As filed with the Securities and Exchange Commission on April 8, 1998
Securities Act Registration No. 333-44193
Investment Company Act Registration No. 811-08605
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-effective Amendment No. 1 Post-effective Amendment No. __
PBHG ADVISOR FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
825 Duportail Road
Wayne, Pennsylvania 19087
(Address of Principal Executive Offices:
Number, Street, City, State, Zip Code)
(610) 647-4100
(Area Code and Telephone Number)
Harold J. Baxter
Pilgrim Baxter & Associates, Ltd.
825 Duportail Road
Wayne, Pennsylvania 19087
(Name and Address of Agent for Service)
Copies to:
Thomas H. Duncan, Esq. John M. Zerr, Esq.
Ballard Spahr Andrews & Ingersoll, LLP General Counsel
1225 Seventeenth Street, Suite 2300 Pilgrim Baxter & Associates, Ltd.
Denver, Colorado 80202 825 Duportail Road
(303) 292-2400 Wayne, Pennsylvania 19087
(610) 647-4100
Approximate Date of Proposed Public Offering: As soon as practicable after
the effective date of this Registration Statement.
The securities being registered are Class A shares of the Registrant's PBHG
Advisor Enhanced Equity Fund, PBHG Advisor Master Fixed Income Fund and PBHG
Advisor Short-Term Government Fund. No filing fee is required because an
indefinite number of shares is being registered pursuant to Rule 24f-2 under the
Investment Company Act of 1940, as amended.
It is proposed that this registration statement shall hereafter become
effective on May 8, 1998, in accordance with Rule 488.
<PAGE>
THE PBHG ADVISOR FUNDS, INC.
FORM N-14
Cross Reference Sheet
Pursuant to Rule 481(a) under the 1933 Act
Item Location in Combined Proxy
No. Statement and Prospectus
- ----- ------------------------------
Part A
1. Beginning of Registration Cover Page
Statement and Outside Front
Cover Page or Prospectus
2. Beginning and Outside Back Table of Contents
Cover Page
3. Fee Table, Synopsis and Risk Summary; Risk Factors
Factors
4. Information About the Transaction Summary; Information About the
Agreement
5. Information About the Registrant Summary; Comparison of Investment
Objectives and Policies;
Information About the Agreement;
Rights of Shareholders;
Additional Information About Each
Fund; Capitalization
6. Information About the Company Summary; Comparison of Investment
Being Acquired Objectives and Policies;
Information About the Agreement;
Rights of Shareholders;
Additional Information About Each
Fund; Capitalization; Financial
Statements; Ownership of Analytic
Portfolio Shares
7. Voting Information Summary; Information Relating to
Voting Matters
8. Interest of Certain Persons and Summary; Additional Information
Experts About Each Fund
9. Additional Information Required Not Applicable
for Reoffering by Persons
Deemed to be Underwriters
Location in Statement of
Part B Additional Information
-------------------------------
10. Cover Page Cover Page
11. Table of Contents Cover Page
12. Additional Information About the The Company; Description of
Registrant Permitted Investments; Directors
and Officers of the Company;
Advisory and Management-Related
Services Agreement and Plans of
Distribution; Portfolio
Transactions; Description of
Shares; Determination of Net
Asset Value; Taxes; Performance
Data; Financial Information
13. Additional Information About the Not Applicable
Company Being Acquired
14. Financial Statements Financial Information
<PAGE>
Part C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of this document.
<PAGE>
THE ANALYTIC SERIES FUND
Dear Shareholder:
The accompanying Combined Proxy Statement and Prospectus contains an important
proposal for your consideration as a shareholder of Analytic Enhanced Equity
Portfolio, Analytic Master Fixed Income Portfolio or Analytic Short-Term
Government Portfolio. Your Board of Trustees has proposed that the Enhanced
Equity Portfolio combine with PBHG Advisor Enhanced Equity Fund, the Master
Fixed Income Portfolio combine with PBHG Advisor Master Fixed Income Fund and
the Short-Term Government Portfolio combine with PBHG Advisor Short-Term
Government Fund (the "Reorganizations"). If the proposed Reorganizations are
approved, you will receive shares of the corresponding PBHG Advisor Fund having
an aggregate net asset value equal to the aggregate net asset value of your
Analytic Portfolio shares, with no tax effect to you.
The Analytic Portfolios have distinct investment objectives that were designed
to offer investors a range of investment opportunities within a single fund
family. While the Analytic Portfolios have performed well, they have not reached
the "critical mass" necessary to achieve operating efficiencies.
Your Board of Trustees believes that the Reorganizations are in the best
interests of the shareholders of the Analytic Portfolios. The investment
objectives and policies of the PBHG Advisor Funds are the same as those of the
corresponding Analytic Portfolios. Analytic TSA Global Asset Management, Inc.
("Analytic TSA"), the adviser to the Analytic Portfolios, will be the
sub-adviser to the PBHG Advisor Funds, so your investment will continue to
benefit from Analytic TSA's distinctive investment philosophy. If, as expected,
the distributor of the PBHG Advisor Funds is able to distribute PBHG Advisor
Fund shares successfully, growth in assets would make possible the realization
of economies of scale and attendant savings in costs to the PBHG Advisor Funds
and their shareholders. In addition, following the Reorganizations, you will be
able to purchase additional shares of the other funds in PBHG Advisor Funds
without paying a sales charge and you will be able to freely exchange your PBHG
Advisor Fund shares without paying a sales charge for shares of the same class
of the other funds in PBHG Advisor Funds representing a wide range of investment
objectives and policies.
The enclosed materials provide more information about the proposal. Please read
this information carefully and call us if you have any questions. Our toll free
number is 1-800-374-2633.
Your vote is important no matter how many shares you own. Voting your shares
early will help us avoid follow-up mailings and telephone solicitations.
After reviewing the enclosed materials, we ask that you vote FOR the proposed
Reorganizations by completing, dating, and signing your proxy card, and mailing
it to us.
Sincerely,
Michael Koehn
Chairman
The Analytic Series Fund
<PAGE>
THE ANALYTIC SERIES FUND
ANALYTIC ENHANCED EQUITY PORTFOLIO
ANALYTIC MASTER FIXED INCOME PORTFOLIO
ANALYTIC SHORT-TERM GOVERNMENT PORTFOLIO
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held on May __, 1998
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the "Special
Meeting") of The Analytic Series Fund (the "Fund"), will be held at the offices
of the Fund, 700 South Flower Street, Suite 2400, Los Angeles, California 80017,
on May __, 1998, at ______ _.m., for the following purposes.
1. To consider and vote on a proposed Agreement and Plan of Reorganization
(the "Agreement") between the Fund and PBHG Advisor Funds, Inc. ("PBHG
Advisor Funds"), providing for (a) the acquisition of all the assets of the
Enhanced Equity Portfolio, Master Fixed Income Portfolio, and Short-Term
Government Portfolio series of the Fund by the corresponding series of PBHG
Advisor Funds (the PBHG Advisor Enhanced Equity Fund, PBHG Advisor Master
Fixed Income Fund, and PBHG Advisor Short-Term Government Fund series,
respectively), in exchange for Class A shares of such respective series of
PBHG Advisor Funds, and (b) the liquidation of the Fund and its Portfolios,
and the pro rata distribution of each Portfolio's holdings of PBHG Fund
shares to its shareholders.
2. To transact any other business that may properly come before the Special
Meeting.
Only shareholders of record at the close of business on April 14, 1998, the
record date for the Special Meeting, will be entitled to vote at the Special
Meeting or any adjournments thereof.
YOUR VOTE IS IMPORTANT.
PLEASE RETURN YOUR PROXY CARD PROMPTLY.
As a shareholder you are asked to attend the Special Meeting either in person or
by proxy. If you are unable to attend the Special Meeting in person, we urge you
to complete, sign, date, and return the enclosed proxy in the enclosed postage
prepaid envelope. Your prompt return of the proxy will help assure a quorum at
the Special Meeting and avoid further solicitation. Sending in your proxy will
not prevent you from voting your shares in person at the Special Meeting and you
may revoke your proxy by advising the Secretary of the Fund in writing (by
subsequent proxy or otherwise) of such revocation at any time before it is
voted.
By Order of the Board of Trustees,
Charles L. Dobson
Secretary
April __, 1998
<PAGE>
THE ANALYTIC SERIES FUND
ANALYTIC ENHANCED EQUITY PORTFOLIO
ANALYTIC MASTER FIXED INCOME PORTFOLIO
ANALYTICSHORT-TERM GOVERNMENT PORTFOLIO
UAM Fund Services, Inc.
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, Massachusetts 02228-2798
Toll Free: (800) 374-2633
PBHG ADVISOR FUNDS, INC.
PBHG ADVISOR ENHANCED EQUITY FUND
PBHG ADVISOR MASTER FIXED INCOME FUND
PBHG ADVISOR SHORT-TERM GOVERNMENT FUND
c/o Pilgrim Baxter & Associates, Ltd.
825 Duportail Road
Wayne, Pennsylvania 19087
Toll Free: (800) ________________
COMBINED PROXY STATEMENT AND PROSPECTUS
Dated April __, 1998
This Combined Proxy Statement and Prospectus is furnished in connection
with the solicitation of proxies by the Board of Trustees of The Analytic Series
Fund (the "Fund") on behalf of Analytic Enhanced Equity Portfolio (the "Enhanced
Equity Portfolio"), Analytic Master Fixed Income Portfolio (the "Master Fixed
Income Portfolio") and Analytic Short-Term Government Portfolio (the "Short-Term
Government Portfolio") (collectively, the "Analytic Portfolios"), each a
separate series of the Fund, in connection with the Special Meeting of
Shareholders of the Fund (the "Special Meeting") to be held at the offices of
the Fund, 700 South Flower Street, Suite 2400, Los Angeles, California 80017 on
May __, 1998, at [insert time].
At the Special Meeting, the shareholders of each of the Analytic
Portfolios will be asked to approve or disapprove the Agreement and Plan of
Reorganization (the "Agreement"), dated as of March __, 1998, between the Fund
and PBHG Advisor Funds, Inc., a Maryland corporation ("PBHG Advisor Funds") as
it relates to the respective Analytic Portfolios. The Agreement provides for the
reorganization of the Analytic Portfolios into three newly created investment
portfolios of PBHG Advisor Funds (the "PBHG Funds"). The Board of Trustees of
the Fund has unanimously approved the Agreement and the reorganizations (the
"Reorganizations") as being fair to and in the best interests of the Analytic
Portfolio shareholders.
Under the terms of the Agreement, the Enhanced Equity Portfolio will be
combined with the PBHG Advisor Enhanced Equity Fund (the "Advisor Enhanced
Equity Fund"), the Master Fixed Income Portfolio will be combined with the PBHG
Advisor Master Fixed Income Fund (the "Advisor Master Fixed Income Fund") and
the Short-Term Government Portfolio will be combined with the PBHG Advisor
Short-Term Government Fund (the "Advisor Short-Term Government Fund"). On the
closing date for the Reorganizations (the "Closing Date"), which is currently
scheduled to take place on June 1, 1998, substantially all of the property and
assets of each Analytic Portfolio (except for certain excluded assets and a
reserve for certain expenses and liabilities) will be transferred to the
corresponding PBHG Fund. Upon such transfer, PBHG Advisor Funds will issue Class
A shares of the voting common stock of the corresponding PBHG Funds to the
Analytic Portfolios. The Analytic Portfolios will then make liquidating
distributions of the PBHG Fund shares to the shareholders of the Analytic
Portfolios, so that each shareholder of an Analytic Portfolio on the Closing
Date will receive PBHG Fund shares having an aggregate net asset value equal to
the aggregate net asset value of the shareholder's Analytic Portfolio shares
immediately
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS COMBINED PROXY STATEMENT AND PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
before the Closing Date. Following the Reorganizations, the Analytic Portfolios
will pay or make provision for payment of all of their respective liabilities.
If any undistributed income and capital gains recognized prior to the transfer
of its assets remain, the Analytic Portfolios will distribute those amounts to
their respective shareholders in the form of dividends. The Analytic Portfolios
will then be terminated as separate series of the Fund and the Fund will be
dissolved under the terms of its Declaration of Trust. For further information
about the Reorganizations and the Agreement, see "Additional Information About
the Agreement."
The Advisor Enhanced Equity Fund, Advisor Master Fixed Income Fund and
Advisor Short-Term Government Fund are separate investment portfolios of PBHG
Advisor Funds that were created specifically for the purpose of the
Reorganizations. The investment objective of the Advisor Enhanced Equity Fund is
the same as that of the Enhanced Equity Portfolio, to achieve above average
total returns by investing in a diversified portfolio consisting primarily of
common stocks and related investments such as options and futures. The
investment objective of the Advisor Master Fixed Income Fund is the same as that
of the Master Fixed Income Portfolio, to achieve above average total returns by
investing in a diversified bond portfolio consisting primarily of domestic
government, corporate and mortgage-related fixed income securities. The
investment objective of the Short-Term Government Portfolio is the same as that
of the Advisor Short-Term Government Fund, to achieve a high level of income
consistent with both low fluctuation in market value and low credit risk. See
"Comparison of Investment Objectives and Policies."
This Combined Proxy Statement and Prospectus sets forth concisely the
information that a shareholder of the Analytic Portfolios should know before
voting on the Agreement and the Reorganizations, and it should be retained for
future reference. The Agreement is attached to this Combined Proxy Statement and
Prospectus as Exhibit A.
A form of Prospectus for PBHG Advisor Funds which describes the
investment program and operation of the Advisor Enhanced Equity Fund, Advisor
Master Fixed Income Fund and Advisor Short-Term Government Fund, is attached to
this Combined Proxy Statement and Prospectus as Exhibit B. A Prospectus for the
Analytic Portfolios dated October 20, 1997, is attached to this Combined Proxy
Statement and Prospectus as Exhibit C. Additional information concerning the
Analytic Portfolios is set forth in the Statement of Additional Information for
the Analytic Portfolios dated October 20, 1997. Further information concerning
the matters considered herein is set forth in the Statement of Additional
Information to this Combined Proxy Statement and Prospectus dated April 9, 1998.
Each of these documents is on file with the Securities and Exchange Commission
("SEC"), and is available without charge upon oral or written request by writing
or calling the Fund or PBHG Advisor Funds at the addresses and telephone numbers
shown on the cover page of this Combined Proxy Statement and Prospectus. The SEC
maintains a Web site at http:\\www.sec.gov that contains the Statements of
Additional Information, material incorporated by reference and other information
regarding PBHG Advisor Funds, the Fund, and other registrants that file
electronically with the SEC. The information contained in the Statement of
Additional Information to this Combined Proxy Statement and Prospectus is
incorporated herein by reference.
This Combined Proxy Statement and Prospectus constitutes the proxy
statement of the Fund for the Special Meeting of Shareholders and the prospectus
for the shares of the PBHG Funds which are to be issued in connection with the
Reorganization.
The Notice of Special Meeting of Shareholders, this Combined Proxy
Statement and Prospectus, and the accompanying proxy are expected to first be
sent to shareholders of the Analytic Portfolios on or about April __, 1998.
<PAGE>
TABLE OF CONTENTS
Page
----
SUMMARY .................................................................. 1
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES........................... 7
RISK FACTORS............................................................... 9
INFORMATION ABOUT THE AGREEMENT............................................ 10
RIGHTS OF SHAREHOLDERS..................................................... 13
INFORMATION FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.............. 17
ADDITIONAL INFORMATION ABOUT EACH FUND..................................... 18
CAPITALIZATION............................................................. 21
FINANCIAL STATEMENTS....................................................... 22
OWNERSHIP OF ANALYTIC PORTFOLIO SHARES..................................... 22
INFORMATION RELATING TO VOTING MATTERS..................................... 23
Exhibit A: Form of Agreement and Plan of Reorganization
Exhibit B: Prospectus of the PBHG Advisor Funds, Inc.
Exhibit C: Prospectus of The Analytic Series Fund
Exhibit D: Discussion of Performance of the Analytic Portfolios
<PAGE>
SUMMARY
The following is a summary of certain information relating to the
Agreement, the proposed Reorganizations, the Fund and PBHG Advisor Funds. It is
qualified by reference to the more complete information contained elsewhere in
this Combined Proxy Statement and Prospectus and the related Statement of
Additional Information, the form of Prospectus of PBHG Advisor Funds, Inc.
attached as Exhibit B, the Prospectus of the Fund attached as Exhibit C and the
Agreement attached to this Combined Proxy Statement and Prospectus as Exhibit A.
Proposed Reorganization and the Agreement.
The Agreement and Reorganizations will result in the combination of the
Analytic Portfolios and the PBHG Funds as described below.
Under the terms of the Agreement, the Enhanced Equity Portfolio will be
combined with the Advisor Enhanced Equity Fund, the Master Fixed Income
Portfolio will be combined with the Advisor Master Fixed Income Fund and the
Short-Term Government Portfolio will be combined with the Advisor Short-Term
Government Fund. On the closing date for the Reorganizations (the "Closing
Date"), which is currently scheduled to take place on April 30, 1998,
substantially all of the property and assets of each Analytic Portfolio (except
for certain excluded assets and a reserve for certain expenses and liabilities)
will be transferred to the corresponding PBHG Fund. Upon such transfer, PBHG
Advisor Funds will issue Class A shares of the voting common stock of the
corresponding PBHG Funds to the Analytic Portfolios. The Analytic Portfolios
will then make liquidating distributions of the PBHG Fund shares to the
shareholders of the Analytic Portfolios, so that each shareholder of an Analytic
Portfolio on the Closing Date will receive PBHG Fund shares having an aggregate
net asset value equal to the aggregate net asset value of the shareholder's
Analytic Portfolio shares immediately before the Closing Date. Following the
Reorganizations, the Analytic Portfolios will pay or make provision for payment
of all of their respective liabilities. If any undistributed income and capital
gains recognized prior to the transfer of its assets remain, the Analytic
Portfolios will distribute those amounts to their respective shareholders in the
form of dividends. The Analytic Portfolios will then be terminated as separate
series of the Fund and the Fund will be dissolved. For further information about
the Reorganizations and the Agreement, see "Additional Information About the
Agreement."
Paul, Hastings, Janofsky & Walker, LLP, counsel for the Fund, will issue an
opinion as of the Closing Date to the effect that the Reorganizations will
constitute a tax-free reorganization for Federal income tax purposes. Thus,
shareholders will not have to pay Federal income taxes as a result of the
Reorganizations. See "Additional Information About the Agreement -- Federal
Income Tax Consequences."
Reasons for Reorganizations.
The Board of Trustees of the Fund, including the independent trustees, has
determined that it is in the best interests of the Analytic Portfolios and their
shareholders to reorganize into the PBHG Funds. In making such determination,
the Board of Trustees considered, among other things, the relatively small asset
size and lack of significant recent sales growth of the Analytic Portfolios, and
the resulting difficulty in achieving adequate economies of scale. Because of
the Analytic Portfolios' relatively small asset levels, the Fund's investment
adviser, Analytic TSA Global Asset Management, Inc. ("Analytic TSA"), has
voluntarily waived a substantial portion of its advisory fees since the Fund was
organized in 1992. Analytic TSA has advised the Board of Trustees that such
voluntary fee waiver will not be continued after May 1, 1998. Without the fee
waiver, the Board of Trustees does not believe that the Analytic Portfolios will
be able to maintain competitive expense ratios. On the other hand, the expense
ratios for the PBHG Funds are projected to be significantly less than those of
the Analytic Portfolios (absent the expense waivers), and the Board of Trustees
believes that the Reorganizations should provide shareholders of the Fund with a
more advantageous long-term cost structure than could be achieved by the
Analytic Portfolios.
<PAGE>
In addition, the Board of Trustees of the Fund considered the following
factors: (a) the investment objectives and policies of the Analytic Portfolios
and PBHG Funds are the same; (b) Analytic TSA serves as adviser to the Analytic
Portfolios and will serve as sub-adviser to the PBHG Funds, providing day-to-day
portfolio management for both funds; (c) the Reorganizations will be tax-free to
the Analytic Portfolios and their shareholders; (d) holders of shares of the
PBHG Funds will have a broader range of shareholder services available to them
than holders of shares of the Analytic Portfolios; and (e) PBHG Advisor Funds
has good prospects for increasing the assets of the PBHG Funds to levels which
can provide reasonable economics of scale.
See the discussion under "Additional Information About the Agreement -
Board Consideration" for more information concerning the deliberations of the
Board of Trustees.
Risk Considerations.
The risks involved in investing in the Analytic Portfolios and PBHG Funds
are the same, given that the investment objectives, policies and restrictions of
each PBHG Fund are identical to those of the corresponding Analytic Portfolio.
See "Risk Factors" below.
Overview of the Analytic Portfolios and the PBHG Funds.
Investment Objectives and Policies.
The investment objectives and policies of the Analytic Portfolios and the
PBHG Funds are the same. The PBHG Funds were created specifically for the
purpose of the Reorganizations.
The investment objective of the Advisor Enhanced Equity Fund is to provide
above-average total returns from a diversified equity portfolio which consists
primarily of domestic common stocks and related investments such as options and
futures. Up to 20% of the total assets of the Advisor Enhanced Equity Fund may
be invested in securities of foreign issuers.
The investment objective of the Advisor Master Fixed Income Fund is to
provide above-average total returns from a diversified bond portfolio consisting
primarily of domestic government, corporate, and mortgage-related fixed income
securities. Up to 20% of the total assets of the Advisor Master Fixed Income
Fund may be invested in securities of foreign issuers.
The investment objective of the Advisor Short-Term Government Fund is to
provide a high level of income consistent with both low fluctuations in market
value and low credit risk. At least 80% of the total assets of the Advisor
Short-Term Government Fund will be invested in U.S. Government securities and up
to 20% may be invested in securities of foreign issuers.
Advisory and Administrative Services
Analytic Portfolios
Analytic TSA, 700 South Flower Street, Suite 2400, Los Angeles, CA 90017,
is the adviser of the Fund. Analytic TSA is a wholly owned subsidiary of United
Asset Management Corporation ("UAM").
Pursuant to an Investment Advisory Agreement with the Fund, Analytic TSA,
subject to the control and direction of the Fund's Officers and Board of
Trustees, manages the Analytic Portfolios in accordance with the stated
investment objective and policies and makes investment decisions for the
Analytic Portfolios.
2
<PAGE>
UAM Fund Services, Inc., a wholly-owned subsidiary of UAM, performs and
oversees all administrative, fund accounting, dividend disbursing and transfer
agent services to the Fund pursuant to a Fund Administration Agreement with the
Fund (the "Administration Agreement"). For its services UAM Fund Services
receives a fee based on net assets. UAM Fund Services' principal office is
located at 211 Congress Street, Boston, Massachusetts 02110. UAM Fund Services
has subcontracted some of these services to Chase Global Funds Services Company,
an affiliate of The Chase Manhattan Bank. Chase Global Funds Services Company is
located at 73 Tremont Street, Boston, Massachusetts 02108.
For further information concerning Analytic TSA and management of the Fund,
see the Prospectus of the Fund attached hereto as Exhibit C.
PBHG Funds
PBHG Advisor Funds and Pilgrim Baxter & Associates, Ltd. ("Pilgrim Baxter")
have entered into an investment advisory agreement with respect to the PBHG
Funds (the "Advisory Agreement"). PBHG Advisor Funds, Pilgrim Baxter, and
Analytic TSA intend to enter into an investment sub-advisory agreement pursuant
to which Analytic TSA will assume responsibility for management of the PBHG
Funds. Under the terms of the sub-advisory agreement Analytic TSA will provide
a program of continuous investment management for the PBHG Funds in accordance
with their investment objectives, policies and limitations, make investment
decisions for the PBHG Funds, and place orders to purchase and sell securities
for the PBHG Funds, subject to the supervision of the Board of Directors.
PBHG Fund Services, a wholly owned subsidiary of Pilgrim Baxter, serves as
the administrator for PBHG Advisor Funds, and SEI Fund Resources serves as
sub-administrator for PBHG Advisor Funds.
For further information concerning Pilgrim Baxter and management of the
PBHG Funds, see the form of Prospectus of PBHG Advisor Funds attached hereto as
Exhibit B.
Ownership of Advisors
Pilgrim Baxter is wholly-owned by UAM as is Analytic TSA. Immediately prior
to the mergers, UAM intends to contribute the stock of Analytic TSA to Pilgrim
Baxter so that Analytic TSA will become a wholly-owned subsidiary of Pilgrim
Baxter. For further information concerning UAM, see the discussion under the
heading "General Information -- The Advisor" in the form of Prospectus of PBHG
Advisor Funds attached hereto as Exhibit B.
Expense Levels
The following table sets forth the current fees and expenses of the
Analytic Portfolios for the fiscal period ended December 31, 1997, and the
estimated expenses for the Class A shares of PBHG Funds. Analytic Portfolio
shareholders will be able to purchase additional shares of any portfolio of PBHG
Advisor Funds without paying a sales charge and will be permitted to exchange
their PBHG Funds shares for shares of any portfolio of PBHG Advisor Funds
without payment of a sales charge. The maximum sales load shown in the table
below is not applicable to Analytic Portfolio shareholders.
Enhanced Equity Portfolio - Advisor Enhanced Equity Fund
<TABLE>
<CAPTION>
Enhanced
Equity Advisor Enhanced
Portfolio Equity Fund
--------- -----------
<S> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases None 5.75%
(as a percentage of the offering price)
</TABLE>
3
<PAGE>
Annual Operating Expenses
(as a percentage of average net assets)
<TABLE>
<CAPTION>
Enhanced Advisor
Equity Enhanced Equity
Portfolio Fund
--------- ----
<S> <C> <C>
Advisory Fees(1)(4) 0.00% 0.00%
(after fee waivers)
Other Expenses(1)(4) 1.00% 1.16%
(after expense reimbursement)
12b-1 Fees(2) 0.00% 0.25%
----- -----
Total Operating Expenses(1)(3)(4) 1.00% 1.41%
(after fee waivers and expense
reimbursement)
</TABLE>
Master Fixed Income Portfolio - Advisor Master Fixed Income Fund
<TABLE>
<CAPTION>
Shareholder Transaction Expenses Master Fixed Advisor Master
Income Portfolio Fixed Income Fund
---------------- -----------------
<S> <C> <C>
Maximum Sales Load Imposed on Purchases None 4.75%
(as a percentage of the offering price)
</TABLE>
Annual Operating Expenses
(as a percentage of average net assets)
<TABLE>
<CAPTION>
Advisor
Master Fixed Master Fixed
Income Portfolio Income Fund
---------------- -----------
<S> <C> <C>
Advisory Fees(1)(4) 0.45% 0.00%
(after fee waivers)
Other Expenses(1)(4) 0.45% 1.01%
(after expense reimbursement)
12b-1 Fees(2) 0.00% 0.25%
----- -----
Total Operating Expenses(1)(3)(4) 0.90% 1.26%
(after fee waivers and expense
reimbursement)
</TABLE>
Short-Term Government Portfolio - Advisor Short-Term Government Fund
<TABLE>
<CAPTION>
Shareholder Transaction Expenses Short-Term Advisor Short-Term
Government Portfolio Government Fund
-------------------- ---------------
<S> <C> <C>
Maximum Sales Load Imposed on Purchases None 1.50%
(as a percentage of the offering price)
</TABLE>
4
<PAGE>
Annual Operating Expenses
(as a percentage of average net assets)
<TABLE>
<CAPTION>
Short-Term Advisor
Government Short-Term
Portfolio Government Fund
--------- ---------------
<S> <C> <C>
Advisory Fees(1)(4) 0.00% 0.00%
(after fee waivers)
Other Expenses(1)(4) 0.60% 0.86%
(after expense reimbursement)
12b-1 Fees(2) 0.00% 0.25%
----- -----
Total Operating Expenses(1)(3)(4) 0.60% 1.11%
(after fee waivers and expense
reimbursement)
</TABLE>
- ----------
(1) Because the PBHG Advisor Funds had not yet commenced operations prior to
the date of this filing, "Other Expenses" are based on estimated amounts,
net of any expense reimbursement. Absent any fee waiver or expense
reimbursement arrangement, "Advisory Fees," "Other Expenses" and "Total
Operating Expenses," respectively, as a percentage of average net assets of
each Fund would be as follows:
PBHG Advisor Enhanced Equity Fund 0.60% 1.27% and 2.12%
PBHG Advisor Master Fixed Income Fund 0.45% 1.82% and 2.52%
PBHG Advisor Short-Term Government Fund 0.30% 1.82% and 2.37%
(2) As a result of the 12b-1 fees, long-term shareholders of Class A shares may
pay more than the economic equivalent of the maximum front-end sales charge
permitted by the National Association of Securities Dealers, Inc. The
Company estimates that the maximum permissible front-end sales charge would
not be exceeded for a substantial number of years.
(3) Pilgrim Baxter has agreed to waive or limit its Advisory Fees or assume
Other Expenses in an amount that operates to limit the aggregate annual
total of certain operating expenses of each Fund as follows: 0.82% of the
Advisor Enhanced Equity Fund; 0.67% of the Advisor Master Fixed Income
Fund; and 0.52% of the Advisor Short-Term Government Fund. The expenses
subject to such limitation are those which are not specifically allocated
to a class of shares of a PBHG Fund under its multiple class plan (the
"Rule 18f-3 Plan") including, but not limited to, investment advisory fees
of Pilgrim Baxter, but excluding: (i) interest, taxes, brokerage
commissions, and other expenditures which are capitalized in accordance
with generally accepted accounting principles; (ii) expenses specifically
allocated to a class of shares of a PBHG Fund under the Rule 18f-3 Plan,
such as Rule 12b-1 expenses and transfer agency fees; and (iii) other
extraordinary expenses not incurred in the ordinary course of a PBHG Fund's
business. The fee waiver/expense reimbursement arrangement for each PBHG
Fund is expected to remain in effect for the current fiscal year. Each
waiver of Advisory Fees or assumption of Other Expenses by Pilgrim Baxter
is subject to a possible reimbursement by each PBHG Fund in future years if
such reimbursement can be made within the foregoing annual expense limits.
(4) Analytic TSA has voluntarily agreed to reimburse expenses of the Analytic
Portfolios, including advisory fees (but excluding interest, taxes and
extraordinary expenses), that exceed 0.60%, 0.90% and 1.00% of average
daily net assets for the Short-Term Government, Master Fixed Income and
Enhanced Equity Portfolios, respectively, for the year ended December 31,
1997. Without such reimbursement, the "Advisory Fees," "Other Expenses" and
"Total Operating Expenses" respectively, as a percentage of average net
assets of each Analytic Portfolio, would be as follows:
Short-Term Government .30% 7.48% 7.78%
Master Fixed Income .45% 0.64% 1.09%
Enhanced Equity .60% 1.59% 2.19%
Example of Fund Expenses
An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
Fund 1 Year 3 Years 5 Years 10 Years
---- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Enhanced Equity Portfolio $10 $ 32 $ 55 $122
Advisor Enhanced Equity Fund 71 100 130 217
Master Fixed Income Portfolio 9 29 50 111
Advisor Master Fixed Income Fund 60 86 113 193
Short-Term Government Portfolio 6 19 33 75
Advisor Short-Term Government Fund 26 50 75 148
</TABLE>
The examples are based upon total operating expenses for the funds, as set forth
in the "Annual Operating Expenses" tables above. The examples should not be
considered a representation of past or future expenses. Actual expenses may be
greater or less than those shown. The purpose of this table is to assist the
investor in understanding the various costs and expenses that may be directly or
indirectly borne by investors in the Analytic Portfolios and, on an estimated
basis, in the PBHG Funds after the Reorganizations.
Organization
The Fund is organized as a Delaware business trust. PBHG Advisor Funds is
organized as a Maryland corporation.
Purchase, Exchange and Redemption Policies
Analytic Portfolios
Shares of the Analytic Portfolios are purchased directly from the Fund by
wire, mail, or exchange from another Analytic Portfolio with no sales charge or
commission at the net asset value per share next computed after an order and
payment are received by the Fund. Any order received after 1:00 p.m. Pacific
Time will be processed at the next day's closing net asset value.
5
<PAGE>
There is no minimum initial or subsequent purchase of Analytic Portfolio shares
by tax deferred retirement plans (including IRA, SEP-IRA and profit sharing and
money purchase plans) or Uniform Gifts to Minors Act accounts. For other
investors the minimum is $5,000 for an initial purchase, in any proportion among
the Analytic Portfolios, and there is no minimum for subsequent purchases.
Redemptions may be made on any business day. Shares are redeemed without
charge and redemptions may be made by telephone, mail, or exchange to another
Analytic Portfolio. Redemption orders placed prior to 4:00 p.m. eastern time
will be effective that day. Shares are redeemed without charge at the net asset
value per share next computed after instructions and required documents are
received in proper form.
Shares of any Analytic Portfolio may be exchanged for shares of any other
Analytic Portfolio at the net asset value per share next computed after the
receipt of instructions in proper form.
Please refer to the Prospectus of the Fund attached hereto as Exhibit C for
further information on its purchase, exchange and redemption policies.
PBHG Funds
Purchases are made through an investment dealer or selected financial
institutions. Purchases may be made on any day on which the New York Stock
Exchange ("NYSE") is open for business ("Business Day"). A purchase order will
be effective as of the Business Day received by the PBHG Funds if PBHG Advisor
Funds receives sufficient information to execute the order and receive payment
by check or readily available funds prior to 4:00 p.m. Eastern time.
No sales charge will be imposed in connection with the issuance of Class A
shares of the PBHG Advisor Funds as part of the Reorganizations. A sales charge
of up to 5.75% for the Advisor Enhanced Equity Fund, 4.75% for the Advisor
Master Fixed Income Fund, and 1.50% for the Advisor Short-Term Government Fund
is imposed on purchases of Class A shares at the time of purchase. Analytic
Portfolio shareholders will be able to purchase additional shares of any
portfolio of PBHG Advisor Funds without paying a sales charge. Class A
shares are not subject to any charges when they are redeemed (except for sales
at net asset value in excess of $1 million which are not subject to a sales
charge at the time of purchase but are subject to a contingent deferred sales
charge). Certain purchases of Class A shares qualify for a sales charge waiver
or reduction. Class A shares bear a distribution fee currently at the annual
rate of 0.25% of each PBHG Fund's average net assets attributable to Class A
shares which is imposed pursuant to a distribution plan approved by the Board of
Directors of PBHG Advisor Funds pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended ("1940 Act"). Minimum initial investment in
Class A Shares of the PBHG Funds is $2,500 for regular accounts, $2,000 for
Individual Retirement Accounts. There is no minimum for subsequent investments.
Redemptions may be made on any Business Day. Redemption orders placed prior
to 4:00 p.m. Eastern time on any Business Day will be effective that day. The
redemption price for shares is the net asset value per share determined as of
the end of the day the order is effective.
Shares of the PBHG Funds may generally be exchanged for shares of the same
class of the other portfolios of PBHG Advisor Funds at net asset value. Analytic
Portfolio shareholders will be permitted to exchange their PBHG Funds shares
for shares of any other PBHG Advisor Funds portfolios without payment of a
sales charge.
Please refer to the form of Prospectus of the PBHG Funds attached hereto as
Exhibit B for further information on its purchase, exchange and redemption
policies.
6
<PAGE>
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
The investment objectives, investment policies and investment restrictions
of the Analytic Portfolios and the PBHG Funds are identical. The PBHG Funds were
created specifically for the purpose of the Reorganizations. The following
discussion summarizes the investment objectives and policies of the PBHG Funds
and is qualified in its entirety by the discussion in the form of Prospectus and
Statement of Additional Information of the PBHG Funds.
Advisor Enhanced Equity Fund
The Advisor Enhanced Equity Fund, a diversified portfolio, seeks above
average total returns through investments in Equity Securities. ("Equity
Securities" as used herein include common stocks, preferred stocks, warrants and
securities convertible into or exchangeable for common or preferred stocks.) The
Advisor Enhanced Equity Fund will invest in a diversified equity portfolio
consisting primarily of common stocks and related investments such as options
and futures. For this purpose, "above average" total returns means returns above
the average long-term total returns of other mutual funds with similar
investment policies and risk characteristics.
The Advisor Enhanced Equity Fund seeks to achieve its objective by
investing primarily in the publicly traded common stocks of U.S. domiciled
corporations and options and futures that relate to such stocks. While the
Advisor Enhanced Equity Fund may invest in stocks of any market capitalization,
it is anticipated that the average capitalization of the Advisor Enhanced Equity
Fund's stocks will be typical of medium to large companies (typically $15
billion or higher).
Under normal market conditions, the Advisor Enhanced Equity Fund will
invest at least 65% of its total assets in Equity Securities of U.S. domiciled
corporations.
Advisor Master Fixed Income Fund
The Advisor Master Fixed Income Fund, a diversified portfolio, seeks to
provide above-average total returns. The Advisor Master Fixed Income Fund will
invest in a diversified bond portfolio consisting primarily of U.S. Government,
corporate, and mortgage-related fixed income securities. For this purpose,
"above average" total returns means returns above the average long-term total
returns of other mutual funds with similar investment policies and risk
characteristics.
The Advisor Master Fixed Income Fund seeks to achieve its objective by
investing primarily in U.S. Treasury, U.S. Government, and U.S. dollar
denominated high grade securities, including mortgage-related securities. The
weighted average duration of the Advisor Master Fixed Income Fund's fixed income
investments is generally expected, under normal market conditions, to range
between 3 and 10 years.
Under normal market conditions, the Advisor Master Fixed Income Fund will
invest at least 65% of its total assets in U.S. dollar denominated, high grade,
fixed income debt securities. The high grade investment standard for the Fund
includes only those securities with (i) over 1 year original maturity and rated
at the time of purchase a minimum of A by Moody's Investors Service, Inc.
("Moody's") or Standard & Poor's Corporation ("Standard & Poor's"), (ii) under 1
year original maturity and rated at the time of purchase a minimum of Prime 1
7
<PAGE>
by Moody's or A-1 by Standard & Poor's, or (iii) unrated securities determined
by Analytic TSA at the time of purchase to be equivalent to these ratings.
Subject to certain additional limitations, under normal market conditions,
the remainder of the Advisor Master Fixed Income Fund's assets may be invested
in floating rate and other types of debt securities, high grade non-U.S. dollar
denominated debt securities, below high grade fixed income securities,
convertible securities, "synthetic convertible" positions, covered call and cash
secured put investments, preferred stock, and the shares of other investment
companies which invest primarily in high grade debt securities. The Advisor
Master Fixed Income Fund may also invest in interest and currency rate-related
derivative securities.
Advisor Short-Term Government Fund
The investment objective of the Advisor Short-Term Government Fund is to
provide a high level of income consistent with both low fluctuations in market
value and low credit risk.
The Advisor Short-Term Government Fund seeks to achieve its investment
objective by investing primarily in U.S. Treasury or U.S. Government agency
securities to minimize credit risk. To minimize fluctuations in market value,
the Advisor Short-Term Government Fund is expected, under normal market
conditions, to maintain a dollar weighted average maturity and weighted average
duration between 1 and 3 years. Duration is the weighted average time to receipt
of both principal and interest payments of a debt security and also a measure of
the sensitivity of fixed income related investments to interest rate changes.
Under normal market conditions, the Advisor Short-Term Government Fund will
invest at least 80% of its total assets in U.S. Government securities. Subject
to certain additional limitations, the remainder of the Advisor Short-Term
Government Fund's assets may be invested in other high grade debt securities,
securities of foreign governments and supranational organizations considered to
be of high grade investment quality, currency-rate and interest rate-related
options and futures, and cash and cash equivalents. The high grade investment
standard for the Advisor Short-Term Government Fund includes only those
securities with (i) over 1 year original maturity and rated at the time of
purchase a minimum of A by Moody's or Standard & Poor's, (ii) under 1 year
original maturity and rated at the time of purchase a minimum of Prime 1 by
Moody's or A-1 by Standard & Poor's, or (iii) unrated securities determined by
Analytic TSA at the time of purchase to be equivalent to these ratings.
The Advisor Short-Term Government Fund may also invest in repurchase
agreements collateralized by U.S. Government securities. For temporary defensive
purposes, the Advisor Short-Term Government Fund may reduce the average duration
to less than 1 year.
General Investment Policies
For a discussion of the investment process followed by Pilgrim Baxter and
Analytic TSA, please see "General Investment Policies and Strategies" in the
form of prospectus of PBHG Advisor Funds attached as Exhibit B.
The investment objectives of the Analytic Portfolios are fundamental
policies, meaning they may not be changed without a vote of a majority of the
particular Analytic portfolios outstanding shares. The investment objectives of
the PBHG Funds are not fundamental policies and may be changed by action of the
Board of Directors of PBHG Advisor Funds. Shareholders will be notified of any
such change.
Pilgrim Baxter and Analytic TSA expect that under normal market conditions
the annual portfolio turnover rate for the Advisor Enhanced Equity Fund will not
exceed 150%, for the Advisor Master Fixed Income Fund will not exceed 150% and
for the Advisor Short-Term Government Fund will not exceed 300%. High rates of
portfolio turnover necessarily result in correspondingly greater brokerage and
portfolio trading costs, which are paid by a PBHG Fund. Trading in
over-the-counter and fixed-income securities does not generally involve the
payment of brokerage commissions, but does involve indirect transaction costs.
In addition to portfolio trading costs, higher rates of portfolio turnover may
result in the realization of capital gains. To the extent net short-term capital
gains are realized, any distributions resulting from such gains are considered
ordinary income for federal income tax purposes.
8
<PAGE>
Under normal market conditions, each PBHG Fund expects to be fully invested
in its primary investments, as described above. However, for temporary defensive
purposes, when the adviser or the sub-adviser, as appropriate, determines that
market conditions warrant, each PBHG Fund may invest up to 100% of its assets in
investment grade debt securities, cash and money market instruments (consisting
of securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities; certificates of deposit, time deposits and bankers'
acceptances issued by banks or savings and loan associations having net assets
of at least $500 million as stated on their most recently published financial
statements; commercial paper rated in one of the two highest rating categories
by at least one NRSRO; repurchase agreements involving such securities; and, to
the extent permitted by applicable law and each PBHG Fund's investment
restrictions, shares of other investment companies investing solely in money
market securities). To the extent a PBHG Fund is invested in temporary defensive
instruments, it will not be pursuing its investment objective. See the Statement
of Additional Information for additional information.
Portfolio Managers
Pursuant to the investment sub-advisory agreement by and among PBHG Advisor
Funds, on behalf of each PBHG Fund, Pilgrim Baxter and Analytic TSA.
Analytic TSA is responsible for the management of the PBHG Funds.
The following individuals are currently responsible for managing the Analytic
Portfolios and will be responsible for managing the corresponding PBHG Funds.
Advisor Enhanced Equity Fund
Dennis M. Bein and Harindra de Silva have been the portfolio managers for
the Enhanced Equity Portfolio since November 1996. Mr. Bein has been a member of
the portfolio management and research team for Analytic TSA since August 1995.
He concurrently serves as a senior associate for Analysis Group, Inc. with which
he has been associated with since August 1990. Dr. de Silva is the President of
the Fund and serves as a managing director of Analytic TSA, which he joined in
May of 1995. He concurrently serves as a principal of Analysis Group, Inc.,
which he joined in March 1986. They are subject to the supervision of Analytic
TSA's investment management committee.
Advisor Short-Term Government and Advisor Master Fixed Income Funds
Scott Barker, Greg McMurran and Bob Bannon have been the portfolio managers
for the Short-Term Government and Master Fixed Income Portfolios since November
1996. Mr. Barker has been a member of the portfolio management and research team
for Analytic TSA since August 1995. He concurrently serves as a research analyst
with Analysis Group, Inc., with which he has been associated since October 1993.
Previously, he was with Xontech, Inc. for six years as a scientific analyst. Mr.
McMurran is the Chief Investment Officer of Analytic TSA and has been with the
firm since October 1976 as a portfolio manager. Mr. Bannon is a managing
director of Analytic TSA specializing in the fixed income area. He joined the
firm in January 1996 when TSA Capital Management merged with Analytic TSA. He
was formerly a managing director with TSA since April 1995. Previously, he
served as a senior bond strategist with IDEA for four years. They are subject to
the supervision of Analytic TSA's investment management committee.
RISK FACTORS
The PBHG Funds have the same investment objectives and policies as the
Analytic Portfolios. The investments of the PBHG Funds will be managed by the
same portfolio managers of Analytic TSA that are responsible for management of
the Analytic Portfolios using the same investment techniques and strategies.
Accordingly, the risks associated with an investment in the PBHG Funds should be
the same as the risks associated with an investment in the Analytic Portfolios.
9
<PAGE>
To achieve their investment objectives, the PBHG Funds may invest in
foreign securities, in securities that are considered illiquid and in securities
issued by technology companies or companies with small market capitalizations.
The PBHG Funds may also utilize various call option, put option and financial
future strategies in pursuit of their investment objectives. See the heading
"Risk Factors" in the form of prospectus for the PBHG Advisor Funds attached as
Exhibit B for a discussion of the risks associated with those investments and
investment strategies.
INFORMATION ABOUT THE AGREEMENT
The terms and conditions under which the Reorganizations may be consummated
are set forth in the Agreement. Significant provisions of the Agreement are
summarized below; however, this summary is qualified in its entirety by
reference to the Agreement attached as Exhibit A.
Description of the Agreement
The Agreement provides that at the Closing Date substantially all of the
property and assets of each Analytic Portfolio will be transferred to the
corresponding PBHG Fund free and clear of all liens, encumbrances, and claims,
except for (a) any unamortized or deferred fees or expenses, prepaid expenses or
goodwill shown as assets on the books of the Analytic Portfolio and (b) cash or
bank deposits (the "Reserve Account") in an amount necessary: to discharge all
of the unpaid liabilities on the books and records of the Analytic Portfolio at
the Closing Date (including any amounts due to shareholders of the Analytic
Portfolio for unpaid dividends or otherwise) and to pay contingent liabilities,
if any, that the Board of Trustees of the Fund may reasonably deem to exist
against the Analytic Portfolio at the Closing Date. (The property and assets to
be transferred to the PBHG Fund are referred to below as the "Analytic
Portfolios' Net Assets.") Upon the satisfaction or other resolution of all such
liabilities and obligations, any amount remaining from the Reserve Account will
be transferred to the PBHG Fund.
In exchange for the transfer to the PBHG Fund of the Analytic Portfolios's
Net Assets, PBHG Advisor Funds will simultaneously issue at the Closing Date
full and fractional Class A shares of the corresponding PBHG Fund to the
Analytic Portfolio for distribution pro rata by the Analytic Portfolio to its
shareholders. The Class A shares issued by PBHG Advisor Funds will have an
aggregate net asset value equal to the value of the Analytic Portfolios' Net
Assets on the Closing Date.
On the Closing Date, each of the Analytic Portfolios will be liquidated and
distribute pro rata to its shareholders the PBHG Fund Class A Shares received by
the Analytic Portfolio. Each shareholder owning Analytic Portfolio Shares at the
Closing Date will receive PBHG Fund Class A shares having an aggregate net asset
value equal to the aggregate net asset value of his or her Analytic Portfolio
Shares, plus the right to receive any dividends or distributions which were
declared before the Closing Date but that remained unpaid at that time on the
Analytic Portfolio Shares. In connection with the Reorganizations, each of the
Analytic Portfolios will be terminated as a series of the Fund.
The share transfer books of the Analytic Portfolios will be permanently
closed as of the close of business on the day immediately preceding the Closing
Date. Redemption requests received thereafter by the Analytic Portfolios will be
deemed to be redemption requests for the corresponding PBHG Fund Class A Shares.
10
<PAGE>
The Reorganizations are subject to a number of conditions, including, among
other things: (a) approval of the Agreement and the transactions contemplated
thereby described in this Combined Proxy Statement and Prospectus by the
Analytic Portfolios' shareholders; (b) that the shares of each PBHG Fund that
will be offered for sale after the Closing Date be duly registered under the
1933 Act on the Closing Date; (c) the receipt of certain legal opinions
described in Sections 7 and 8 of the Agreement, which include a legal opinion
that the PBHG Fund Class A Shares issued and outstanding at the Closing Date
will be duly authorized, validly issued, fully paid, and non-assessable and a
legal opinion that the Reorganizations will not give rise to the recognition of
income, gain, or loss for federal income tax purposes to the Analytic
Portfolios, or their respective shareholders; (d) the receipt of certain
certificates from the parties concerning the continuing accuracy of the
representations and warranties in the Agreement and other matters; and (e) the
parties' performance of their respective agreements and undertakings in the
Agreement. Assuming satisfaction of the conditions in the Agreement, the Closing
Date will be on April 30, 1998, or such other date as is agreed to by the
parties.
Pilgrim Baxter and Analytic TSA will be liable for all reasonable expenses
incurred by the PBHG Funds and the Analytic Portfolios in connection with
entering into and carrying out the transactions contemplated by the Agreement,
whether or not the transactions are consummated. Analytic TSA has agreed to
indemnify two of the trustees ("Trustees") of the Fund against any losses
arising out of their services as Trustees of the Fund.
The Agreement may be terminated and the Reorganizations abandoned at any
time prior to the Closing Date by the mutual consent of the parties to the
Agreement. In such event, there will be no liability for damages on the part of
either the Analytic Portfolios or the PBHG Funds, or the Fund's Board of
Trustees or officers or PBHG Advisor Funds' Board of Directors or officers, but
Pilgrim Baxter and Analytic TSA will be liable for reimbursement of all
reasonable expenses incurred in connection with entering into and carrying out
the transaction contemplated by the Agreement. At any time prior to or after
approval of the Agreement by the Analytic Portfolios' shareholders, the Fund and
PBHG Advisor Funds may amend, modify, or supplement the Agreement. However, no
such amendment, modification, or supplement may have the effect of changing the
provisions for determining the number of PBHG Fund Class A Shares to be
distributed to Analytic Portfolio shareholders under the Agreement to the
detriment of the Analytic Portfolio shareholders, unless the Analytic Portfolio
shareholders approve such change or unless the amendment merely changes the
Closing Date.
Board Consideration
The Board of Trustees of the Fund has unanimously determined that the
proposed Reorganizations are in the best interest of the shareholders of the
Analytic Portfolios, and recommends the approval of the Agreement by such
shareholders at the Special Meeting. The following is a summary of the
information that was presented to, and considered by, the Board of Trustees in
making their determination.
Initially, the Board of Trustees reviewed several areas of concern
regarding the Analytic Portfolios. The Board of Trustees considered that (a) the
relatively small asset size of the Analytic Portfolios has prevented them from
realizing significant economies of scale and reducing their expense ratios
(absent waivers of fees and assumption of expenses by Analytic TSA); (b)
Analytic TSA on a voluntary basis has continuously waived a substantial portion
of its advisory fee since the Analytic Portfolios' inception; (c) based on the
Analytic Portfolios' historical asset growth and the distribution systems
available to the Analytic Portfolios under their current structure, their assets
are unlikely to grow sufficiently in the foreseeable future to result in
significant economies of scale; (d) in the absence of significant asset growth,
it is unlikely that Analytic TSA will receive its full advisory fee in the
future; (e) Analytic TSA has indicated that it will become a wholly-owned
subsidiary of Pilgrim Baxter on May 1, 1998; and (f) because the voluntary fee
cap prevents Analytic TSA from achieving any profits from its services to the
Analytic Portfolios, Analytic TSA and Pilgrim Baxter have indicated that
Analytic TSA will not continue its voluntary fee waiver after April 30, 1998.
At a meeting of the Board of Trustees held on February 26, 1998,
management of the Fund proposed that the Board of Trustees approve the proposed
Reorganizations on behalf of the Analytic Portfolios. During the course of their
review and deliberation, the Trustees evaluated the potential benefits and
detriments to the Analytic
11
<PAGE>
Portfolios and their shareholders. The Trustees requested and received from
Analytic TSA and Pilgrim Baxter written materials containing relevant
information about the PBHG Funds and the proposed Reorganizations, including fee
and expense information on a future estimated basis. Analytic TSA and Pilgrim
Baxter also provided the Trustees with comparative expense ratio information,
analyses of the projected benefits to the shareholders of the Analytic
Portfolios resulting from the proposed Reorganizations, information regarding
the marketing plan for the PBHG Funds and projections of anticipated growth for
the PBHG Funds, and a variety of other information relevant to the consideration
of the proposed Reorganizations.
The Board of Trustees believes that shareholders of each Analytic Portfolio
will benefit from the economies of scale that are expected to develop as the
PBHG Funds grow in asset size. Based on the projected net sales and asset levels
for each of the PBHG Funds, the 1998 and 1999 projected total expense ratios for
Class A Shares of each PBHG Fund are as follows:
<TABLE>
<CAPTION>
PBHG Funds Analytic Portfolio
---------------------------- -------------------------
1998 Total 1999 Total Current Actual
Projected Projected Expense Total
Expenses(1) Expenses (1) Cap (2) Expenses (3)
<S> <C> <C> <C> <C>
Enhanced Equity Fund/Portfolio 1.41% 1.41% 1.00% 2.24%
Master Fixed Income Fund/Portfolio 1.26% 1.26% 0.90% 1.09%(4)
Short-Term Government Fund/Portfolio 1.11% 1.11% 0.60% 7.80%
</TABLE>
- --------------------
(1) Projected total expenses of Class A Shares after fee waivers.
(2) Total current fund expenses of each Analytic Portfolio after fee waivers.
(3) Total actual 1997 fund expenses of each Analytic Portfolio before fee
waivers.
(4) Projected 1998 total expenses before fee waivers for the Analytic Master
Fixed Income Portfolio is 3.11% based on 12/31/97 asset levels.
Although the projected expense ratios of the PBHG Funds are greater than
those of the Analytic Portfolios (after fee waiver), the PBHG Funds have more
favorable ratios when fee waivers are eliminated, as will be the case after
April 30, 1998. In addition, Pilgrim Baxter has agreed to request the Board of
Directors of PBHG Advisor Funds to continue the expense limitations for a period
of three years after the Closing Date. Accordingly, the PBHG Funds are expected
to provide the Analytic Portfolios' shareholders with a more advantageous
long-term cost structure than would otherwise be achievable by the Analytic
Portfolios.
In addition, the Board of Trustees noted that the shareholders of the
Analytic Portfolios would not be subject to additional potential or actual risks
as shareholders of the PBHG Funds, and that the Reorganizations would result in
continuity of investment advisory services, since the Analytic Portfolios
currently employ Analytic TSA as investment adviser and the PBHG Funds will
employ Analytic TSA as investment sub-adviser, and the individuals who will
serve as the portfolio managers for the PBHG Funds currently serve as the
portfolio managers for the Analytic Portfolios. The Board of Trustees noted
further that no sales or other charges would be imposed on any of the PBHG Fund
shares acquired by shareholders of the Analytic Portfolios in connection with
the Reorganization and that the shareholders of the Fund would not bear the
costs of the Reorganizations. Finally, the Board of Trustees reviewed the terms
of the Agreement. The Board of Trustees noted that the Analytic Portfolios would
be provided with an opinion of counsel with respect to the tax-free treatment of
the Reorganizations.
At a meeting of the Board of Trustees of the Fund on March 4, 1998, the
proposed Reorganizations were again considered by the Board of Trustees of the
Fund. At a subsequent meeting on March 6, 1998, based upon their evaluation of
the relevant information presented to them, and in light of their fiduciary
duties under federal and state law, the Board of Trustees unanimously determined
that the proposed Reorganizations are in the best interest of the Analytic
Portfolios and their shareholders and that the interests of the Analytic
Portfolios' shareholders will not be diluted as a result of the proposed
Reorganizations, and recommended the approval of the Agreement by shareholders
at the Special Meeting.
12
<PAGE>
On February 20, the Board of Directors of PBHG Advisor Funds considered the
proposed Reorganizations with respect to the PBHG Funds. Based upon their
evaluation of the relevant information provided to them, and in light of their
fiduciary duties under federal and state law, the Board of Directors unanimously
determined that the proposed Reorganizations were in the best interests of the
PBHG Funds and their shareholders and the interests of the existing PBHG Funds
shareholders will not be diluted as a result of the proposed Reorganization.
Federal Income Tax Consequences
The following is a general summary of the material federal income tax
consequences of the Reorganizations to the shareholders of the Fund and is based
upon the current provisions of the Code, the existing Treasury regulations
thereunder, current administrative rulings of the Internal Revenue Service (the
"IRS") and judicial decisions, all of which are subject to change.
The principal Federal income tax consequences that are expected to result
from the Reorganizations, under currently applicable law, are as follows: (i)
the Reorganizations will constitute "reorganizations" within the meaning of
Section 368(a)(1)(C) of the Code; (ii) no gain or loss will be recognized by the
Analytic Portfolios upon the transfer of their assets to the PBHG Funds or upon
the distribution of the shares of the PBHG Funds to their shareholders pursuant
to the Reorganizations; (iii) no gain or loss will be recognized by any
shareholder of the Analytic Portfolios upon the exchange of shares of the
Analytic Portfolios solely for shares of the PBHG Funds; (iv) no gain or loss
will be recognized by the PBHG Funds on the receipt of the assets of the
Analytic Portfolios in exchange for shares of the PBHG Funds as a result of the
Reorganizations; (v) the tax basis of the shares of the PBHG Funds to be
received by a shareholder of the Analytic Portfolios will be the same as the tax
basis of the shares of the Analytic Portfolios surrendered in exchange therefor;
(vi) the basis to the PBHG Funds of the assets of the Analytic Portfolios will
be the same as the basis of those assets in the hands of the Analytic Portfolios
immediately prior to the Reorganizations; (vii) the holding period of the shares
of PBHG Funds to be received by a shareholder of the Analytic Portfolios will
include the holding period for which such shareholder held the shares of the
Analytic Portfolios exchanged therefor, provided that such shares of the
Analytic Portfolios are capital assets in the hands of such shareholder as of
the Closing Date; (viii) the holding period of the assets of the Analytic
Portfolios in the hands of the PBHG Funds will include the period during which
those assets were held by the Analytic Portfolios; and (ix) the taxable year of
the Analytic Portfolios will end on the Closing Date, and each of the PBHG Funds
will succeed to and take into account those attributes of the corresponding
Analytic Portfolio described in Section 381(c) of the Code, subject to the
provisions and limitations specified in Sections 381, 382, 383 and 384, if
applicable, and the Treasury regulations thereunder.
As a condition to the Closing, Paul, Hastings, Janofsky & Walker LLP will
render a favorable opinion as to the foregoing Federal tax consequences of the
Reorganizations, which opinion will be conditioned upon the accuracy, as of the
date of the Agreement and as of the Closing, of certain representations upon
which Paul, Hastings, Janofsky & Walker, LLP will rely. Neither the Fund nor
PBHG Advisor Funds has sought a tax ruling from the Internal Revenue Service
("IRS"). The opinion of counsel is not binding on the IRS and does not preclude
the IRS from adopting a contrary position.
The foregoing description of the Federal income tax consequences of the
Reorganizations is made without regard to the particular facts and circumstances
of any shareholder of the Analytic Portfolios. The tax consequences to certain
shareholders, such as dealers in securities, foreign persons, mutual funds,
insurance companies and tax-exempt entities, that are subject to special
treatment under the Code or under the laws of other jurisdictions may differ
materially from those outlined above. All the Analytic Portfolios shareholders
are urged to consult their own tax advisors as to the specific consequences to
them of the Reorganizations, including the applicability and effect of state,
local, foreign and other tax laws.
Capital Loss Carryforward
Short-Term Government Portfolio had a capital loss carryforward available
to offset future capital gains of approximately $797,773 as of December 31,
1997. Under Section 381 of the Code, the Advisor Short-Term Government Fund will
succeed to the capital loss carryforwards of Short-Term Government Portfolio if,
as described in "Additional Information about the Agreement--Federal Income Tax
Consequences" above, the transfer of the assets of the Short-Term Government
Portfolio to the Advisor Short-Term Government Fund qualifies as a
"reorganization" under Section 368(a)(1)(C) of the Code. The carryforward period
for capital losses is limited to eight years and accordingly, absent realized
capital gains, these capital loss carryforwards will expire in Years 1999, 2001,
2003, 2004 and 2005.
As a result of the Reorganizations, Short-Term Government Portfolio will
undergo an ownership change, as defined under Section 382 of the Code. The
amount of Short-Term Government Portfolio's capital loss carryforwards which can
be taken into account each year by the Advisor Short-Term Government Fund to
offset any realized capital gains will be limited generally to an amount equal
to the fair market value of Short-Term Government Portfolio on the Closing Date
multiplied by the long-term tax-exempt rate in effect at that time.
The amount of such capital loss carryforwards may be different at the
Closing Date. The Agreement does not provide for any adjustment to the number of
shares that Short-Term Government Portfolio shareholders will receive to reflect
any potential income tax effect on the shareholders of Short-Term Government
Portfolio which might result from any differences in the proportionate amounts
of the capital loss carryforward because of the difficulty of predicting the
potential use by the Advisor Short-Term Government Fund of such capital loss
carryforward. It is anticipated that there will be no distributions to
shareholders of current or future net realized gains on investments until the
capital loss carryforwards are offset or expire, although any such gains would
be reflected in the calculation of net asset value.
RIGHTS OF SHAREHOLDERS
PBHG Advisor Funds is a Maryland corporation and the Fund is a Delaware
business trust. There is much that is similar between the two forms of
organization. For example, the responsibilities, powers and fiduciary duties of
the trustees of the Fund are substantially the same as those of the directors of
PBHG Advisor Funds.
13
<PAGE>
There are, however, certain differences between the two forms of
organization. The operations of PBHG Advisor Funds, as a Maryland corporation,
are governed by its Articles of Incorporation, and amendments and supplements
thereto, and applicable Maryland law. The operations of the Fund, as a Delaware
business trust, are governed by its Agreement and Declaration of Trust, as
amended (the "Declaration of Trust") and Delaware law.
Liability of Shareholders
The Delaware Business Trust Act provides that shareholders of a Delaware
business trust shall be entitled to the same limitations of liability extended
to shareholders of private for-profit corporations. There is, however, a remote
possibility that, under certain circumstances, shareholders of a Delaware
business trust might be held personally liable for the trust's obligations to
the extent the courts of another state which does not recognize such limited
liability were to apply the laws of such state to a controversy involving such
obligations. The Declaration of Trust provides that shareholders of the Fund
shall not be subject to any personal liability for acts or obligations of the
Fund and that every written agreement, obligation or other undertaking made or
issued by the Fund shall contain a provision to the effect that shareholders are
not personally liable thereunder. In addition, the Declaration of Trust provides
for indemnification out of the Fund property for any shareholder held personally
liable solely by reason of his or her being or having been a shareholder.
Therefore, the risk of any shareholder incurring financial loss beyond his
investment due to shareholder liability is limited to circumstances in which the
Fund itself is unable to meet its obligations and the express disclaimer of
shareholder liabilities is determined not to be effective. Given the nature of
the Fund's assets and operations, the possibility of the Fund being unable to
meet its obligations is considered remote, and even if a claim were brought
against the Fund and a court determined that shareholders were personally
liable, it would likely not impose a material obligation on a shareholder.
Shareholders of a Maryland corporation generally do not have personal
liability for the corporation's obligations, except that a shareholder may be
liable to the extent that he receives any distribution which exceeds the amount
which he could properly receive under Maryland law or where such liability is
necessary to prevent fraud.
Election of Directors/Trustees; Terms; Annual Shareholder Meetings
The initial shareholders of the Fund elected the Trustees of the Fund at a
meeting of the shareholders held prior to the effective date of its registration
under the 1940 Act and the Securities Act of 1933, as amended ("1933 Act"). Such
Trustee serves for the life of the Fund, subject to the earlier death,
incapacitation, resignation, retirement or removal (see below). Shareholders may
elect successors to such Trustees only at special meetings of shareholders. The
Fund is not required to hold annual meetings and does not do so unless required
by the 1940 Act.
The sole initial shareholder of the PBHG Advisor Funds will elect the
Directors by written consent prior to the Closing Date. Each Director serves
until a successor is elected, subject to earlier death, incapacitiation,
resignation, retirement or removal (see below). Shareholders may elect
successors to such Directors only at annual or special meetings of shareholders.
PBHG Advisor Funds is not required to hold annual meetings unless required by
the 1940 Act, and does not intend to do so.
The By-laws of PBHG Advisor Funds provide that the Directors shall be
elected at the annual meeting of the shareholders provided that such annual
meetings for the election of Directors are required under the 1940 Act. The 1940
Act requires that at least two-thirds of the directors of an investment company
be elected by shareholders. Elections may also be held at a special meeting of
shareholders called for the purpose of electing Directors. The Directors of
PBHG Advisor Funds will be elected by consent of the sole initial shareholder of
PBHG Advisor Funds.
Removal of Trustees/Directors
A Trustee of the Fund may be removed with cause at any time by vote of at
least two-thirds of the Trustees and with or without cause by vote of two-thirds
of the outstanding shares of the Fund. The Declaration of Trust provides that
vacancies may be filled by either of the holders of at least a majority of the
Fund's shares or a majority vote of the remaining Trustees.
14
<PAGE>
A director of PBHG Advisor Funds may be removed by the affirmative vote of
a majority of the Board of Directors, a committee of the Board of Directors
appointed for such purpose, or the holders of the outstanding shares of PBHG
Advisor Funds.
Special Meetings of Shareholders
The Fund's Declaration of Trust provides that a majority of the trustees
may call special meetings of shareholders and the trustees shall call a special
meeting of the shareholders upon written request of the holders of not less than
10% of the Fund's shares. Special meetings may be called for the purpose of
electing trustees or for any other action requiring shareholder approval, or for
any matter deemed by the trustees to be necessary or desirable.
The PBHG Advisor Funds' By-Laws provide that a special meeting of
shareholders may be called by the President, Secretary, a majority of the Board
of Directors or holders of shares entitled to cast at least 10% of the votes
entitled to be cast at the special meeting. Requests for special meetings must,
among other things, state the purpose of such meeting and the matters to be
voted upon. No special meeting may be called to consider any matter previously
voted upon at a special meeting called by the shareholders during the preceding
twelve months, unless requested by a majority of all shares entitled to vote at
such meeting.
Liability of Directors/Trustees and Officers; Indemnification
Delaware law provides that trustees of a business trust shall not be liable
to the business trust or its shareholders for acting in good faith reliance on
the provisions of its governing instrument and that the trustee's liabilities
may be expanded or restricted by such instrument. Under the Fund's Declaration
of Trust, the trustees and officers of the Fund are not liable for any act or
omission or any conduct whatsoever in their capacity as trustees, except for
liability to the trust or shareholders due to willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
the office of trustee. Delaware law allows a business trust to indemnify and
hold harmless any trustee or other person against any and all claims and
demands. The Fund's Declaration of Trust requires the indemnification of its
trustees and officers to the fullest extent permitted by Delaware law, except
with respect to any matter in which it has been determined that such director or
officer acted with willful misfeasance, bad faith, gross negligence or reckless
disregard of his or her duties.
Maryland law permits a corporation to eliminate liability of its directors
and officers to the corporation or its stockholders, except for liability
arising from receipt of an improper benefit or profit and from active and
deliberate dishonesty. PBHG Advisor Funds' Articles of Incorporation eliminates
director and officer liability to the fullest extent permitted under Maryland
law. Under Maryland law, indemnification of a corporation's directors and
officers is mandatory if a director or officer has been successful on the merits
or otherwise in the defense of certain proceedings. Maryland law permits
indemnification for other matters unless it is established that the act or
omission giving rise to the proceeding was committed in bad faith, a result of
active and deliberate dishonesty, or one in which a director or officer actually
received an improper benefit.
Termination
The Fund's Declaration of Trust provides that the Fund may be terminated at
any time by the vote of shareholders holding two-thirds of the shares
outstanding, or by the trustees after written notice to shareholders.
Maryland law provides that PBHG Advisor Funds may be dissolved by the vote
of a majority of the Board of Directors and two-thirds of the stockholders
entitled to vote on the dissolution.
15
<PAGE>
Voting Rights of Shareholders
The Fund's Declaration of Trust grants shareholders power to do the
following: (i) elect Trustees; (ii) approve certain contracts, such as
investment advisory contracts, as required by the 1940 Act; (iii) terminate or
reorganize the Fund; and (iv) approve such additional matters as may be required
by law or as the Trustees, in their sole discretion, shall determine.
Shareholders of a Maryland corporation such as PBHG Advisor Funds are
entitled to vote on, among other things, those matters which effect fundamental
changes in the corporate structure (such as a merger, consolidation or sale of
substantially all of the assets of the corporation) as provided by Maryland
corporation law.
Dissenters' Rights
Neither Delaware law nor the Declaration of Trust confer upon the Fund's
shareholders appraisal or dissenters' rights.
Under Maryland law, a PBHG Advisor Funds shareholder may not demand the
fair value of his shares from the successor company in a transaction involving
the transfer of the PBHG Advisor Funds' assets, and is bound by the terms of the
transaction.
Amendments to Organization Documents
Consistent with Delaware law, the Board of Trustees of the Fund may,
without shareholder approval, amend the Declaration of Trust at any time, except
that no amendment may be made which repeals the limitations of personal
liability of any shareholder, which reduces the amount payable in respect of the
Fund's shares upon liquidation of the Fund or which diminishes or eliminates any
voting rights pertaining to the Fund's shares, without approval of the majority
of the Fund's shares. The trustees shall have the power to alter, amend or
repeal the By-Laws of the Trust or adopt new By-Laws at any time.
Consistent with Maryland law, PBHG Advisor Funds reserves the right to
amend, alter, change or repeal any provision contained in its Articles of
Incorporation in the manner now or hereafter prescribed by statute, including
any amendment that alters the contract rights, as expressly set forth in the
Articles of Incorporation, of any outstanding stock, and all rights conferred on
shareholders are granted subject to this reservation. The Board of Directors of
PBHG Advisor Funds may approve amendments to the Articles of Incorporation to
classify or reclassify unissued shares of a class of stock without shareholder
approval. Other amendments to PBHG Advisor Funds' Articles of Incorporation may
be adopted if approved by a vote of a majority of the shares at any meeting at
which a quorum is present. PBHG Advisor Funds' Bylaws provide that the Bylaws
may be amended at any regular meeting or special meeting of the stockholders
provided that notice of such amendment is contained in the notice of the special
meeting. Except as to any particular Bylaw which is specified as not subject to
amendment by the Board of Directors, the Bylaws may be also amended by the
affirmative vote of a majority of the Board of Directors at any regular or
special meeting of the Board.
16
<PAGE>
INFORMATION FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
This Combined Proxy Statement and Prospectus and the related Statement of
Additional Information do not contain all of the information set forth in the
registration statements and the exhibits relating thereto which the Fund and
PBHG Advisor Funds have filed with the SEC or in the annual reports which the
Fund has filed with the SEC pursuant to the requirements of the 1933 Act and the
1940 Act. The SEC file numbers for the Fund registration statement containing
the Prospectus and Statement of Additional Information relating to the Analytic
Portfolios are 33-55758 and 811-7366. The SEC file numbers for PBHG's
registration statement containing the Prospectus and Statement of Additional
Information relating to the PBHG Funds is 333-44193 and 811-08605.
The Fund and the PBHG Advisor Funds are each subject to the informational
reporting requirements of the Securities Exchange Act of 1934, as amended, and
the 1940 Act, as applicable, and, in accordance with such requirements, files
proxy materials, reports, and other information with the SEC. These materials
can be inspected and copied at the Public Reference Facilities maintained by the
SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, at the SEC's Northeast
Regional Office, 7 World Trade Center, Suite 1300, New York, New York 10048, and
at the SEC's Midwest Regional Office, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such materials can also be obtained from the
Public Reference Branch, Office of Consumer Affairs and Information Services,
Securities and Exchange Commission, Washington, D.C. 20549, at prescribed rates.
The SEC maintains a web site at http:\\www.sec.gov that contains information
regarding PBHG Advisor Funds, the Fund, and other registrants that file
electronically with the SEC.
17
<PAGE>
ADDITIONAL INFORMATION ABOUT EACH FUND
Financial Information
The financial statements in the tables below for each of the five years in
the period ended December 31, 1997, and the one month ended December 31, 1992,
have been audited by Deloitte & Touche LLP, independent auditors. Such financial
statements and the report of Deloitte & Touche LLP thereon are included in the
Statement of Additional Information. Copies of the Fund's 1997 Annual Report to
Shareholders may be obtained, at no charge, by telephoning the Fund at the
telephone number appearing on the cover page of this Prospectus.
The Analytic Series Fund
Analytic Enhanced Equity Portfolio
FINANCIAL HIGHLIGHTS
Per Share Data and
Ratios for a Share
Outstanding Throughout
the Period Indicated:
<TABLE>
<CAPTION>
Year Ended December 31, One Month
1996 1995 1994 1993 Ended
---- ---- ---- ---- December 31,
1997 1992
---- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, Beginning
of period......................... $ 12.09 $ 12.94 $ 9.83 $ 10.15 $ 10.02 $ 10.00
------ ------ ------ ------ ------ ------
Net Investment Income............. 0.15 0.21 0.23 0.28 0.40 0.01
Net Realized and Unrealized
Gains or Losses on
Investments...................... 3.45 2.74 3.22 (0.32) 0.62 0.02
------ ------ ------ ------ ------ ------
Total From Investment
Operations....................... 3.60 2.95 3.45 (0.04) 1.02 0.03
------ ------ ------ ------ ------ ------
Distributions From Net
Investment Income................ 0.15 0.21 0.23 0.28 0.40 0.01
In excess of net investment income 0.01 0.00 0.00 0.00 0.00 0.00
Distribution from Net Realized
Gains............................ 1.79 3.58 0.11 0.00 0.37 0.00
In excess of Net Realized Gains... 0.02 0.01 0.00 0.00 0.00 0.00
Return of capital................. 0.00 0.00 0.00 0.00 0.12 0.00
------ ------ ------ ------ ------ ------
Total Distributions............... 1.97 3.80 0.34 0.28 0.89 0.01
------ ------ ------ ------ ------ ------
Net Asset Value, End of
Period........................... $ 13.72 $ 12.09 $ 12.94 $ 9.83 $ 10.15 $ 10.02
====== ====== ====== ====== ====== ======
Total Return:..................... 29.86% 22.95% 35.36% (0.37)% 10.07% 4.08%
===== ===== ====== ===== ===== ======
Ratios and Supplemental Data
Net Assets, End of Period (000)... $ 7,331 $ 3,519 $ 2,318 $ 1,511 $ 903 $12,823
Ratio of Expenses to
Average Net Assets (1).......... 2.24%* 1.51% 1.33% 1.35% 1.35% 1.07%*
Ratio of Net Investment
Income to Average Net
Assets.......................... 1.17%* 1.53% 2.02% 3.24% 2.16% 1.66%*
Portfolio Turnover Rate........... 189.39% 179.47% 10.15% 24.75% 76.34% 25.20%
Average Commission Rate(2)........ $0.0288 $0.0658 $0.0431
</TABLE>
- --------------------
(1) Gross of Advisor reimbursed expenses and expenses paid indirectly through
broker arrangements. With both expense reductions, such ratios would have
been 1.00%, 0.91%, 0.50%, 0.24%, 0.57%, and 0.70%* for each of the years in
the periods ended December 31, 1997, and for the month ended December 31,
1992, respectively.
(2) The formula for calculating the average commission rate is total commission
paid divided by the total shares purchased and sold. Each option contract
is 100 shares.
* Calculated on an annualized basis.
18
<PAGE>
The Analytic Series Fund
Analytic Master Fixed Income Portfolio
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Per Share Data and Ratios for a Share Outstanding Throughout the Period Indicated:
Year Ended December 31, One Month
1996 1995 1994 1993 Ended
---- ---- ---- ---- December 31,
1997 1992
---- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, Beginning
of period......................... $ 10.27 $ 10.41 $ 9.50 $ 10.26 $ 10.06 $ 10.00
------ ------ ------ ------ ------ ------
Net Investment Income............. 0.59 0.58 0.61 0.64 0.67 0.04
Net Realized and Unrealized
Gains or Losses on
Investments...................... 0.41 (0.01) 0.91 (0.75) 0.41 0.06
------ ------ ------ ------ ------ ------
Total From Investment
Operations....................... 1.00 0.57 1.52 (0.11) 1.08 0.10
------ ------ ------ ------ ------ ------
Distributions From Net
Investment Income................ 0.59 0.58 0.61 0.64 0.67 0.04
Distribution from Net Realized
Gains............................ 1.75 0.12 0.00 0.01 0.21 0.00
In excess of Net Realized Gains... 0.09 0.01 0.00 0.00 0.00 0.00
------ ------ ------ ------ ------ ------
Total Distributions............... 2.43 0.71 0.61 0.65 0.88 0.04
------ ------ ------ ------ ------ ------
Net Asset Value, End of
Period........................... $ 8.84 $ 10.27 $ 10.41 $ 9.50 $ 10.26 $ 10.06
====== ====== ====== ====== ====== ======
Total Return:..................... 10.04% 5.69% 16.43% (1.04)% 10.94% 13.09%
====== ====== ======= ====== ====== ======
Ratios and Supplemental Data
Net Assets, End of Period (000)... $5,712 $28,926 $24,868 $ 6,155 $ 8,066 $ 9,219
Ratio of Expenses to
Average Net Assets (1).......... 1.0%* 0.97% 1.03% 1.17% 1.04% 1.05%*
Ratio of Net Investment
Income to Average Net
Assets.......................... 5.60%* 5.66% 5.99% 7.16% 6.39% 5.63%*
Portfolio Turnover Rate........... 39.98% 21.95% 31.82% 44.30% 105.39% 0.00%
Average Commission Rate(2)........ $0.0375 $0.0418 $0.0277
</TABLE>
- --------------------
(1) Gross of Advisor reimbursed expenses and expenses paid indirectly through
broker arrangements. With both expense reductions, such ratios would have
been 0.90%, 0.72%, 0.69%, 0.60%, 0.60%, and 0.60%* for each of the years in
the periods ended December 31, 1997, and for the month ended December 31,
1992, respectively.
(2) The formula for calculating the average commission rate is total commission
paid divided by the total shares purchased and sold. Each option contract
is 100 shares.
* Calculated on an annualized basis.
19
<PAGE>
The Analytic Series Fund
Analytic Short-Term Government Portfolio
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Per Share Data and Ratios for a Share Outstanding Throughout the Period Indicated:
Year Ended December 31, One Month
1996 1995 1994 1993 Ended
---- ---- ---- ---- December 31,
1997 1992
---- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, Beginning
of period......................... $ 9.83 $ 9.98 $ 9.55 $ 10.03 $ 10.03 $ 10.00
------ ------ ------ ------ ------ ------
Net Investment Income............. 0.55 0.62 0.56 0.48 0.53 0.05
Net Realized and Unrealized
Gains or Losses on
Investments...................... (0.02) (0.10) 0.43 (0.48) 0.00 0.03
------ ------ ------ ------ ------ ------
Total From Investment
Operations....................... 0.53 0.52 0.99 0.00 0.53 0.08
------ ------ ------ ------ ------ ------
Distributions From Net
Investment Income................ 0.55 0.66 0.56 0.48 0.53 0.05
Return of capital................. 0.00 0.01 0.00 0.00 0.00 0.00
------ ------ ------ ------ ------ ------
Total Distributions............... 0.55 0.67 0.56 0.48 0.53 0.05
------ ------ ------ ------ ------ ------
Net Asset Value, End of
Period........................... $ 9.81 $ 9.83 $ 9.98 $ 9.55 $ 10.03 $ 10.03
====== ====== ====== ====== ====== ======
Total Return:..................... 5.54% 5.28% 10.65% 0.00 5.37% 9.38%
====== ====== ======= ====== ====== ======
Ratios and Supplemental Data
Net Assets, End of Period (000)... $ 2,978 $ 1,008 $27,880 $24,481 $26,097 $ 7,619
Ratio of Expenses to
Average Net Assets (1).......... 7.80%* 0.76% 0.82% 0.85% 0.75% 0.77%*
Ratio of Net Investment
Income to Average Net
Assets.......................... 5.53%* 5.99% 5.76% 5.37% 4.91% 5.45%*
Portfolio Turnover Rate........... 33.50% 31.48% 10.15% 3.21% 85.69% 0.00%
</TABLE>
- --------------------
(1) Gross of Advisor reimbursed expenses and expenses paid indirectly through
broker arrangements. With both expense reductions, such ratios would have
been 0.60%, 0.56%, 0.50%, 0.45%, 0.45%, and 0.45%* for each of the years in
the periods ended December 31, 1997, and for the month ended December 31,
1992, respectively.
* Calculated on an annualized basis.
Management Discussion and Analysis of Performance
A discussion of the performance of the Analytic Portfolios for the fiscal
year ended December 31, 1997 is set forth in Exhibit D to this Combined Proxy
Statement and Prospectus.
Further Information About PBHG Advisor Funds
[For more information with respect to PBHG Funds concerning the following
topics, please refer to the PBHG Fund Prospectus attached hereto as Exhibit B as
indicated: (i) see the headings "Summary," "The Company and the Funds," and
"General Information" for information on the organization, management and
operations of PBHG Advisor Funds and the Fund; (ii) see the headings "Investment
Objectives and Policies," "General Investment Policies and Strategies" and
"Investment Limitations" for a description of the investment objectives and
policies of the Fund; (iii) see the headings "Summary," "The Company and the
Funds," "Taxes" and "General Information" for further information concerning the
capital stock of PBHG Advisor Funds; and (iv) see the headings "How to Purchase
Fund Shares," "Shareholder Services" and "How to Redeem Fund Shares" for further
information regarding the purchase, exchange and redemption of shares of the
Fund.]
20
<PAGE>
Further Information About the Fund
For more information with respect to the Fund concerning the following
topics, please refer to the Analytic Portfolios Prospectus as follows: (i) see
the headings "Implementation of Policies," "Management of the Fund," "Investment
Adviser," and "General Information" for further information on the organization,
management and operation of the Fund and the Analytic Portfolios; (ii) see the
headings "Investment Objectives and Policies," and "Who Should Invest" for
further information concerning the investment objectives and policies of the
Analytic Portfolios; (iii) see the headings "Prospectus Summary," "Dividends,
Capital Gain Distributions and Taxes" and "General Information" for further
information concerning the shares of beneficial interest of the Fund; and (iv)
see the headings "Purchasing Shares," "Redeeming Shares," "Exchanging Shares,"
and "Shareholder Guide" for further information concerning the purchase,
exchange and redemption of shares of the Analytic Portfolios.
CAPITALIZATION
The following table sets forth as of March 20, 1998: (i) the
capitalization of the Analytic Portfolios; (ii) the capitalization of the PBHG
Funds; and (iii) the pro forma capitalization of the PBHG Funds as adjusted to
give effect to the Reorganizations. If the Reorganizations are consummated, the
capitalization of the PBHG Funds is likely to be different at the Closing Date
as a result of daily share purchase and redemption activity in the Analytic
Portfolios.
<TABLE>
<CAPTION>
Enhanced Equity Advisor Enhanced Pro Forma
Portfolio Equity Fund Combined
<S> <C> <C> <C>
Total Net Assets $9,982,475 $3,625 $9,986,100
Shares Outstanding 625,467 363 998,610
Net Asset Value Per Share $15.96 $10.00 $10.00
Master Fixed Income Advisor Master Pro Forma
Portfolio Fixed Income Fund Combined
<S> <C> <C> <C>
Total Net Assets $4,241,705 $3,625 $4,245,330
Shares Outstanding 473,441 363 424,533
Net Asset Value Per Share $8.96 $10.00 $10.00
Short-Term Advisor Short-Term Pro Forma
Government Government Fund Combined
Portfolio
<S> <C> <C> <C>
Total Net Assets $3,367,466 $100 $3,367,560
Shares Outstanding 342,654 10 336,757
Net Asset Value Per Share $9.93 $10.00 $10.00
</TABLE>
21
<PAGE>
FINANCIAL STATEMENTS
The financial statements in the Fund's 1997 Annual Report to Shareholders
that are included in the Statement of Additional Information, related to this
Combined Proxy Statement and Prospectus, have been audited by the Fund's
independent auditors, Deloitte & Touche LLP, whose report thereon also appears
in such Annual Report. Such financial statements have been incorporated in
reliance upon such reports given upon their authority as experts in accounting
and auditing. Copies of the Fund's Annual Report to Shareholders may be obtained
at no charge by telephoning the Fund at the number on the front page of the
Statement of Additional Information.
OWNERSHIP OF ANALYTIC PORTFOLIO SHARES
On January 31, 1998, the name, address, and share ownership of the persons
who owned of record 5% or more of the outstanding shares of the Analytic
Portfolios is as follows:
Analytic Enhanced Equity Portfolio
Analytic TSA Global Asset Management Inc.
Inv. Mgr. for Prison Law Office 25.0%
Attn: Joy Yap
700 S. Flower Street, Suite 2400
Los Angeles, CA 90017
Analytic TSA Global Asset Management Inc.
FBO Mountain Grove Cemetery Assn. 22.9%
700 S. Flower Street, Suite 2400
Los Angeles, CA 90017
Charles Schwab & Co. Inc.
Special Custody Account for Benefit
of Customers 09.8%
101 Montgomery St.
San Francisco, CA 94104
Analytic Master Fixed Income Portfolio
Analytic TSA Global Asset Management Inc.
FBO Mountain Grove Cemetery Assn. 13.8%
700 Flower Street, Suite 2400
Los Angeles, CA 90017
Tucker Anthony Inc.
VMEP NHC Pension 12.6%
Attn: Stephen T. Monahan
4 Landmark Square
Stamford, CT 06901-2700
R. Borzilleri
VMEP 12.3%
Attn: Stephen T. Monahan
4 Landmark Square
Stamford, CT 06901-2700
Greg McNurran 06.3%
2116 N. Westwood Ave.
Santa Ana, CA 92706
Tucker Anthony Inc.
VMEP Blodgett 05.3%
Attn: Stephen T. Monahan
4 Landmark Square
Stamford, CT 06901-2700
Analytic Short-Term Government Portfolio
Analytic TSA Global Asset Management Inc.
Inv. Mgr. 62.7%
FBO Southern Baptist Foundation
700 S. Flower Street, Suite 2400
Los Angeles, Ca 90017
Analytic TSA Global Asset Management Inc.
Inv. Mgr. for Prison Law Office 13.4%
Attn: Joy Yap
700 S. Flower Street, Suite 2400
Los Angeles, CA 90017
Analytic TSA Global Asset Management Inc.
FBO Mountain Grove Cemetery Assn. 05.8%
700 S. Flower Street, Suite 2400
Los Angeles, CA 90017
The Fund has no information regarding the beneficial ownership of the shares.
No shares of the PBHG Funds will be issued in advance of consummation of
the Reorganizations, other than shares purchased by Pilgrim Baxter, as initial
shareholder, to provide initial capitalization for each PBHG Fund.
22
<PAGE>
INFORMATION RELATING TO VOTING MATTERS
General Information
This Combined Proxy Statement and Prospectus is being furnished in
connection with the solicitation of proxies by the Fund's Board of Trustees in
connection with the Special Meeting. Solicitation of proxies will be primarily
by mail. Officers of the Fund, PBHG Advisor Funds, Analytic TSA, and/or Pilgrim
Baxter may also solicit proxies by telephone, telegraph, or personal interview.
Any shareholder giving a proxy may revoke it at any time before it is exercised
by submitting to the Fund a written notice of revocation or a subsequently
executed proxy or by attending the Special Meeting and voting in person.
Only shareholders of record at the close of business on April 14, 1998,
will be entitled to vote at the Special Meeting. On that date there were
outstanding and entitled to be voted ___________ shares of the Enhanced Equity
Portfolio, _______ shares of the Master Fixed Income Portfolio and _____ shares
of the Short-Term Government Portfolio. Each share or fraction thereof is
entitled to one vote or fraction thereof.
If the accompanying proxy is executed and returned in time for the Special
Meeting, the shares covered thereby will be voted in accordance with the proxy
on all matters that may properly come before the Special Meeting or any
adjournment thereof. For information on adjournment of the Special Meeting, see
"Quorum" below.
Shareholder Approvals
The Agreement and the transactions contemplated thereby are being submitted
at the Special Meeting for approval by the shareholders of the Analytic
Portfolios. In accordance with the provisions of the Agreement and Declaration
of Trust of the Fund and the Delaware Business Trust Act, approval of the
proposal requires the affirmative vote of the lessor of (i) 67% or more of the
shares present or represented at the Special Meeting, provided the holders of
more than 50% of the shares are present or represented by proxy, or (ii) more
than 50% of the shares of each of the Analytic Portfolios. Abstentions will have
the same effect as casting a vote against the proposal. The vote of the
shareholders of the PBHG Funds is not being solicited, because their approval or
consent is not required for the Reorganizations to be consummated.
If for any reason the Reorganizations are not approved, the Board of
Trustees believes that it will have no viable alternative to the dissolution of
the Fund.
The Board of Trustees, including the independent Trustees, recommend that
shareholders vote FOR the Reorganizations.
Quorum
In the event that a quorum is not present at the Special Meeting, or in the
event that a quorum is present at the Special Meeting but sufficient votes to
approve the Agreement and the Reorganizations are not received, the persons
named as proxies may propose one or more adjournments of the Special Meeting to
permit further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of the shares represented at the Special Meeting
in person or by proxy. If a quorum is present, the persons named as proxies will
vote those proxies which they are entitled to vote FOR the Agreement in favor of
such adjournments, and will vote those proxies required to be voted AGAINST such
proposal against any adjournment. A quorum is constituted by the presence in
person or by proxy of the holders of one-third or more of the outstanding
shares. Proxies properly executed and marked with a negative vote or an
abstention, or broker non-votes, will be considered to be present at the Special
Meeting for the purposes of determining the existence of a quorum for the
transaction of business. Broker non-votes occur when a broker proxy indicates
that the broker is not authorized to vote on a particular proposal.
23
<PAGE>
Other Business
The Board of Trustees of the Fund knows of no other business to be brought
before the Special Meeting. However, if any other matters come before the
Special Meeting, proxies which do not contain specific restrictions to the
contrary will be voted on such matters in accordance with the judgment of the
persons named in the enclosed form of proxy.
Shareholder Inquiries
Shareholder inquiries may be addressed to the Fund in writing at the
address on the cover page of this Combined Proxy Statement and Prospectus or by
telephoning 1-800-374-2633.
* * *
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE SPECIAL MEETING ARE URGED TO
DATE AND SIGN THE ENCLOSED PROXY AND PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE
WHICH IS ADDRESSED FOR YOUR CONVENIENCE AND NEEDS NO POSTAGE IF MAILED IN THE
UNITED STATES. IN ORDER TO AVOID THE EXPENSE OF FURTHER SOLICITATION, WE ASK
YOUR COOPERATION IN COMPLETING AND RETURNING YOUR PROXY PROMPTLY.
24
<PAGE>
PBHG ADVISOR FUNDS, INC.
PBHG Advisor Enhanced Equity Fund
PBHG Advisor Master Fixed Income Fund
PBHG Advisor Short-Term Government Fund
825 Duportail Road
Wayne, Pennsylvania 19087
Toll Free: (800) xxx-xxxx
THE ANALYTIC SERIES FUND
Analytic Enhanced Equity Portfolio
Analytic Master Mixed Income Portfolio
Analytic Short-Term Government Portfolio
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, Massachusetts 02228-2798
Toll Free: (800) 374-2633
STATEMENT OF ADDITIONAL INFORMATION
(1998 Special Meeting of Shareholders of The Analytic Series Fund)
This Statement of Additional Information is not a prospectus but should be
read in conjunction with the Combined Proxy Statement and Prospectus dated April
__, 1998 for the Special Meeting of Shareholders of The Analytic Series Fund
(the "Fund") to be held on May __, 1998. Copies of the Combined Proxy
Statement and Prospectus may be obtained at no charge by writing the Portfolios
at the address shown above or by calling 1-800- xxx-xxxx.
Unless otherwise indicated, capitalized terms used herein and not otherwise
defined have the same meanings as are given to them in the Combined Proxy
Statement and Prospectus.
The date of this Statement of Additional Information is April __, 1998.
TABLE OF CONTENTS
THE COMPANY................................................................. 2
DESCRIPTION OF PERMITTED INVESTMENTS........................................ 2
DIRECTORS AND OFFICERS OF THE COMPANY....................................... 2
ADVISORY AND MANAGEMENT - RELATED SERVICES AGREEMENTS AND PLANS OF
DISTRIBUTION.......................................................... 2
PORTFOLIO TRANSACTIONS...................................................... 2
DESCRIPTION OF SHARES....................................................... 2
DETERMINATION OF NET ASSET VALUE............................................ 2
TAXES....................................................................... 2
PERFORMANCE DATA............................................................ 3
FINANCIAL INFORMATION....................................................... 3
Appendix I - PBHG Advisor Funds, Inc. Statement of Additional Information
Appendix II - Annual Report of The Analytic Series Fund
Appendix III - Statements of Assets and Liabilities of the PBHG Funds
<PAGE>
THE COMPANY
This Statement of Additional Information relates to PBHG Advisor Funds, Inc.
(the "Company") and each of the PBHG Advisor Funds listed on the first page of
this Statement of Additional Information. Each Fund is a separate series of the
Company, which was incorporated in Maryland on January 9, 1998 and is registered
as an open-end management investment company under the Investment Company Act of
1940, as amended (the "1940 Act"). No shares of PBHG Advisor Funds have been
issued as of the date of this Statement of Additional Information.
DESCRIPTION OF PERMITTED INVESTMENTS
For a discussion of the Company's fundamental and nonfundamental policies
adopted by its Board of Directors, see heading "Description of Permitted
Investments" in the Company's Statement of Additional Information attached
hereto as Appendix I.
DIRECTORS AND OFFICERS OF THE COMPANY
For a disclosure of the names and a brief occupational biography of each of the
Company's officers and directors identifying those who are interested persons of
the Company as well as stating their aggregate renumeration, see heading
"Directors and Officers of the Company" in the Company's Statement of Additional
Information attached hereto as Appendix I.
ADVISORY AND MANAGEMENT - RELATED SERVICES AGREEMENTS AND PLANS OF
DISTRIBUTION
For a discussion of the Company's advisory and management-related services
agreements and plans of distribution, see headings "The Advisor", "The
Sub-Advisor," "The Administrator and Sub-Administrator," "The Distribution
Plans," and "The Distributor" in the Company's Statement of Additional
Information attached hereto as Appendix I.
PORTFOLIO TRANSACTIONS
For a discussion of the Company's brokerage policy, see heading "Portfolio
Transactions" in the Company's Statement of Additional Information attached
hereto as Appendix I.
DESCRIPTION OF SHARES
For a discussion of the Company's authorized securities and the characteristics
of the Company's capital stock, see heading "Description of Shares" in the
Company's Statement of Additional Information attached hereto as Appendix I.
DETERMINATION OF NET ASSET VALUE
For a discussion of the Company's valuation and pricing procedures and a
description of its purchase and redemption procedures, see heading
"Determination of Net Asset Value" in the Company's Statement of Additional
Information attached hereto as Appendix I.
TAXES
For a discussion of any tax information relating to ownership of the Company's
shares, see heading "Taxes" in the Company's Statement of Additional information
attached hereto as Appendix I.
S-2
<PAGE>
PERFORMANCE DATA
For a description and quotation of certain performance data used by the Company,
see headings "Computation of Yield" and "Calculation of Total Return" in the
Company's Statement of Additional Information attached hereto as Appendix I.
FINANCIAL INFORMATION
The audited Financial Statements of the Analytic Series Fund and the report
thereon by Deloitte & Touche, LLP, are set forth in the Annual Report of the
Analytic Series Fund dated December 31, 1997, which is incorporated herein by
reference and attached hereto as Appendix II.
Statements of Assets and Liabilities of the Company at March 20, 1998, and the
report thereon by Coopers & Lybrand, LLP are incorporated herein by reference
and attached hereto as Appendix III.
S-3
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholder and Board of Directors
of PBHG Advisor Series Fund, Inc.:
We have audited the accompanying Statements of Assets and Liabilities of PBHG
Advisor Funds, Inc. (the "Fund"), comprised of the PBHG Advisor Core Value, PBHG
Advisor Opportunities, PBHG Advisor New Contrarian, PBHG Advisor REIT, PBHG
Advisor Blue Chip Growth, PBHG Advisor Growth Opportunities, PBHG Advisor
Enhanced Equity, PBHG Advisor Trend, PBHG Advisor New Opportunities, PBHG
Advisor Global Technology & Communications, PBHG Advisor Growth II, PBHG Advisor
Large Cap Concentrated, PBHG Advisor High Yield, PBHG Advisor Master Fixed
Income, PBHG Advisor Short-Term Government and PBHG Advisor Cash Reserves Funds,
as of March 20, 1998. These financial statements are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Fund as of March 20, 1998
in conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
- -----------------------------
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
March 30, 1998
S-4
<PAGE>
PBHG Advisor Funds, Inc.
Statements of Assets and Liabilities
March 20, 1998
<TABLE>
<CAPTION>
PBHG Advisor
PBHG Advisor Value PBHG Advisor PBHG Advisor
Core Value Opportunities New Contrarian REIT
Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Cash $ 300.00 $10,900.00 $10,875.00 $ 300.00
Organizational Cost $25,875.00 $ 2,875.00 $2,875.00 $2,875.00
---------- ---------- ---------- ---------
Total Assets $26,175.00 $13,775.00 $13,750.00 $3,175.00
Liabilities:
Accrued Expenses $25,875.00 $ 2,875.00 $ 2,875.00 $2,875.00
---------- ---------- ---------- ---------
Total Liabilities $25,875.00 $ 2,875.00 $ 2,875.00 $2,875.00
Net Assets:
Portfolio shares of Class A (authorized 100,000,000 shares -
$0.001 par value for each fund) based on 10, 365, 363 and
10 outstanding shares of common stock, respectively $ 100.00 $ 3,650.00 $ 3,625.00 $ 100.00
Net Assets:
Portfolio shares of Class B (authorized 100,000,000 shares -
$0.001 par value for each fund) based on 10, 363, 363 and
10 outstanding shares of common stock, respectively $ 100.00 $ 3,625.00 $ 3,625.00 $ 100.00
Net Assets:
Portfolio shares of Class I (authorized 100,000,000 shares -
$0.001 par value for each fund) based on 10, 363, 363 and
10 outstanding shares of common stock, respectively $ 100.00 $ 3,625.00 $ 3,625.00 $ 100.00
- -----------------------------------------------------------------------------------------------------------------------------------
Total Net Assets $ 300.00 $10,900.00 $10,875.00 $ 300.00
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value Per Share - Class A $ 10.00 $ 10.00 $ 10.00 $ 10.00
Net Asset Value Per Share - Class B $ 10.00 $ 10.00 $ 10.00 $ 10.00
Net Asset Value Per Share - Class I $ 10.00 $ 10.00 $ 10.00 $ 10.00
</TABLE>
The accompanying notes are an integral part of the statements of assets and
liabilities.
S-5
<PAGE>
PBHG Advisor Funds, Inc.
Statements of Assets and Liabilities
March 20, 1998
<TABLE>
<CAPTION>
PBHG Advisor PBHG Advisor
Blue Chip Growth PBHG Advisor PBHG Advisor
Growth Opportunities Enhanced Equity Trend
Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Cash $ 300.00 $10,875.00 $10,875.00 $ 300.00
Organizational Cost $25,875.00 $ 2,875.00 $25,875.00 $2,875.00
---------- ---------- ---------- ---------
Total Assets $26,175.00 $13,750.00 $36,750.00 $3,175.00
Liabilities:
Accrued Expenses $25,875.00 $ 2,875.00 $25,875.00 $2,875.00
---------- ---------- ---------- ---------
Total Liabilities $25,875.00 $ 2,875.00 $25,875.00 $2,875.00
Net Assets:
Portfolio shares of Class A (authorized 100,000,000 shares -
$0.001 par value for each fund) based on 10, 363, 363,
10, 363 and 363 outstanding shares of common stock,
respectively $ 100.00 $ 3,625.00 $ 3,625.00 $ 100.00
Net Assets:
Portfolio shares of Class B (authorized 100,000,000 shares -
$0.001 par value for each fund) based on 10, 363, 363,
10, 363 and 363 outstanding shares of common stock,
respectively $ 100.00 $ 3,625.00 $ 3,625.00 $ 100.00
Net Assets:
Portfolio shares of Class I (authorized 100,000,000 shares -
$0.001 par value for each fund) based on 10, 363, 363,
10, 363 and 363 outstanding shares of common stock,
respectively $ 100.00 $ 3,625.00 $ 3,625.00 $ 100.00
- -----------------------------------------------------------------------------------------------------------------------------------
Total Net Assets $ 300.00 $10,875.00 $10,875.00 $ 300.00
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value Per Share - Class A $ 10.00 $ 10.00 $ 10.00 $ 10.00
Net Asset Value Per Share - Class B $ 10.00 $ 10.00 $ 10.00 $ 10.00
Net Asset Value Per Share - Class I $ 10.00 $ 10.00 $ 10.00 $ 10.00
<CAPTION>
PBHG Advisor
PBHG Advisor Global
New Technology &
Opportuities Communications
Fund Fund
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Cash $10,875.00 $10,875.00
Organizational Cost $25,875.00 $ 2,875.00
---------- ----------
Total Assets $36,750.00 $13,750.00
Liabilities:
Accrued Expenses $25,875.00 $ 2,875.00
---------- ----------
Total Liabilities $25,875.00 $ 2,875.00
Net Assets:
Portfolio shares of Class A (authorized 100,000,000 shares -
$0.001 par value for each fund) based on 10, 363, 363,
10, 363 and 363 outstanding shares of common stock,
respectively $ 3,625.00 $ 3,625.00
Net Assets:
Portfolio shares of Class B (authorized 100,000,000 shares -
$0.001 par value for each fund) based on 10, 363, 363,
10, 363 and 363 outstanding shares of common stock,
respectively $ 3,625.00 $ 3,625.00
Net Assets:
Portfolio shares of Class I (authorized 100,000,000 shares -
$0.001 par value for each fund) based on 10, 363, 363,
10, 363 and 363 outstanding shares of common stock,
respectively $ 3,625.00 $ 3,625.00
- --------------------------------------------------------------------------------------------------
Total Net Assets $ 10,875.00 $10,875.00
- --------------------------------------------------------------------------------------------------
Net Asset Value Per Share - Class A $ 10.00 $ 10.00
Net Asset Value Per Share - Class B $ 10.00 $ 10.00
Net Asset Value Per Share - Class I $ 10.00 $ 10.00
</TABLE>
The accompanying notes are an integral part of the statements of assets and
liabilities
<PAGE>
PBHG Advisor Funds, Inc.
Statements of Assets and Liabilities
March 20, 1998
<TABLE>
<CAPTION>
PBHG Advisor PBHG Advisor PBHG Advisor
PBHG Advisor Large Cap PBHG Advisor Master Fixed Short-Term PBHG Advisor
Growth II Concentrated High Yield Income Government Cash Reserves
Fund Fund Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Cash $ 300.00 $10,875.00 $ 300.00 $10,875.00 $ 300.00 $10,875.00
Organizational Cost $2,556.00 $29,571.00 $2,556.00 $29,571.00 $29,571.00 $29,571.00
--------- ---------- --------- ---------- ---------- ----------
Total Assets $2,856.00 $40,446.00 $2,856.00 $40,446.00 $29,871.00 $40,446.00
Liabilities:
Accrued Expenses $2,556.00 $29,571.00 $2,556.00 $29,571.00 $29,571.00 $29,571.00
--------- ---------- --------- ---------- ---------- ----------
Total Liabilities $2,556.00 $29,571.00 $2,556.00 $29,571.00 $29,571.00 $29,571.00
Net Assets
Portfolio shares of Class A
(authorized 100,000,000 shares
- $0.001 par value for each
fund) based on 10, 363, 10, 363,
10 and 3,625 outstanding shares
of common stock, respectively $ 100.00 $ 3,625.00 $ 100.00 $ 3,625.00 $ 100.00 $ 3,625.00
Net Assets
Portfolio shares of Class B
(authorized 100,000,000 shares
- $0.001 par value for each
fund) based on 10, 363, 10, 363,
10 and 3,625 outstanding shares
of common stock, respectively $ 100.00 $ 3,625.00 $ 100.00 $ 3,625.00 $ 100.00 $ 3,625.00
Net Assets
Portfolio shares of Class 1
(authorized 100,000,000 shares
- $0.001 par value for each
fund) based on 10, 363, 10, 363,
10 and 3,625 outstanding shares
of common stock, respectively $ 100.00 $ 3,625.00 $ 100.00 $ 3,625.00 $ 100.00 $ 3,625.00
- -----------------------------------------------------------------------------------------------------------------------------------
Total Net Assets $ 300.00 $10,875.00 $ 300.00 $10,875.00 $ 300.00 $10,875.00
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value Per Share - Class A $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 1.00
Net Asset Value Per Share - Class B $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 1.00
Net Asset Value Per Share - Class I $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 1.00
The accompanying notes are an integral part of the statements of assets and liabilities.
</TABLE>
<PAGE>
Notes To Statements of Assets and Liabilities PBHG Advisor Funds, Inc.
March 20, 1998
(1) Organization
PBHG Advisor Funds, Inc. (the "Funds"), a Maryland corporation, is registered
under the Investment Company Act of 1940, as amended, as an open-end
management investment company with sixteen series: the PBHG Advisor Core
Value Fund (the "Core Value Fund"), the PBHG Advisor Value Opportunities Fund
(the "Value Opportunities Fund"), the PBHG Advisor New Contrarian Fund (the "New
Contrarian Fund"), the PBHG Advisor REIT Fund (the "REIT Fund"), the PBHG
Advisor Large Cap Concentrated Fund (the "Large Cap Concentrated Fund"), the
PBHG Advisor Growth II Fund (the "Growth II Fund"), the PBHG Advisor New
Opportunities Fund (the "New Opportunities Fund"), the PBHG Advisor Global
Technology & Communications Fund (the "Globa1 Technology & Communications
Fund"), the PBHG Advisor Blue Chip Growth Fund (the "Blue Chip Growth Fund"),
the PBHG Advisor Growth Opportunities Fund (the "Growth Opportunities Fund"),
the PBHG Advisor Enhanced Equity Fund (the "Enhanced Equity Fund"), the PBHG
Advisor Trend Fund (the "Trend Fund"), (collectively referred to as the
"Equity Portfolios"), the PBHG Advisor Master Fixed Income Fund (the "Master
Fixed Income Fund"), the PBHG Advisor High Yield Fund (the "High Yield
Fund"), the PBHG Advisor Cash Reserves Fund (the "Cash Reserves Fund"), and the
PBHG Advisor Short-Term Government Fund (the "Short-Term Government Fund")
(each a "Fund" and, collectively, the "Funds"). To date, the Fund has had no
transactions other than those relating to organizational matters and the
issuance of 10,000 shares of common stock to Pilgrim Baxter & Associates, Ltd.
(the "Adviser"). Each of the Funds has distinct investment objectives and
policies that are described in the prospectus.
(2) Significant Accounting Policies
The following is a summary of the significant accounting policies followed by
the Funds.
Security Valuation - Investment securities of the Equity Funds that are listed
on a securities exchange for which market quotations are available are valued at
the last quoted sales price on each business day. If there is no such reported
sale, these securities and unlisted securities for which market quotations are
readily available, are valued at the most recently quoted bid price. However,
debt securities (other than short-term obligations), including listed issues,
are valued on the basis of valuations furnished by the pricing service which
utilizes electronic data processing techniques to determine valuations for
normal institutional size trading units of debt securities, without exclusive
reliance upon exchange or over-the-counter prices. 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. The values of investment
securities held by the Cash Reserves Fund are stated at amortized cost, which
approximates market value. Under this valuation method, acquisition discounts
and premiums are accreted and amortized ratably to maturity and are included in
interest income.
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
<PAGE>
the respective holding periods. Acquisition discounts and premiums are accreted
and amortized to maturity using a method which approximates the effective
interest method.
Dividends - Dividends from net investment income for the Equity Funds are
declared annually, if available. Dividends from net investment income for the
Master Fixed Income Fund, the High Yield Fund, the Short-Term Government Fund
and the Cash Reserves fund are declared daily and paid monthly. Distributions of
net realized capital gains, for all funds, are generally made to shareholders
annually. 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 or accumulated net realized gain, as
appropriate, in the period that the differences arise.
Organizational Costs - All organizational costs incurred with the start up of
the Funds will be amortized on a straight line basis over a period of sixty
months commencing with operations provided that the series commenced operations
prior to June 30, 1998. For those series that commenced operations after June
30, 1998 all organizational costs incurred with the start of the Funds will be
expensed over a period not to exceed one year. In the event that any of the
initial shares of the Fund are redeemed by any holder thereof during the period
that the Fund 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.
Federal Income Taxes - It is each Fund's intention 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 each Fund's assets, less
liabilities, by the number of shares outstanding.
Repurchase Agreements - Securities pledged as collateral for repurchase
agreements are held by the custodian bank until the respective agreements
mature. Provisions of the repurchase agreements and procedures adopted by
Pilgrim Baxter & Associates, Ltd. (the "Adviser") ensure 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, of if the counterparty enters into insolvency
proceedings, realization of the collateral by a Fund may be delayed or limited.
Other - Expenses that are directly related to one of the Funds are charged
directly to that Fund. Other operating expenses are prorated to the Funds on the
basis of relative net assets. Class specific expenses, such as l2b-1 service
fees and transfer agent fees, are borne directly by that class. Income, other
expenses and realized and unrealized gains and losses of a Fund are allocated to
the respective class on the basis of the relative net assets each day.
(3) Investment Advisory Fees, Administrative Fees and Other Transactions with
Affiliates
The Funds and the Adviser are parties to an Investment Advisory Agreement (the
"Advisory Agreement"). Under the terms of the Advisory Agreement, the Adviser
is entitled to a fee, which is calculated daily and paid monthly, at an annual
rate of 0.85% of the average daily net assets of the Value Opportunities, Large
Cap Concentrated, Growth II, and Global Technology & Communications Funds;
0.75% of the average net assets of the REIT and New Opportunities Funds; 0.65%
of the average net assets of the Growth Opportunities and Trend Funds; 0.60% of
the average net assets of the Core Value, New Contrarian, Blue Chip Growth, and
Enhanced Equity Funds; 0.50% of the average net assets of the
<PAGE>
High Yield Fund; 0.45% of the average net assets of the Master Fixed Income
Fund; and 0.30% of the average net assets of the Cash Reserves and Short-Term
Government Funds.
Pilgrim Baxter Value Investors ("Value Investors") serves as the sub-adviser to
the Core Value, New Contrarian, REIT, and Value Opportunities Funds. For its
services provided pursuant to its Investment Sub-Advisory Agreement with the
Adviser and the Fund, Value Investors is entitled to receive, from the Adviser,
a sub-advisory fee with respect to the average daily net assets of each such
Fund that is computed daily and paid monthly at annual rates of 0.40%, 0.40%,
0.55% and 0.65%, respectively. Value Investors receives no fees directly from
the Core Value, New Contrarian REIT, and Value Opportunities Funds.
Wellington serves as the sub-adviser to the Cash Reserves Fund. For its services
provided pursuant to its Investment Sub-Advisory Agreement with the Adviser and
the Fund, Wellington is entitled to receive, from the Adviser, a sub-advisory
fee that is computed daily and paid monthly at an annual rate of 0.075% of the
average daily net assets up to and including $500 million and 0.020% of the
Fund's average daily net assets over $500 million, but subject to a minimum
annual fee of $50,000. Wellington receives no fees directly from the Cash
Reserves Fund.
Analytic TSA serves as the sub-adviser to the Enhanced Equity, Master Fixed
Income, and Short-Term Government Funds. For its services provided pursuant to
its Investment Sub-Advisory Agreement with the Adviser and the Fund, Analytic
TSA is entitled to receive, from the Adviser, a sub-advisory fee with respect
to the average daily net assets of each such Fund that is computed daily and
paid monthly at annual rates of 0.40%, 0.25%, and 0.10%, respectively.
Analytic TSA receives no fees directly from the Enhanced Equity, Master Fixed
Income, and Short-term Government Funds.
In the interest of limiting the expenses of the PBHG Advisor Funds, the Adviser
has entered into an Expense Limitation Agreement with the Company, on behalf of
each Fund. The Adviser has agreed to waive or limit its advisory fees or assume
other expenses in an amount that operates to limit the aggregate annual total of
certain operating expenses of each Fund as follows: 0.82% of the PBHG Advisor
Core Value Fund, PBHG Advisor New Contrarian Fund, PBHG Advisor Blue Chip Growth
Fund, and PBHG Advisor Enhanced Equity Fund; 1.07% of the PBHG Advisor Value
Opportunities Fund, PBHG Advisor Large Cap Concentrated Fund, PBHG Advisor
Growth II Fund, and PBHG Advisor Global Technology & Communications Fund; 0.97%
of the PBHG Advisor REIT Fund and PBHG Advisor New Opportunities Fund; 0,87% of
the PBHG Advisor Growth Opportunities Fund and PBHG Advisor Trend Fund; 0.67%
of the PBHG Advisor Master Fixed Income Fund; 0.72% of the PBHG Advisor High
Yield Fund; and 0.52% of the PBHG Advisor Short-Term Government Fund and PBHG
Advisor Cash Reserves Fund. The expenses subject to such limitation are those
that are not specifically allocated to a class of shares of a Fund under the
Company's multiple class plan (the "Rule l8f-3 Plan") including, but not limited
to, investment advisory fees of the Adviser, but excluding: (i) interest, taxes,
brokerage commissions, and other expenditures which are capita1ized in
accordance with generally accepted accounting principles; (ii) expense
specifically allocated to a class of shares of a Fund under the Rule 18f-3 Plan,
such as Rule 12b-1 expenses and transfer agency fees; and (iii) other
extraordinary expenses not incurred in the ordinary course of a Fund's business.
Reimbursement by the Funds of the advisory fees waived or limited and other
expenses paid by the Adviser pursuant to the Expense Limitation Agreement may
be made at a later date when such Funds have reached a sufficient asset size to
permit reimbursement to be made without causing the total annual expense ratio
of each Fund to exceed the percentages discussed in this paragraph.
Consequently, no reimbursement by a Fund will be made unless: (i) the Fund's
assets exceed $75 million; (ii) the Fund's total annual expense ratio is less
than the specified percentage; and (iii) the payment of such reimbursement
was approved by the Board of Directors on a quarterly basis. The total amount
of reimbursement to which the Adviser may be entitled shall equal, at any time,
the sum of all investment advisory fees previously waived or reduced by the
Adviser and all other payments remitted by the Adviser to the Fund, during
any of the previous two fiscal years, less any reimbursement previously paid
by such Fund to the Adviser.
PBHG Fund Services (the "Administrator"), a wholly-owned subsidiary of the
Adviser, provides the Funds with administrative services, including regulatory
reporting and all necessary office space, equipment, personnel and facilities.
For these administrative services, the Administrator is entitled to a fee, which
is calculated daily and paid monthly, at an annual rate of 0.15% of the average
daily net assets of the Funds.
<PAGE>
SEI Financial Management Corporation, a wholly-owned subsidiary of SEI
Corporation, is the owner of all beneficial interest in SEI Fund Resources (the
"Sub-Administrator"). The Sub-Administrator assists the Administrator in
providing administrative services to the Funds.
PBHG Fund Distributors, a wholly owned subsidiary of the Adviser, provides the
Funds with distribution services.
DST Systems, Inc. serves as the transfer agent, dividend disbursing agent for
the Funds under a transfer agent agreement with the Funds. PBHG Fund Services
provides shareholder support and other shareholder account-related services with
assistance from UAM Shareholder Service Center. CoreStates Bank, N.A. serves as
the custodian for the Funds.
The Funds have adopted Distribution Plans (the "12b-1 Plan") for those Funds
offering Class A and B shares. The Plan provides for the payment by the Funds to
the Distributor of up to 0.35% of each Fund's average net assets attributable to
Class A shares and up to 1.00% for Class B shares. The Funds' directors have
determined that payments under the 12b-1 distribution plan for Class A shares
will currently be limited to 0.25%. Class I shares are not subject to 12b-1
fees.
Certain officers and directors of the Fund who are or were officers of the
Adviser, Administrator, Sub-Administrator and the Distributor receive no
compensation from the Fund for their services.
(4) Reorganization
On February 20, 1998, the Board of Directors of the Fund and the Board of
Trustees of The Analytic Series Fund approved an Agreement and Plan of
Reorganization to reorganize the Analytic Enhanced Equity Portfolio,
Analytic Master Fixed Income Portfolio, and Analytic Short-Term Government
Portfolios into the PBHG Advisor Enhanced Equity Fund, PBHG Advisor Master
Fixed Income Fund and PBHG Advisor Short-Term Government Fund, respectively.
This reorganization is pending approval of the shareholders of the Analytic
Series Fund at a special meeting currently scheduled to be held on April 28,
1998.
The reorganization is expected to be performed on May 31, 1998 with all of the
property and assets of the Analytic Series Fund to be transferred to the
corresponding PBHG Advisor Fund. Upon this transfer, the PBHG Advisor Fund will
issue Class A shares of the voting common stock. The portfolios of the Analytic
Series Fund will be accounting survivors for financial reporting purposes.
<PAGE>
<PAGE>
PART C. OTHER INFORMATION
Item 15. Indemnification
---------------
Article 7.4 of Registrant's Articles of Incorporation provides as follows:
7.4 Indemnification. The Corporation, including its successors and assigns,
shall indemnify its directors and officers and make advance payment of
related expenses to the fullest extent permitted, and in accordance with
the procedures required, by the General Laws of the State of Maryland and
the Investment Company Act of 1940. The By-Laws may provide that the
Corporation shall indemnify its employees and/or agents in any manner and
within such limits as permitted by applicable law. Such indemnification
shall be in addition to any other right or claim to which any director,
officer, employee or agent may otherwise be entitled. The Corporation may
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer, partner,
trustee, employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise or employee benefit
plan, against any liability (including, with respect to employee benefit
plans, excise taxes) asserted against and incurred by such person in any
such capacity or arising out of such person's position, whether or not the
Corporation would have had the power to indemnify against such liability.
The rights provided to any person by this Article 7.4 shall be enforceable
against the Corporation by such person who shall be presumed to have relied
upon such rights in serving or continuing to serve in the capacities
indicated herein. No amendment of these Articles of Incorporation shall
impair the rights of any person arising at any time with respect to events
occurring prior to such amendment.
In addition, Article VI of Registrant's By-Laws provides as follows:
Article VI: Indemnification
The Corporation shall indemnify (a) its Directors and officers whether
serving the Corporation or at its request any other entity, to the full
extent required or permitted by (i) Maryland law now or hereafter in force,
including the advance of expenses under the procedures and to the full
extent permitted by law, and (ii) the Investment Company Act of 1940, as
amended, and (b) other employees and agents to such extent as shall be
authorized by the Board of Directors and be permitted by law. The foregoing
rights of indemnification shall not be exclusive of any other rights to
which those seeking indemnification may be entitled. The Board of Directors
may take such action as is necessary to carry out these indemnification
provisions and is expressly empowered to adopt, approve and amend from time
to time such resolutions or contracts implementing such provisions nor such
further indemnification arrangements as may be permitted by law.
Insofar as indemnification for liability arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
<PAGE>
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
To the extent that the Articles of Incorporation, By-Laws or any other
instrument pursuant to which the Registrant is organized or administered
indemnify any director or officer of the Registrant, or that any contract
or agreement indemnifies any person who undertakes to act as investment
adviser or principal underwriter to the Registrant, any such provision
protecting or purporting to protect such persons against any liability to
the Registrant or its security holders to which he would otherwise by
subject by reason or willful misfeasance, bad faith, or gross negligence,
in the performance of his duties, or by reason of his contract or
agreement, will be interpreted and enforced in a manner consistent with the
provisions of Sections 17(h) and (i) of the Investment Company Act of 1940,
as amended, and Release No. IC-11330 issued thereunder.
Item 16. Exhibits.
1(a) Articles of Incorporation(1)
1(b) Articles Supplementary of Registrant(2)
2 By-Laws(1)
3 Voting trust agreement - none
4 Agreement and Plan of Reorganization, filed herewith as Exhibit A
to the Combined Proxy Statement and Prospectus
5 Not Applicable
6(a) Investment Advisory Agreement between the Registrant and Pilgrim
Baxter & Associates, Ltd. dated April 1, 1998(2)
6(b) Form of Investment Sub-Advisory Agreement by and among the Registrant
and Analytic TSA Global Asset Management, Inc.(2)
6(c) Investment Sub-Advisory Agreement by and among the Registrant,
Pilgrim Baxter & Associates, Ltd. and Wellington Management Company,
LLP dated April 1, 1998.(2)
6(d) Investment Sub-Advisory Agreement by and among the Registrant,
Pilgrim Baxter & Associates, Ltd. and Pilgrim Baxter Value
Investments, Inc. dated April 1, 1998.(2)
7(a) Distribution Agreement between the Registrant and PBHG
Fund Distributors relating to Class A Shares dated April 1, 1998.(2)
7(b) Distribution Agreement between the Registrant and PBHG Fund
Distributors relating to Class B Shares dated April 1, 1998.(2)
7(c) Distribution Agreement between the Registrant and PBHG Fund
Distributors relating to Class I Shares dated April 1, 1998.(2)
7(d) Form of Selected Dealer Agreement(2)
7(e) Form of Bank Agency Agreement relating to shares of the Registrant(2)
7(f) Form of Shareholder Service Agreement for sale of Shares of
Registrant(2)
8 Bonus, profit sharing or pension plans - none
9 Form of Custodian Agreement between the Registrant and CoreStates
Bank, N.A.(2)
10(a) Distribution Plan of the Registrant pursuant to Rule 12b-1
relating to Class A Shares dated April 1, 1998.(2)
10(b) Distribution Plan of the Registrant pursuant to Rule 12b-1
relating to Class B Shares dated April 1, 1998.(2)
10(c) Multiple Class Plan of the Registrant pursuant to Rule 18f-3
dated April 1, 1998.(2)
11 Opinion of Counsel and Consent of Ballard Spahr Andrews & Ingersoll,
LLP with respect to corporate matters - to be filed by Amendment.
C-2
<PAGE>
12 Opinion of counsel and Consent of Paul, Hastings, Janofsky & Walker,
LLP with respect to tax matters - to be filed by Amendment.
13(a) Administrative Services Agreement by and between the Registrant and
PBHG Fund Services dated April 1, 1998.(2)
13(b) Form of Sub-Administrative Services Agreement by and between the
Registrant, PBHG Fund Services and SEI Fund Resources(2)
13(c) Expense Limitation Agreement by and between the Registrant, on behalf
of each portfolio of the Registrant and Pilgrim Baxter & Associates,
Ltd. dated April 1, 1998.(2)
(2)
14(a) Consent of Coopers & Lybrand, LLP
14(b) Consent of Deliotte & Touche, LLP
14(c) Consent of Coopers & Lybrand, LLP in respect of audited statements
of Assets and Liabilities
15 Not Applicable
16 Not Applicable
17 Form of Proxy
(1) Incorporated herein by reference to Registrant's Registration Statement
on Form N-1A (File Nos. 333-44193 and 811-08605) as filed electronically with
the Commission on January 13, 1998.
(2) Incorporated herein by reference to Pre-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A (File No. 333-44193 and
811-08605).
Item 17. Undertakings
------------
(1) The undersigned Registrant agrees that prior to any public reoffering
of the securities registered through the use of a prospectus which is a
part of this registration statement by any person or party who is deemed to
be an underwriter within the meaning of Rule 145(c) of the Securities Act
of 1933, as amended, the reoffering prospectus will contain the information
called for by the applicable registration form for reofferings by persons
who may be deemed underwriters, in addition to the information called for
by the other items of the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as part of an amendment to the
registration statement and will not be used until the amendment is
effective, and that, in determining any liability under the Securities Act
of 1933, each post-effective amendment shall be deemed to be a new
registration statement for the securities offered therein, and the offering
of the securities at that time shall be deemed to be the initial bona fide
offering of them.
C-3
<PAGE>
SIGNATURES
Pursuant to the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has duly caused this Pre-Effective Amendment No. 1 to its
Registration Statement on Form N-14 to be signed on its behalf by the
undersigned thereto duly authorized, in the City of Wayne, and Commonwealth of
Pennsylvania, on the 8th day of April, 1998.
PBHG ADVISOR FUNDS, INC.
Registrant
By: /s/ Harold J. Baxter
-----------------------------
Harold J. Baxter
Chairman and Director
Pursuant to the requirements of the Securities Act of 1933, this Pre-Effective
Amendment No. 1 to its Registration Statement on Form N-14 has been signed below
by the following persons on the 8th day of April, 1998 in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE AND TITLE DATE
<S> <C> <C>
/s/ Harold J. Baxter Chairman and Director April 8, 1998
- ---------------------------
Harold J. Baxter
/s/ Harold J. Baxter , POA Director April 8, 1998
- ---------------------------
John R. Bartholdson
/s/ Harold J. Baxter , POA Director April 8, 1998
- ---------------------------
Jettie M. Edwards
/s/ Harold J. Baxter , POA Director April 8, 1998
- ---------------------------
Albert A. Miller
/s/ Gary L. Pilgrim President April 8, 1998
- ---------------------------
Gary L. Pilgrim
/s/ Lee T. Cummings Treasurer, Chief Financial Officer April 8, 1998
- --------------------------- and Controller
Lee T. Cummings
</TABLE>
C-4
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Description
- ----------- -----------
14(c) Consent of Coopers & Lybrand, LLP in respect of audited
statements of Assets and Liabilities
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement
under the Securities Act of 1933, filed on Form N-14 (File No. 333-44193), of
our report dated March 30, 1998 on our audit of the Statements of Assets and
Liabilities of The PBHG Advisor Funds, Inc. as of March 20, 1998, which report
is included as Appendix III to the Statement of Additional Information.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
April 8, 1998
