<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>
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<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
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[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
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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
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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
- ----------- -----------
MORTGAGE-BACKED SECURITIES (CONTINUED)
<C> <S> <C>
$ 297,548 Pool #247223, 9.00%, 04/15/18........... $ 319,140
42,084 Pool #177793, 9.50%, 05/15/19........... 45,473
9,892 Pool #256032, 8.50%, 10/15/19........... 10,583
6,782 Pool #284645, 8.50%, 02/15/20........... 7,252
64,840 Pool #290778, 9.50%, 05/15/20........... 70,085
26,194 Pool #319650, 7.00%, 11/15/22........... 26,825
50,268 Pool #350532, 6.50%, 06/15/23........... 50,800
1,579,578 Pool #351405, 6.50%, 01/15/24........... 1,595,631
169,727 Pool #359470, 7.00%, 01/15/24........... 173,731
256,349 Pool #376445, 6.50%, 04/15/24........... 258,954
189,437 Pool #386348, 7.50%, 06/15/24........... 195,267
1,417,755 Pool #780035, 6.50%, 07/15/24........... 1,432,163
335,292 Pool #407323, 8.25%, 04/15/25........... 351,847
737,376 Pool #464820, 7.00%, 09/15/28........... 754,435
-----------
5,874,934
-----------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $13,652,651)...................... 13,786,806
-----------
</TABLE>
<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
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
*MOODY'S
PRINCIPAL /S&P INTEREST MATURITY
AMOUNT RATINGS RATE DATE VALUE
- ---------- --------- --------- ---------- -----------
MUNICIPAL BONDS (CONTINUED)
<C> <S> <C> <C> <C> <C>
HEALTHCARE--2.3%
$ 420,000 New York State Dormitory Authority,
Nursing Home Our Lady of Consolation.... NR/AA 5.200% 8/1/2005 $ 445,112
500,000 New York State Medical Care
Facilities--Downstate Medical Center.... NR/AAA 5.700 2/15/2004 539,905
-----------
985,017
-----------
HOUSING--2.4%
500,000 New York State Mortgage
Revenue--Homeowner Mtg Series 37-A...... Aa2/NR 5.850 4/1/2006 525,600
500,000 New York State Mortgage
Revenue--Homeowner Mtg Series 39........ Aa2/NR 5.300 4/1/2004 521,425
-----------
1,047,025
-----------
INDUSTRIAL DEVELOPMENT BONDS--5.5%
1,000,000 Hempstead Town--New York Industrial
Development Agency...................... Aaa/AAA 4.875 12/1/2006 1,046,540
1,000,000 Hempstead Town--New York Industrial
Development Agency...................... Aaa/AAA 5.000 12/1/2007 1,056,820
250,000 Westchester County Industrial
Development Agency Series A............. Aaa/AAA 4.850 7/1/2000 255,295
-----------
2,358,655
-----------
PREREFUNDED/ESCROWED/US GUARANTEED--5.0%
830,000 New York Housing Finance Agency, ETM
State University Construction........... Aaa/AAA 6.500 11/1/2006 909,788
950,000 New York State Power Authority Revenue &
General Purpose Series CC............... Aaa/AAA 4.900 1/1/2006 1,007,846
257,000 Puerto Rico Aqueduct & Sewer Authority,
ETM..................................... Aaa/AAA 4.500 7/1/2002 260,750
-----------
2,178,384
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
68
<PAGE>
BNY HAMILTON INTERMEDIATE NEW YORK 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>
SPECIAL TAX--23.3%
$1,000,000 MTA Dedicated Tax, MBIA Insured+........ Aaa/AAA 6.000% 4/1/2005 $ 1,107,520
1,000,000 Municipal Assistance Corp. for New York
City.................................... Aa2/AA 4.800 7/1/2003 1,039,330
2,000,000 Municipal Assistance Corp. for New York
City Series E........................... Aa2/AA 6.000 7/1/2005 2,223,340
1,500,000 New York State Local Government
Assistance Corp. ....................... A3/A+ 4.250 4/1/2002 1,522,215
500,000 New York State Local Government
Assistance Corp. ....................... A3/A+ 4.800 4/1/2005 520,075
655,000 New York State Local Government
Assistance Corp. ....................... A3/A+ 5.000 4/1/2002 679,392
340,000 New York State Local Government
Assistance Corp. ....................... A3/A+ 6.750 4/1/2002 367,577
750,000 New York, New York City Transitional
Finance Authority Revenue............... Aa3/AA 5.000 11/15/2010 788,085
1,225,000 New York, New York City Transitional
Finance Authority Revenue Series A...... Aa3/AA 5.000 8/15/2005 1,291,076
500,000 New York, New York City Transitional
Finance Authority Revenue Series C...... Aa3/AA 4.000 5/1/2002 504,285
-----------
10,042,895
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
69
<PAGE>
BNY HAMILTON INTERMEDIATE NEW YORK 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--18.8%
$1,000,000 Metropolitan Transportation Authority
Service Contract Revenue................ Baa1/BBB+ 5.750% 7/1/2007 $ 1,104,580
300,000 New York State, CTFS Partnership........ Baa/BBB+ 4.125 9/1/2004 301,599
520,000 New York State Dormitory Authority,
Albany County........................... Baa1/BBB+ 5.000 4/1/2002 537,914
250,000 New York State Dormitory Authority,
Albany County........................... Baa1/BBB+ 5.500 4/1/2008 271,585
300,000 New York State Dormitory Authority,
State University........................ A3/A- 5.200 5/15/2003 315,648
650,000 New York State Dormitory Authority,
Upstate Community Colleges.............. Baa1/BBB+ 5.600 7/1/2007 705,295
505,000 New York State Medical Care
Facilities--Mental Health............... A3/A- 4.700 8/15/2001 517,145
480,000 New York State Medical Care
Facilities--Mental Health............... A3/A- 6.100 8/15/2002 515,093
500,000 New York State Thruway Authority Service
Contract Highway & Bridge Trust Fund.... Baa1/BBB+ 5.750 4/1/2008 550,280
750,000 New York State Thruway Authority Service
Contract Revenue........................ Baa1/BBB+ 5.625 4/1/2007 821,355
565,000 New York State Urban Development
Corp. .................................. Baa1/BBB+ 4.200 1/1/2004 570,074
1,000,000 New York State Urban Development
Corp. .................................. Baa1/BBB+ 5.900 1/1/2007 1,070,510
750,000 New York State Urban Development
Corp. .................................. Baa1/BBB+ 6.000 1/1/2007 838,770
-----------
8,119,848
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
70
<PAGE>
BNY HAMILTON INTERMEDIATE NEW YORK 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%
$1,100,000 New York State Thruway Authority General
Revenue................................. Aa3/AA- 5.250% 1/1/2001 $ 1,137,301
500,000 Port Authority New York & New Jersey.... A1/AA- 4.750 10/1/2008 521,785
650,000 Port Authority New York & New Jersey.... A1/AA- 5.100 8/1/2001 674,642
1,000,000 Port Authority New York & New Jersey.... A1/AA- 5.300 8/1/2003 1,058,170
500,000 Port Authority New York & New Jersey.... A1/AA- 6.100 10/15/2002 540,690
400,000 Triborough Bridge & Tunnel Authority
General Purpose......................... Aa3/A+ 4.600 1/1/2005 413,120
-----------
4,345,708
-----------
UTILITIES--7.2%
1,500,000 Long Island Power Authority New York
Electric System Revenue................. Aaa/AAA 5.500 12/1/2010 1,645,995
300,000 New York State Environmental Facility
Corp. PCR State Water................... Aaa/AAA 6.000 5/15/2002 321,525
100,000 New York State Environmental Facility
Corp. PCR State Water................... Aaa/AAA 6.300 9/15/2000 104,848
1,000,000 New York State Power Authority Revenue &
General Purpose Series A................ Aa3/AA- 4.250 2/15/2004 1,015,050
-----------
3,087,418
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
71
<PAGE>
BNY HAMILTON INTERMEDIATE NEW YORK 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>
OTHER--2.0%
$ 205,000 New York City, Trust for Cultural
Resources Museum MOMA--AMBAC Insured+... Aaa/AAA 4.900% 1/1/2001 $ 210,658
75,000 New York City, Trust for Cultural
Resources Museum MOMA--AMBAC Insured+... Aaa/AAA 5.000 1/1/2002 77,874
165,000 New York City, Trust for Cultural
Resources Museum MOMA--AMBAC Insured+... Aaa/AAA 5.000 1/1/2002 171,275
350,000 New York City, Trust for Cultural
Resources Museum MOMA--AMBAC Insured+... Aaa/AAA 6.300 1/1/2003 382,515
-----------
842,322
-----------
TOTAL MUNICIPAL BONDS
(Cost $41,254,701)...................... 42,984,696
-----------
</TABLE>
<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 MATURITY
AMOUNT RATINGS RATE DATE VALUE
- ---------- ---------- -------- ------------ ------------
MUNICIPAL BONDS (CONTINUED)
<C> <S> <C> <C> <C> <C>
OTHER--0.1%
200,000 New York State Dormitory Authority
Revenue Metropolitan Museum of Art
Series B, Floating Rate Notes, payable
monthly, interest rate resets weekly,
next interest rate reset date 1/6/99.... Aa1/AA+ 3.650 ++ 7/1/2023 200,000
100,000 New York State Local Government
Assistance Corp. Series A, Floating Rate
Notes, payable monthly, interest rate
resets weekly, next interest rate reset
date 1/6/99............................. Aa3/AA 3.900 ++ 4/1/2022 100,000
------------
300,000
------------
TOTAL MUNICIPAL BONDS
(Cost $253,271,110)..................... 266,114,624
------------
</TABLE>
<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>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ------------
REPURCHASE AGREEMENTS (CONTINUED)
<C> <S> <C>
REPURCHASE AGREEMENTS WITH MORGAN STANLEY DEAN
WITTER--5.0%
$125,000,000 4.80%, due 01/04/99, repurchase price
$125,066,667 (Collateral-- Various
United States Government Agency Discount
Notes & Bonds, 0.00%-7.12%,
1/04/99-1/30/13; aggregate market value
plus accrued interest $128,030,930)..... $125,000,000
------------
TOTAL REPURCHASE AGREEMENTS
(Cost $685,000,000)..................... 685,000,000
------------
</TABLE>
<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
<CAPTION>
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)
<CAPTION>
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
<CAPTION>
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.
(C) REPURCHASE AGREEMENTS
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
<CAPTION>
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
<CAPTION>
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
