>
<CAPTION>
EQUITY INTERMEDIATE
INCOME GOVERNMENT
FUND FUND
------------- -------------
<S> <C> <C>
Shares converted.................................. 14,210,212 5,760,887
Dollar amount of conversion....................... $ 201,927,107 $ 54,901,254

INTERMEDIATE
NEW YORK
TAX-EXEMPT
FUND
-------------
<S> <C> <C>
Shares converted.................................. 2,610,884
Dollar amount of conversion....................... $ 26,526,577
</TABLE>

The shares and dollar amounts for each Fund relating to this transfer were
included as an increase to Shares Sold--Institutional Shares and proceeds from
capital stock sold-- Institutional Shares and an increase to Shares
Repurchased--Investor Shares and cost of capital stock repurchased--Investor
Shares on each Fund's respective Statement of Changes in Net Assets for the year
ended December 31, 1997.

2. SIGNIFICANT ACCOUNTING POLICIES

(A) SECURITY VALUATIONS

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 at the close of the primary exchange. Unlisted securities
traded only on the over-the-counter market are valued at the average of the
quoted bid and the asked prices over-the-counter market.

109
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

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.

The determination of the value of certain portfolio debt securities, other
than temporary investments in short-term securities, 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.

Securities included in the Money Fund and Treasury Money Fund, and short-term
securities with a remaining maturity of 60 days or less in all other Funds are
valued at amortized cost which approximates fair 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.

Securities for which market quotations are not readily available, including
investments that are subject to limitations as to their sale (such as certain
restricted securities and illiquid securities), are valued at fair value as
determined in good faith by the Board of Directors. In determining fair value,
consideration is given to cost, operating and other financial data.

(B) CURRENCY TRANSLATION

Assets and liabilities denominated in foreign currencies are translated into
U.S. dollars at the mean of the bid and asked price of respective exchange rate
on the last day of the period. Purchases and sales of investments denominated in
foreign currencies are translated at the exchange rate on the date of the
transaction.

Foreign exchange gain or loss resulting from the sale of an investment,
holding of a foreign currency, expiration of a foreign currency exchange
contract, difference in exchange rates between the trade date and settlement
date of an investment purchased or sold, and the difference between dividends
actually received compared to the amount shown in a Fund's accounting records on
the date of receipt are shown as net realized gains or losses in the respective
Fund's statement of operations.

Foreign exchange gain or loss on assets and liabilities other than investments
currently shown on the respective Fund's statement of assets and liabilities are
shown as unrealized appreciation (depreciation) on foreign currency
transactions.

A Fund's custodian or designated sub-custodians, as the case may be for
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, a 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.

110
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(D) WRITTEN OPTIONS AND PURCHASED OPTIONS

All Funds (except the Money Fund and the Treasury Money Fund) may enter into
an option contracts 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 a 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 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 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, a Fund does not have control over exercising of
such options. As a result, that Fund bears unlimited market risk of favorable
changes in the value of the call option's underlying securities. The Fund also
bears unlimited market risk in the value of the written call option itself.

If an option which a Fund has purchased expires on its stipulated expiration
date, it realizes a loss in the amount of the cost of the option. If it 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
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 a Fund exercises a call option, the cost of the
security which it purchases upon exercise will be increased by the premium
originally paid.

(E) FEDERAL INCOME TAXES

Each Fund is created 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.

(F) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS

The Intermediate Government Fund, the Intermediate Investment Grade Fund, the
Intermediate New York Tax-Exempt Fund, the Intermediate Tax-Exempt Fund, the
Money Fund and the Treasury Money Fund declare dividends daily and pay dividends
monthly. The Equity Income Fund and the Large Cap Growth Fund declare and pay
dividends monthly. The Small Cap Growth Fund and the International Equity Fund
declare and pay dividends annually, provided that there is net investment income
at the end of the fiscal year.

111
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(G) 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 the Intermediate Tax-Exempt Fund are
accreted, and premiums on securities purchased for the Intermediate New York
Tax-Exempt Fund, the Intermediate Tax-Exempt Fund, the Money Fund, and the
Treasury Money Fund are amortized.

(H) FINANCIAL STATEMENTS PREPARATION

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses for the
period. Actual results could differ from those estimates.

(I) ORGANIZATION COSTS

Costs incurred in connection with the organization and initial registration of
the Large Cap Growth Fund, Small Cap Growth Fund, International Equity Fund,
Intermediate Investment Grade Fund, Intermediate Tax-Exempt Fund and Treasury
Money Fund are being amortized evenly over the period of benefit not to exceed
60 months from the date upon which those 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%
Large Cap Growth Fund....................................................... .60%
Small Cap Growth Fund....................................................... .75%
International Equity Fund................................................... .425%
Intermediate Government Fund................................................ .50%
Intermediate Investment Grade Fund.......................................... .50%
Intermediate New York Tax-
Exempt Fund............................................................... .50%
Intermediate Tax-Exempt Fund................................................ .50%
Money Fund.................................................................. .10%
Treasury Money Fund......................................................... .10%
</TABLE>

The International Equity Fund is also sub-advised by Indocam, formerly
Indosuez International Investment Services (the "Sub-Adviser"), a subsidiary of
Banque Indosuez. The Fund accrues daily an additional fee to the Sub-Adviser,
payable monthly at the rate of .425% of average daily net assets of the
International Equity Fund.

BNY Hamilton Distributors, Inc. (a wholly-owned subsidiary of The BISYS Group,
Inc.) acts as the Funds' administrator (the "Administrator") and will assist 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

112
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

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 Administration Agreement permits the
Administrator to delegate certain of responsibilities to other service
providers. Pursuant to this authority, the Administrator had delegated certain
administrative functions to The Bank of New York. The Bank of New York is not an
affiliated person of BNY Hamilton Distributors, Inc.

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%
Large Cap Growth Fund....................................................... .20%
Small Cap Growth Fund....................................................... .20%
International Equity Fund................................................... .20%
Intermediate Government Fund................................................ .20%
Intermediate Investment Grade Fund.......................................... .20%
Intermediate New York Tax-
Exempt Fund............................................................... .20%
Intermediate Tax-Exempt Fund................................................ .20%
Money Fund.................................................................. .10%
Treasury Money Fund......................................................... .10%
</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 ("Custodian"). Each Fund
maintains a compensating balance arrangement with the Custodian, whereby a Fund
would have its respective custody fees reduced by income earned on cash balances
maintained with the Custodian. The income earned on cash balances by each Fund
for the year ended December 31, 1998 is shown on its respective Statement of
Operations under the caption "Earnings Credit Adjustment." For the year ended
December 31, 1998, the Intermediate New York Tax-Exempt Fund did not earn any
such monies.

As of December 31, 1998, the Bank of New York has voluntarily agreed to
assume/ waive expenses for certain Funds to the extent that each Fund's expense
ratio exceeded the percentage of average daily net assets as shown below:

<TABLE>
<CAPTION>
INSTITUTIONAL INVESTOR
SHARES SHARES
------------- -------------
<S> <C> <C>
Large Cap Growth Fund............................. .82% 1.07%
Small Cap Growth Fund............................. .97% 1.22%
International Equity Fund......................... 1.27% 1.52%
Intermediate Government Fund...................... .90% 1.15%
Intermediate Investment Grade Fund................ .90% 1.15%
Intermediate New York Tax-Exempt Fund............. .90% 1.15%
Intermediate Tax-Exempt Fund...................... .90% 1.15%
</TABLE>

The Treasury Money Fund had various limitations for each class of shares
throughout the period. Effective July 1, 1998, the waivers for both classes in
the Treasury Money Fund were discontinued.

Management reserves the right to implement or discontinue expense limitations
at any time.

The Company has adopted a distribution plan (the "12b-1 Plans") with respect
to each Fund (except for the Treasury Money Fund). Under the 12b-1 Plans, the
Funds will pay the Distributor for distribution expenses

113
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

incurred in connection with sales of shares as outlined in the following chart:

<TABLE>
<CAPTION>
DATE OF
IMPLEMENTATION OF
NAME OF FUND CLASS 12B-1 PLAN
- -------------------------------------------------- ----------------- -----------------
<S> <C> <C>
Equity Income Fund................................ Investor April 1, 1997
Large Cap Growth Fund............................. Investor May 1, 1997
Small Cap Growth Fund............................. Investor May 1, 1997
International Equity Fund......................... Investor May 1, 1997
Intermediate Government Fund...................... Investor April 1, 1997
Intermediate Investment Grade Fund................ Investor May 1, 1997
Intermediate New York Tax-Exempt Fund............. Investor April 1, 1997
Intermediate
Tax-Exempt Fund................................. Investor May 1, 1997
Money Fund........................................ Hamilton Classic December 4, 1995
</TABLE>

Payments for distribution expenses may not exceed .25% of the average daily
net assets of each class noted in the chart above.
BNY Hamilton Funds, Inc. has adopted a shareholder servicing plan for the
Money Fund and the Treasury Money Fund, pursuant to which, Hamilton Premier
Shares and Hamilton Classic Shares of the Money Fund and Hamilton Premier Shares
of the Treasury Money Fund are sold to certain institutions that enter into
servicing agreements with the Company. The Bank of New York and the
Administrator (the "Shareholder Servicing Agents") have each entered into
Shareholder Service Agreements with respect to these Shares. The Shareholder
Servicing Agents will perform shareholder support services. Pursuant to the
Shareholder Service Agreements, Hamilton Premier Shares and Hamilton Classic
Shares of the Money Fund and Hamilton Premier Shares of the Treasury Money Fund
will pay the Shareholder Servicing Agents an annual shareholder servicing fee,
accrued daily and payable monthly, of .25% of the 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 of the Money Fund and the Treasury Money Fund.

During fiscal year 1998, the Bank of New York purchased the brokerage firm of
ESI Securities ("ESI"). During 1998, the Large Cap Growth Fund and Small Cap
Growth Fund paid brokerage commissions of $5,295 and $378, respectively, to ESI.

4. PORTFOLIO SECURITIES

For the year ended December 31, 1998, the cost of securities purchased and the
proceeds from sales of securities, excluding short-term securities, were as
follows:
<TABLE>
<CAPTION>
EQUITY INCOME FUND
--------------------------
PURCHASES SALES
------------ ------------
<S> <C> <C>
US Gov't Securities............................... $ -- $ --
All Others........................................ 208,481,815 277,415,260

LARGE CAP GROWTH FUND
--------------------------
PURCHASES SALES
------------ ------------
<S> <C> <C>
US Gov't Securities............................... $ -- $ --
All Others........................................ 100,237,125 106,493,497
<CAPTION>

SMALL CAP GROWTH FUND
--------------------------
PURCHASES SALES
------------ ------------
<S> <C> <C>
US Gov't Securities............................... $ -- $ --
All Others........................................ 180,376,294 127,609,705
<CAPTION>

INTERNATIONAL EQUITY FUND
--------------------------
PURCHASES SALES
------------ ------------
<S> <C> <C>
US Gov't Securities............................... $ -- $ --
All Others........................................ 166,113,589 106,016,025
</TABLE>

114
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
INTERMEDIATE
GOVERNMENT FUND
--------------------------
PURCHASES SALES
------------ ------------
<S> <C> <C>
US Gov't Securities............................... $ 44,836,334 $ 44,659,066
All Others........................................ 1,841,744 852,267

INTERMEDIATE INVESTMENT
GRADE FUND
--------------------------
PURCHASES SALES
------------ ------------
<S> <C> <C>
US Gov't Securities............................... $ 82,125,677 $ 77,574,393
All Others........................................ 143,522,313 115,784,557
<CAPTION>

INTERMEDIATE NEW YORK
TAX-EXEMPT FUND
--------------------------
PURCHASES SALES
------------ ------------
<S> <C> <C>
US Gov't Securities............................... $ -- $ --
All Others........................................ 12,396,180 10,080,587
<CAPTION>

INTERMEDIATE TAX-EXEMPT
FUND
--------------------------
PURCHASES SALES
------------ ------------
<S> <C> <C>
US Gov't Securities............................... $ -- $ --
All Others........................................ 96,853,454 97,844,499
</TABLE>

5. FEDERAL INCOME TAXES

For federal income tax purposes, the Funds indicated below have capital loss
carryforwards as of December 31, 1998 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>
International Equity Fund............................. $ 114,800 2005
9,953,400 2006
Intermediate Government Fund.......................... 881,300 2002
681,600 2003
447,700 2004
390,800 2005
</TABLE>

6. WRITTEN OPTION ACTIVITY

Transactions in written options for the year ended December 31, 1998 were as
follows:

EQUITY INCOME FUND

<TABLE>
<CAPTION>
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ---------
<S> <C> <C>
Options outstanding at December 31, 1997................... 500 $ 51,623
Options written during the period.......................... 980 265,050
Options expired............................................ (880) (153,479)
--- ---------
Options outstanding at December 31, 1998................... 600 $ 163,194
--- ---------
--- ---------
</TABLE>

LARGE CAP GROWTH FUND

<TABLE>
<CAPTION>
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- -----------
<S> <C> <C>
Options outstanding at December 31, 1997............... 1,100 $ 197,324
Options written during the period...................... 11,131 3,310,297
Options terminated in closing purchase transactions.... (2,336) (1,346,817)
Options exercised...................................... (2,890) (693,095)
Options expired........................................ (5,205) (876,877)
--------- -----------
Options outstanding at December 31, 1998............... 1,800 $ 590,832
--------- -----------
--------- -----------
</TABLE>

SMALL CAP GROWTH FUND

<TABLE>
<CAPTION>
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- --------
<S> <C> <C>
Options outstanding at December 31, 1997................... -0- $ -0-
Options written during the period.......................... 500 97,097
Options terminated in closing purchase transactions........ (500) (97,097 )
--- --------
Options outstanding at December 31, 1998................... -0- $ -0-
--- --------
--- --------
</TABLE>

115
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

7. RECLASSIFICATION OF CAPITAL ACCOUNTS

At December 31, 1998, reclassifications were made to the capital accounts of
all Funds except the Intermediate New York Tax-Exempt Fund to reflect permanent
book/tax differences and income and gains available for distributions under
income tax regulations. Net investment income, net realized gains, and net
assets were not affected by these changes.

8. GEOGRAPHIC CONCENTRATION

The International Equity Fund has a relatively large concentration of
portfolio securities invested in companies domiciled in the United Kingdom. The
International Equity Fund may be more susceptible to political, social and
economic events adversely affecting United Kingdom companies than funds not so
concentrated.

9. CONCENTRATION OF RISK

The Intermediate New York Tax-Exempt Fund invests substantially all of its
assets in a portfolio of tax-exempt debt obligations primarily consisting of
securities issued by the State of New York and its authorities, agencies,
municipalities and political sub-divisions. Also, the Intermediate Tax-Exempt
Fund invests approximately 28% of its assets in debt obligations of the State of
New York. The issuers' ability to meet their obligations may be affected by New
York's political, social, economic, and/or regional developments.

116
<PAGE>
REPORT OF INDEPENDENT AUDITORS

THE SHAREHOLDERS AND BOARD OF DIRECTORS OF
BNY HAMILTON FUNDS, INC.:

We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of BNY Hamilton Funds, Inc. (comprising,
respectively, the 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, BNY Hamilton Money Fund, and BNY Hamilton
Treasury Money Fund) as of December 31, 1998, and the related statements of
operations for the year then ended and changes in net assets and financial
highlights for the two years then ended for the BNY Hamilton Equity Income Fund,
BNY Hamilton Intermediate Government Fund, BNY Hamilton Intermediate New York
Tax-Exempt Fund, and BNY Hamilton Money Fund and for the one year and the period
April 1, 1997 (commencement of investment operations) to December 31, 1997, for
the BNY Hamilton Large Cap Growth Fund, BNY Hamilton Small Cap Growth Fund, BNY
Hamilton International Equity Fund, BNY Hamilton Intermediate Investment Grade
Fund, BNY Hamilton Intermediate Tax-Exempt Fund and BNY Hamilton Treasury Money
Fund. 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. The
financial highlights for each of the three years in the period ended December
31, 1996, were audited by other auditors whose report thereon dated February 7,
1997, expressed an unqualified opinion on those financial highlights.

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 as of
December 31, 1998 by correspondence with the custodian and the performance of
other appropriate audit 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.

117
<PAGE>
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
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, BNY Hamilton Money Fund, and BNY Hamilton Treasury
Money Fund (constituting the BNY Hamilton Funds, Inc.) as of December 31, 1998,
the results of their operations, changes in their net assets and financial
highlights for the respective stated periods in the two-year period then ended,
in conformity with generally accepted accounting principles.

KPMG LLP
New York, New York
February 17, 1999

- --------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION (UNAUDITED)

For federal income tax purposes, 59.34% and 100.00% of the ordinary income
dividends paid to you during the year ended December 31, 1998 for BNY Hamilton
Equity Income Fund and BNY Hamilton Large Cap Growth Fund, respectively, qualify
for the corporate dividends deduction under section 243 of the Internal Revenue
Code.

Capital gain distributions paid to shareholders by the Fund during the year
ended December 31, 1998, whether taken in shares or cash, were:

<TABLE>
<CAPTION>
20% CAPITAL GAIN
DISTRIBUTIONS
----------------------------
<S> <C>
BNY Hamilton Equity Income Fund.................................................. 23,393,781
BNY Hamilton Large Cap Growth Fund............................................... 24,128,423
BNY Hamilton Small Cap Growth Fund............................................... 5,459,565
BNY Hamilton Intermediate Investment Grade Fund.................................. 957,902
BNY Hamilton Intermediate New York Tax-Exempt Fund............................... 39,374
BNY Hamilton Intermediate Tax-Exempt Fund........................................ 5,042,988
</TABLE>

In addition, for the calendar year ended December 31, 1998, BNY Hamilton
Intermediate New York Tax-Exempt Fund and BNY Hamilton Intermediate Tax-Exempt
Fund designate 100% of the dividends paid by each Fund from net investment
income as "exempt-interest dividends".

118
<PAGE>
DIRECTORS AND OFFICERS
Edward L. Gardner, Director and Chairman of the Board
Peter Herrick, Director
Leif H. Olsen, Director
Stephen Stamas, Director
James E. Quinn, Director
Karen Osar, Director
J. David Huber, Chief Executive Officer
William J. Tomko, President
Richard Baxt, Vice President
Michael A. Grunewald, Vice President
Nimish Bhatt, Treasurer
Ellen Stoutamire, Secretary
Alaina Metz, Assistant Secretary

INVESTMENT ADVISER
The Bank of New York

ADMINISTRATOR AND DISTRIBUTOR
BNY Hamilton Distributors, Inc.

TRANSFER AGENT
BISYS Fund Services, Ohio, Inc.

CUSTODIAN
The Bank of New York

INDEPENDENT AUDITORS
KPMG LLP

LEGAL COUNSEL
Sullivan & Cromwell

119
<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 distributions to prospective investors
unless preceded or accompanied by a current prospectus for Hamilton Shares of
BNY Hamilton Money Fund and BNY Hamilton Treasury Money Fund, Hamilton
Premier shares of BNY Hamilton Money Fund and BNY Hamilton Treasury Money
Fund, Hamilton Classic Shares of BNY Hamilton Money Fund, Equity Funds,
Taxable Fixed Income Funds or Tax-Exempt Fixed Income Funds.

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.

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.

<PAGE>

BNY
HAMILTON
FUNDS

90 Park Avenue, 10th Floor
New York, NY 10016

02/99 BNY-0121

<PAGE>

ARTICLES SUPPLEMENTARY

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) 16,200,000,000 authorized shares of Common Stock
were previously classified by the Board of Directors and were
allocated among the Corporation's ten series as follows:

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

<PAGE>

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

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

and (iii) the remaining 3,800,000,000 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) increased the number of shares of Common Stock
designated as shares of the BNY Hamilton Treasury Money Fund Series
from 4,000,000,000 shares to 6,000,000,000 shares, (ii) reclassified
the existing BNY Hamilton Treasury Money Fund Series into three
classes, which are designated as the "Hamilton" class, the "Hamilton
Premier" class and the "Hamilton Classic" class, and (iii) provided
for the issuance of shares of each such class. Each class so created
shall consist, until further changed, of the number of shares
allocated to such class by the Board of Directors as set forth below:

BNY Hamilton Treasury Money Fund
Hamilton class 2,000,000,000
Hamilton Premier class 2,000,000,000
Hamilton Classic class 2,000,000,000

-2-
<PAGE>

with the result that the authorized shares of Common Stock are now
allocated as follows:

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
Hamilton Classic 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

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

-3-
<PAGE>

BNY Hamilton Intermediate Tax-Exempt Fund
Institutional Class 200,000,000
Investor Class 200,000,000

and the remaining 1,800,000,000 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, August
15, 1995 and January 22, 1997.

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.

-4-
<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 April ____, 1999.

WITNESS: BNY HAMILTON FUNDS, INC.

By:_________________________ By:_________________________
Name: Name:
Title: Title:

THE UNDERSIGNED, _________________ 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.

---------------------------------
Name:

-5-

<PAGE>

SHAREHOLDER SERVICING AGREEMENT

[DATE]

BNY Hamilton Funds, Inc.
125 West 55th Street
New York, New York 10019

Gentlemen:

We wish to enter into this Shareholder Servicing Agreement
with you concerning the provision of personal shareholder service and
administrative assistance to our customers ("Customers") who may from time to
time beneficially own shares of the Hamilton Classic class of BNY Hamilton
Treasury Money Fund (the "Hamilton Classic Class") of BNY Hamilton Funds, Inc.
(the "Corporation"). The terms and conditions of this agreement are as follows:

1. We agree to provide any or all of the following support
services to Customers who may from time to time beneficially own
shares of the Hamilton Classic Class ("Hamilton Classic Shares"): (i)
aggregating and processing purchase and redemption requests for
Hamilton Classic Shares from Customers and placing net purchase and
redemption orders with BNY Hamilton Distributors, Inc., the
Corporation's distributor; (ii) providing Customers with a service
that invests the assets of their accounts in Hamilton Classic Shares
pursuant to specific or pre-authorized instructions; (iii) processing
dividend payments from the Corporation on behalf of Customers; (iv)
providing information periodically to Customers showing their
positions in the Hamilton Classic Class; (v) arranging for bank wires;
(vi) providing dedicated walk-in and telephone facilities to respond
to Customer inquiries and needs; (vii) providing sub-accounting with
respect to Hamilton Classic Shares beneficially owned by Customers or
the information to the Hamilton Classic Class necessary for
sub-accounting; (viii) if required by law, forwarding shareholder
communications from the Corporation (such as proxies, shareholder
reports, annual and semi-annual financial statements and dividend
distribution and tax notices) to Customers; and (ix) providing such
other similar services as the Corporation may reasonably request to
the extent we are permitted to do so under applicable statutes, rules
or regulations.

<PAGE>

2. We may be subject to the provisions of the Glass-Steagall
Act and other laws governing, among other things, the conduct of
activities by federally chartered and supervised banks and other
banking organizations. As such, the Corporation recognizes that we are
restricted in the activities we may undertake and for which we may be
paid and, therefore, we will perform only those activities that are
consistent with our statutory and regulatory obligations. We will act
solely as agent for, upon the order of, and for the account of, our
Customers.

3. We will provide such office space and equipment, telephone
facilities and personnel (which may be any part of the space,
equipment and facilities currently used in our business, or any
personnel employed by us) as may be reasonably necessary or beneficial
in order to provide such services to Customers.

4. We will not, nor will any of our officers, employees or
agents, make any representations concerning the Corporation or the
Hamilton Classic Shares, except those contained in the Corporation's
then-current prospectus for the Hamilton Classic Class, copies of
which will be supplied to us by the Corporation, or in such
supplemental literature or advertising as may be authorized by the
Corporation in writing.

5. For all purposes of this Agreement, we will be deemed to
be an independent contractor, and will have no authority to act as
agent for the Corporation in any matter or in any respect. We agree to
and do release, indemnify and hold the Corporation harmless from and
against any and all direct or indirect liabilities or losses resulting
from requests, directions, actions or inactions of or by us or our
officers, employees or agents regarding our responsibilities hereunder
or the purchase, redemption, transfer or registration of Hamilton
Classic Shares by or on behalf of Customers. We and our employees,
upon request, will be available during normal business hours to
consult with the Corporation or its designees concerning the
performance of our responsibilities under this Agreement.

6. In consideration of the services and facilities provided
by us hereunder, the Corporation agrees to pay us and we will accept
as full payment therefor, a fee at the annual rate of .25% of the
average daily net asset value of the Hamilton Classic Shares
beneficially owned by our Customers with whom we have a servicing
relationship (the "Customers' Shares"), which fee will be computed
daily and payable monthly. We agree to and do waive such portion of
the fee payable under this Section 6

-2-
<PAGE>

as is necessary to assure that the amount of such fee which is
required to be accrued on any day with respect to our Customers does
not exceed the income to be accrued to our Customers' Shares on that
day. For purposes of determining the fees payable under this Section
6, the average daily net asset value of the Customers' Shares will be
computed in the manner specified in the Corporation's registration
statement (as the same is in effect from time to time) in connection
with the computation of the net asset value of the Hamilton Classic
Class for purposes of purchases and redemptions. The Corporation, in
its discretion and without notice, may suspend or withdraw the sale of
Hamilton Classic Shares, including the sale of such shares for the
account of any Customer or Customers.

7. Any person authorized to direct the disposition of monies
paid or payable by the Corporation pursuant to this Agreement will
provide to the Corporation's Board of Directors, and the Corporation's
Directors will review, at least quarterly, a written report of the
amounts so expended and the purposes for which such expenditures were
made. In addition, we will furnish the Corporation or its designees
with such information as the Corporation or its designees may
reasonably request (including, without limitation, periodic
certifications confirming the provision to Customers of the services
described herein), and will otherwise cooperate with the Corporation
or its designees (including, without limitation, any auditors
designated by the Corporation), in connection with the preparation of
reports to the Corporation's Board of Directors concerning this
agreement and the monies paid or payable pursuant hereto, as well as
any other reports or filings that may be required by law. We will
promptly report to the Corporation any potential or existing conflicts
with respect to the investments of our customers in the Hamilton
Classic Class.

8. The Corporation may enter into other similar Shareholder
Servicing Agreements with any other person or persons without our
consent.

9. We represent, warrant and agree that: (i) in no event will
any of the services provided by us hereunder be primarily intended to
result in the sale of any shares issued by the Corporation; (ii) the
compensation payable to us hereunder, together with any other
compensation payable to us by Customers in connection with the
investment of their assets in the Hamilton Classic Class, will be
disclosed by us to our Customers, will be authorized by our Customers
and will not result in an excessive or unreasonable fee to us; (iii)
we will not advertise or otherwise promote our

-3-
<PAGE>

Customer accounts primarily as a means of investing in the Hamilton
Classic Class or establish or maintain Customer accounts for the
primary purpose of investing in the Hamilton Classic Class; (iv) in
the event an issue pertaining to this agreement is submitted for
shareholder approval, we will vote any Hamilton Classic Shares held
for our own account in the same proportion as the vote of the Hamilton
Classic Shares held for our Customers' benefit; and (v) we will not
engage in activities pursuant to this Agreement which constitute
acting as a broker or dealer under state law unless we have obtained
the licenses required by such law.

10. This Agreement will become effective on the date a fully
executed copy of this agreement is received by the Corporation or its
designee. Unless sooner terminated, this Agreement will continue until
_______________, and thereafter will continue automatically for
successive annual periods ending on ________________.

11. All notices and other communications will be duly given
if mailed, telegraphed, telexed or transmitted by similar
telecommunications device to the appropriate address shown above, or
to such other address as either party shall so provide the other.

12. This Agreement shall be construed in accordance with the
internal laws of the State of New York without giving effect to
principles of conflict of laws, and is non-assignable by the parties
hereto.

-4-
<PAGE>

If you agree to be legally bound by the provisions of this
Agreement, please sign a copy of this letter where indicated below and promptly
return it to us.

Very truly yours,

[Shareholder Organization]

By: ______________________________

Name:

Title:

Date:

Accepted and agreed to:

BNY HAMILTON FUNDS, INC.

By: _____________________________

Name:

Title:

Effective Date:

<PAGE>

Approval of Amendment to Rule 18f-3 Plan to include Hamilton
- ------------------------------------------------------------
Classic Class of BNY Hamilton Treasury Money Fund
- -------------------------------------------------

WHEREAS, the BNY Hamilton Funds, Inc. (the "Funds") desire to amend
the existing written plan (the "18f-3 Plan") of the Funds adopted under Rule
18f-3 under the Investment Company Act of 1940 (the "1940 Act") to include the
Hamilton Classic class of shares of BNY Hamilton Treasury Money Fund; and

WHEREAS, the Directors of the Funds, including a majority of those
Directors who are not interested persons of the Funds (as defined in the 1940
Act) and who have no direct or indirect financial interest in the operation of
the 18f-3 Plan (the "Non-Interested Directors"), have determined that amending
the 18f-3 Plan to include the Hamilton Classic class of shares of BNY Hamilton
Treasury Money Fund is in the best interests of each class individually and the
Funds as a whole;

IT IS THEREFORE:

RESOLVED, that the Amendment to the Plan, as it has been deemed by the
Non-Interested Directors to be in the best interests of each class individually
and the Funds as a whole, be and hereby is, approved in the form presented to
this meeting; and

FURTHER RESOLVED, that the officers of the Funds be, and they hereby
are, authorized to take such actions that are necessary or appropriate in order
to effectuate the aforesaid.

Proposed for action by the "Non-Interested" Directors voting alone and then by
the entire Board.

* * *

Approval of Proposed Shareholder Servicing Plan for Hamilton
- ------------------------------------------------------------
Classic Class of BNY Hamilton Treasury Money Fund
- -------------------------------------------------

RESOLVED, that the Shareholder Servicing Plan (the "Servicing Plan")
for the Hamilton Classic class of shares of BNY Hamilton Treasury Money Fund
(the "Fund") be, and the same hereby is, approved in substantially the form
presented and discussed at this meeting with such other changes as counsel to
BNY Hamilton Funds, Inc. (the "Corporation") may deem necessary or advisable,
after consideration of all factors deemed relevant by the Board in the exercise
of its reasonable business judgment and in light of its fiduciary duties under
state law and Section 36(a) and (b) of the Investment Company Act of 1940 (the
"1940 Act") including, but not limited to:

<PAGE>

(1) the information provided to the Board by BNY Hamilton
Distributors, Inc.,
the Fund's administrator and distributor, at this meeting,

(2) the purposes for which the Servicing Plan was created and the
degree to which the Servicing Plan addresses these purposes;

(3) the nature, amount and purpose of the payments that are proposed
to be made under the Servicing Plan; and

(4) the protections afforded by the Servicing Plan to the Fund and the
Hamilton Classic class of Fund shareholders;

FURTHER RESOLVED, that the Board, including the Directors of the
Corporation who are not "interested persons" of the Corporation (as defined in
the 1940 Act) and who have no direct or indirect financial interest in the
operation of the Servicing Plan (the "Independent Directors"), hereby
determines, in the exercise of its reasonable business judgment and in light of
its fiduciary duties, that there is a reasonable likelihood that the Servicing
Plan will benefit the Fund and the Hamilton Classic class of Fund shareholders;

FURTHER RESOLVED, that the shareholder servicing arrangements and
compensation payable under the Servicing Plan are determined (i) in good faith,
based on the information provided, to be competitive with compensation offered
in the industry, and (ii) to be fair and reasonable in light of such matters as
the Directors have considered relevant in the exercise of their reasonable
business judgment;

FURTHER RESOLVED, that the form of Shareholder Servicing Agreement
presented and discussed at this meeting be, and the same hereby is, approved to
be used pursuant to the Servicing Plan, with such changes as counsel to the
Corporation may deem necessary or advisable;

FURTHER RESOLVED, that, upon recommendation of the Corporation's
administrator and distributor, BNY Hamilton Distributors, Inc., any officer of
the Corporation be, and he or she hereby is, authorized to execute and deliver
Shareholder Servicing Agreements, in substantially the form presented to this
meeting, on behalf of the Fund, with securities dealers and other industry
professionals ("Service Organizations") with respect to the provision of
shareholder administrative support services to their customers who own of
record or beneficially the Fund's Hamilton Classic shares in consideration for
the Fund's payment of a fee, computed daily and payable monthly, at an annual
rate of up to .25% of the daily net asset value of shares of the Hamilton
Classic class owned of record or beneficially by such customers;

-2-

<PAGE>

FURTHER RESOLVED, that the Corporation be, and it hereby is,
authorized to enter into Shareholder Servicing Agreements with Service
Organizations that may be affiliated with the Corporation's investment adviser
or administrator and that the Board and the Independent Directors hereby
determine that:

(1) such Agreements are in the best interest of the Fund and its
shareholders;

(2) the services to be performed pursuant to such Fund's Agreements
are required for the Fund's operations;

(3) such Service Organizations can provide services the nature and
quality of which are at least equal to those provided by others offering the
same or similar services; and

(4) the fees for such services are fair and reasonable in light of the
usual and customary charges of others for services of the same nature and
quality; and

FURTHER RESOLVED, that the appropriate officers of the Corporation be,
and each of them hereby is, authorized and directed to enter into Shareholder
Servicing Agreements, and to take such other actions as may be necessary or
desirable and proper to effectuate the provisions of the Servicing Plan and the
intent of the foregoing resolutions.

* * *

Approval of Issue and Sale of Shares of Hamilton
- ------------------------------------------------
Classic Class of BNY Hamilton Treasury Money Fund
- -------------------------------------------------

RESOLVED, that the Funds' issuance and sale of ________________ shares
of common stock, par value of $.001 per share, of the Hamilton Classic class of
the BNY Hamilton Treasury Money Fund series to BISYS Fund Services at a price
per share of $1.00 is hereby approved, ratified and confirmed in all respects.

-3-

<PAGE>

Independent Auditors' Consent

To the Shareholders and Board of Directors of the
BNY Hamilton Funds, Inc.:

We consent to the use of our report dated February 17, 1999 with respect to BNY
Hamilton Funds, Inc. (including the 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, BNY Hamilton Money
Fund, and the BNY Hamilton Treasury Fund), incorporated herein by reference and
to the references of our Firm under the headings "Financial Highlights" in each
of the Funds' Prospectuses and Fund, Shareholder and Other Services in the
Statement of Additional Information.

KPMG LLP

New York, New York
April 28, 1999

<PAGE>

Approval of Proposed Plan of Distribution for Hamilton
Classic Class of BNY Hamilton Treasury Money Fund

RESOLVED, that the Plan of Distribution Pursuant to Rule 12b-1 (the
"Plan") for the Hamilton Classic class of shares of the BNY Hamilton Treasury
Money Fund (the "Fund") be, and the same hereby is, approved in substantially
the form presented and discussed at this meeting with such other changes as
counsel to BNY Hamilton Funds, Inc. (the "Corporation") may deem necessary or
advisable, after consideration of all factors deemed relevant by the Board in
the exercise of its reasonable business judgment and in light of its fiduciary
duties under state law and Section 36(a) and (b) of the Investment Company Act
of 1940 (the "1940 Act") including, but not limited to:

(1) the information provided to the Board by BNY Hamilton
Distributors, Inc., the Fund's administrator and distributor, at this meeting,

(2) the purposes for which the Plan was created and the degree to
which the Plan addresses these purposes;

(3) the nature, amount and purpose of the payments that are proposed
to be made under the Plan;

(4) the protection afforded by the Plan to the Fund and the Hamilton
Classic class of Fund shareholders; and

(5) the requirements of Rule 12b-1 under the 1940 Act;

FURTHER RESOLVED, that the Board, including the Directors of the
Corporation who are not "interested persons" of the Corporation (as defined in
the 1940 Act) and who have no direct or indirect financial interest in the
operation of the Plan (the "Independent Directors"), hereby determines, in the
exercise of its reasonable business judgment and in light of its fiduciary
duties, that there is a reasonable likelihood that the Plan will benefit the
Fund and the Hamilton Classic class of Fund shareholders;

FURTHER RESOLVED, that the distribution arrangements and compensation
payable under the Plan determined (i) in good faith, based on the information
provided, to be competitive with compensation offered in the industry, and (ii)
to be fair and reasonable in light of such matters as the Directors have
considered relevant in the exercise of their reasonable business judgment;

[Include the following if Plan has not yet been approved by sole shareholder --
FURTHER RESOLVED, that the Plan shall be submitted to BISYS Fund
Services (as sole shareholder of the Hamilton Classic class of Fund shares),
for approval prior to the public offering of shares of the Hamilton Classic
class; ]

<PAGE>

FURTHER RESOLVED, that the form of Rule 12b-1 Related Agreement
presented and discussed at this meeting be, and the same hereby is, approved to
be used pursuant to the Plan, with such changes as counsel to the Corporation
may deem necessary or advisable;

FURTHER RESOLVED, that, upon recommendation of the Corporation's
administrator and distributor, BNY Hamilton Distributors, Inc., any officer of
the Fund's distributor be, and he or she hereby is, authorized to execute and
deliver Rule 12b-1 Related Agreements, in substantially the form presented to
this meeting, on behalf of the Fund, with securities dealers and other industry
professionals ("12b-1 Service Organizations") with respect to the provision of
distribution-related services to their customers who own of record or
beneficially shares of the Fund's Hamilton Classic class in consideration for
the Fund's payment of a fee, computed daily and payable monthly, at an annual
rate of up to .25% of the daily net asset value of Hamilton Classic shares
owned of record or beneficially by such customers;

FURTHER RESOLVED, that the Corporation be, and it hereby is,
authorized to enter into Rule 12b-1 Related Agreements with 12b-1 Service
Organizations that may be affiliated with the Corporation's investment adviser
or administrator and that the Board and the Independent Directors hereby
determine that:

(1) such Agreements are in the best interest of the Fund and its
shareholders;

(2) the services to be performed pursuant to such Fund's Agreements
are required for the Fund's operations;

(3) such 12b-1 Service Organizations can provide services the nature
and quality of which are at least equal to those provided by others offering
the same or similar services; and

(4) the fees for such services are fair and reasonable in light of the
usual and customary charges of others for services of the same nature and
quality; and

FURTHER RESOLVED, that [Include the following if Plan has not yet been
approved by sole shareholder -- , subject to its approval by the sole
shareholder of the Hamilton Classic class in accordance with the 1940 Act,] the
appropriate officers of the Corporation be, and each of them hereby is,
authorized and directed to make payments to the Fund's distributor pursuant to
the Plan and to take such other action as may be necessary or desirable and
proper to effectuate the provisions of the Plan and the intent of the foregoing
resolutions.

-2-

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<EXPENSES-NET> 7,468,362
<NET-INVESTMENT-INCOME> 103,213,492
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<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 103,213,492
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<DISTRIBUTIONS-OF-INCOME> (43,650,908)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9,474,354,796
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<SHARES-REINVESTED> 27,238,815
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<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .050
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<ARTICLE> 6
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<SHARES-COMMON-STOCK> 19,994,520
<SHARES-COMMON-PRIOR> 16,724,385
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<OVERDISTRIBUTION-GAINS> 0
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<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 110,681,854
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<NET-INVESTMENT-INCOME> 103,213,492
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<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 103,213,492
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<DISTRIBUTIONS-OF-INCOME> (903,654)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 76,263,435
<NUMBER-OF-SHARES-REDEEMED> (73,769,087)
<SHARES-REINVESTED> 775,787
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<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
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<PER-SHARE-NII> .047
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<ARTICLE> 6
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<NET-ASSETS> 12,524,486
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<EXPENSES-NET> 707,311
<NET-INVESTMENT-INCOME> 4,212,416
<REALIZED-GAINS-CURRENT> 390,562
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<EXPENSES-NET> 707,311
<NET-INVESTMENT-INCOME> 4,212,416
<REALIZED-GAINS-CURRENT> 390,562
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<DISTRIBUTIONS-OF-INCOME> (3,582,992)
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<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,849,294
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<SHARES-REINVESTED> 223,193
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<ACCUMULATED-GAINS-PRIOR> (2,878,731)
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<GROSS-EXPENSE> 755,297
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<PER-SHARE-DIVIDEND> (0.56)
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<ARTICLE> 6
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<S> <C>
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<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 41,274,004
<INVESTMENTS-AT-VALUE> 43,003,999
<RECEIVABLES> 720,890
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 198,635
<TOTAL-LIABILITIES> 698,635
<SENIOR-EQUITY> 4,046
<PAID-IN-CAPITAL-COMMON> 41,359,379
<SHARES-COMMON-STOCK> 1,087,045
<SHARES-COMMON-PRIOR> 985,415
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<ACCUMULATED-NET-GAINS> 5,538
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,729,995
<NET-ASSETS> 11,579,890
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,029,374
<OTHER-INCOME> 0
<EXPENSES-NET> 410,359
<NET-INVESTMENT-INCOME> 1,619,015
<REALIZED-GAINS-CURRENT> 256,154
<APPREC-INCREASE-CURRENT> 325,257
<NET-CHANGE-FROM-OPS> 2,200,426
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (379,819)
<DISTRIBUTIONS-OF-GAINS> (9,845)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 414,391
<NUMBER-OF-SHARES-REDEEMED> (341,124)
<SHARES-REINVESTED> 28,363
<NET-CHANGE-IN-ASSETS> 1,815,588
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (211,242)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 213,358
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 483,063
<AVERAGE-NET-ASSETS> 10,523,569
<PER-SHARE-NAV-BEGIN> 10.52
<PER-SHARE-NII> 0.38
<PER-SHARE-GAIN-APPREC> 0.14
<PER-SHARE-DIVIDEND> (0.38)
<PER-SHARE-DISTRIBUTIONS> (0.01)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.65
<EXPENSE-RATIO> 1.15
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000887318
<NAME> BNY HAMILTON INTERMEDIATE NEW YORK TAX-EXEMPT FUND
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<NAME> INSTITUTIONAL SHARES

<S> <C>
<PERIOD-TYPE> YEAR
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<PERIOD-END> DEC-31-1998
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<INVESTMENTS-AT-VALUE> 43,003,999
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</TABLE>

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<NAME> BNY HAMILTON INTERMEDIATE INVESTMENT GRADE FUND
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</TABLE>

<ARTICLE> 6
<CIK> 0000887318
<NAME> BNY HAMILTON INTERMEDIATE INVESTMENT GRADE FUND
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</TABLE>

<ARTICLE> 6
<CIK> 0000887318
<NAME> BNY HAMILTON INTERMEDIATE TAX-EXEMPT FUND
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<NAME> INVESTOR SHARES

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</TABLE>

<ARTICLE> 6
<CIK> 0000887318
<NAME> BNY HAMILTON INTERMEDIATE TAX-EXEMPT FUND
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<NAME> INSTITUTIONAL SHARES

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</TABLE>

<ARTICLE> 6
<CIK> 0000887318
<NAME> BNY INTERNATIONAL EQUITY FUND
<SERIES>
<NUMBER> 071
<NAME> INVESTOR SHARES

<S> <C>
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</TABLE>

<ARTICLE> 6
<CIK> 0000887318
<NAME> BNY INTERNATIONAL EQUITY FUND
<SERIES>
<NUMBER> 072
<NAME> INSTITUTIONAL SHARES

<S> <C>
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</TABLE>

<ARTICLE> 6
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<NAME> BNY HAMILTON SMALL CAP GROWTH FUND
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</TABLE>

<ARTICLE> 6
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<NAME> BNY HAMILTON SMALL CAP GROWTH FUND
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<ARTICLE> 6
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<NAME> BNY HAMILTON TREASURY MONEY FUND
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<NAME> HAMILTON SHARES

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<ARTICLE> 6
<CIK> 0000887318
<NAME> BNY HAMILTON TREASURY MONEY FUND
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<NAME> HAMILTON PREMIER SHARES

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</TABLE>