[Logo omitted]
PBHG INSURANCE SERIES FUND, INC.
SEMI-ANNUAL REPORT June 30, 2000
[bullet] PBHG Growth II Portfolio
[bullet] PBHG Select 20 Portfolio
[bullet] PBHG Select Value Portfolio
[bullet] PBHG Small Cap Value Portfolio
[bullet] PBHG Technology & Communications Portfolio
<PAGE>
[Logo omitted]
PBHG Insurance Series Fund, Inc.
--------------------------------------------------------------------------------
PBHG GROWTH II PORTFOLIO
Dear Shareholder,
The PBHG Growth II Portfolio returned +20.09% for the first half of 2000. This
compares favorably with the +12.14% return of the Russell MidcapTM Growth Index
for the same period.
The most significant factor in the equity markets during the first half of 2000
was VOLATILITY. Whether it was caused by an aggressively restrictive Federal
Reserve or valuation levels that were unsustainable by mid-March, volatility
ruled the day. This was especially evident in the technology sector, which
experienced both the greatest run-up over the last 18 months and the biggest
correction during the two-month sell-off. Overall, the first half turned out to
be a very good period for reasons other than just performance. First,
fundamentals of many aggressive growth companies continued to be strong and
actually improved throughout the half. Second, rational thinking appeared to
return to the market. Investors began to scrutinize business models. As a result
of this change in investor mindset, the days when the stock of a company with
only a vague semblance of a business strategy, no real track record, and no
visible path to profitability could attain a stratospheric valuation may be
gone. While this transition has caused near-term volatility in the technology
sector, we believe it was necessary and beneficial over the long run because it
will enable companies exhibiting improving fundamentals and well-executed
business plans to come to the forefront.
Several factors led to the portfolio's favorable results in the first half.
First, growth stocks outperformed value stocks across the mid and large
capitalization range. This was evidenced by the return of the Russell MidcapTM
Growth Index of +12.1% vs. -0.7% for the Russell MidcapTM Value Index. Second,
we were overweighted in the technology and energy sectors, which had among the
best returns. Third, the Portfolio's technology and health care sector holdings
outperformed those of the benchmark. Lastly, the companies in the Portfolio
experienced a minimal number of earnings disappointments this year.
<TABLE>
<CAPTION>
TOP FIVE HOLDINGS AS OF JUNE 30, 2000 TOP FIVE SECTORS AS OF JUNE 30, 2000
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Verisign 3.7% Technology 58.8%
Redback Networks 3.6% Health Care 9.3%
MRV Communications 2.8% Energy 8.3%
Art Technology Group 2.8% Industrial 7.5%
Newport 2.6% Consumer Cyclical 4.0%
</TABLE>
The Portfolio is dominated by fewer sectors today than historically. We continue
to have just under a 60% weighting in technology. Health care and energy
represent the next largest areas of focus, as the consumer and services sectors
have declined. This narrow focus reflects our opinion that the economy lacks
breadth in its underlying strengths. Because of this higher level of sector
concentration, the Portfolio is more volatile at present than in prior quarters,
although it is difficult to imagine a time of greater volatility than the
six-month period just passed. Going forward, we will attempt to add greater
sector diversification to the Portfolio by seeking to provide exposure to other
sectors as they become more attractive.
Sincerely,
/s/signature
Jeffrey A. Wrona, CFA
Portfolio Manager
1
<PAGE>
[Logo omitted]
PBHG Insurance Series Fund, Inc.
--------------------------------------------------------------------------------
PBHG GROWTH II PORTFOLIO (UNAUDITED)
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN1 AS OF JUNE 30, 2000
--------------------------------------------------------------------------------
Annualized Annualized
Six-Month One Year Three Year Inception to
Return Return Return Date2
--------------------------------------------------------------------------------
PBHG Growth II Portfolio 20.09% 90.24% 38.36% 37.88%
--------------------------------------------------------------------------------
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE PBHG
GROWTH II PORTFOLIO, VERSUS THE RUSSELL MIDCAP GROWTH INDEX AND
THE LIPPER MID-CAP GROWTH FUNDS AVERAGE
[Line graph omitted--plot points as follows:]
<TABLE>
<CAPTION>
PBHG Growth II Portfolio Russell Midcap Growth Index3 Lipper Mid-Cap Growth Funds Average4
<S> <C> <C> <C>
4/30/97 $10,000 $10,000 $10,000
5/31/97 $10,090 $9,572 $11,241
6/30/97 $10,450 $7,745 $11,768
7/31/97 $11,300 $8,331 $12,678
8/31/97 $10,960 $8,944 $12,707
9/30/97 $11,440 $9,547 $13,697
10/31/97 $10,830 $10,536 $12,890
11/30/97 $10,580 $10,852 $12,648
12/31/97 $10,750 $10,321 $12,731
1/31/98 $10,380 $10,896 $12,542
2/28/98 $11,250 $11,393 $13,649
3/31/98 $11,710 $11,246 $14,326
4/30/98 $12,140 $12,031 $14,432
5/31/98 $11,240 $11,648 $13,560
6/30/98 $11,840 $11,527 $14,156
7/31/98 $10,950 $11,429 $13,316
8/31/98 $8,430 $12,313 $10,493
9/30/98 $9,320 $13,588 $11,288
10/31/98 $9,720 $15,941 $11,737
11/30/98 $10,240 $15,938 $12,759
12/31/98 $11,630 $19,288 $14,397
1/31/99 $12,620 $19,308 $15,029
2/28/99 $11,490 $17,434 $13,854
3/31/99 $12,460 $16,163 $14,882
4/30/99 $13,380 $17,878 $15,519
5/31/99 $13,190 $19,480 $15,491
6/30/99 $14,550 $20,019 $16,837
7/31/99 $14,550 $21,935 $16,704
8/31/99 $15,170 $21,721 $16,676
9/30/99 $15,370 $22,821 $17,111
10/31/99 $16,850 $21,677 $18,589
11/30/99 $18,550 $21,905 $20,887
12/31/99 $23,050 $22,192 $24,820
1/31/2000 $22,990 $21,792 $24,435
2/29/2000 $31,010 $23,841 $30,532
3/31/2000 $27,110 $24,841 $28,999
4/30/2000 $23,510 $25,178 $26,044
5/31/2000 $21,420 $24,142 $23,846
6/30/2000 $27,680 $24,825 $27,063
</TABLE>
1 Performance is historical and not indicative of future results. The favorable
returns experienced by the technology sector in 1999 and the first half of
2000 involved accepting the volatility and risk inherent in that sector and
that these returns cannot be consistently achieved. In addition, the products
of technology companies may be subject to severe competition and rapid
obsolescence. The investment return and principal value of an investment will
fluctuate, so that an investor's shares, when redeemed, may be worth more or
less than their original cost.
2 The PBHG Growth II Portfolio commenced operations on April 30, 1997.
3 The Russell Midcap Growth Index is an unmanaged index comprised of the 800
smallest securities in the Russell 1000 Index with a greater-than-average
growth orientation. The Index reflects the reinvestment of income dividends
and capital gain distributions, if any, but does not reflect fees, brokerage
commissions, or other expenses of investing. The Index is not intended to
imply the Portfolio's past or future performance.
4 The Lipper Mid-Cap Growth Funds Average represents the average performance of
all mutual funds classified by Lipper, Inc. in the Mid-Cap Growth category.
These performance figures are based on the changes in net asset value of the
Funds in the category with all capital gains distributions and income
dividends reinvested. The Average is not intended to imply the Portfolio's
past or future performance.
SECTOR WEIGHTINGS - AT JUNE 30, 2000
[Pie chart omitted--plot points as follows:]
Consumer Cyclical 4%
Energy 8%
Financial 1%
Health Care 9%
Industrial 7%
Services 3%
Technology 59%
Cash 9%
% of Total Portfolio Investments
TOP TEN HOLDINGS - JUNE 30, 2000
Verisign 3.7%
Redback Networks 3.6%
MRV Communications 2.8%
Art Technology Group 2.8%
Newport 2.6%
Globespan 2.6%
Extreme Networks 2.4%
Vitria Technology 2.3%
Teva Pharmaceutical ADR 2.2%
Infospace 2.1%
---------------------------------------
% OF TOTAL PORTFOLIO INVESTMENTS 27.1%
2
<PAGE>
[Logo omitted]
PBHG Insurance Series Fund, Inc.
--------------------------------------------------------------------------------
PBHG SELECT 20 PORTFOLIO
Dear Shareholder,
We believe the advantages of concentrated investing -- focusing on a limited
number of stocks possessing the greatest fundamental business momentum -- were
borne out in the results of the SELECT 20 PORTFOLIo. The Portfolio returned
+10.49% for the six months ending June 30, 2000, compared to the -0.41% return
of its benchmark, the S&P 500 Index. The outperformance relative to the
benchmark occurred primarily in the first quarter during which time the
Portfolio appreciated +19.60%. The Portfolio declined 7.62% while the S&P
declined a seemingly mild -2.65% in the second quarter, however, this figure
inadequately describes the roller coaster investors had to withstand during this
period.
The recent phenomenon, of investors willing to pay lofty prices for Internet
companies with no current earnings but growing revenues seemed to come to an
abrupt halt. As these "New Economy" companies' valuations grew, the scrutiny
increased with regard to all technology companies' price appreciation. At the
same time, "Old Economy" companies were being devalued by the stock market. The
divergence in these two segments reached a crescendo on March 10. Since then,
there has been a revision in valuations. Many New Economy issues
indiscriminately lost 30% of their value into the close of the first quarter of
2000. The slide continued into April and May with the average NASDAQ issue off
40% from its 52-week high, and nearly 80% of the companies down at least 20%.
The second quarter was highly volatile, especially for those invested in
technology issues. But, just as the bears began to roar, the bulls charged
forward, with the NASDAQ rebounding +16.6% in June -- one of the largest
single-month gains ever for the Index.
Reminiscent of 1999, investors continued to favor technology stocks above all
others during the first six months of this year. Determining factors seemed to
be sustainable, above-average earnings and revenue growth rates in an
environment characterized by increased trading liquidity. Our investment style
continued to be in favor over the last six months. We continue to believe that
high quality, well managed, non-cyclical growth companies with sustainable
competitive advantages represent the most compelling investment opportunities.
Consistent with this view, technology issues continued to be our largest sector
representation, ending the period at 69.5%. We remain steadfast in our view that
technology is likely to continue to be the fastest growing sector of our economy
with the best business momentum. At June 30, the Portfolio's holdings were
divided among five economic sectors: technology, 69.5%; consumer cyclicals,
8.4%; industrial, 5.0%; financial, 4.4%; and health care, 1.3%.
We also experienced some disappointments in the first half. Deteriorating
fundamentals prompted the sale of a number of holdings, most ahead of their
share price deterioration and, unfortunately, a few after. While negative
surprises are a fact of life for investors, minimizing them helps to create
superior returns over time. We continue to work diligently to anticipate changes
in our companies' business fundamentals.
As we enter the second half of the year, the equity markets are in a period of
transition. The euphoria of the last quarter of 1999 and the first quarter of
2000 has abated, and the new mode is one of caution. Clearly, the Federal
Reserve is no longer accommodative with respect to interest rates as they remove
the excess liquidity generated for Y2K. Valuations have been reined in, however,
we expect continued periods of extreme short-term volatility. In our opinion,
the odds are low for a major sustained downdraft in equity markets in the
presence of a vibrant U.S. economy and exceptional fundamental business
dynamics. At present, some of the market's "arrogance" that it could continue
climbing unabated has waned. In one sense, we are relieved that the ominous
correction everyone was anticipating for New Economy stocks has already
occurred. While we experienced some discomfort watching some of our "babies" get
thrown out with the "bath water", the subsequent rebound separated our
"contenders" from the "pretenders". The pullback also presented us with the
opportunity to commit new capital to our investments at lower prices, thereby,
we believe strengthening the Portfolio for the long-term.
Thank you for the confidence you've shown in Pilgrim Baxter & Associates, Ltd.
and for your continued participation in the PBHG SELECT 20 PORTFOLIO.
Sincerely,
/s/signature
Michael S. Sutton, CFA
Portfolio Manager
3
<PAGE>
[Logo omitted]
PBHG Insurance Series Fund, Inc.
--------------------------------------------------------------------------------
PBHG SELECT 20 PORTFOLIO (UNAUDITED)
----------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN1 AS OF JUNE 30, 2000
----------------------------------------------------------------------
Annualized
Six-Month One Year Inception to
Return Return Date2
----------------------------------------------------------------------
PBHG Select 20 Portfolio 10.49% 102.18% 59.15%
----------------------------------------------------------------------
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE
PBHG SELECT 20 PORTFOLIO, VERSUS THE S&P 500 INDEX AND THE
LIPPER LARGE-CAP GROWTH FUNDS AVERAGE
[Line graph omitted--plot points as follows:]
<TABLE>
<CAPTION>
PBHG Select 20 Portfolio S&P 500 Index3 Lipper Large-Cap Growth Funds Average4
<S> <C> <C> <C>
9/30/97 $10,000 $10,000 $10,000
10/31/97 $9,629 $9,666 $9,640
11/30/97 $9,679 $10,113 $9,842
12/31/97 $10,050 $10,287 $9,933
1/31/98 $10,220 $10,401 $10,086
2/28/98 $11,353 $11,150 $10,901
3/31/98 $11,994 $11,721 $11,420
4/30/98 $12,234 $11,839 $11,596
5/31/98 $11,964 $11,636 $11,298
6/30/98 $13,176 $12,108 $12,012
7/31/98 $13,247 $11,979 $11,929
8/31/98 $11,042 $10,249 $9,928
9/30/98 $12,626 $10,906 $10,676
10/31/98 $12,876 $11,793 $11,365
11/30/98 $13,778 $12,508 $12,167
12/31/98 $16,333 $13,229 $13,515
1/31/99 $17,726 $13,782 $14,441
2/28/99 $16,543 $13,354 $13,827
3/31/99 $17,966 $13,888 $14,672
4/30/99 $17,305 $14,426 $14,710
5/31/99 $16,734 $14,085 $14,219
6/30/99 $17,906 $14,867 $15,258
7/31/99 $17,445 $14,403 $14,802
8/31/99 $18,187 $14,331 $14,836
9/30/99 $18,798 $13,938 $14,725
10/31/99 $20,862 $14,820 $15,789
11/30/99 $24,890 $15,122 $16,718
12/31/99 $32,766 $16,012 $18,794
1/31/2000 $31,915 $15,208 $18,031
2/29/2000 $38,297 $14,920 $19,399
3/31/2000 $39,189 $16,379 $20,437
4/30/2000 $34,720 $15,887 $19,180
5/31/2000 $30,201 $15,561 $18,003
6/30/2000 $36,203 $15,944 $19,393
1 Performance is historical and not indicative of future results. The favorable
returns experienced by the technology sector in 1999 and the first half of
2000 involved accepting the volatility and risk inherent in that sector and
that these returns cannot be consistently achieved. In addition, the products
of technology companies may be subject to severe competition and rapid
obsolescence. The investment return and principal value of an investment will
fluctuate, so that an investor's shares, when redeemed, may be worth more or
less than their original cost.
2 The PBHG Select 20 Portfolio commenced operations on September 25, 1997.
3 The S&P 500 Index is a capitalization weighted index of 500 stocks designed to
measure performance of the broad domestic economy. The Index is unmanaged and
reflects the reinvestment of income dividends and capital gains distributions,
if any, but does not reflect fees, brokerage commissions, or other expenses of
investing. The Index is not intended to imply the Portfolio's past or future
performance.
4 The Lipper Large-Cap Growth Funds Average represents the average performance
of all mutual funds classified by Lipper, Inc. in the Large-Cap Growth
category. The performance figures are based on changes in net asset value of
the Funds in the category with all capital gains distributions and income
dividends reinvested. The Average is not intended to imply the Portfolio's
past or future performance.
</TABLE>
SECTOR WEIGHTINGS - AT JUNE 30, 2000
[Pie chart omitted--plot points as follows:]
Consumer Cyclical 9%
Financial 4%
Health Care 1%
Industrial 5%
Technology 70%
Cash 11%
% of Total Portfolio Investments
TOP TEN HOLDINGS - JUNE 30, 2000
Nortel Networks 8.6%
JDS Uniphase 8.3%
Juniper Networks 5.5%
Flextronics International 5.0%
Broadcom 5.0%
EMC 4.9%
Cisco Systems 4.7%
Applied Materials 4.5%
Citigroup 4.4%
Nokia ADR, Cl A 4.3%
-------------------------------------------
% OF TOTAL PORTFOLIO INVESTMENTS 55.2%
4
<PAGE>
[Logo omitted]
PBHG Insurance Series Fund, Inc.
--------------------------------------------------------------------------------
PBHG SELECT VALUE PORTFOLIO
Dear Shareholder:
In spite of the volatility that characterized the first half of 2000, which
ended with mixed returns for the major indexes, your portfolio was able to post
a positive return. The PBHG Select Value Portfolio returned +6.06% versus -0.41%
for the S&P 500 and -4.23% for the Russell 1000 Value Index.
MARKET OVERVIEW
Economic data also was mixed. Reports in late May and early June indicated a
strong, but slowing economy. Housing and auto sales are off their highs (and
probably have peaked for this cycle), indicating that interest rate hikes have
begun to have their effect. Anecdotal evidence, however, indicates that
"fearless" consumers are still spending. For example, houses are still being
sold above their asking prices in many areas; it is difficult to hire qualified
workers; and contractors, such as painters and landscapers, are booked for weeks
in advance. Most likely, a clearer outlook on the direction of the economy will
not become obvious until later in the year.
Regardless of the economic outlook, we continue to employ our approach of
focusing on value stocks with sound business fundamentals. This led us to
pharmaceutical and energy stocks in the first half. In early March we were able
to purchase shares of major pharmaceutical companies (Merck, Schering-Plough,
Bristol Myers Squibb) at P/E ratios below the P/E of the S&P 500. Historically,
this has been a terrific buying opportunity for us and, thus far, we believe
these stocks have been an excellent investment. Likewise, high oil prices and
rising earnings allowed for good performance in the energy sector this year. El
Paso Energy is an example of our success in that sector.
Finally, high valuations and a slowing economy led us to underweight the
technology sector for the first half. This decision, along with good security
selection in this sector (including Intel and Microsoft) was beneficial to
returns for most of that time period. Despite the recent correction, we continue
to find technology stocks generally overvalued and are being very selective in
our purchases.
INVESTMENT STRATEGY
The market appears to be priced for a "soft landing" in the belief that the
Federal Reserve is finished raising interest rates. We disagree with that
belief. Mr. Greenspan is determined to slow the economy, which raises the odds
of a "hard landing". While a soft landing is possible, historically it is a low
probability bet. We continue to follow our disciplined approach that seeks to
identify companies at attractive valuations which also offer a combination of
strong long-term growth potential and a solid near-term business outlook.
We are concerned that companies in more economically-sensitive industries may
have trouble meeting earnings expectations going forward. As a result, we have
positioned the portfolio defensively to help protect against market volatility
and enable us to make purchases of companies with solid business dynamics if the
slowing economy brings valuations to a more attractive level.
In closing, we thank you for your confidence in Pilgrim Baxter Value Investors,
Inc. and in the PBHG Insurance Series Fund, Inc.
Sincerely,
/s/signature
Raymond J. McCaffrey, CFA
Portfolio Manager
5
<PAGE>
[Logo omitted]
PBHG Insurance Series Fund, Inc.
--------------------------------------------------------------------------------
PBHG SELECT VALUE PORTFOLIO (UNAUDITED)
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN1 AS OF JUNE 30, 2000
--------------------------------------------------------------------------------
Annualized
Six-Month One Year Inception to
Return Return Date2
-------------------------------------------------------------------------------
PBHG Select Value Portfolio 6.06% 5.70% 20.91%
-------------------------------------------------------------------------------
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE PBHG SELECT
VALUE PORTFOLIO, VERSUS THE S&P 500 INDEX AND THE
LIPPER LARGE-CAP VALUE FUNDS AVERAGE
[Line graph omitted--plot points as follows:]
<TABLE>
<CAPTION>
PBHG Select Value Portfolio S&P 500 Index3 Lipper Large-Cap Value Funds Average4
<S> <C> <C> <C>
10/31/97 $10,000 $10,000 $10,000
11/30/97 $10,200 $10,463 $10,339
12/31/97 $10,440 $10,642 $10,530
1/31/98 $10,440 $10,760 $10,553
2/28/98 $11,111 $11,535 $11,278
3/31/98 $11,642 $12,125 $11,768
4/30/98 $11,862 $12,247 $11,866
5/31/98 $11,862 $12,037 $11,640
6/30/98 $12,022 $12,526 $11,864
7/31/98 $11,956 $12,393 $11,616
8/31/98 $10,284 $10,603 $9,944
9/30/98 $11,115 $11,282 $10,507
10/31/98 $12,387 $12,200 $11,356
11/30/98 $13,298 $12,940 $11,954
12/31/98 $14,403 $13,685 $12,469
1/31/99 $14,656 $14,258 $12,719
2/28/99 $14,060 $13,814 $12,382
3/31/99 $14,424 $14,367 $12,777
4/30/99 $14,827 $14,924 $13,508
5/31/99 $14,898 $14,571 $13,282
6/30/99 $15,736 $15,380 $13,848
7/31/99 $15,403 $14,900 $13,491
8/31/99 $15,140 $14,826 $13,206
9/30/99 $14,950 $14,419 $12,763
10/31/99 $15,714 $15,332 $13,393
11/30/99 $15,983 $15,643 $13,496
12/31/99 $15,683 $16,565 $13,940
1/31/2000 $15,425 $15,733 $13,369
2/29/2000 $14,434 $15,435 $12,841
3/31/2000 $16,055 $16,945 $14,057
4/30/2000 $16,592 $16,435 $13,891
5/31/2000 $17,088 $16,098 $13,852
6/30/2000 $16,633 $16,494 $13,737
</TABLE>
1 Performance is historical and not indicative of future results. The investment
return and principal value of an investment will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their
original cost. Prior to May 1, 2000, the Portfolio was named PBHG Large Cap
Value Portfolio and was not limited to the number of stocks it could hold.
Therefore, the Portfolio's performance prior to May 1, 2000 may not be an
indication of how it will perform in the future.
2 The PBHG Select Value Portfolio commenced operations on October 28, 1997.
3 The S&P 500 Index is a capitalization weighted index of 500 stocks designed to
measure performance of the broad domestic economy. The Index is unmanaged and
reflects the reinvestment of income dividends and capital gains distributions,
if any, but does not reflect fees, brokerage commissions, or other expenses of
investing. The Index is not intended to imply the Portfolio's past or future
performance.
4 The Lipper Large-Cap Value Funds Average represents the average performance of
all mutual funds classified by Lipper, Inc. in the Large-Cap Value category.
The performance figures are based on changes in net asset value of the Funds
in the category with all capital gains distributions and income dividends
reinvested. The Average is not intended to imply the Portfolio's past or
future performance.
SECTOR WEIGHTINGS - AT JUNE 30, 2000
[Pie chart omitted--plot points as follows:]
Consumer Cyclical 5%
Consumer Non-Cyclical 4%
Energy 15%
Financial 16%
Health Care 16%
Industrial 4%
Services 12%
Technology 13%
Registered Investment Company 3%
Cash 12%
% of Total Portfolio Investments
TOP TEN HOLDINGS - JUNE 30, 2000
Bellsouth 4.2%
GTE 4.1%
Exxon Mobil 4.1%
Merck 4.1%
Pharmacia 4.1%
Pfizer 3.9%
Schering-Plough 3.8%
Citigroup 3.8%
Microsoft 3.8%
Intel 3.7%
----------------------------------------------------
% OF TOTAL PORTFOLIO INVESTMENTS 39.6%
6
<PAGE>
[Logo omitted]
PBHG Insurance Series Fund, Inc.
--------------------------------------------------------------------------------
PBHG SMALL CAP VALUE PORTFOLIO
Dear Shareholder,
OVERVIEW
In all of the value portfolios we manage, we take a unique approach to value
investing. When screening our universe of stocks, we discard not only the 25%
which represent the most expensive stocks (as most value investors would), but
we also disregard the 25% with the poorest business fundamentals, regardless of
valuation. While most value investors love cheap stocks, we will only buy cheap
stocks that we think have good profit prospects.
Our goal is to achieve consistent market beating returns. Our process reflects
this goal by focusing our efforts on the most promising investment candidates
within each sector, industry and capitalization range. Our process relies
heavily on both quantitative and fundamental research to aid in identifying
investment candidates for purchase and sale. In building the portfolio, we
attempt to balance a company's long-term growth potential and near-term business
results with the valuation it commands in the market. The PBHG Small Cap Value
Portfolio is typically fully invested across a diversified portfolio of
companies. We strive to have an aggregate P/E ratio below the Portfolio's
benchmark, the Russell 2000 Index, as well as significantly stronger current
business trends and comparable long-term growth expectations compared to those
of the companies which make up the index.
The PBHG Small Cap Value Portfolio returned +29.72% for the six-months ended
June 30, 2000. This compares favorably to the returns for the period of both the
Russell 2000 Index +3.03% and the Russell 2000 Value Index +5.83%. For the year
ended June 30, the Portfolio returned +45.86%, versus +14.33% for the Russell
2000 Index and -0.95% for the Russell 2000 Value Index. Since inception on
October 28, 1997, the Portfolio has produced an average annual return of
+23.24%, compared to an average annual return of +8.10% for the Russell 2000
Index and +0.73% for the Russell 2000 Value Index.
Energy and health care were the main contributors to the strong performance in
the past six months. The Portfolio was overweighted in and also enjoyed
exceptional returns within the sectors relative to its benchmark. In energy, we
have continued to find great investment opportunities in companies with
exceptional near-term dynamics and modest valuations. Most of our energy
companies have significant operations involved in natural gas. In our opinion,
the supply/ demand issues in natural gas were instrumental to the rise in
commodity price and companies' share prices during the period. We remain bullish
on natural gas-related companies.
The market's volatility throughout the six-month period allowed us to build
positions in what we believe are some great healthcare companies. While most of
the companies we own contributed positive returns during the period, some
produced negative returns. We are currently working on identifying new
candidates which possess the appropriate attributes for inclusion in the
Portfolio.
The Portfolio's results within the financial sector were particularly strong
during the first quarter, with attractive relative performance. Conversely,
technology was our worst performing sector in the second quarter in terms of
stock selection. Unfortunately, we were in stocks that people wanted to sell
rather than buy. However, we remain confident that our approach will be
successful across all sectors over time and look forward to redeeming ourselves
within the technology sector.
For the period ended June 30, 2000, the portfolio's top five economic sector
weightings were: energy, 18.6%; technology, 18.1%; financial, 14.9%; industrial,
9.5%; and consumer cyclical, 8.0%.
7
<PAGE>
[Logo omitted]
PBHG Insurance Series Fund, Inc.
--------------------------------------------------------------------------------
PBHG SMALL CAP VALUE PORTFOLIO
<TABLE>
<CAPTION>
PERIOD ENDING PBHG SMALL CAP RUSSELL 2000 RUSSELL 2000
JUNE 30, 2000 VALUE PORTFOLIO INDEX VALUE INDEX
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Six Months 29.72% 3.03% 5.83%
One Year 45.86% 14.33% -0.95%
Since Inception* (10/28/97) 23.24% 8.10% 0.73%
</TABLE>
*ANNUALIZED
LOOKING FORWARD
Expect volatility. Although you are probably tired of hearing this from people
(or maybe just from us), it bears repeating. The summer months are typically
difficult ones for technology stocks and, although we expect fundamentals for
most technology stocks to be outstanding, the seasonal pattern of selling
technology stocks in the summer may provide us with future opportunities to own
great companies at a discount to their intrinsic worth. We will be monitoring
the rhetoric out of Washington. As our presidential hopefuls take their stabs at
fixing the budget, social security and healthcare costs, expect the market to
fixate on small details of both plans and use them as excuses to sell stocks. We
will be cognizant of the coming debates/proposals concerning drug costs and the
impact they will have on pharmaceutical companies with improving near-term
business dynamics and buy them when valuations seem attractive. The only
certainty in the market is that volatility provides great opportunities for
patient investors. We will seek to exploit those opportunities to the advantage
of our investors.
Sincerely,
/s/signature
Jerome J. Heppelmann, CFA
Portfolio Manager
8
<PAGE>
[Logo omitted]
PBHG Insurance Series Fund, Inc.
--------------------------------------------------------------------------------
PBHG SMALL CAP VALUE PORTFOLIO (UNAUDITED)
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN1 AS OF JUNE 30, 2000
--------------------------------------------------------------------------------
Annualized
Six-Month One Year Inception to
Return Return Date2
--------------------------------------------------------------------------------
PBHG Small Cap Value Portfolio 29.72% 45.86% 23.24%
--------------------------------------------------------------------------------
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE PBHG SMALL
CAP VALUE PORTFOLIO, VERSUS THE RUSSELL 2000 INDEX, THE RUSSELL 2000 VALUE INDEX
AND THE LIPPER SMALL-CAP VALUE FUNDS AVERAGE
[Line graph omitted--plot points as follows:]
<TABLE>
<CAPTION>
PBHG Small Cap Value Portfolio Russell 2000 Index3 Russell 2000 Value Index4 Lipper Small-Cap Value Funds Average5
<S> <C> <C> <C> <C>
10/31/97 $10,000 $10,000 $10,000 $10,000
11/30/97 $10,010 $9,935 $10,110 $9,937
12/31/97 $10,428 $10,109 $10,453 $10,045
1/31/98 $10,577 $9,949 $10,264 $9,878
2/28/98 $11,194 $10,685 $10,884 $10,527
3/31/98 $11,891 $11,126 $11,326 $10,994
4/30/98 $12,169 $11,187 $11,381 $11,108
5/31/98 $11,532 $10,585 $10,979 $10,674
6/30/98 $11,463 $10,607 $10,917 $10,480
7/31/98 $10,940 $9,748 $10,061 $9,747
8/31/98 $8,768 $7,855 $8,486 $8,051
9/30/98 $9,187 $8,470 $8,965 $8,318
10/31/98 $10,014 $8,815 $9,231 $8,653
11/30/98 $10,751 $9,277 $9,481 $9,039
12/31/98 $11,568 $9,851 $9,778 $9,351
1/31/99 $11,229 $9,982 $9,556 $9,192
2/28/99 $10,373 $9,174 $8,904 $8,565
3/31/99 $10,014 $9,317 $8,830 $8,438
4/30/99 $10,701 $10,152 $9,637 $9,196
5/31/99 $11,389 $10,300 $9,933 $9,510
6/30/99 $11,927 $10,766 $10,292 $9,959
7/31/99 $12,066 $10,471 $10,048 $9,858
8/31/99 $11,847 $10,083 $9,681 $9,468
9/30/99 $11,748 $10,085 $9,487 $9,273
10/31/99 $11,469 $10,126 $9,298 $9,107
11/30/99 $12,037 $10,731 $9,346 $9,429
12/31/99 $13,412 $11,945 $9,633 $9,884
1/31/2000 $13,412 $11,754 $9,381 $9,570
2/29/2000 $15,634 $13,695 $9,954 $9,947
3/31/2000 $16,640 $12,792 $10,001 $10,421
4/30/2000 $15,783 $12,022 $10,060 $10,339
5/31/2000 $15,853 $11,321 $9,907 $10,193
6/30/2000 $17,397 $12,308 $10,196 $10,546
</TABLE>
1 Performance is historical and not indicative of future results. The investment
return and principal value of an investment will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
2 The PBHG Small Cap Value Portfolio commenced operations on October 28, 1997.
3 The Russell 2000 Index is an unmanaged index comprised of the 2,000 smallest
securities in the Russell 3000 Index. The Index reflects the reinvestment of
income dividends and capital gains distributions, if any, but does not reflect
fees, brokerage commissions, or other expenses of investing. The Index is not
intended to imply the Portfolio's past or future performance.
4 The Russell 2000 Value Index is an unmanaged index that measures the
performance of those securities in the Russell 2000 Index with lower
price-to-book ratios and lower forecasted growth values. The Index reflects
the reinvestment of income dividends and capital gain distributions, if any,
but does not reflect fees, brokerage commissions, or other expenses of
investing. The Index is not intended to imply the Portfolio's past or future
performance.
5 The Lipper Small-Cap Value Funds Average represents the average performance of
all mutual funds classified by Lipper, Inc. in the Small-Cap Value category.
The performance figures are based on changes in net asset value of the Funds
in the category with all capital gains distributions and income dividends
reinvested. The Average is not intended to imply the Portfolio's past or
future performance.
SECTOR WEIGHTINGS - AT JUNE 30, 2000
[Pie chart omitted--plot points as follows:]
Basic Materials 3%
Consumer Cyclical 8%
Energy 19%
Financial 15%
Health Care 7%
Industrial 9%
Services 1%
Technology 18%
Transportation 1%
Utilities 2%
Cash 17%
% of Total Portfolio Investments
TOP TEN HOLDINGS - JUNE 30, 2000
EOG Resources 2.1%
Santa Fe Synder 1.9%
S3 1.8%
Affiliated Managers Group 1.7%
Kent Electronics 1.7%
Forest Oil 1.6%
Cypress Semiconductor 1.5%
Alpharma, Cl A 1.4%
Harrah's Entertainment 1.3%
Crompton 1.3%
---------------------------------------------
% OF TOTAL PORTFOLIO INVESTMENTS 16.3%
9
<PAGE>
[Logo omitted]
PBHG Insurance Series Fund, Inc.
--------------------------------------------------------------------------------
PBHG TECHNOLOGY & COMMUNICATIONS PORTFOLIO
Dear Shareholder,
The PBHG Insurance Series Fund, Inc. - PBHG Technology & Communications
Portfolio returned +16.93% for the first half of 2000. This compares
competitively with the +17.39% return of the Soundview Technology Index and
+13.30% for the Pacific Stock Exchange (PSE) Technology Index.
Volatility has been the dominant theme in technology this year. While
fundamentals remained strong and growth outlooks have emerged intact, investors
have begun to take a harder look at valuations. More importantly, investors have
started to scrutinize business models across the board, which, in our opinion,
is a healthy development. As a result of this change in investor mindset, the
days when the stock of a company with only a vague semblance of a business
strategy, no real track record, and no visible path to profitability could
attain a stratospheric valuation may be gone. While this transition has caused
near-term volatility in the technology sector, we believe it was necessary and
beneficial over the long run because it will enable companies exhibiting
improving fundamentals and well-executed business plans to come to the
forefront.
We have increased the Portfolio's weighting in telecommunications equipment
suppliers, especially those companies that supply equipment into the optics
area. We believe that accelerating demand for bandwidth, together with
competition by telecom service providers to offer the most cost-efficient and
fastest networks to their customers, is driving unprecedented spending in this
sub-sector. Rapid consolidation is also helping to support the high relative
valuations that accompany these strong fundamentals.
The Portfolio's holdings are now more concentrated. When the technology sector
experienced a dramatic sell-off in mid-April, we used the opportunity to focus
on fewer companies. While valuations became more attractive across the board,
the companies with the best fundamentals (which tended to have the highest
valuations) sold off the most, strengthening our conviction in those stocks. As
a result, we have decreased the number of stocks in the portfolio from over 80
to just over 60 by quarter-end. In keeping with this focus, the top ten holdings
now represent approximately 43% of the total portfolio, versus less than 30%
three months ago.
<TABLE>
<CAPTION>
SUBSECTOR WEIGHTINGS AS OF JUNE 30, 2000 TOP FIVE HOLDINGS AS OF JUNE 30, 2000
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Networking/Telecom Equip. 46.7% Infospace 9.4%
Software 21.1% JDS Uniphase 5.5%
Semiconductors 15.5% Redback Networks 5.2%
Internet 14.2% Globespan 4.2%
Services 2.5% Verisign 4.0%
</TABLE>
LOOKING FORWARD
We have recently reduced our weighting in semiconductors and the Portfolio is
now underweighted in this sub-sector. While we continue to note improving
business fundamentals in the communications segment of the semiconductor world,
we are wary of what we believe to be negative business momentum in some of the
commodity-oriented areas of the semiconductor sector. Because of capacity
constraints that the industry has experienced over the past 12 months, we
believe there are some indications of inventory building and occurrences of
double ordering. We are not predicting the end of the current semiconductor
cycle, but for the near term we continue to limit our overall exposure to
semiconductors, including semiconductor capital equipment companies.
Recently, two of the most controversial themes in technology have been the areas
of Internet Business-to Consumer (B2C) and Internet Portals. With the recent
volatility of the markets, many upstart "dot.coms" have found it difficult to
fund their business plans. In fact, we are beginning to see some of these
companies significantly reduce their spending plans, cut back on staffing and,
in some cases, just close up shop. This has some direct bearing on many of the
traditional, established Internet areas that depend on the success of upstart
dot.coms for revenue growth. One of these areas is on-line advertising. Should
dot.coms continue to suffer from the adverse effects of market volatility, many
of the portals that generate significant revenues from the start-ups (as well as
some of the direct plays on on-line advertising) could experience weakness in
their dot.com business in the second half. We should note that, although the
dot.coms represent a sizable part of on-line advertising, much of the
anticipated growth in advertising should come from the traditional
bricks-and-mortar companies. Accordingly, the Portfolio continues to have
minimal exposure in this sub-sector and we remain cautious while investors
reassess these companies' business models.
Sincerely,
/s/signature
Jeffrey A. Wrona, CFA
Portfolio Manager
10
<PAGE>
[Logo omitted]
PBHG Insurance Series Fund, Inc.
--------------------------------------------------------------------------------
PBHG TECHNOLOGY & COMMUNICATIONS PORTFOLIO (UNAUDITED)
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN1 AS OF JUNE 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Annualized Annualized
Six-Month One Year Three Year Inception to
Return Return Return Date2
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PBHG Technology & Communications Portfolio 16.93% 165.29% 73.40% 70.04%
------------------------------------------------------------------------------------------------------------
</TABLE>
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE PBHG TECHNOLOGY
& COMMUNICATIONS PORTFOLIO, VERSUS THE SOUNDVIEW TECHNOLOGY INDEX AND THE
LIPPER SCIENCE & TECHNOLOGY FUNDS AVERAGE
[Line graph omitted--plot points as follows:]
<TABLE>
<CAPTION>
PBHG Technology & Communications Portfolio Soundview Technology Index3 Lipper Science & Technology Funds Average4
<S> <C> <C> <C>
4/30/97 $10,000 $10,000 $10,000
5/31/97 $9,990 $11,342 $11,359
6/30/97 $10,320 $11,369 $11,500
7/31/97 $11,550 $13,164 $12,978
8/31/97 $11,490 $13,567 $12,978
9/30/97 $12,290 $13,895 $13,633
10/31/97 $10,790 $12,286 $12,455
11/30/97 $10,550 $12,152 $12,348
12/31/97 $10,410 $11,333 $12,043
1/31/98 $10,040 $11,611 $12,350
2/28/98 $11,150 $13,111 $13,767
3/31/98 $11,590 $13,051 $14,166
4/30/98 $11,860 $13,946 $14,720
5/31/98 $10,840 $12,635 $13,667
6/30/98 $11,690 $13,322 $14,728
7/31/98 $11,082 $13,042 $14,492
8/31/98 $9,331 $10,055 $11,594
9/30/98 $10,642 $11,570 $13,136
10/31/98 $10,812 $12,713 $14,078
11/30/98 $12,032 $14,099 $15,974
12/31/98 $13,762 $16,129 $18,571
1/31/99 $16,613 $18,647 $21,515
2/28/99 $14,832 $16,311 $19,656
3/31/99 $17,423 $17,460 $21,879
4/30/99 $18,543 $17,972 $22,572
5/31/99 $17,773 $18,544 $22,263
6/30/99 $20,283 $20,903 $24,930
7/31/99 $19,973 $20,952 $24,629
8/31/99 $21,573 $22,224 $25,936
9/30/99 $22,063 $22,699 $26,847
10/31/99 $26,494 $25,165 $29,765
11/30/99 $31,475 $29,668 $34,944
12/31/99 $46,017 $37,062 $43,974
1/31/2000 $47,367 $36,059 $43,020
2/29/2000 $67,680 $47,112 $54,764
3/31/2000 $57,469 $47,210 $52,141
4/30/2000 $47,577 $43,724 $45,420
5/31/2000 $39,836 $38,735 $39,683
6/30/2000 $53,808 $43,505 $46,417
</TABLE>
1 Performance is historical and not indicative of future results. The favorable
returns experienced by the technology sector in 1999 and the first half of
2000 involved accepting the volatility and risk inherent in that sector and
that these returns cannot be consistently achieved. In addition, the products
of technology companies may be subject to severe competition and rapid
obsolescence. The investment return and principal value of an investment will
fluctuate, so that an investor's shares, when redeemed, may be worth more or
less than their original cost. Prior to November 2, 1999, the Portfolio was
diversified and did not concentrate its investments. Therefore, the
Portfolio's performance prior to November 2, 1999 may not be indicative of how
it will perform in the future.
2 The PBHG Technology & Communications Portfolio commenced operations on April
30, 1997.
3 The Soundview Technology Index is an equal dollar weighted index designed to
measure the performance of the technology industry. It is comprised of 100
major technology companies chosen by Soundview Financial Group. The Index
reflects the reinvestment of income dividends and capital gains distributions,
if any, but does not reflect fees, brokerage commissions, or other expenses of
investing. The Index is not intended to imply the Portfolio's past or future
performance.
4 The Lipper Science & Technology Funds Average represents the average
performance of all mutual funds classified by Lipper, Inc. in the Science &
Technology category. The performance figures are based on changes in net asset
value of the Funds in the category with all capital gains distributions and
income dividends reinvested. The Average is not intended to imply the
Portfolio's past or future performance.
SECTOR WEIGHTINGS - AT JUNE 30, 2000
[Pie chart omitted--plot points as follows:]
Consumer Cyclical 1%
Technology 94%
Cash 5%
% of Total Portfolio Investments
TOP TEN HOLDINGS - JUNE 30, 2000
Infospace 9.4%
JDS Uniphase 5.5%
Redback Networks 5.2%
Globespan 4.2%
Verisign 4.0%
MRV Communications 3.3%
E-Tek Dynamics 3.0%
Triquint Semiconductor 2.8%
Extreme Networks 2.8%
Brocade Communications Systems 2.8%
------------------------------------------------------
% OF TOTAL PORTFOLIO INVESTMENTS 43.0%
11
<PAGE>
[Logo omitted]
PBHG Insurance Series Fund, Inc.
-------------------------------------------------------------------------------
PBHG GROWTH II PORTFOLIO
STATEMENT OF NET ASSETS
AS OF JUNE 30, 2000 (UNAUDITED)
-------------------------------------------------------------
Market
Description Shares Value (000)
-------------------------------------------------------------
COMMON STOCK -- 96.7%
CONSUMER CYCLICAL -- 4.3%
AUDIO/VIDEO PRODUCTS -- 0.9%
Polycom* 43,400 $ 4,084
------------
4,084
-------------------------------------------------------------
RESORTS/THEME PARKS -- 0.7%
Premier Parks* 127,600 2,903
------------
2,903
-------------------------------------------------------------
RETAIL-JEWELRY -- 2.0%
Tiffany & Company 48,800 3,294
Zale* 144,500 5,274
------------
8,568
-------------------------------------------------------------
TELEVISION -- 0.7%
Univision Communication* 28,900 2,991
------------
2,991
------------
TOTAL CONSUMER CYCLICAL (COST $19,716) 18,546
------------
-------------------------------------------------------------
ENERGY -- 8.8%
OIL COMPANIES--EXPLORATION & PRODUCTION -- 1.0%
EOG Resources 129,600 4,342
------------
4,342
-------------------------------------------------------------
OIL FIELD MACHINERY & EQUIPMENT -- 1.8%
Cooper Cameron* 120,600 7,960
------------
7,960
-------------------------------------------------------------
OIL & GAS DRILLING -- 4.6%
Diamond Offshore Drilling* 125,600 4,412
Ensco International 215,300 7,710
Global Marine* 138,600 3,907
Santa Fe International 120,600 4,213
------------
20,242
-------------------------------------------------------------
OIL-FIELD SERVICES -- 1.4%
Baker Hughes 48,800 1,562
BJ Services* 68,800 4,300
------------
5,862
------------
TOTAL ENERGY (COST $34,998) 38,406
------------
-------------------------------------------------------------
FINANCIAL -- 0.5%
SUPER-REGIONAL BANKS-U.S. -- 0.5%
Bank One* 92,700 2,462
------------
2,462
------------
TOTAL FINANCIAL (COST $2,913) 2,462
------------
-------------------------------------------------------------
HEALTH CARE -- 9.9%
DIAGNOSTIC EQUIPMENT -- 1.2%
Cytyc* 94,700 5,055
------------
5,055
-------------------------------------------------------------
-------------------------------------------------------------
Market
Description Shares Value (000)
-------------------------------------------------------------
MEDICAL INFORMATION SYSTEMS -- 0.6%
Allscripts* 117,600 $ 2,705
------------
2,705
-------------------------------------------------------------
MEDICAL-BIOMEDICAL/GENETIC -- 0.4%
Incyte Pharmaceuticals* 23,900 1,964
------------
1,964
-------------------------------------------------------------
MEDICAL-DRUGS -- 7.7%
Celgene* 154,500 9,096
Medicis Pharmaceutical, Cl A* 99,700 5,683
Medimmune* 113,600 8,406
Teva Pharmaceutical ADR 185,400 10,278
------------
33,463
------------
TOTAL HEALTH CARE (COST $33,631) 43,187
------------
-------------------------------------------------------------
INDUSTRIAL -- 8.0%
CAPACITORS -- 0.7%
Kemet* 125,600 3,148
------------
3,148
-------------------------------------------------------------
ELECTRONIC COMPONENTS-MISCELLANEOUS-- 0.6%
Celestica* 51,800 2,571
------------
2,571
-------------------------------------------------------------
ELECTRONIC MEASURING INSTRUMENTS -- 1.3%
Credence Systems* 105,700 5,833
------------
5,833
-------------------------------------------------------------
INSTRUMENTS-CONTROLS -- 5.4%
Mettler-Toledo International* 208,300 8,332
Microchip Technology* 50,800 2,960
Newport 113,600 12,197
------------
23,489
------------
TOTAL INDUSTRIAL (COST $27,945) 35,041
------------
-------------------------------------------------------------
SERVICES -- 2.7%
ADVERTISING SALES -- 0.4%
Lamar Advertising* 42,900 1,858
------------
1,858
-------------------------------------------------------------
ADVERTISING SERVICES -- 1.2%
Getty Images* 135,700 5,029
------------
5,029
-------------------------------------------------------------
COMMERCIAL SERVICES -- 1.1%
Convergys* 92,700 4,809
------------
4,809
-------------------------------------------------------------
TOTAL SERVICES (COST $11,026) 11,696
------------
-------------------------------------------------------------
TECHNOLOGY -- 62.5%
APPLICATIONS SOFTWARE -- 0.7%
Quest Software* 55,800 3,090
------------
3,090
-------------------------------------------------------------
COMPUTER DATA SECURITY -- 1.0%
Checkpoint Software* 21,900 4,637
------------
4,637
-------------------------------------------------------------
12
<PAGE>
[Logo omitted]
PBHG Insurance Series Fund, Inc.
-------------------------------------------------------------
PBHG GROWTH II PORTFOLIO
-------------------------------------------------------------
Market
Description Shares Value (000)
-------------------------------------------------------------
COMPUTERS-INTEGRATED SYSTEMS -- 5.9%
Brocade Communications Systems* 50,800 $ 9,321
Redback Networks* 93,700 16,679
------------
26,000
-------------------------------------------------------------
COMPUTERS-MEMORY DEVICES -- 1.6%
Sandisk* 49,800 3,047
Storage Networks* 6,000 542
Veritas Software* 31,375 3,546
------------
7,135
-------------------------------------------------------------
EDUCATIONAL SOFTWARE -- 1.1%
Smartforce ADR* 97,700 4,690
------------
4,690
-------------------------------------------------------------
ELECTRONIC COMPONENTS-SEMICONDUCTORS-- 8.3%
Atmi* 76,800 3,571
Cypress Semiconductor* 108,700 4,593
Globespan* 99,000 12,086
Qlogic* 31,900 2,107
Triquint Semiconductor* 79,700 7,626
Xilinx* 76,800 6,341
------------
36,324
-------------------------------------------------------------
ENTERPRISE SOFTWARE/SERVICES -- 1.1%
BEA Systems* 93,700 4,632
------------
4,632
-------------------------------------------------------------
FIBER OPTICS -- 9.1%
C-COR.net 37,900 1,023
Ciena* 26,900 4,484
Finisar* 91,700 2,401
JDS Uniphase* 74,200 8,895
MRV Communications* 195,400 13,141
SDL* 15,300 4,363
Sycamore Networks* 48,800 5,386
------------
39,693
-------------------------------------------------------------
INTERNET CONTENT -- 3.0%
China.com, Cl A* 71,200 1,455
Infospace* 175,400 9,691
Rare Medium Group* 123,300 1,950
------------
13,096
-------------------------------------------------------------
INTERNET SOFTWARE -- 15.0%
Ariba* 71,800 7,040
Art Technology* 127,600 12,880
Commerce One* 72,800 3,303
Niku* 189,800 6,406
Verisign* 97,845 17,270
Vignette* 157,500 8,192
Vitria Technology* 171,500 10,483
------------
65,574
-------------------------------------------------------------
NETWORK SOFTWARE -- 1.4%
Micromuse* 35,900 5,941
------------
5,941
-------------------------------------------------------------
-------------------------------------------------------------
Shares/Face Market
Description Amount (000) Value (000)
-------------------------------------------------------------
NETWORKING PRODUCTS -- 6.4%
Emulex* 30,900 $ 2,030
Extreme Networks* 104,700 11,046
Foundry Networks* 27,900 3,068
Juniper Networks* 47,800 6,958
Turnstone Systems* 29,900 4,954
------------
28,056
-------------------------------------------------------------
SOFTWARE TOOLS -- 0.9%
Mercury Interactive* 39,900 3,860
------------
3,860
-------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT -- 6.1%
Advanced Fibre Communication* 65,800 2,982
Audiocodes Limited* 27,000 3,240
Clarent* 62,800 4,490
Ditech Communications* 56,800 5,371
Natural Microsystems* 22,900 2,575
Sonus Networks* 33,200 5,241
Tekelec* 55,800 2,689
------------
26,588
-------------------------------------------------------------
WIRELESS EQUIPMENT -- 0.9%
Netro* 67,800 3,890
------------
3,890
------------
TOTAL TECHNOLOGY (COST $206,243) 273,206
------------
TOTAL COMMON STOCK (COST $336,472) 422,544
------------
-------------------------------------------------------------
REPURCHASE AGREEMENT -- 9.6%
Greenwich Capital 6.55%,
dated 6/30/00,
matures 7/03/00,
repurchase price
$41,859,921
(collateralized by
U.S Government Agency
Instruments: total market
value $42,675,315)(A) $41,837 41,837
------------
TOTAL REPURCHASE AGREEMENT (COST $41,837) 41,837
------------
TOTAL INVESTMENTS-- 106.3% (COST $378,309) 464,381
------------
-------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- (6.3%)
Payable for investment securities purchased (31,159)
Other assets and liabilities, net 3,853
------------
TOTAL OTHER ASSETS AND LIABILITIES, NET (27,306)
------------
-------------------------------------------------------------
NET ASSETS:
Paid-in-capital (authorized 500 million
shares-- $0.001 par value) based on 15,787,926
outstanding shares of common stock 349,207
Accumulated net investment loss (871)
Accumulated net realized gain on investments 2,667
Net unrealized appreciation on investments 86,072
------------
TOTAL NET ASSETS-- 100.0% $ 437,075
============
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE $27.68
======
* Non-income producing security
(A) -- Tri-party repurchase agreement
ADR -- American depository receipt
Cl -- Class
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
[Logo omitted]
PBHG Insurance Series Fund, Inc.
-------------------------------------------------------------
PBHG SELECT 20 PORTFOLIO
STATEMENT OF NET ASSETS
AS OF JUNE 30, 2000 (UNAUDITED)
-------------------------------------------------------------
Market
Description Shares Value (000)
-------------------------------------------------------------
COMMON STOCK -- 91.4%
CONSUMER CYCLICAL -- 8.7%
AUDIO/VIDEO PRODUCTS -- 3.7%
Gemstar International* 559,600 $ 34,389
------------
34,389
-------------------------------------------------------------
BROADCAST SERVICE/PROGRAM -- 2.0%
Clear Channel Communications* 254,800 19,110
------------
19,110
-------------------------------------------------------------
RETAIL-BUILDING PRODUCTS -- 3.0%
Home Depot 573,000 28,614
------------
28,614
------------
TOTAL CONSUMER CYCLICAL (COST $69,848) 82,113
------------
-------------------------------------------------------------
FINANCIAL -- 4.5%
DIVERSIFIED FINANCIAL SERVICES -- 4.5%
Citigroup 711,700 42,880
------------
42,880
------------
TOTAL FINANCIAL (COST $41,588) 42,880
------------
-------------------------------------------------------------
HEALTH CARE -- 1.3%
MEDICAL-BIOMEDICAL/GENETIC -- 1.3%
Genentech* 72,700 12,504
------------
12,504
------------
TOTAL HEALTH CARE (COST $5,226) 12,504
------------
-------------------------------------------------------------
INDUSTRIAL -- 5.1%
ELECTRONIC COMPONENTS-MISCELLANEOUS -- 5.1%
Flextronics International* 706,200 48,507
------------
48,507
------------
TOTAL INDUSTRIAL (COST $39,458) 48,507
------------
-------------------------------------------------------------
TECHNOLOGY -- 71.8%
APPLICATIONS SOFTWARE -- 4.4%
Siebel Systems * 254,400 41,610
------------
41,610
-------------------------------------------------------------
COMPUTERS-MEMORY DEVICES -- 8.4%
EMC* 619,200 47,640
Veritas Software* 278,775 31,506
------------
79,146
-------------------------------------------------------------
COMPUTERS-MICRO -- 4.2%
Sun Microsystems* 438,300 39,858
------------
39,858
-------------------------------------------------------------
-------------------------------------------------------------
Shares/Face Market
Description Amount (000) Value (000)
-------------------------------------------------------------
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 14.2%
Applied Materials* 481,000 $ 43,591
Broadcom* 220,600 48,298
Texas Instruments 611,300 41,989
------------
133,878
-------------------------------------------------------------
FIBER OPTICS -- 8.6%
JDS Uniphase* 673,700 80,760
------------
80,760
-------------------------------------------------------------
NETWORKING PRODUCTS -- 18.6%
Cisco Systems* 726,400 46,172
Foundry Networks* 340,200 37,422
Juniper Networks* 371,200 54,032
Oracle* 445,500 37,450
------------
175,076
-------------------------------------------------------------
TELECOMMUNICATION EQUIPMENT -- 13.4%
Nokia ADR, Cl A 843,900 42,142
Nortel Networks+ 1,229,838 83,936
------------
126,078
------------
TOTAL TECHNOLOGY (COST $388,219) 676,406
------------
TOTAL COMMON STOCK (COST $544,339) 862,410
------------
-------------------------------------------------------------
REPURCHASE AGREEMENTS -- 11.8%
JP Morgan
6.75% dated 06/30/00,
matures 07/03/00, repurchase
price $54,174,006 (collateralized
by U.S Government Agency
Instruments: total market
value $55,226,421) (A) $ 54,144 54,144
JP Morgan 6.75% dated 06/30/00,
matures 07/03/00, repurchase
price $57,056,096 (collateralized
by U.S. Government Agency
Instruments: total market
value $58,164,965) (A) 57,024 57,024
------------
TOTAL REPURCHASE AGREEMENTS (COST $111,168) 111,168
------------
TOTAL INVESTMENTS-- 103.2% (COST $ 655,507) 973,578
------------
-------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- (3.2%)
TOTAL OTHER ASSETS AND LIABILITIES, NET (30,224)
-------------------------------------------------------------
NET ASSETS
Paid-in-capital
(authorized 500 million
shares-- $0.001 par value)
based on 26,109,799
outstanding shares
of common stock 443,659
Accumulated net investment loss (2,126)
Accumulated net realized gain on investments 183,750
Net unrealized appreciation on investments 318,071
------------
TOTAL NET ASSETS -- 100.0% $ 943,354
============
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE $36.13
======
* Non-income producing security
+ The Portfolio held Canadian securities as of June 30, 2000.
The total market value of investments is $83,936,444 and
represents 8.9% of the Portfolio.
(A) -- Tri-party repurchase agreement
ADR -- American depository receipt
Cl -- Class
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
[Logo omitted]
PBHG Insurance Series Fund, Inc.
-------------------------------------------------------------
PBHG SELECT VALUE PORTFOLIO
SCHEDULE OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
-------------------------------------------------------------
Market
Description Shares Value (000)
-------------------------------------------------------------
COMMON STOCK -- 95.3%
CONSUMER CYCLICAL -- 5.9%
APPLIANCES -- 2.3%
Maytag 39,400 $ 1,453
------------
1,453
-------------------------------------------------------------
RETAIL-RESTAURANTS -- 3.6%
McDonald's 69,200 2,279
------------
2,279
------------
TOTAL CONSUMER CYCLICAL (COST $3,646) 3,732
------------
-------------------------------------------------------------
CONSUMER NON-CYCLICAL -- 4.3%
FOOD-MISCELLANEOUS/DIVERSIFIED -- 2.2%
Quaker Oats 18,000 1,352
------------
1,352
-------------------------------------------------------------
FOOD-RETAIL -- 2.1%
Kroger* 59,300 1,308
------------
1,308
------------
TOTAL CONSUMER NON-CYCLICAL (COST $2,440) 2,660
------------
-------------------------------------------------------------
ENERGY -- 17.0%
OIL COMPANIES-INTEGRATED -- 8.6%
Exxon Mobil 36,400 2,858
Royal Dutch Petroleum 40,400 2,487
------------
5,345
-------------------------------------------------------------
OIL-FIELD SERVICES -- 5.3%
Baker Hughes 58,500 1,872
BJ Services* 22,900 1,431
------------
3,303
-------------------------------------------------------------
PIPELINES -- 3.1%
El Paso Energy 37,800 1,925
------------
1,925
------------
TOTAL ENERGY (COST $10,747) 10,573
------------
-------------------------------------------------------------
FINANCIAL -- 18.5%
DIVERSIFIED FINANCIAL SERVICES -- 4.3%
Citigroup 44,200 2,663
------------
2,663
-------------------------------------------------------------
FINANCE-MORTGAGE LOAN/BANKER -- 2.9%
Federal Home Loan Mortgage 45,400 1,839
------------
1,839
-------------------------------------------------------------
LIFE/HEALTH INSURANCE -- 2.5%
Aflac 34,500 1,585
------------
1,585
-------------------------------------------------------------
-------------------------------------------------------------
Market
Description Shares Value (000)
-------------------------------------------------------------
S & L/THRIFTS-WESTERN U.S. -- 2.8%
Washington Mutual 59,900 $ 1,730
------------
1,730
-------------------------------------------------------------
SUPER-REGIONAL BANKS-U.S. -- 6.0%
Fleet Boston Financial 55,000 1,870
PNC Bank 39,200 1,838
------------
3,708
------------
TOTAL FINANCIAL (COST $11,747) 11,525
------------
-------------------------------------------------------------
HEALTH CARE -- 17.9%
MEDICAL-DRUGS -- 17.9%
Merck 37,300 2,858
Pfizer 57,250 2,748
Pharmacia 54,800 2,832
Schering-Plough 53,100 2,682
------------
11,120
------------
TOTAL HEALTH CARE (COST $9,857) 11,120
------------
-------------------------------------------------------------
INDUSTRIAL -- 4.2%
ELECTRONIC COMPONENTS-MISCELLANEOUS -- 4.2%
AVX 56,100 1,287
Vishay Intertechnology* 34,600 1,313
------------
2,600
------------
TOTAL INDUSTRIAL (COST $2,605) 2,600
------------
-------------------------------------------------------------
SERVICES -- 13.1%
TELEPHONE-INTEGRATED -- 8.4%
GTE 46,300 2,882
SBC Communications 54,300 2,348
------------
5,230
-------------------------------------------------------------
TELEPHONE-LOCAL -- 4.7%
Bellsouth 68,600 2,924
------------
2,924
------------
TOTAL SERVICES (COST $8,818) 8,154
------------
-------------------------------------------------------------
TECHNOLOGY -- 14.4%
APPLICATIONS SOFTWARE -- 4.2%
Microsoft* 33,000 2,640
------------
2,640
-------------------------------------------------------------
COMPUTERS-MICRO -- 3.0%
Compaq Computers 74,500 1,904
------------
1,904
-------------------------------------------------------------
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 4.2%
Intel 19,400 2,594
------------
2,594
-------------------------------------------------------------
15
<PAGE>
[Logo omitted]
PBHG Insurance Series Fund, Inc.
-------------------------------------------------------------
PBHG SELECT VALUE PORTFOLIO
-------------------------------------------------------------
Shares/Face Market
Description Amount (000) Value (000)
-------------------------------------------------------------
WIRELESS EQUIPMENT -- 3.0%
Motorola 63,500 $ 1,845
------------
1,845
------------
TOTAL TECHNOLOGY (COST $8,512) 8,983
------------
TOTAL COMMON STOCK (COST $58,372) 59,347
------------
-------------------------------------------------------------
REGISTERED INVESTMENT COMPANY -- 3.1%
FINANCIAL -- 3.1%
INVESTMENT COMPANIES -- 3.1%
S & P 500 Depository Receipt 13,200 1,918
------------
1,918
------------
TOTAL FINANCIAL (COST $1,892) 1,918
------------
TOTAL REGISTERED INVESTMENT COMPANY (COST $1,892) 1,918
------------
-------------------------------------------------------------
REPURCHASE AGREEMENT -- 13.7%
Morgan Stanley
6.70%, dated 06/30/00,
matures 07/03/00,
repurchase price
$8,549,614 (collateralized
by U.S. Government Agency
Instruments: total market
value $8,843,726) (A) $8,545 8,545
------------
TOTAL REPURCHASE AGREEMENT (COST $8,545) 8,545
------------
TOTAL INVESTMENTS -- 112.1% (COST $68,809) $ 69,810
============
Percentages are based on net assets of $62,251,988
* Non-income producing security
(A) Tri-party repurchase agreement
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
[Logo omitted]
PBHG Insurance Series Fund, Inc.
-------------------------------------------------------------
PBHG SMALL CAP VALUE PORTFOLIO
SCHEDULE OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
-------------------------------------------------------------
Market
Description Shares Value (000)
-------------------------------------------------------------
COMMON STOCK -- 89.1%
BASIC MATERIALS -- 3.0%
CHEMICALS-PLASTICS -- 0.1%
Hanna 14,200 $ 128
------------
128
-------------------------------------------------------------
CHEMICALS-SPECIALTY -- 2.6%
Crompton 130,300 1,596
Cytec Industries* 39,900 985
Grace (W.R.) & Company* 29,000 352
------------
2,933
-------------------------------------------------------------
FERTILIZERS -- 0.2%
IMC Global 21,000 273
------------
273
-------------------------------------------------------------
METAL-ALUMINUM -- 0.1%
Commonwealth Industries 12,700 75
------------
75
------------
TOTAL BASIC MATERIALS (COST $3,463) 3,409
------------
-------------------------------------------------------------
CONSUMER CYCLICAL -- 8.6%
AUDIO/VIDEO PRODUCTS -- 0.9%
Harman International 17,600 1,074
------------
1,074
-------------------------------------------------------------
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL-- 0.4%
Delco Remy International* 31,100 259
Lear* 6,800 136
Tower Automotive* 5,900 74
------------
469
-------------------------------------------------------------
BUILDING-RESIDENTIAL/COMMERCIAL -- 0.3%
Centex 12,400 291
------------
291
-------------------------------------------------------------
CASINO HOTELS -- 1.4%
Harrah's Entertainment* 77,800 1,629
------------
1,629
-------------------------------------------------------------
CASINO SERVICES -- 0.5%
International Game Technology 19,800 525
------------
525
-------------------------------------------------------------
PUBLISHING-NEWSPAPERS -- 0.9%
Journal Register* 13,200 241
Pulitzer 17,800 751
------------
992
-------------------------------------------------------------
RETAIL-APPAREL/SHOE -- 0.9%
Ann Taylor Stores* 30,200 1,000
------------
1,000
-------------------------------------------------------------
-------------------------------------------------------------
Market
Description Shares Value (000)
-------------------------------------------------------------
RETAIL-CONSUMER ELECTRONICS -- 1.3%
Tweeter Home Entertainment Group* 15,000 $ 456
Ultimate Electronics* 40,200 1,077
------------
1,533
-------------------------------------------------------------
RETAIL-JEWELRY -- 0.0%
Friedman's, Cl A 8,800 43
------------
43
-------------------------------------------------------------
RETAIL-RESTAURANTS -- 0.7%
Wendys International 46,000 819
------------
819
-------------------------------------------------------------
RUBBER-TIRES -- 0.1%
Cooper Tire & Rubber 14,300 159
------------
159
-------------------------------------------------------------
TELEVISION -- 1.2%
Paxson Communications* 62,500 500
Pegasus Communications* 16,900 829
------------
1,329
------------
TOTAL CONSUMER CYCLICAL (COST $9,308) 9,863
------------
-------------------------------------------------------------
CONSUMER NON-CYCLICAL -- 0.2%
CONSUMER PRODUCTS-MISCELLANEOUS -- 0.2%
Playtex Products* 24,600 278
------------
278
------------
TOTAL CONSUMER NON-CYCLICAL (COST $268) 278
------------
-------------------------------------------------------------
ENERGY -- 20.0%
OIL COMPANIES - EXPLORATION & PRODUCTION -- 12.5%
Barrett Resources* 29,400 895
Comstock Resources* 27,300 218
EOG Resources 77,900 2,610
Forest Oil* 123,400 1,967
Louis Dreyfus Natural Gas* 48,500 1,519
Newfield Exploration* 10,200 399
Noble Affiliates 40,500 1,509
Ocean Energy* 69,700 989
Santa Fe Snyder* 200,800 2,284
Unit* 52,000 702
Vintage Petroleum 55,900 1,261
------------
14,353
-------------------------------------------------------------
OIL REFINING & MARKETING -- 1.9%
Tesoro Petroleum* 78,400 794
Valero Energy 42,400 1,346
------------
2,140
-------------------------------------------------------------
OIL & GAS DRILLING -- 2.2%
Key Energy Services* 122,500 1,179
Patterson Energy* 31,300 892
Pride International* 19,100 473
------------
2,544
-------------------------------------------------------------
17
<PAGE>
[Logo omitted]
PBHG Insurance Series Fund, Inc.
-------------------------------------------------------------
PBHG SMALL CAP VALUE PORTFOLIO
-------------------------------------------------------------
Market
Description Shares Value (000)
-------------------------------------------------------------
OIL-FIELD SERVICES -- 2.1%
Friede Goldman Halter* 169,100 $ 1,511
OSCA* 55,700 940
------------
2,451
-------------------------------------------------------------
PIPELINES -- 1.3%
Kinder Morgan 43,600 1,507
------------
1,507
------------
TOTAL ENERGY (COST $19,434) 22,995
------------
-------------------------------------------------------------
FINANCIAL -- 16.0%
COMMERCIAL BANKS-CENTRAL U.S. -- 0.2%
Firstmerit 9,200 197
------------
197
-------------------------------------------------------------
COMMERCIAL BANKS-EASTERN U.S. -- 1.0%
Commercial Bank of New York 4,700 55
Mercantile 23,300 695
Valley National Bancorp 15,627 380
------------
1,130
-------------------------------------------------------------
COMMERCIAL BANKS-WESTERN U.S. -- 1.7%
Bancwest 69,700 1,146
City National 22,191 771
------------
1,917
-------------------------------------------------------------
FINANCE-INVESTMENT BANKER/BROKER -- 2.0%
Morgan Keegan 51,500 760
Raymond James Financial 44,000 990
Wit Soundview Group* 46,400 498
------------
2,248
-------------------------------------------------------------
FINANCIAL GUARANTEE INSURANCE -- 0.6%
Financial Security Assurance 9,400 713
------------
713
-------------------------------------------------------------
INVESTMENT MANAGEMENT/ADVISOR SERVICES-- 2.5%
Affiliated Managers Group* 45,400 2,066
Federated Investors 10,100 354
Waddell & Reed Financial, Cl A 14,050 461
------------
2,881
-------------------------------------------------------------
LIFE/HEALTH INSURANCE -- 2.1%
Liberty Financial 22,700 498
Mony Group 36,900 1,248
Protective Life 3,500 93
Torchmark 21,100 521
------------
2,360
-------------------------------------------------------------
PROPERTY/CASUALTY INSURANCE -- 0.5%
Fidelity National Financial 19,100 350
First American Financial 19,500 279
------------
629
-------------------------------------------------------------
REINSURANCE -- 0.5%
Annuity & Life 25,700 630
------------
630
-------------------------------------------------------------
-------------------------------------------------------------
Market
Description Shares Value (000)
-------------------------------------------------------------
REITS-APARTMENTS -- 0.0%
Pennsylvania Real Estate
Investment Trust 1,800 $ 31
------------
31
-------------------------------------------------------------
REITS-REGIONAL MALLS -- 0.4%
CBL & Associates 19,400 484
------------
484
-------------------------------------------------------------
REITS-SHOPPING CENTERS -- 0.4%
JP Realty 28,700 511
------------
511
-------------------------------------------------------------
S&L/THRIFTS-CENTRAL U.S. -- 0.5%
Bank United, Cl A 12,800 450
Commercial Federal 8,200 128
------------
578
-------------------------------------------------------------
S&L/THRIFTS-EASTERN U.S. -- 2.5%
Berkshire Hills Bancorp* 74,400 949
Dime Bancorp 65,100 1,025
Roslyn Bancorp 40,600 674
Sovereign Bancorp 16,500 116
Woronoco Bancorp 10,200 108
------------
2,872
-------------------------------------------------------------
S&L/THRIFTS-WESTERN U.S. -- 1.1%
Golden State Bancorp* 59,500 1,071
Washington Federal 10,300 188
------------
1,259
------------
TOTAL FINANCIAL (COST $17,312) 18,440
------------
-------------------------------------------------------------
HEALTH CARE -- 7.8%
DISPOSABLE MEDICAL PRODUCTS -- 0.7%
Bard (C.R.) 16,300 784
------------
784
-------------------------------------------------------------
MEDICAL PRODUCTS -- 1.3%
Haemonetics* 70,900 1,489
------------
1,489
-------------------------------------------------------------
MEDICAL-BIOMEDICAL/GENETICS -- 0.8%
Aclara Biosciences* 7,200 367
Inhale Therapeutic Systems* 6,200 629
------------
996
-------------------------------------------------------------
MEDICAL-DRUGS -- 0.9%
Chirex* 13,800 276
Cima Labs* 3,900 79
Dura Pharmaceuticals* 32,400 466
Warner Chilcott Labs* 10,300 229
------------
1,050
-------------------------------------------------------------
MEDICAL-GENERIC DRUGS -- 1.5%
Alpharma, Cl A 27,500 1,711
------------
1,711
-------------------------------------------------------------
MEDICAL-HMO -- 0.5%
Trigon Healthcare* 10,100 521
------------
521
-------------------------------------------------------------
18
<PAGE>
[Logo omitted]
PBHG Insurance Series Fund, Inc.
-------------------------------------------------------------
PBHG SMALL CAP VALUE PORTFOLIO
-------------------------------------------------------------
Market
Description Shares Value (000)
-------------------------------------------------------------
PATIENT MONITORING EQUIPMENT -- 0.9%
Aspect Medical Systems* 38,400 $ 1,037
------------
1,037
-------------------------------------------------------------
PHARMACY SERVICES -- 0.2%
Syncor* 3,500 252
------------
252
-------------------------------------------------------------
THERAPEUTICS -- 1.0%
Tularik* 14,500 428
United Therapeutics* 6,900 748
------------
1,176
------------
TOTAL HEATH CARE (COST $6,617) 9,016
------------
-------------------------------------------------------------
INDUSTRIAL -- 10.2%
AEROSPACE/DEFENSE -- 1.2%
Teledyne Technologies* 81,400 1,363
------------
1,363
-------------------------------------------------------------
BUILDING & CONSTRUCTION PRODUCTS-MISCELLANEOUS -- 0.1%
Dal-Tile International* 15,200 125
------------
125
-------------------------------------------------------------
CERAMIC PRODUCTS -- 0.6%
Coorstek* 15,000 690
------------
690
-------------------------------------------------------------
CIRCUIT BOARDS -- 0.8%
Manufacturers Services* 46,300 952
------------
952
-------------------------------------------------------------
DIVERSIFIED MANUFACTURING OPERATIONS -- 0.9%
ITT Industries 32,800 996
------------
996
-------------------------------------------------------------
ELECTRIC PRODUCTS-MISCELLANEOUS -- 0.3%
Applied Power, Cl A 9,200 308
------------
308
-------------------------------------------------------------
ELECTRONIC COMPONENTS-MISCELLANEOUS-- 3.0%
ACT Manufacturing* 16,500 766
DSP Group* 10,500 588
Kent Electronics* 69,100 2,060
------------
3,414
-------------------------------------------------------------
ELECTRONICS-MILITARY -- 0.2%
Aeroflex* 5,700 283
------------
283
-------------------------------------------------------------
HAZARDOUS WASTE DISPOSAL -- 0.2%
Stericycle* 9,200 221
------------
221
-------------------------------------------------------------
INSTRUMENTS-SCIENTIFIC -- 0.2%
Perkinelmer 4,300 284
------------
284
-------------------------------------------------------------
-------------------------------------------------------------
Market
Description Shares Value (000)
-------------------------------------------------------------
MACHINERY-GENERAL INDUSTRY -- 1.1%
Applied Science & Technology* 35,400 $ 916
Gasonics International* 8,200 323
------------
1,239
-------------------------------------------------------------
METAL PROCESSORS & FABRICATORS -- 0.5%
Wolverine Tube* 31,500 536
------------
536
-------------------------------------------------------------
STEEL PIPE & TUBE -- 0.9%
NS Group* 49,400 1,034
------------
1,034
-------------------------------------------------------------
TRUCKING & LEASING -- 0.2%
Ryder System 13,500 256
------------
256
-------------------------------------------------------------
TOTAL INDUSTRIAL (COST $10,292) 11,701
------------
-------------------------------------------------------------
SERVICES -- 0.7%
COMMERCIAL SERVICES -- 0.2%
AC Nielson* 12,000 264
------------
264
-------------------------------------------------------------
CONSULTING SERVICES -- 0.3%
Maximus* 17,600 389
------------
389
-------------------------------------------------------------
SCHOOLS -- 0.2%
Edison Schools* 6,400 148
------------
148
------------
TOTAL SERVICES (COST $899) 801
------------
-------------------------------------------------------------
TECHNOLOGY -- 19.5%
APPLICATIONS SOFTWARE -- 1.7%
Parametric Technology* 121,500 1,337
Sonic Foundry* 27,200 571
------------
1,908
-------------------------------------------------------------
CELLULAR TELECOMMUNICATIONS -- 0.4%
Alamosa PCS Holdings* 20,600 430
------------
430
-------------------------------------------------------------
COMMUNICATIONS SOFTWARE -- 0.7%
Avid Technology* 62,900 755
------------
755
-------------------------------------------------------------
COMPUTER DATA SECURITY -- 0.5%
Axent Technologies* 22,400 556
------------
556
-------------------------------------------------------------
COMPUTERS-MEMORY DEVICES -- 0.8%
Overland Data* 7,700 107
Sandisk* 13,600 832
------------
939
-------------------------------------------------------------
19
<PAGE>
[Logo omitted]
PBHG Insurance Series Fund, Inc.
-------------------------------------------------------------
PBHG SMALL CAP VALUE PORTFOLIO
-------------------------------------------------------------
Market
Description Shares Value (000)
-------------------------------------------------------------
COMPUTERS-MICRO -- 0.4%
Micron Electronics* 33,600 $ 420
------------
420
-------------------------------------------------------------
COMPUTERS-PERIPHERAL EQUIPMENT -- 2.4%
Mobility Electronics* 41,500 540
S3* 150,500 2,220
------------
2,760
-------------------------------------------------------------
DATA PROCESSING/MANAGEMENT -- 1.2%
Acxiom* 17,400 474
Excelon* 66,700 529
Informix* 47,100 350
------------
1,353
-------------------------------------------------------------
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 4.1%
Cypress Semiconductor* 43,400 1,834
Dense-Pac Microsystems* 10,400 113
Electroglas* 28,100 604
Genus* 84,400 691
HI / FN * 14,900 661
Memc Electronic Materials* 19,200 346
Zoran* 6,500 429
------------
4,678
-------------------------------------------------------------
ENTERPRISE SOFTWARE/SERVICES -- 0.0%
Hyperion Solutions* 100 3
------------
3
-------------------------------------------------------------
FIBER OPTICS -- 0.6%
Exfo Electro-Optical Engineering* 16,300 715
------------
715
-------------------------------------------------------------
INTERNET SOFTWARE -- 0.6%
Ravisent Technologies* 90,000 636
------------
636
-------------------------------------------------------------
NETWORKING PRODUCTS -- 2.6%
Apex* 21,400 936
Cabletron Systems* 44,700 1,129
MMC Networks* 18,000 962
------------
3,027
-------------------------------------------------------------
PRINTERS & RELATED PRODUCTS -- 0.0%
Splash Technologies* 6,900 54
------------
54
-------------------------------------------------------------
SOFTWARE TOOLS -- 0.3%
Broadbase Software* 12,800 392
------------
392
-------------------------------------------------------------
TELECOMMUNICATION EQUIPMENT -- 1.7%
Antec* 18,200 756
Tekelec* 5,900 284
Westell Technologies* 63,500 953
------------
1,993
-------------------------------------------------------------
-------------------------------------------------------------
Shares/Face Market
Description Amount (000) Value (000)
-------------------------------------------------------------
TELECOMMUNICATION SERVICES -- 0.4%
Latitude Communication* 40,500 $ 453
------------
453
-------------------------------------------------------------
WIRELESS EQUIPMENT -- 1.1%
Carrier Access* 10,700 566
Glenayre Technologies* 70,200 741
-------------------------------------------------------------
1,307
------------
TOTAL TECHNOLOGY (COST $21,357) 22,379
------------
-------------------------------------------------------------
TRANSPORTATION -- 1.5%
AIRLINES -- 0.6%
Alaska Airgroup* 9,800 266
Mesaba Holdings* 6,200 59
Midway Airlines* 77,400 397
------------
722
-------------------------------------------------------------
TRANSPORTATION-TRUCK -- 0.9%
Covenant Transportation* 35,100 281
Hunt (J.B.) Transportation Services 20,100 310
US Xpress* 55,400 447
------------
1,038
------------
TOTAL TRANSPORTATION (COST $2,205) 1,760
------------
-------------------------------------------------------------
UTILITIES -- 1.6%
ELECTRIC-INTEGRATED -- 1.2%
CH Energy Group 1,300 44
CMS Energy 16,400 363
Idacorp 7,000 226
Madison Gas & Electric 800 16
Western Resources 51,800 802
------------
1,451
-------------------------------------------------------------
GAS-DISTRIBUTION -- 0.4%
UGI 21,600 443
------------
443
------------
TOTAL UTILITIES (COST $1,973) 1,894
------------
TOTAL COMMON STOCK (COST $93,128) 102,536
------------
-------------------------------------------------------------
REPURCHASE AGREEMENT -- 18.2%
Morgan Stanley
6.70%, dated 06/30/00,
matures 07/03/00, repurchase
price $20,915,838
(collateralized by
U.S Government Agency
Instruments: total market
value $21,769,307) (A) $20,904 20,904
------------
TOTAL REPURCHASE AGREEMENT (COST $20,904) 20,904
------------
TOTAL INVESTMENTS-- 107.3% (COST $114,032) $ 123,440
============
Percentages are based on net assets of $114,991,350
* Non-income producing security
(A) -- Tri-party repurchase agreement
Cl -- Class
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
[Logo omitted]
PBHG Insurance Series Fund, Inc.
-------------------------------------------------------------
PBHG TECHNOLOGY & COMMUNICATIONS PORTFOLIO
STATEMENT OF NET ASSETS
AS OF JUNE 30, 2000 (UNAUDITED)
-------------------------------------------------------------
Market
Description Shares Value (000)
-------------------------------------------------------------
COMMON STOCK -- 95.3%
CONSUMER CYCLICAL -- 0.6%
AUDIO/VIDEO PRODUCTS -- 0.6%
Polycom* 166,300 $ 15,648
------------
15,648
------------
TOTAL CONSUMER CYCLICAL (COST $18,880) 15,648
------------
-------------------------------------------------------------
SERVICES -- 0.5%
ADVERTISING SERVICES -- 0.5%
Getty Images* 300,500 11,137
------------
11,137
------------
TOTAL SERVICES (COST $13,112) 11,137
------------
-------------------------------------------------------------
TECHNOLOGY -- 94.2%
APPLICATIONS SOFTWARE -- 0.9%
Quest Software* 399,600 22,128
------------
22,128
-------------------------------------------------------------
COMPUTERS-INTEGRATED SYSTEMS -- 8.0%
Brocade Communications Systems* 371,100 68,091
Redback Networks* 723,000 128,694
------------
196,785
-------------------------------------------------------------
COMPUTERS-MEMORY DEVICES -- 2.9%
Sandisk* 440,700 26,965
Storage Networks* 71,600 6,462
Veritas Software* 336,250 38,002
------------
71,429
-------------------------------------------------------------
DATA PROCESSING/MANAGEMENT -- 0.6%
Autonomy ADR* 129,100 15,879
------------
15,879
-------------------------------------------------------------
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 13.4%
Analog Devices* 29,400 2,234
Applied Micro Circuits* 112,900 11,149
Globespan* 855,500 104,438
Infineon Technologies ADR* 197,400 15,644
Micron Technology 526,200 46,338
PMC-Sierra 149,200 26,511
Silicon Image* 126,000 6,284
Transwitch* 307,850 23,762
Triquint Semiconductor* 735,800 70,407
Xilinx* 267,700 22,102
------------
328,869
-------------------------------------------------------------
ENTERPRISE SOFTWARE/SERVICES -- 5.0%
BEA Systems* 688,200 34,023
I2 Technologies* 266,215 27,757
Oracle* 727,900 61,189
------------
122,969
-------------------------------------------------------------
-------------------------------------------------------------
Market
Description Shares Value (000)
-------------------------------------------------------------
FIBER OPTICS -- 19.5%
Avanex* 207,900 $ 19,854
Ciena* 190,500 31,754
E-Tek Dynamics* 281,200 74,184
JDS Uniphase* 1,138,100 136,430
Metromedia Fiber Network* 534,400 21,209
MRV Communications* 1,221,100 82,119
New Focus* 189,500 15,563
SDL* 193,900 55,298
Sycamore Networks* 390,893 43,145
------------
479,556
-------------------------------------------------------------
INTERNET CONTENT -- 11.1%
China.com, Cl A* 249,300 5,095
Go2net* 225,900 11,366
Infospace* 4,197,482 231,911
Rare Medium Group* 1,552,700 24,552
------------
272,924
-------------------------------------------------------------
INTERNET SOFTWARE -- 16.5%
Agile Software* 449,000 31,739
Ariba* 330,900 32,444
Art Technology* 574,300 57,968
Broadvision* 200,600 10,193
Commerce One* 564,200 25,601
Genuity* 591,900 5,420
Internap Network Services* 582,100 24,166
Interwoven* 196,000 21,558
Verisign* 560,160 98,868
Vignette* 719,600 37,430
Vitria Technology* 993,200 60,709
------------
406,096
-------------------------------------------------------------
NETWORK SOFTWARE -- 0.3%
Micromuse* 37,100 6,139
------------
6,139
-------------------------------------------------------------
NETWORKING PRODUCTS -- 6.2%
Extreme Networks* 663,400 69,989
Foundry Networks* 65,600 7,216
Juniper Networks* 411,900 59,957
Network Appliance* 175,800 14,152
------------
151,314
-------------------------------------------------------------
SOFTWARE TOOLS -- 0.5%
Mercury Interactive* 117,400 11,358
------------
11,358
-------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT -- 9.3%
ADC Telecommunications* 428,800 35,966
Advanced Fibre Communications* 841,300 38,121
Clarent* 268,100 19,169
Ditech Communication* 492,600 46,581
Next Level Communications* 270,000 23,153
Nortel Networks+ 421,900 28,795
Tekelec* 524,200 25,260
Terayon Communication* 163,700 10,515
------------
227,560
------------
TOTAL TECHNOLOGY (COST $1,768,532) 2,313,006
------------
TOTAL COMMON STOCK (COST $1,800,524) 2,339,791
-------------------------------------------------------------
21
<PAGE>
[Logo omitted]
PBHG Insurance Series Fund, Inc.
-------------------------------------------------------------
PBHG TECHNOLOGY & COMMUNICATIONS PORTFOLIO
STATEMENT OF NET ASSETS
AS OF JUNE 30, 2000 (UNAUDITED)
-------------------------------------------------------------
Face Market
Description Amount (000) Value (000)
-------------------------------------------------------------
REPURCHASE AGREEMENTS -- 5.3%
Greenwich Capital
6.55%, dated 06/30/00,
matures 07/03/00,
repurchase price
$16,098,921 (collateralized
by U.S. Government Agency
Instruments: total market
value $16,416,051) (A) $16,090 $ 16,090
JP Morgan
6.75%, dated 06/30/00,
matures 07/03/00,
repurchase price
$72,438,652 (collateralized
by U.S. Government Agency
Instruments: total market
value $73,815,415) (A) 72,368 72,368
Morgan Stanley
6.70%, dated 06/30/00,
matures 07/03/00, repurchase
price $42,468,920
(collateralized by
U.S. Government Agency
Instruments: total market
value $43,497,280) (A) 42,446 42,446
------------
TOTAL REPURCHASE AGREEMENTS (COST $130,904) 130,904
------------
TOTAL INVESTMENTS -- 100.6% (COST $1,931,428) 2,470,695
------------
-------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- (0.6%)
TOTAL OTHER ASSETS AND LIABILITIES, NET (14,361)
------------
-------------------------------------------------------------
NET ASSETS:
Paid-in-capital (authorized
500 million shares --
$0.001 par value) based on
45,652,783 outstanding
shares of common stock 1,468,315
Accumulated net investment loss (10,240)
Accumulated net realized gain on investments 458,992
Net unrealized appreciation on investments 539,267
------------
TOTAL NET ASSETS -- 100.0% $ 2,456,334
============
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE $53.80
======
* Non-income producing security
+ The Portfolio held Canadian securities as of June 30, 2000.
The total market value of investments is $28,794,675 and
represents 1.2% of the Portfolio.
(A) -- Tri-party repurchase agreement
ADR -- American depository receipt
Cl -- Class
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
PBHG Insurance Series Fund, Inc.
--------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES (000)
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
------------ ---------------
PBHG PBHG
SELECT VALUE SMALL CAP VALUE
PORTFOLIO PORTFOLIO
------------ ---------------
ASSETS:
<S> <C> <C>
Investment securities (Cost $60,264 and $93,128) at market value $61,265 $102,536
Repurchase agreements (Cost $8,545 and $20,904) at market value 8,545 20,904
Receivable for investment securities sold 9,662 7,200
Receivable for capital shares sold 18 899
Dividends and interest receivable 85 43
------- --------
Total Assets 79,575 131,582
------- --------
LIABILITIES:
Payable for investment securities purchased 16,253 16,493
Payable for capital shares redeemed 1,025 --
Accrued expenses 45 98
------- --------
Total Liabilities 17,323 16,591
------- --------
NET ASSETS:
Paid-in-capital (authorized 500 million shares -- $0.001 par value) based
on 3,864,311 and 6,585,749 outstanding shares of common stock 54,096 88,958
Undistributed net investment income/Accumulated net investment loss 531 (2)
Accumulated net realized gain on investments 6,624 16,627
Net unrealized appreciation on investments 1,001 9,408
------- --------
NET ASSETS $62,252 $114,991
======= ========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE $16.11 $17.46
====== ======
</TABLE>
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
23
<PAGE>
<PAGE>
[Logo omitted]
PBHG Insurance Series Fund, Inc.
--------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS (000)
For the six month period ended June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
--------- --------- --------- --------- --------------
PBHG PBHG PBHG
PBHG PBHG SELECT SMALL CAP TECHNOLOGY &
GROWTH II SELECT 20 VALUE VALUE COMMUNICATIONS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- --------------
INVESTMENT INCOME:
<S> <C> <C> <C> <C> <C>
Dividends $ 92 $ 359 $ 327 $ 216 $ 16
Interest 800 1,906 109 171 1,640
------- ------- ------ ------- --------
Total Investment Income 892 2,265 436 387 1,656
------- ------- ------ ------- --------
EXPENSES:
Investment Advisory Fees 1,405 3,675 164 324 9,573
Administrative Fees 248 648 38 49 1,689
Custodian Fees 8 8 5 7 21
Professional Fees 3 (7) (1) (2) 29
Transfer Agent Fees 13 13 12 13 13
Printing Fees 8 22 2 1 95
Directors' Fees 4 14 1 1 34
Amortization of Deferred Organizational Costs 1 1 1 1 1
Interest Expense 1 -- 14 -- 420
Insurance and Other Expenses 3 17 1 1 21
------- ------- ------ ------- --------
TOTAL EXPENSES 1,694 4,391 237 395 11,896
------- ------- ------ ------- --------
Waiver of Investment Advisory Fees -- -- -- (6) --
------- ------- ------ ------- --------
Advisory Fee Recaptured 69 -- -- -- --
------- ------- ------ ------- --------
Net Expenses 1,763 4,391 237 389 11,896
------- ------- ------ ------- --------
NET INVESTMENT INCOME (LOSS) (871) (2,126) 199 (2) (10,240)
------- ------- ------ ------- --------
Net Realized Gain (Loss) from Security Transactions (5,796) 133,833 993 12,571 300,640
Net Change in Unrealized Appreciation (Depreciation)
on Investments 41,307 (57,393) 957 4,235 (93,900)
------- ------- ------ ------- --------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 35,511 76,440 1,950 16,806 206,740
------- ------- ------ ------- --------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $34,640 $74,314 $2,149 $16,804 $196,500
======= ======= ====== ======= ========
</TABLE>
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
[Logo omitted]
PBHG Insurance Series Fund, Inc.
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (000)
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2000 (UNAUDITED) AND THE YEAR ENDED
DECEMBER 31, 1999.
<TABLE>
<CAPTION>
-------------------- ---------------------- ------------------- -------------------
PBHG PBHG PBHG PBHG
GROWTH II SELECT 20 SELECT VALUE SMALL CAP VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------------- ---------------------- ------------------- -------------------
01/01/00 01/01/99 01/01/00 01/01/99 01/01/00 01/01/99 01/01/00 01/01/99
to to to to to to to to
06/30/00 12/31/99 06/30/00 12/31/99 06/30/00 12/31/99 06/30/00 12/31/99
-------- -------- -------- -------- ------- ------- -------- -------
INVESTMENT ACTIVITIES:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Investment Income (Loss) $ (871) $ (175) $ (2,126) $ (1,979) $ 199 $ 333 $ (2) $ (85)
Net Realized Gain (Loss) from
Security Transactions (5,796) 10,179 133,833 60,911 993 5,838 12,571 5,191
Net Change in Unrealized
Appreciation (Depreciation)
on Investments 41,307 41,832 (57,393) 301,184 957 (2,558) 4,235 1,136
-------- -------- -------- -------- ------- ------- -------- -------
Net Increase in Net Assets
Resulting from Operations 34,640 51,836 74,314 360,116 2,149 3,613 16,804 6,242
-------- -------- -------- -------- ------- ------- -------- -------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net Investment Income -- -- -- -- -- (1) -- --
Net Realized Gains from
Security Transactions -- -- -- -- -- (982) -- --
-------- -------- -------- -------- ------- ------- -------- -------
Total Distributions -- -- -- -- -- (983) -- --
-------- -------- -------- -------- ------- ------- -------- -------
CAPITAL SHARE TRANSACTIONS:
Shares Issued 292,949 126,363 202,565 191,978 72,612 30,700 74,824 25,034
Shares Issued upon Reinvestment
of Distributions -- -- -- -- -- 983 -- --
Shares Redeemed (69,116) (17,918) (87,097) (116,448) (52,481) (16,627) (20,121) (31,832)
-------- -------- -------- -------- ------- ------- -------- -------
Increase (Decrease) in Net
Assets Derived from Capital
Share Transactions 223,833 108,445 115,468 75,530 20,131 15,056 54,703 (6,798)
-------- -------- -------- -------- ------- ------- -------- -------
Total Increase (Decrease) in
Net Assets 258,473 160,281 189,782 435,646 22,280 17,686 71,507 (556)
-------- -------- -------- -------- ------- ------- -------- -------
NET ASSETS:
Beginning of Period 178,602 18,321 753,572 317,926 39,972 22,286 43,484 44,040
-------- -------- -------- -------- ------- ------- -------- -------
End of Period $437,075 $178,602 $943,354 $753,572 $62,252 $39,972 $114,991 $43,484
======== ======== ======== ======== ======= ======= ======== =======
SHARES ISSUED AND REDEEMED:
Shares Issued 10,966 7,432 5,723 10,077 4,576 2,112 4,676 2,202
Shares Issued upon
Reinvestment of Distributions -- -- -- -- -- 66 -- --
Shares Redeemed (2,925) (1,260) (2,657) (6,541) (3,343) (1,108) (1,320) (2,765)
-------- -------- -------- -------- ------- ------- -------- -------
Net Increase (Decrease) in
Shares Outstanding 8,041 6,172 3,066 3,536 1,233 1,070 3,356 (563)
======== ======== ======== ======== ======= ======= ======== =======
</TABLE>
-----------------------
PBHG
TECHNOLOGY &
COMMUNICATIONS
PORTFOLIO
-----------------------
01/01/00 01/01/99
to to
06/30/00 12/31/99
---------- ----------
INVESTMENT ACTIVITIES:
Net Investment Income (Loss) $ (10,240) $ (2,459)
Net Realized Gain (Loss) from
Security Transactions 300,640 162,638
Net Change in Unrealized
Appreciation (Depreciation)
on Investments (93,900) 625,480
---------- ----------
Net Increase in Net Assets
Resulting from Operations 196,500 785,659
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net Investment Income -- --
Net Realized Gains from
Security Transactions -- --
---------- ----------
Total Distributions -- --
---------- ----------
CAPITAL SHARE TRANSACTIONS:
Shares Issued 1,294,546 847,733
Shares Issued upon Reinvestment
of Distributions -- --
Shares Redeemed (670,160) (30,437)
---------- ----------
Increase (Decrease) in Net
Assets Derived from Capital
Share Transactions 624,386 817,296
---------- ----------
Total Increase (Decrease) in
Net Assets 820,886 1,602,955
---------- ----------
NET ASSETS:
Beginning of Period 1,635,448 32,493
---------- ----------
End of Period $2,456,334 $1,635,448
========== ==========
SHARES ISSUED AND REDEEMED:
Shares Issued 23,610 34,740
Shares Issued upon
Reinvestment of Distributions -- --
Shares Redeemed (13,502) (1,557)
---------- ----------
Net Increase (Decrease) in
Shares Outstanding 10,108 33,183
========== ==========
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
25
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH FISCAL YEAR OR PERIOD
<TABLE>
<CAPTION>
Net Realized and Net
Asset Net Unrealized Distributions Distributions Asset
Value Investment Gains or from Net from Value
Beginning Income Losses Investment Capital End Total
of Period (Loss) on Securities Income Gains of Period Return
-----------------------------------------------------------------------------------------------------------------------------------
------------------------
PBHG GROWTH II PORTFOLIO
------------------------
<S> <C> <C> <C> <C> <C>
2000 4** $23.05 $(0.07) $4.70 -- -- $27.68 20.09%+
1999 4 11.63 (0.04) 11.46 -- -- 23.05 98.19%
1998 10.75 (0.06) 0.94 -- -- 11.63 8.19%
1997 1 10.00 -- 0.75 -- -- 10.75 7.50%+
------------------------
PBHG SELECT 20 PORTFOLIO
------------------------
2000** $32.70 $(0.07) $3.50 -- -- $36.13 10.49%+
1999 16.30 (0.08) 16.48 -- -- 32.70 100.61%
1998 10.03 (0.01) 6.28 -- -- 16.30 62.52%
1997 2 10.00 -- 0.03 -- -- 10.03 0.30%+
---------------------------
PBHG SELECT VALUE PORTFOLIO
---------------------------
2000** $15.19 $0.01 $0.91 -- -- $16.11 6.06%+
1999 14.27 0.13 1.13 -- $ (0.34) 15.19 8.89%
1998 10.43 (0.02) 3.98 $(0.04) (0.08) 14.27 37.96%
1997 3 10.00 0.02 0.41 -- -- 10.43 4.30%+
------------------------------
PBHG SMALL CAP VALUE PORTFOLIO
------------------------------
2000** $13.46 $(0.02) $4.02 -- -- $17.46 29.72%+
1999 11.61 (0.03) 1.88 -- -- 13.46 15.93%
1998 10.48 (0.02) 1.16 -- $ (0.01) 11.61 10.94%
1997 3 10.00 0.01 0.47 -- -- 10.48 4.80%+
------------------------------------------
PBHG TECHNOLOGY & COMMUNICATIONS PORTFOLIO
------------------------------------------
20004** $46.01 $(0.24) $8.03 -- -- $53.80 16.93%+
19994 13.76 (0.13) 32.38 -- -- 46.01 234.38%
1998 10.41 (0.04) 3.39 -- -- 13.76 32.20%
1997 1 10.00 -- 0.41 -- -- 10.41 4.10%+
</TABLE>
<TABLE>
<CAPTION>
Ratio
of Net
Ratio Ratio Investment
Net of Net of Expenses Income (Loss)
Assets Ratio Income to Average to Average
End of Expenses (Loss) Net Assets Net Assets Portfolio
of Period to Average to Average (Excluding (Excluding Turnover
(000) Net Assets Net Assets Waivers) Waivers) Rate
----------------------------------------------------------------------------------------------------------------
------------------------
PBHG GROWTH II PORTFOLIO
------------------------
<S> <C> <C> <C> <C> <C> <C>
2000 4** $ 437,075 1.06%* (0.53)%* 1.06%* (0.53)%* 79.84%+
1999 4 178,602 1.20% (0.38)% 1.20% (0.38)% 236.82%
1998 18,321 1.20% (0.64)% 1.54% (0.98)% 228.09%
1997 1 10,236 1.20%* (0.11)%* 4.38%* (3.29)%* 44.57%+
------------------------
PBHG SELECT 20 PORTFOLIO
------------------------
2000** $ 943,354 1.01%* (0.49)%* 1.01%* (0.49)%* 66.21%+
1999 753,572 1.05% (0.46)% 1.05% (0.46)% 139.05%
1998 317,926 1.20% (0.18)% 1.21% (0.19)% 48.79%
1997 2 7,617 1.20%* 0.51%* 3.36%* (1.65)%* 18.53%+
---------------------------
PBHG SELECT VALUE PORTFOLIO
---------------------------
2000** $ 62,252 0.94%* 0.79%* 0.94%* 0.79%* 686.43%+
1999 39,972 0.95% 0.84% 0.95% 0.84% 927.02%
1998 22,286 1.00% 0.67% 1.47% 0.20% 635.10%
1997 3 1,560 1.00%* 1.91%* 8.04%* (5.13)%* 68.93%+
------------------------------
PBHG SMALL CAP VALUE PORTFOLIO
------------------------------
2000** $ 114,991 1.20%* (0.01)%* 1.22%* (0.03)%* 143.79%+
1999 43,484 1.20% (0.20)% 1.29% (0.29)% 277.95%
1998 44,040 1.20% (0.15)% 1.46% (0.41)% 293.90%
1997 3 9,321 1.20%* 1.40%* 3.63%* (1.03)%* 41.14%+
--------------------------------
PBHG TECHNOLOGY & COMMUNICATIONS
--------------------------------
20004** $2,456,334 1.05%* (0.91)%* 1.05%* (0.91)%* 180.31%+
19994 1,635,448 1.09% (0.64)% 1.09% (0.64)% 273.76%
1998 32,493 1.20% (0.55)% 1.56% (0.91)% 264.58%
1997 1 9,117 1.20%* 0.37%* 5.09%* (3.52)%* 69.34%+
</TABLE>
* Annualized.
** For the six month period ended June 30, 2000 (Unaudited).
+ Total return and portfolio turnover have not been annualized.
1 The PBHG Growth II and the PBHG Technology & Communications Portfolios
commenced operations on April 30, 1997.
2 The PBHG Select 20 Portfolio commenced operations on September 25,1997.
3 The PBHG Select Value and the PBHG Small Cap Value Portfolios commenced
operations on October 28, 1997.
4 Per share calculations were performed using average shares for the period
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
26
<PAGE>
[Logo omitted]
PBHG Insurance Series Fund, Inc.
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
1. ORGANIZATION
The PBHG Insurance Series Fund, Inc. (the "Fund"), a Maryland corporation' is
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company. The Fund consists of seven Portfolios: the PBHG
Growth II Portfolio (the "Growth II Portfolio"), the PBHG Large Cap Growth
Portfolio (the "Large Cap Growth Portfolio"), the PBHG Technology &
Communications Portfolio (the "Technology & Communications Portfolio"), the PBHG
Small Cap Value Portfolio (the "Small Cap Value Portfolio"), the PBHG Select
Value Portfolio (the "Select Value Portfolio", formerly the Large Cap Value
Portfolio), the PBHG Select 20 Portfolio (the "Select 20 Portfolio"), and the
PBHG Mid-Cap Value Portfolio (the "Mid-Cap Value Portfolio") (each a "Portfolio"
and, collectively, the "Portfolios"). Each Portfolio is classified as a
diversified management investment company, with the exception of the Select 20
Portfolio and the Technology & Communications Portfolio which are classified as
non-diversified management investment companies. The financial statements
presented herein do not include the Large Cap Growth Portfolio or the Mid-Cap
Value Portfolio, whose financial statements are presented separately. Each
Portfolio's prospectus provides a description of the Portfolio's investment
objectives, policies and strategies. The assets of each Portfolio are
segregated, and a shareholder's interest is limited to the Portfolio in which
shares are held. The Fund is intended to be a funding vehicle for variable
annuity contracts and variable life insurance policies to be offered by the
separate accounts of life insurance companies. At June 30, 2000 the following
percentage of outstanding shares of the Portfolios were held by the separate
accounts of the number of participating insurance companies listed below:
PERCENTAGE OF NUMBER OF
PORTFOLIO OUTSTANDING SHARES INSURANCE COMPANIES
---------------- ------------------ -------------------
Growth II Portfolio 80%, 16% 2
Select 20 Portfolio 99% 1
Select Value Portfolio 100% 1
Small Cap Value Portfolio 100% 1
Technology &
Communications Portfolio 96% 1
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies followed by
the Portfolios.
SECURITY VALUATION -- Investment securities of the Portfolios that are listed on
a securities exchange, and for which market quotations are readily available,
are valued at the last quoted sales price at the close of trading on the New
York Stock Exchange (currently 4:00 p.m., Eastern Time). If there is no such
reported sale, these securities and unlisted securities for which market
quotations are not readily available, are valued at the last bid price.
Short-term investments may be valued at amortized cost which approximates market
value. Foreign securities are valued based upon quotations from the primary
market in which they are traded, and are translated from the local currency into
U.S. dollars using current exchange rates. In addition, if quotations are not
readily available, or if the values have been materially affected by events
occurring after the closing of a foreign market, assets may be valued by another
method that the Board of Directors believes accurately reflects fair value.
SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security transactions are
accounted for on the date the securities are purchased or sold (trade date).
Dividend income and distributions to shareholders are recognized on the
ex-dividend date; interest income is recognized on the accrual basis. Costs used
in determining realized capital gains and losses on the sale of investment
securities are those of the specific securities sold adjusted for the accretion
and amortization of acquisition discounts and premiums during the respective
holding periods.
DIVIDENDS -- Dividends from net investment income of each Portfolio are declared
annually, if available. Distributions of net realized capital gains of each
Portfolio are generally made to shareholders annually, if available. Dividends
from net investment income and distributions from net realized capital gains are
determined in accordance with U.S. Federal income tax regulations, which may
differ from those amounts determined under generally accepted accounting
principles. These book/tax differences are either temporary or permanent in
nature. To the extent these differences are permanent, they are charged or
credited to paid-in-capital, undistributed net investment income or accumulated
net realized gain, as appropriate, in the period that the differences arise.
FEDERAL INCOME TAXES -- It is each Portfolio's intention to continue to qualify
as a regulated investment company for Federal income tax purposes and to
distribute all of its taxable income and net capital gains. Accordingly, no
provision has been made for Federal income taxes.
NET ASSET VALUE PER SHARE -- The net asset value per share is calculated each
business day by dividing the total value of the Portfolio's assets, less
liabilities, by the number of shares outstanding.
REPURCHASE AGREEMENTS -- Securities pledged as collateral for repurchase
agreements are held by a third party custodian bank until the respective
agreements mature. Provisions of the repurchase agreements and procedures
adopted by the Fund and followed by Pilgrim Baxter & Associates, Ltd. (the
"Adviser") require that the market value of the collateral including accrued
interest thereon, is sufficient in the event of default by the counterparty. If
the counterparty defaults and the value of the collateral declines, or if the
counterparty enters into insolvency proceedings, realization of the collateral
by a Portfolio may be delayed or limited.
OTHER -- Expenses that are directly related to one of the Portfolios are charged
directly to that Portfolio. Other operating expenses are prorated to the
Portfolios on the basis of relative net assets.
All organizational costs incurred in connection with the start up of the Fund
have been equally allocated to each Portfolio, except the Mid-Cap Value
Portfolio which commenced operations on November 30, 1998, and are being
amortized on a straight line basis over a period of sixty months from
commencement of operations. In the event that any of the initial shares of each
Portfolio are redeemed by any holder thereof during the period that each
Portfolio is amortizing its organizational costs, the redemption proceeds
payable to the holder thereof will be reduced by the unamortized organizational
costs in the same ratio as the number of initial shares being redeemed bears to
the number of initial shares outstanding at the time of redemption.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS -- The preparation
of financial statements, in conformity with generally accepted accounting
principles, requires management to make estimates and assumptions that affect
the reported amount of assets and liabilities and disclosure of contingent
assets and liabilities, if any, at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
3. INVESTMENT ADVISORY FEES, ADMINISTRATIVE FEES AND OTHER TRANSACTIONS
WITH AFFILIATES
The Fund and the Adviser are parties to an Investment Advisory Agreement (the
"Advisory Agreement"). Under the terms of the Advisory Agreement, the Adviser is
paid a monthly fee at an annual rate of 0.85% of the average daily net assets of
the Growth II, Select 20 and Technology & Communications Portfolios' average
daily net assets, 0.65% of the Select Value Portfolio's average daily net
assets, and 1.00% of the Small Cap Value Portfolio's average daily net assets.
In the interest of limiting expenses of the Portfolios, the Adviser has entered
into an expense limitation agreement with the Fund ("Expense Limitation
Agreement"). The Adviser has agreed to waive or limit its fees and to
27
<PAGE>
[Logo omitted]
PBHG Insurance Series Fund, Inc.
--------------------------------------------------------------------------------
assume other expenses of each Portfolio to the extent necessary to limit the
total annual operating expenses (expressed as a percentage of the Portfolio's
average daily net assets) to 1.20% of the average daily net assets of the Growth
II, Select 20, Small Cap Value and Technology & Communications Portfolios and to
not more than 1.00% of the average daily net assets of the Select Value
Portfolio. Reimbursement by the Portfolio of the advisory fees waived or limited
and other expenses paid by the Adviser pursuant to the Expense Limitation
Agreement during any of the two previous fiscal years may be made at a later
date when the Portfolio has reached a sufficient asset size to permit
reimbursement to be made without causing the total annual expense ratio of each
Portfolio to exceed the total operating expense percentages described above.
Consequently, no reimbursement by the Portfolio will be made unless: (i) a
Portfolio's net assets exceed $75 million; (ii) a Portfolio's total annual
expense ratio is less than that listed above, and (iii) the payment of such
reimbursement is approved by the Board of Directors on a quarterly basis. During
the six months ended June 30, 2000, the Board of Directors has approved the
reimbursement of previously waived fees by the Adviser for the prior fiscal year
in the amount of $69,241 for the Growth II Portfolio. At June 30, 2000, the
amount of advisory fees waived and reimbursement of third party expenses by the
Adviser subject to possible reimbursement were as follows:
Select Value Portfolio $ 36,853
Small Cap Value Portfolio $123,789
Pilgrim Baxter Value Investors, Inc., a wholly-owned subsidiary of the Adviser,
serves as the sub-advisor to the Select Value Portfolio and the Small Cap Value
Portfolio. For its services provided pursuant to its Investment Sub-Advisory
Agreement with the Adviser and the Fund, Pilgrim Baxter Value Investors, Inc.
receives a fee from the Adviser at an annual rate of 0.40%, and 0.65%,
respectively, of the average daily net assets of the Select Value Portfolio and
the Small Cap Value Portfolio. Pilgrim Baxter Value Investors, Inc. receives no
fees directly from the Select Value Portfolio or the Small Cap Value Portfolio.
PBHG Fund Services (the "Administrator"), a wholly-owned subsidiary of the
Adviser, provides the Fund with administrative services, including regulatory
reporting and all necessary office space, equipment, personnel and facilities.
For these administrative services, the Administrator receives a fee, which is
calculated daily and paid monthly, at an annual rate of 0.15% of the average
daily net assets of each Portfolio.
SEI Investments Distribution Co. (the "Distributor") a wholly-owned subsidiary
of SEI, and the Fund are parties to a distribution agreement (the "Distribution
Agreement") dated April 1, 1997, pursuant to which the Distributor serves as
principal underwriter for the Company. The Distributor receives no compensation
for serving in such capacity.
SEI Investments Management Corporation, a wholly-owned subsidiary of SEI
Investments Company, is the owner of all beneficial interest in SEI Investments
Mutual Funds Services (the "Sub-Administrator"). The Sub-Administrator is an
affiliate of the Fund's distributor and assists the Administrator in providing
administrative services to the Fund. For acting in this capacity, the
Administrator pays the Sub-Administrator a fee equal to the greater of $35,000
per Portfolio and $5,000 per additional class of shares or at the annual rate of
0.04% of the first $2.5 billion of the average daily net assets of (i) the Fund,
and (ii) The PBHG Funds, Inc., another fund family managed by the Adviser
(collectively known as the "PBHG Fund Family"), 0.025% of the next $7.5 billion
of the average daily net assets of each portfolio in the PBHG Fund Family, and
0.02% of the average daily net assets of each portfolio in the PBHG Fund Family
in excess of $10 billion.
The Adviser has entered into an agreement with SEI Investments to manage the
investments of repurchase agreements for the Funds. Listed below are the amounts
SEI Investments received for its services from each portfolio for the period
ended June 30, 2000.
Growth II Portfolio $6,923
Select 20 Portfolio $16,137
Select Value Portfolio $908
Small Cap Value Portfolio $1,416
Technology & Communications
Portfolio $13,863
DST Systems, Inc. serves as the transfer agent and dividend disbursing agent of
the Fund. First Union National Bank, serves as the custodian for the Fund.
The Fund has entered into a shareholder servicing agreement with PBHG Fund
Services to provide shareholder support and other shareholder account-related
services. PBHG Fund Services has, in turn, contracted with UAM Shareholder
Service Center, Inc. ("UAMSSC") to assist in the provision of these services.
UAMSSC receives no fees directly from the Portfolios. For the period ended June
30, 2000, PBHG Fund Services was paid $4,200 each by the Growth II, Select 20,
Select Value, Small Cap Value and Technology & Communications Portfolios for
shareholder services.
Certain officers and directors of the Fund who are or were officers of the
Adviser, Administrator, Sub-Administrator and the Distributor received no
compensation from the Fund for such services.
4. INVESTMENT TRANSACTIONS
The cost of securities purchased and the proceeds from securities sold, other
than short-term investments, for each Portfolio for the six months ended June
30, 2000 were as follows:
PURCHASES SALES
(000) (000)
--------- ---------
Growth II Portfolio 471,325 244,482
Select 20 Portfolio 605,882 528,840
Select Value Portfolio 346,741 326,812
Small Cap Value Portfolio 137,404 91,909
Technology & Communications
Portfolio 4,446,145 3,924,701
At June 30, 2000, the total cost of securities and the net realized gains or
losses on securities sold for Federal income tax purposes was not materially
different from amounts reported for financial reporting purposes.
The aggregate gross unrealized appreciation and depreciation of securities held
by each Portfolio at June 30, 2000 were as follows:
NET
UNREALIZED
UNREALIZED UNREALIZED APPRECIATION/
APPRECIATION DEPRECIATION (DEPRECIATION)
(000) (000) (000)
------------ ------------ -------------
Growth II Portfolio 116,299 30,227 86,072
Select 20 Portfolio 339,014 20,943 318,071
Select Value Portfolio 2,750 1,749 1,001
Small Cap Value Portfolio 14,186 4,778 9,408
Technology &
Communications Portfolio 731,535 192,268 539,267
5. LINE OF CREDIT
Each Portfolio may borrow, an amount up to its prospectus defined limitations,
from a $500,000,000 committed line of credit available to certain of the funds
in the PBHG Fund Family. Borrowings from the line of credit will bear interest
at the Federal Funds Rate plus 0.50%. The PBHG Fund Family pays an annual
commitment fee of 0.10% of the outstanding committed amount. Each Portfolio is
allocated a portion of this fee based on its net assets relative to the net
assets of the PBHG Fund Family. No Portfolio had an outstanding borrowing at
June 30, 2000. Listed below are the Portfolios which had an outstanding balance
during the period ended June 30, 2000:
WEIGHTED
MAXIMUM AVERAGE DAILY WEIGHTED
AMOUNT OUTSTANDING AVERAGE
BORROWED BALANCE INTEREST RATE
------------- ----------- --------------
Growth II Portfolio $3,500,000 $38,462 6.45%
Select Value Portfolio $6,700,000 $449,451 6.20%
Small Cap Value Portfolio $600,000 $4,945 6.29%
Technology &
Communications Portfolio $142,900,000 $8,307,143 6.51%
28
<PAGE>
[Logo omitted]
PBHG Insurance Series Fund, Inc.
INVESTMENT ADVISER
Pilgrim Baxter & Associates, Ltd.
DISTRIBUTOR
SEI Investments Distribution, Co.
Oaks, PA
