<PAGE>
- --------------------------------------------------------------------------------
MESSAGE TO SHAREHOLDERS THE PBHG FUNDS, INC.
- --------------------------------------------------------------------------------
Dear Shareholder:
This past six-month period has been a positive time for The PBHG Funds, Inc.
Our domestic equity funds continued to deliver solid performance and we have
accomplished several important goals in making The PBHG Funds more responsive
to the needs of shareholders.
Two significant steps forward are expected at the November 17, 1995
Shareholder Meeting:
. Proposals to standardize and clarify the investment limitations of the
PBHG equity funds, if passed as expected, will unify the practices of the
funds and make compliance efforts more economical. The proposals help
ensure that all the funds follow the same basic investment limitations,
but they do not in any way alter the investment objectives, programs, or
philosophies of the funds.
. Reflecting the importance of having the people who manage investments for
the funds also be more closely involved in the overall management of the
funds, I hope to be elected to the new Board of Directors for The PBHG
Funds, Inc. Separately, we expect that in the near future Gary Pilgrim
will be nominated and approved by the Board of Directors as the new
President of The PBHG Funds.
The timing of these changes is meaningful. As you know, we started the
Growth Fund nearly ten years ago, on December 19, 1985. The Emerging Growth
Fund was introduced on June 14, 1993. As of October 1, 1995, we are a $2.5
billion mutual fund complex, with six equity funds and one money market fund.
We intend to broaden our equity line even further to give you a greater choice
of quality growth investments.
In addition to the above expected changes, we have already implemented a
number of steps intended to make your investment experience with us uniformly
satisfying.
In September, Murray Johnstone International, Ltd. was approved by
shareholders as the new sub-adviser to the PBHG International Fund. Based in
Glasgow, Scotland, Murray Johnstone and its affiliates and predecessors have
been managing overseas investments since 1907, and currently have $8 billion
in assets under management worldwide. Rodger Scullion, Murray Johnstone's
Chief Investment Officer and a 23-year investment veteran, is portfolio
manager for the fund.
On October 1, we introduced the PBHG Technology & Communications Fund. This
fund takes a focused approach to investing in the fields that have been
supercharging market returns over the past year, and that we believe have
significant upside potential for some time to come.
We also continue to make inroads in enhancing shareholder services. Our new
Shareholder Service Line gives you the flexibility to manage your fund
investments when it's most convenient
(Over please)
1
<PAGE>
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MESSAGE TO SHAREHOLDERS (CONTINUED)
- --------------------------------------------------------------------------------
for you. The Shareholder Service Line, accessible by calling 1-800-433-0051,
lets you obtain fund or account information and make transactions 24 hours a
day, any day of the year.
Many of you may have received a questionnaire from us this fall. Your
responses will give us valuable information about the types of funds and
services you, our shareholders, want. We very much appreciate the time and
effort of everyone who completed and returned a questionnaire. We hope to
share the results with you in our next shareholder report.
The following pages detail the most recent six-month performance for The
PBHG Funds, and provide insight into how the managers view the coming months.
We hope that the information is of value to you.
Thank you for choosing The PBHG Funds as part of your investment portfolio.
We appreciate the confidence you have placed in us, and will continue to work
hard to provide you with the finest services and investment results.
Sincerely,
/s/ Harold J. Baxter
Harold J. Baxter
President & Chief Executive Officer
Pilgrim Baxter & Associates
Adviser to The PBHG Funds, Inc.
2
<PAGE>
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INVESTMENT ADVISER'S REVIEW THE PBHG FUNDS, INC.
- --------------------------------------------------------------------------------
THE PBHG FUNDS, INC. The PBHG Funds, Inc. are now a family of six equity
mutual funds focused on long-term growth of capital, and a money
market fund. The funds are advised by Pilgrim Baxter & Associates,
Ltd. ("Pilgrim Baxter"), in Wayne, Pennsylvania. Since 1982, Pilgrim
Baxter has been an investment adviser to some of the country's largest
pension plans, foundations and endowments, and currently manages over
$6.5 billion in assets for individuals and institutions.
DISCIPLINED GROWTH INVESTMENT APPROACH. To manage the domestic equity funds,
Pilgrim Baxter follows a team approach. Led by Chief Investment
Officer Gary Pilgrim, the portfolio managers of all the funds meet
regularly to exchange ideas and share insights. To locate investments,
the managers follow a disciplined Four-Step Investment Process that
combines a proprietary quantitative ranking system with fundamental
research and stringent analysis. This is the proven investment process
used successfully by Pilgrim Baxter over the past thirteen years,
initially to manage institutional accounts and now for the PBHG mutual
funds.
1. The investment team first constructs a universe of companies
that have already demonstrated -- and continue to show --
extraordinary earnings growth characteristics. To be included,
a company's earnings growth rates must exceed 20%, and the
average company in Pilgrim Baxter's universe has grown in
excess of 50% over the last year.
2. Using a proprietary Quantitative Ranking System (QRS), the
investment team ranks companies within that universe and
evaluates each company against its own operating and financial
expectations as well as against its peers.
3. Next, the team conducts extensive fundamental research on the
companies that qualify for investment through the QRS.
Traditional bottom-up analysis, including proprietary research
and face-to-face contact with companies, helps further refine
selections.
4. Strict disciplines are followed in making all buy and sell
decisions. To stay in a fund's portfolio, a company must
continue its strong earnings growth trends.
The investment process that Murray Johnstone uses to manage the
International Fund, while not identical to Pilgrim Baxter's
methodology, is an equally disciplined process.
3
<PAGE>
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INVESTMENT ADVISER'S REVIEW (CONTINUED)
- --------------------------------------------------------------------------------
THE PBHG FAMILY OF FUNDS
[]PBHG GROWTH FUND seeks capital appreciation by investing at least
65% of its total assets in common stocks of small companies with
a market capitalization under $1.5 billion. This fund is
aggressive and should be considered a long-term investment. The
fund is currently closed to new investors but available for new
contributions from existing accounts and defined contribution
plans.
[]PBHG EMERGING GROWTH FUND seeks long-term growth of capital by
investing at least 65% of its total assets in common stocks of
emerging U.S. companies with a market capitalization of $250
million or less at the time of initial purchase. This fund is
aggressive and should be considered a long-term investment. The
fund is currently closed to new investors but available for new
contributions from existing accounts and defined contribution
plans.
[]PBHG SELECT EQUITY FUND seeks long-term growth of capital by
investing in a limited number (normally no more than 30) of
companies across the domestic equity market capitalization
spectrum that, in the Adviser's opinion, have a strong earnings
growth outlook and potential for capital appreciation. This fund
is aggressive and should be considered a long-term investment.
[]PBHG LARGE CAP GROWTH FUND seeks long-term growth of capital by
investing at least 65% of its total assets in common stocks of
large, established companies. Many of these are companies that
were followed for the Growth Fund and Emerging Growth Fund until
their cap sizes grew too large for those funds. The fund's net
asset value may be less volatile than that of our smaller cap
funds.
[]PBHG TECHNOLOGY & COMMUNICATIONS FUND seeks long-term growth of
capital by investing at least 65% of its total assets in common
stocks of companies that rely extensively on science, technology
and communications in their product development or operations, or
which are expected to benefit from technology- or communications-
related advances. The fund is aggressive and should be considered
a long-term investment.
[]PBHG INTERNATIONAL FUND seeks to provide long-term capital
appreciation by investing primarily in a diversified portfolio of
equity securities of non-U.S. issuers. The fund is aggressive and
should be considered a long-term investment.
[]PBHG CASH RESERVES FUND seeks to preserve principal and maintain
a high degree of liquidity while providing current income.
------------------------------------------------
ALL PBHG FUNDS ARE SUITABLE FOR:
Regular investments
IRA, SEP-IRA, Keogh and other retirement plans
Rollover IRA
401(k) Rollover
------------------------------------------------
4
<PAGE>
September 30, 1995
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION AND ANALYSIS THE PBHG FUNDS, INC.
- --------------------------------------------------------------------------------
EQUITY OVERVIEW
The U.S. equity market registered solid gains over the six month period ended
September 30, 1995. While growth-oriented indexes held the edge, the margin
between the growth and value styles was narrow as shown below:
------------------------------------------------------------------
PERFORMANCE COMPARISONS
------------------------------------------------------------------
WILSHIRE ASSOCIATES STYLE INDEXES
Large Growth +20.4% Large Value +21.2%
MidCap Growth +24.0% MidCap Value +20.5%
Small Cap Growth +24.5% Small Cap Value +17.9%
------------------------------------------------------------------
We believe these returns obscure the big questions that continued to affect
the market during this period:
[]HOW STRONG (OR WEAK) IS ECONOMIC ACTIVITY?
[]WILL THE FED EASE FURTHER OR REVERSE COURSE?
[]WILL THE GOVERNMENT MAKE REAL PROGRESS ON THE BUDGET DEFICIT OR SHRUG
OFF THE ELECTION MANDATE AND GO BACK TO POLITICS AS USUAL?
[]What about inflation? The bond market persists in its efforts to build a
negative case with little or no evidence to support it.
While these are all serious questions, the actual outcomes have been quite
benign and have produced one of the most favorable investment climates we can
recall. Thanks to our bottom-up approach to stock selection and portfolio
construction, we were not distracted by these overview issues and remained
relatively fully invested.
- --------------------------------------------------------------------------------
CONTROLLING RISK
Because Pilgrim Baxter attempts to stay fully invested at all times, and
companies that are demonstrating high growth and upward earnings trends can
be more volatile, equity fund shareholders may experience significant short-
term fluctuations in net asset value. In addition, the overseas investments
of the International Fund have special risks, including political, economic
and currency risks.
The funds' managers seek to control risk by investing in quality companies
which, we believe, can sustain high earnings long term.
Shareholders can control risk in their portfolios in three ways:
1. Maintain a long-term perspective, since short-term losses tend to be
offset by long-term gains over time.
2. Diversify across types of investments by holding different cap sizes, and
investing in many industries and countries.
3. Adhere to a disciplined investment program of regular monthly purchases.
This "dollar cost averaging" ensures that you don't purchase all your
shares at a market high, although it cannot guarantee a profit or protect
against loss in declining markets.
- --------------------------------------------------------------------------------
5
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED)
- --------------------------------------------------------------------------------
Our funds performed well both absolutely and against their peer groups. A
single-minded focus on investment in the strongest companies with high and
sustainable earnings growth has proven again to be an effective tool for
handling uncertainty in the economic outlook.
We have confidence in our disciplines. Now, as always, our strategy is to
target individual stocks without attempting to anticipate market direction. It
has always seemed eminently sensible to us that as a company grows, so should
its value. And exceptional growth provides the opportunity for above-market
returns. This is, of course, a higher risk investment strategy and our short-
term portfolio volatility is generally high. Thus we encourage patience and a
long-term horizon as you invest with us.
/s/ Gary Pilgrim
Gary Pilgrim
Chief Investment Officer
Pilgrim Baxter & Associates
- --------------------------------------------------------------------------------
OUTLOOK ON TECHNOLOGY
At Pilgrim Baxter, we invest in individual stocks that demonstrate strong,
sustained earnings growth trends, regardless of the sector. Our bottom-up
focus on individual securities, rather than on market movements, helps us
target performers in all environments.
Nonetheless, although there will be short-term corrections, we believe
technology-related fields will continue to provide outstanding opportunities
over the long term for the following reasons:
[]48% of U.S. capital spending in the last quarter of 1994 was in high tech,
and the percentage is expected to continue rising.
[]Productivity and profitability in tech-related industries are at historic
highs.
[]The U.S. leads the world in producing PCs, microprocessors, networks,
software, smart semiconductor chips, client server technology, and data base
applications technology.
[]Many technology industries are global, and less vulnerable to the economic
cycles of individual countries.
[]The pervasiveness of the Internet fosters a continuous cycle of re-
engineering, infrastructure expansion and equipment upgrading.
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
THE PBHG FUNDS, INC.
- --------------------------------------------------------------------------------
PBHG GROWTH FUND
A line graph depicting the total growth (including reinvestment of dividends and
capital gains) of a hypothetical investment of $10,000 in The PBHG Funds, Inc. -
the PBHG Growth Fund from December 31, 1985 through September 30, 1995 as
compared with the growth of a $10,000 investment in the Wilshire Small Cap
Growth Index. The plot points used to draw the line graph were as follows:
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Period Ended Growth of $10,000 Growth of $10,000 Invested
Invested in PBHG in the Wilshire Small Cap
Growth Fund Growth Index
<S> <C> <C>
12/31/85 $10,000 $10,000
3/31/86 $11,510 $11,445
3/31/87 $16,870 $13,678
3/31/88 $14,660 $11,658
3/31/89 $15,244 $12,966
3/31/90 $19,377 $14,163
3/31/91 $22,659 $15,198
3/31/92 $25,781 $18,535
3/31/93 $34,668 $20,697
3/31/94 $47,592 $23,422
3/31/95 $54,217 $26,317
9/30/95 $70,710 $32,752
</TABLE>
/1/ These figures represent past performance. The investment return and
principal value of an investment will fluctuate, so an investor's shares, when
redeemed, may be worth more or less than their original cost.
/2/ The six-month return has not been annualized.
PERFORMANCE
For the six months ended September 30, 1995, the Fund produced a 30.4% return
versus its benchmark index, the Wilshire Small Cap Growth Index, of 24.5%.
Technology, with a weighting that varied between 32% and 41%, accounted for 55%
of the portfolio gain. The majority of the remaining gain was concentrated in
the consumer and service sectors.
STRATEGY
The Fund's strategy is to be invested in the high growth, small company part of
the market. We expect to make the majority of our selections in the $300
million to $1.5 billion range. The portfolio typically has fairly large sector
concentration as we focus first and foremost on stock selection. Going forward,
we expect to continue to find the technology-
- --------------------------------------------------------------------------------
OBJECTIVE: Long-term capital appreciation
INVESTS IN: Small U.S. companies, in any field
- --------------------------------------------------------------------------------
related area with the greatest number of companies meeting our purchase
criteria.
PORTFOLIO HIGHLIGHTS
Of the stocks held for the entire six-month period, the Fund's top five
performers were all technology stocks which produced an average gain of 133%
over the six-month period. Our losers, none of which are still owned, lost an
average of 45% from March 31, 1995 to the point of sale. In all cases of both
successes and failures, the underlying explanation was either good or bad
earnings results.
- --------------------------------------------------------------------------------
TOP FIVE PERFORMERS
- --------------------------------------------------------------------------------
U.S. Robotics
Ascend Communications
Glenarye Technologies
Peoplesoft
Mixim Integrated Products
- --------------------------------------------------------------------------------
BOTTOM FIVE PERFORMERS
- --------------------------------------------------------------------------------
Antec
Sun Healthcare
CYRK
Wall Data
Coventry Corp.
- --------------------------------------------------------------------------------
Sector weightings, as always, are a product of individual stock selec-
tions and did not vary much. Consumer, services, and technology showed small
increases while health related issues were reduced as both subacute care and
HMO companies experienced earnings disappointments.
7
<PAGE>
September 30, 1995
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED)
- --------------------------------------------------------------------------------
PBHG EMERGING GROWTH FUND
A line graph depicting the total growth (including reinvestment of dividends and
capital gains) of a hypothetical investment of $10,000 in The PBHG Funds, Inc. -
the PBHG Emerging Growth Fund from June 30, 1993 through September 30, 1995 as
compared with the growth of a $10,000 investment in the Wilshire Samll Cap
Growth Index. The plot points used to draw the line graph were as follows:
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Period Ended Growth of $10,000 Growth of $10,000 Invested
Invested in PBHG in the Wilshire Small Cap
Emerging Growth Fund Growth Index
<S> <C> <C>
6/30/93 $10,000 $10,000
3/31/94 $13,100 $10,923
3/31/95 $17,290 $12,273
9/30/95 $22,359 $15,274
</TABLE>
/1/ These figures represent past performance. The investment return and
principal value of an investment will fluctuate, so an investor's shares,
when redeemed, may be worth more or less than their original cost.
/2/ The six-month return has not been annualized.
PERFORMANCE
For the six months ended September 30, 1995, the Fund produced a 29.3% return
versus its benchmark index, the Wilshire Small Cap Growth Index, of 24.5%.
Technology, with a weighting that varied between 38% and 42%, accounted for 52%
of the portfolio gain. The majority of the remaining gain was concentrated in
the service and consumer sectors.
STRATEGY
The Fund's strategy is to be invested in the high growth, micro-cap part of the
market. We expect the majority of our initial investments to be in companies
with market capitalizations between $50 million and $250 million. We continue
to employ a bottom-up, disciplined
- --------------------------------------------------------------------------------
OBJECTIVE: Long-term growth of capital
INVESTS IN: Some of the smallest, potentially fastest-growing U.S. companies
in any field
- --------------------------------------------------------------------------------
approach, focused on fundamental growth to build and manage a diversified
portfolio of small high growth companies. As a result of our growth criteria,
the portfolio has sector concentrations in the technology, healthcare and
consumer sectors.
PORTFOLIO HIGHLIGHTS
Of the stocks held for the entire six-month period, the Fund's top five
performers were all technology stocks, producing an average gain of 135% over
the six-months. Our losers lost an average of 15% from March 31, 1995 to the
point of sale. In all cases of both successes and failures, the underlying
explanation was either good or bad earnings results.
- --------------------------------------------------------------------------------
TOP FIVE PERFORMERS
- --------------------------------------------------------------------------------
Coherent Communication Systems
Helix Technology
Datastream Systems
Optical Data Systems
Integrated Silicon Systems
- --------------------------------------------------------------------------------
BOTTOM FIVE PERFORMERS
- --------------------------------------------------------------------------------
Odwalla
AG Associates
Dataware Technologies
Open Environment
Eagle Point Software
- --------------------------------------------------------------------------------
Sector weightings, a product of individual stock selections, were as fol-
lows: technology 44%, healthcare 16%, consumers 12% and services 9%.
8
<PAGE>
- --------------------------------------------------------------------------------
THE PBHG FUNDS, INC.
- --------------------------------------------------------------------------------
PBHG LARGE CAP GROWTH FUND
A line graph depicting the total growth (including reinvestment of dividends and
capital gains) of a hypothetical investment of $10,000 in The PBHG Funds, Inc. -
the PBHG Large Cap Growth Fund from April 5, 1995 (inception) through September
30, 1995 as compared with the growth of a $10,000 investment in the Lipper
Growth Funds Average. The plot points used to draw the line graph were as
follows:
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Period Ended Growth of $10,000 Growth of $10,000 Invested
Invested in PBHG Large in the Lipper Growth
Cap Growth Fund Funds Average
<S> <C> <C>
4/30/95 $10,000 $10,000
9/30/95 $13,160 $11,647
</TABLE>
/1/These figures represent past performance. The investment return and principal
value of an investment will fluctuate, so an investor's shares, when
redeemed, may be worth more or less than their original cost.
/2/This return has not been annualized.
PERFORMANCE
Since inception, April 5, 1995, through September 30, 1995, the Fund produced a
31.6% return versus its benchmark index, the Lipper Growth Average, of 20.4%.
Technology, with a weighting that varied between 29% and 38%, accounted for 34%
of the portfolio gain. The majority of the remaining gain was concentrated in
the healthcare and consumer sectors.
STRATEGY
The Fund's strategy is to be fully invested in a diversified group of larger
companies with superior growth characteristics. The portfolio focuses on the
more stable "blue chip" type of companies that have established leadership
positions in dynamic markets. The diversified nature of the portfolio combined
with the larger company focus should serve to dampen
- --------------------------------------------------------------------------------
OBJECTIVE: Long-term growth of capital
INVESTS IN: Large established U.S. companies, many of them industry leaders
- --------------------------------------------------------------------------------
short-term volatility, while the emphasis on strong and sustainable growth
fundamentals should provide superior long-term returns.
PORTFOLIO HIGHLIGHTS
Of the stocks held for the entire five months, the Fund's top five performers
were derived from a number of different sectors, including healthcare, consumer
and technology. They produced an average gain of 31% during the five months.
Our losers lost an average of 2.62% since purchase.
- --------------------------------------------------------------------------------
TOP FIVE PERFORMERS
- --------------------------------------------------------------------------------
Oxford Health Plans
Medtronic
AVX
Nike
Cordis
- --------------------------------------------------------------------------------
BOTTOM FIVE PERFORMERS
- --------------------------------------------------------------------------------
Applied Materials
Linear Technology
3COM
KLA Instruments
Micro Warehouse
- --------------------------------------------------------------------------------
Sector weightings, a product of individual stock selections, were as
follows: technology 33%, healthcare 19%,consumers 18% and services 10%.
9
<PAGE>
September 30, 1995
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED)
- --------------------------------------------------------------------------------
PBHG SELECT EQUITY FUND
A line graph depicting the total growth (including reinvestment of dividends and
capital gains) of a hypothetical investment of $10,000 in The PBHG Funds, Inc. -
the PBHG Select Equity Fund from April 5, 1995 (inception) through September 30,
1995 as compared with the growth of a $10,000 investment in the Lipper Capital
Appreciation Funds Average. The plot points used to draw the line graph were as
follows:
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Period Ended Growth of $10,000 Growth of $10,000 Invested
Invested in PBHG in the Lipper Capital Appreciation
Select Equity Fund Funds Average
<S> <C> <C>
4/30/95 $10,000 $10,000
9/30/95 $14,545 $11,790
</TABLE>
/1/ These figures represent past performance. The investment return and
principal value of an investment will fluctuate, so an investor's shares, when
redeemed, may be worth more or less than their original cost.
/2/ This return has not been annualized.
PERFORMANCE
Since inception, April 5, 1995, through September 30, 1995, the Fund produced a
48.5% return versus its benchmark index, the Lipper Capital Appreciation Aver-
age, of 20.2%. Technology, with a weighting that varied between 42% and 51%,
accounted for 35% of the portfolio gain. The majority of the remaining gain was
concentrated in the healthcare and consumer sectors.
STRATEGY
The Fund's strategy is to be fully invested in a limited number of companies
(25 to 30) of all sizes that we feel represent the very best current investment
ideas among our universe of high-quality growth stocks. The concentrated ap-
proach provides meaningful representation for each holding. Since the focus is
entirely on in-
- --------------------------------------------------------------------------------
OBJECTIVE: Long-term growth of capital
INVESTS IN: 25 to 30 companies of all sizes -- selected from many fields --
that show outstanding promise
- --------------------------------------------------------------------------------
dividual stock selection, market sector exposure may vary widely. We believe
this focused approach to investing in our very best growth ideas creates the
potential for substantial returns over the long term.
PORTFOLIO HIGHLIGHTS
Of the stocks held for the entire five-month period, the Fund's top five
performers were mixed with multiple sector stocks, including healthcare,
financial and technology. They produced an average gain of 31% during the five
months. Our losers lost an average of 17% from purchase to the point of sale.
- --------------------------------------------------------------------------------
TOP FIVE PERFORMERS
- --------------------------------------------------------------------------------
Oxford Health Plans
Money Store (The)
Optical Data Systems
Phycor
Medtronic
- --------------------------------------------------------------------------------
BOTTOM FIVE PERFORMERS
- --------------------------------------------------------------------------------
Integrated Silicon Solution
Station Casinos
Picturetel
Silicon Valley Group
Integrated Process Equipment
- --------------------------------------------------------------------------------
Sector weightings, a product of individual stock selections, were as
follows: technology 49%, healthcare 17%, services 9% and consumers 6%.
10
<PAGE>
- --------------------------------------------------------------------------------
THE PBHG FUNDS, INC.
- --------------------------------------------------------------------------------
PBHG INTERNATIONAL FUND
SUB-ADVISED BY MURRAY JOHNSTONE
INTERNATIONAL, LTD.
A line graph depicting the total growth (including reinvestment of dividends and
capital gains) of a hypothetical investment of $10,000 in The PBHG Funds, Inc. -
the PBHG International Fund from June 30, 1994 through September 30, 1995 as
compared with the growth of a $10,000 investment in the F.T. Actuaries World
Index, Non-U.S., in U.S. Dollars. The plot points used to draw the line graph
were as follows:
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Period Ended Growth of $10,000 Growth of $10,000 Invested
Invested in PBHG in the F.T. Actuaries World Index,
International Fund Non-U.S., In U.S. Dollars
<S> <C> <C>
6/30/94 $10,000 $10,000
3/31/95 $ 9,203 $10,007
9/30/95 $ 9,698 $10,508
</TABLE>
/1/ These figures represent past performance. The investment return and
principal value of an investment will fluctuate, so an investor's shares, when
redeemed, may be worth more or less than their original cost.
/2/ The six-month return has not been annualized.
PERFORMANCE
For the six month period ended September 30, 1995, the Fund produced a 5.4%
return versus its benchmark index, the FT Actuaries World Index, of 5.01%. On
September 30, 1995, the top five country weightings were as follows: Japan,
United Kingdom, France, Hong Kong and Spain.
STRATEGY
After being appointed, and later approved as, sub-adviser to the PBHG
International Fund, we spent much of this period bringing the portfolio in-line
with our country allocation. This involved removing many securities that tended
to be less liquid and that are not followed internally at Murray Johnstone.
Meanwhile, the MSCI EAFE Index managed to
- --------------------------------------------------------------------------------
OBJECTIVE: Long-term capital appreciation
INVESTS IN: Non-U.S. companies of all sizes in developed and emerging countries.
- --------------------------------------------------------------------------------
rise only 2.8% during the third quarter of 1995, with currency movement playing
a major role.
Throughout periods like this, when markets outside the U.S. have
struggled to make meaningful headway, we have been taking profits in those
areas which have shown resilience, such as Norway and Sweden. We have
reinvested the proceeds in the Far East, focusing on markets which have lagged
in this cycle but are still exhibiting signs of strong and sustainable growth.
PORTFOLIO HIGHLIGHTS
During the three-month period in which Murray Johnstone International, Ltd. was
the Fund's sub-adviser, the Fund's top five performers of the stocks held for
that entire time, produced an average gain of 36% in that period. Our losers
held during the period lost an average of 22%.
- --------------------------------------------------------------------------------
TOP FIVE PERFORMERS
- --------------------------------------------------------------------------------
Tomra Systems--Norway
Bulgari SPA--Italy
Telecom Italia Mobile SPA--Italy
Hermes International--France
Mori Seiki--Japan
- --------------------------------------------------------------------------------
BOTTOM FIVE PERFORMERS
- --------------------------------------------------------------------------------
Legris Industries--France
Polifarb Cieszyn--Poland
Hollandsche Beton Groep--
Netherlands
Consolidated Electric Power-Asia--
Hong Kong
Finansbank AS--Turkey
- --------------------------------------------------------------------------------
11
<PAGE>
September 30, 1995
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED)
- --------------------------------------------------------------------------------
PBHG CASH RESERVES FUND
SUB-ADVISED BY WELLINGTON
MANAGEMENT COMPANY
A bar graph depicting the 7-day and 30-day yields for the The PBHG Funds, Inc. -
the PBHG Cash Reserves Fund for the period ended September 30, 1995 as compared
with the 7-day and 30-day yields of the IBC/Donohue First Tier Average.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
PBHG Cash Reserves IBC Donohue First Tier
Fund Average
<S> <C> <C>
7-Day 5.20% 5.18%
30-Day 5.15% 5.19%
</TABLE>
/1/ Past performance is not predictive of future performance.
PORTFOLIO STRUCTURE & PERFORMANCE
For the seven days ended September 30, 1995, the Fund produced a yield of
5.20% versus its benchmark index, the Donoghue's First Tier Average, of 5.18%.
As assets increase and cash flows stabilize we are able to increase the range
of investments.
The portfolio's holdings are concentrated in commercial paper with a
large concentration in overnight repurchase agreements for liquidity needs. We
are maintaining a longer average maturity in anticipation of lower interest
rates in coming months.
MARKET REVIEW
Short term interest rates declined slightly in the third quarter, led by the
Federal Reserve's 1/4 percent reduction in the Fed Funds rate in early July.
The easing move came in response to economic slow economic growth with a
favorable inflation backdrop.
OUTLOOK AND STRATEGY
We expect that the Fed will lower short term interest rates over the next few
months but would like to wait for the fiscal side of the equation to be
addressed before making further adjustments to the level of interest rates. In
this environment, we will maintain a longer average maturity in order to lock
in prevailing yields for shareholders.
12
<PAGE>
As of September 30, 1995
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS (UNAUDITED) THE PBHG FUNDS, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PBHG GROWTH FUND
- --------------------------------------------------------------------------------
A pie chart depicting industry breakdowns in the PBHG Growth Fund as a
percentage of Total Fund Investments. The breakdown is as follows:
Industry %
-------- -
Technology 39%
Consumers 23%
Health Care 13%
Service 12%
Repurchase Agreements 7%
Industrial/General
Manufacturing 3%
Energy 1%
Financial 1%
Transportation 1%
[CHART APPEARS HERE]
<TABLE>
-----------------------------------------------------------------------------
<CAPTION>
Market
Description Shares Value (000)
<S> <C> <C>
-----------------------------------------------------------------------------
COMMON STOCK -- 92.9%
APPAREL -- 2.5%
Nautica Enterprises* 571,650 $ 19,579
Tommy Hilfiger* 747,000 24,278
----------
43,857
----------
AUTOMATED DATA
COLLECTION -- 1.3%
Zebra Technology* 407,700 21,710
----------
BIOTECHNOLOGY -- 1.5%
Idexx Laboratories* 718,000 26,746
----------
CLIENT/SERVER
SOFTWARE -- 3.0%
Atria Software* 539,600 15,783
Peoplesoft* 396,100 35,996
----------
51,779
----------
-----------------------------------------------------------------------------
<CAPTION>
Market
Description Shares Value (000)
<S> <C> <C>
-----------------------------------------------------------------------------
COMMERCIAL
SERVICE -- 1.0%
Gartner Group, Class A* 528,000 $ 17,292
----------
COMMUNICATION
SERVICE -- 1.8%
Clear Channel Communications* 321,225 24,333
TCA Cable 218,900 6,293
----------
30,626
----------
COMMUNICATIONS EQUIPMENT -- 1.0%
C-Cube Microsystems* 370,100 16,932
----------
COMPONENTS -- 0.8%
Kemet* 402,400 13,782
----------
COMPUTER
SOFTWARE -- 0.8%
Fair Isaac 459,600 13,328
----------
CONSUMER PRODUCT MISCELLANEOUS -- 0.8%
Cidco* 414,900 14,625
----------
CONSUMER
SOFTWARE -- 1.1%
Softkey International* 430,400 19,045
----------
CONTRACT
MANUFACTURING -- 0.9%
Sanmina* 330,800 15,796
----------
CORRECTIONAL
SERVICE -- 0.9%
Corrections of America* 307,100 14,779
----------
DATA
COMMUNICATIONS -- 2.4%
Picturetel* 244,900 11,082
US Robotics* 359,200 30,622
----------
41,704
----------
DATABASE
SOFTWARE -- 1.1%
Progress Software* 292,200 19,577
----------
</TABLE>
*Non-income producing security
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
As of September 30, 1995
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PBHG GROWTH FUND (CONTINUED)
<TABLE>
------------------------------------------------------------------------------
<CAPTION>
Market
Description Shares Value (000)
<S> <C> <C>
------------------------------------------------------------------------------
DESIGN/MANUFACTURING AUTOMATION -- 3.9%
Cognex* 545,900 $ 26,340
Filenet* 507,400 22,452
Integrated Systems* 80,200 3,148
Wonderware* 405,400 15,760
----------
67,700
----------
DRUGS -- 1.0%
Watson Pharmaceuticals* 437,700 17,946
----------
EMPLOYMENT
SERVICE -- 0.9%
Alternative Resources* 504,200 16,134
----------
ENVIRONMENTAL -- 3.5%
Ionics* 457,200 19,031
Sanifill* 694,800 22,755
United Waste Systems* 463,000 19,330
----------
61,116
----------
FINANCIAL -- 0.7%
The Money Store* 262,800 12,450
----------
GRAPHICS/IMAGE
PROCESSING -- 1.4%
Electronics For Imaging* 330,300 23,658
----------
HEALTH CARE-MANAGEMENT SERVICE -- 0.7%
Quintiles Transnational* 207,100 12,219
----------
LEISURE -- 0.3%
Cobra Golf* 185,800 5,551
----------
LODGING -- 0.4%
Doubletree* 332,900 7,407
----------
MANUFACTURING -- 1.3%
Fastenal 598,000 21,827
----------
------------------------------------------------------------------------------
<CAPTION>
Market
Description Shares Value (000)
<S> <C> <C>
------------------------------------------------------------------------------
MEDICAL INFORMATION
SYSTEMS -- 1.5%
Medic Computer Systems* 499,700 $ 25,360
----------
NETWORKING -- 5.9%
Alantec* 383,100 12,163
Ascend Communications* 419,600 33,568
Cascade Communications* 252,200 12,421
Fore Systems* 390,000 14,430
Optical Data Systems* 443,500 17,297
Stratacom* 209,700 11,586
----------
101,465
----------
NETWORKING
SOFTWARE -- 0.7%
McAfee Associates* 229,100 11,799
----------
NON DURABLES -- 0.9%
Blyth Industries* 318,900 14,909
----------
PATIENT CARE -- HEALTH
PLAN -- 1.2%
Healthsource* 412,000 19,828
----------
PATIENT CARE --
HOME -- 2.0%
American Medical Responses* 768,600 21,809
Lincare Holdings* 496,800 12,793
----------
34,602
----------
PATIENT CARE --
HOSPITAL -- 0.9%
Community Health Systems* 373,100 15,064
----------
PHARMACEUTICAL
SERVICE -- 2.1%
Express Scripts, Class A* 377,800 16,623
Omnicare 488,200 19,040
----------
35,663
----------
PHYSICIAN PRACTICE MANAGEMENT -- 2.6%
Medpartners* 168,000 5,292
Phycor* 1,132,275 38,780
----------
44,072
----------
</TABLE>
*Non-income producing security
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
- --------------------------------------------------------------------------------
THE PBHG FUNDS, INC.
- --------------------------------------------------------------------------------
<TABLE>
-----------------------------------------------------------------------------
<CAPTION>
Market
Description Shares Value (000)
<S> <C> <C>
-----------------------------------------------------------------------------
RESTAURANTS -- 3.6%
Apple South* 312,500 $ 7,109
Applebees International* 387,300 10,554
Boston Chicken* 577,900 15,098
Landry's Seafood Restaurants* 740,400 13,327
Papa John's International* 370,400 16,668
----------
62,756
----------
RETAIL-APPAREL -- 0.9%
Gymboree* 387,000 11,659
Men's Wearhouse* 124,700 4,489
----------
16,148
----------
RETAIL-CATALOG -- 2.0%
CDW Computer Centers* 322,400 17,168
Micro Warehouse* 388,600 17,778
----------
34,946
----------
RETAIL-HOME
FURNISHINGS -- 0.8%
Bed Bath & Beyond* 452,100 13,789
----------
RETAIL-OFFICE
PRODUCTS -- 2.1%
Corporate Express* 697,700 17,006
Officemax* 765,700 18,569
----------
35,575
----------
RETAIL-SPECIALITY -- 7.1%
Baby Superstore* 369,500 16,674
Books-A-Million* 722,700 12,738
General Nutrition* 611,200 27,810
Hollywood Entertainment* 490,200 10,509
Just For Feet* 372,250 11,447
Petsmart* 409,050 13,805
Sunglass Hut International* 587,700 29,384
----------
122,367
----------
-----------------------------------------------------------------------------
<CAPTION>
Market
Description Shares Value (000)
<S> <C> <C>
-----------------------------------------------------------------------------
SEMICONDUCTOR
EQUIPMENT -- 9.0%
Credence Systems* 522,300 $ 18,933
Epic Design Technology* 51,200 2,483
FSI International* 571,300 18,996
Helix Technology 234,800 10,860
Integrated Process Equipment* 301,500 12,003
Mattson Technology* 279,200 11,866
Novellus Systems* 187,800 13,146
Semitool* 226,650 5,666
Silicon Valley Group* 458,500 17,710
Tencor Instrument* 572,200 25,319
Ultratech Stepper* 450,700 19,042
----------
156,024
----------
SEMICONDUCTOR MANUFACTURING -- 4.2%
Alliance Semiconductor* 510,450 20,290
Integrated Silicon Solutions* 229,800 8,560
Maxim Integrated Products* 338,200 25,027
Oak Technology* 144,400 6,065
Sierra Semiconductor* 274,500 13,485
----------
73,427
----------
SERVICE/EQUIPMENT -- 0.7%
Input/Output* 313,600 12,034
----------
SOFTWARE -- GENERAL -- 1.6%
Inso* 267,400 8,624
Macro Media* 347,200 19,833
----------
28,457
----------
SYSTEM INTEGRATORS -- 1.1%
Cambridge Technology Partners* 381,200 19,346
----------
TELECOMMUNICATION EQUIPMENT -- 2.7%
Adtran* 436,900 15,182
Glenayre Technologies* 435,225 31,336
----------
46,518
----------
TRANSACTION
PROCESSING -- 2.1%
Concord EFS* 704,700 21,493
National Data 574,800 15,448
----------
36,941
----------
</TABLE>
*Non-income producing security
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
As of September 30, 1995
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PBHG GROWTH FUND (CONTINUED)
<TABLE>
-----------------------------------------------------------------------------
<CAPTION>
Shares/
Face Amount Market
Description (000) Value (000)
<S> <C> <C>
-----------------------------------------------------------------------------
TRANSPORTATION -- 1.2%
Fritz Companies* 291,000 $ 21,443
----------
VOICE/CALL TRANSACTION PROCESSING -- 1.0%
Aspect Telecommunications* 565,200 15,260
Comverse Technology* 88,000 1,914
----------
17,174
----------
TOTAL COMMON STOCK (Cost $1,093,793,187) 1,607,293
----------
REPURCHASE AGREEMENT -- 7.2%
Nomura 6.45%, dated 09/29/95, matures 10/02/95,
repurchase price $103,215,186 (collateralized by
various Federal Home Loan Mortgage Corporation
obligations, total par value $126,765,047,
0.00%-40.14%, 05/15/07-08/01/24: Federal Na-
tional Mortgage Association obligations, total
par value $155,403,441, 0.00%-82.29%, 06/25/08-
11/01/32: total market value of $105,222,934) $103,159 103,159
Union Bank of Switzerland 6.45%, dated 09/29/95,
matures 10/02/95, repurchase price $21,524,224
(collateralized by various Government National
Mortgage Association obligations, total par
value $22,564,833, 6.00%-9.50%,12/15/18-
09/20/25: total market value $21,944,332.46) 21,513 21,513
----------
TOTAL REPURCHASE AGREEMENT (Cost $124,672,398) 124,672
----------
TOTAL INVESTMENTS -- 100.1% (Cost $1,218,465,585) 1,731,965
----------
</TABLE>
<TABLE>
---------------------------------------------------------------------------
<CAPTION>
Market
Description Value (000)
<S> <C>
---------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- (0.1%)
Other Assets and
Liabilities, Net $ (2,229)
----------
NET ASSETS:
Portfolio shares (authorized 200
million shares-$0.001 par
value) based on 79,422,568
outstanding shares of
beneficial interest 1,243,246
Net investment loss (4,897)
Accumulated net realized loss on
investments (22,112)
Net unrealized appreciation on
investments 513,499
----------
TOTAL NET ASSETS -- 100.0% $1,729,736
==========
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE $21.78
==========
</TABLE>
*Non-income producing security
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
- --------------------------------------------------------------------------------
THE PBHG FUNDS, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PBHG EMERGING GROWTH FUND
- --------------------------------------------------------------------------------
A pie chart depicting industry breakdowns in the PBHG Emerging Growth Fund as a
percentage of Total Fund Investments. The breakdown is as follows:
Industry %
-------- -
Technology 44%
Health Care 16%
Repurchase Agreements 16%
Consumers 12%
Service 9%
Industrial/General
Manufacturing 1%
Energy 1%
Financial 1%
[CHART APPEARS HERE]
<TABLE>
----------------------------------------------------------------------------
<CAPTION>
Market
Description Shares Value (000)
<S> <C> <C>
----------------------------------------------------------------------------
COMMON STOCK -- 83.4%
APPAREL -- 1.0%
Kenneth Cole Production, Class A* 181,300 $ 6,368
--------
APPLICATION SOFTWARE & SERVICES -- 0.9%
Pinnacle Systems* 183,100 5,630
--------
BIOTECHNOLOGY -- 0.3%
Bio-Vascular* 107,400 1,933
--------
CLIENT/SERVER
SOFTWARE -- 5.6%
Applix* 337,700 7,429
Atria Software* 250,400 7,324
Datastream Systems* 230,600 5,246
Hyperion Software* 130,100 7,383
Legato Systems* 117,000 3,101
Open Environment* 232,800 4,074
--------
34,557
--------
------------------------------------------------------------------------------
<CAPTION>
Market
Description Shares Value (000)
<S> <C> <C>
------------------------------------------------------------------------------
COMMERCIAL
SERVICES -- 0.1%
Corrections of America* 16,400 $ 789
--------
COMPONENTS -- 2.1%
Cyberoptics* 286,875 9,754
II-VI* 168,900 3,209
--------
12,963
--------
COMPUTER SOFTWARE -- 1.8%
Fair Isaac 129,000 3,741
Kronos* 154,000 7,123
--------
10,864
--------
CONSUMER PRODUCTS --MISCELLANEOUS -- 1.0%
Cidco* 82,000 2,891
Dayrunner* 173,800 3,215
--------
6,106
--------
CONSUMER SERVICES -- 0.8%
Veterinary Centers of America* 276,900 4,707
--------
CONSUMER SOFTWARE -- 1.3%
Dataware Technologies* 149,700 1,909
Minnesota Educational Computing* 146,300 3,949
MySoftware* 177,300 2,261
--------
8,119
--------
CONTRACT
MANUFACTURING -- 2.4%
Altron* 288,200 9,006
Sanmina* 124,000 5,921
--------
14,927
--------
DATA
COMMUNICATIONS -- 0.9%
Global Village
Communication* 426,300 5,862
--------
DESIGN/MANUFACTURING AUTOMATION -- 5.4%
Integrated Silicon Systems* 291,200 8,736
Project Software & Development* 429,050 11,155
Softdesk* 265,700 6,709
Wonderware* 176,100 6,846
--------
33,446
--------
</TABLE>
*Non-income producing security
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
As of September 30, 1995
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PBHG EMERGING GROWTH FUND (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
------------------------------------------------------------------------------
<CAPTION>
Market
Description Shares Value (000)
<S> <C> <C>
------------------------------------------------------------------------------
DISTRIBUTED SYSTEMS/
SOFTWARE -- 1.0%
Veritas Software* 231,800 $ 6,027
--------
EDUCATIONAL
SERVICES -- 1.6%
Apollo Group, Class A* 385,200 10,112
--------
ELECTRICAL PRODUCTS -- 0.7%
PSC* 379,600 4,555
--------
EMPLOYMENT
SERVICES -- 1.9%
Alternative Resources* 249,400 7,981
On Assignment* 142,100 3,606
--------
11,587
--------
ENERGY SERVICES &
EQUIPMENT -- 0.8%
Input/Output* 133,100 5,108
--------
ENVIRONMENTAL
SERVICES -- 0.6%
Tetra Tech* 172,500 4,011
--------
FINANCIAL SERVICES -- 0.5%
First Merchants Acceptance* 118,600 3,113
--------
FOOD, BEVERAGE &
TOBACCO -- 0.2%
Odwalla* 53,600 945
--------
HEALTH CARE -- MANAGEMENT SERVICES -- 2.3%
Compdent* 236,200 6,909
Quintiles Transnational* 120,600 7,115
--------
14,024
--------
HEALTH CARE --
SUPPLIES -- 2.6%
Gulf South Medical Supply* 349,800 8,613
Physician Sales & Services* 159,700 7,666
--------
16,279
--------
------------------------------------------------------------------------------
<CAPTION>
Market
Description Shares Value (000)
<S> <C> <C>
------------------------------------------------------------------------------
HOTELS & LODGING -- 0.2%
Studio Plus Hotels* 43,000 $ 989
--------
LEISURE -- 0.7%
Ride* 198,800 4,175
--------
MEDICAL DEVICES -- 1.8%
Daig* 189,900 4,605
Target Therapeutics* 98,100 6,867
--------
11,472
--------
MEDICAL INFORMATION
SYSTEMS -- 3.1%
CyCare Systems* 197,300 6,560
Medic Computer Systems* 109,100 5,537
Phamis* 268,900 7,361
--------
19,458
--------
NETWORKING -- 2.7%
Microtest* 309,100 6,105
Optical Data Systems* 268,000 10,452
--------
16,557
--------
NETWORKING
SOFTWARE -- 1.8%
McAfee Associates* 211,600 10,897
--------
PATIENT CARE --
HOME -- 0.8%
Pediatric Services of America* 268,400 5,167
--------
PATIENT CARE --
SPECIALIZED -- 3.1%
Orthodontic Centers of America* 301,600 9,727
Renal Treatment Centers* 252,900 9,357
--------
19,084
--------
PHYSICIAN PRACTICE
MANAGEMENT -- 1.7%
MedPartners* 146,700 4,621
OccuSystems* 224,100 4,650
Professional Sportscare* 50,000 269
United Dental Care* 32,100 963
--------
10,503
--------
</TABLE>
*Non-income producing security
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
- --------------------------------------------------------------------------------
THE PBHG FUNDS, INC.
- --------------------------------------------------------------------------------
<TABLE>
------------------------------------------------------------------------------
<CAPTION>
Market
Description Shares Value (000)
<S> <C> <C>
------------------------------------------------------------------------------
RESTAURANTS -- 2.6%
Landry's Seafood Restaurants* 343,200 $ 6,178
Papa John's International* 220,400 9,918
--------
16,096
--------
RETAIL -- CATALOG -- 1.1%
Creative Computers* 223,700 6,599
--------
RETAIL -- GENERAL -- 0.6%
Dollar Tree Stores* 100,900 3,431
--------
RETAIL -- OFFICE -- 1.1%
U.S. Office Products* 453,900 6,865
--------
RETAIL -- SPECIALTY -- 3.4%
Books-A-Million* 328,400 5,788
Just For Feet* 247,875 7,622
West Marine* 230,600 7,379
--------
20,789
--------
SEMICONDUCTOR
EQUIPMENT -- 10.9%
AG Associates* 96,500 2,461
Brooks Automation* 76,600 1,647
Electro Scientific Industries* 92,600 3,229
Epic Design Technology* 209,100 10,141
FSI International* 212,200 7,056
Gasonics International* 295,800 11,019
Helix Technology 242,000 11,192
Integrated Measurement Systems* 65,300 865
Integrated Process Equipment* 108,000 4,300
Mattson Technology* 120,600 5,126
PRI Automation* 139,100 5,703
Ultratech Stepper* 112,300 4,745
--------
67,484
--------
------------------------------------------------------------------------------
<CAPTION>
Market
Description Shares Value (000)
<S> <C> <C>
------------------------------------------------------------------------------
SEMICONDUCTOR
MANUFACTURING -- 2.1%
DSP Communications* 145,300 $ 4,795
Micro Linear* 322,900 5,045
Oak Technology* 77,500 3,255
--------
13,095
--------
SOFTWARE -- GENERAL -- 4.5%
Aspen Technology* 268,000 8,040
Eagle Point Software* 179,000 3,356
Inso* 284,800 9,185
Security Dynamics Technologies* 158,500 7,568
--------
28,149
--------
SYSTEM INTEGRATORS -- 2.0%
Cambridge Technology Partners* 173,200 8,791
Intersolv* 171,800 3,457
Renaissance Solutions* 13,100 319
--------
12,567
--------
TELECOMMUNICATION EQUIPMENT -- 1.6%
Coherent Communications Systems* 371,600 10,219
--------
TRANSACTION PROCESS -- 1.5%
Transaction Network Services* 341,000 9,164
--------
VOICE/CALL TRANSACTIONS PROCESSING -- 0.3%
Active Voice* 75,000 2,128
--------
TOTAL COMMON STOCK (Cost $356,403,529) 516,920
--------
</TABLE>
*Non-income producing security
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
As of September 30, 1995
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PBHG EMERGING GROWTH FUND (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
----------------------------------------------------------------------------
<CAPTION>
Face
Amount Market
Description (000) Value (000)
<S> <C> <C>
----------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 16.7%
Nomura 6.45%, dated 09/29/95, matures 10/02/95,
repurchase price $103,625,061 (collateralized by
various Federal Home Loan Mortgage Corporation
obligations, total par value $528,179,525, 0.00%-
80.00%, 07/15/03-03/15/24: Federal National
Mortgage Association obligations, total par value
$268,199,047, 0.00%-99.435%, 10/25/04-09/01/25:
total market value $105,640,781) $103,569 $103,569
--------
TOTAL REPURCHASE AGREEMENT (Cost $103,569,393) 103,569
--------
TOTAL INVESTMENTS -- 100.1% (Cost $459,972,922) 620,489
--------
OTHER ASSETS AND
LIABILITIES, NET -- (0.1%) (449)
--------
TOTAL OTHER ASSETS AND
LIABILITIES (449)
--------
NET ASSETS:
Portfolio shares (authorized 200 million shares --
$0.001 par value) based on 29,779,363 outstanding
shares of beneficial interest 440,467
Net investment loss (934)
Accumulated net realized gain on investments 19,990
Net unrealized appreciation on investments 160,517
--------
TOTAL NET ASSETS -- 100.0% $620,040
========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER
SHARE $20.82
========
</TABLE>
- --------------------------------------------------------------------------------
PBHG LARGE CAP GROWTH FUND
- --------------------------------------------------------------------------------
A pie chart depicting industry breakdowns in the PBHG Large Cap Growth Fund as a
percentage of Total Fund Investments. The breakdown is as follows:
Industry %
-------- -
Technology 33%
Health Care 19%
Consumers 18%
Service 10%
Repurchase Agreements 10%
Industrial/General
Manufacturing 5%
Financial 5%
[CHART APPEARS HERE]
<TABLE>
-----------------------------------------------------------------------------
<CAPTION>
Market
Description Shares Value (000)
<S> <C> <C>
-----------------------------------------------------------------------------
COMMON STOCK -- 91.4%
APPAREL -- 4.2%
Nike, Class B 1,000 $ 111
Tommy Hilfiger* 10,400 338
-------
449
-------
AUTO FINANCE -- 1.5%
Mercury Finance 6,400 156
-------
AUTO-RELATED -- 1.2%
Harley-Davidson 5,400 132
-------
BIOTECHNOLOGY -- 3.1%
Idexx Laboratories* 9,000 335
-------
</TABLE>
*Non-income producing security
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
- --------------------------------------------------------------------------------
THE PBHG FUNDS, INC.
- --------------------------------------------------------------------------------
<TABLE>
------------------------------------------------------------------------------
<CAPTION>
Market
Description Shares Value (000)
<S> <C> <C>
------------------------------------------------------------------------------
COMMUNICATION
SERVICE -- 6.0%
Clear Channel Communications* 3,900 $ 295
Worldcom* 11,000 354
-------
649
-------
COMPONENTS -- 7.2%
AVX* 4,400 147
Hewlett Packard 3,800 315
Kemet* 9,200 315
-------
777
-------
CONSUMER PRODUCTS -- MISCELLANEOUS -- 1.8%
Gillette* 4,000 191
-------
CONSUMER SERVICES -- 1.7%
CUC International* 5,150 180
-------
CONSUMER SOFTWARE -- 2.4%
Intuit* 5,500 259
-------
DATABASE SOFTWARE -- 4.4%
Informix* 10,500 342
Oracle* 3,500 134
-------
476
-------
DESIGN/MANUFACTURING AUTOMATION -- 1.8%
Parametric Technology* 3,200 197
-------
EMPLOYMENT SERVICE -- 1.7%
Manpower 6,300 183
-------
ENVIRONMENTAL -- 2.1%
Thermo Electron* 4,800 223
-------
FINANCIAL -- 3.2%
First Financial Management 1,000 98
First USA 4,600 249
-------
347
-------
HEALTH & DRUG -- 2.2%
Pfizer 4,500 240
-------
------------------------------------------------------------------------------
<CAPTION>
Market
Description Shares Value (000)
<S> <C> <C>
------------------------------------------------------------------------------
HEALTH-SUPPLIES -- 1.2%
Johnson & Johnson 1,700 $ 126
-------
INFORMATION SYSTEMS -- 0.9%
HBO 1,600 100
-------
MANUFACTURING -- 1.6%
Danaher 5,100 167
-------
MEDICAL DEVICES -- 6.5%
Boston Scientific* 6,200 264
Cordis* 2,300 195
Medtronic 4,400 237
-------
696
-------
NETWORKING -- 3.6%
Stratacom* 6,900 381
-------
PAPER/FOREST PRODUCTS -- 2.6%
Willamette Industries 4,100 274
-------
PATIENT CARE --
HEALTH PLAN -- 3.7%
Oxford Health Plans* 5,400 393
-------
PATIENT CARE --
SPECIALTY -- 1.9%
Healthsouth Rehabilitation* 8,100 207
-------
RETAIL CATALOG -- 2.6%
Micro Warehouse* 6,000 275
-------
RETAIL SPECIALITY
PRODUCTS -- 3.1%
General Nutrition Companies* 7,400 337
-------
RETAIL -- OFFICE
PRODUCTS -- 2.3%
Office Depot* 8,300 250
-------
SEMICONDUCTOR
EQUIPMENT -- 6.2%
Applied Materials* 3,400 348
KLA Instruments* 3,900 313
-------
661
-------
</TABLE>
*Non-income producing security
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
As of September 30, 1995
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PBHG LARGE CAP GROWTH FUND (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
----------------------------------------------------------------------------
<CAPTION>
Shares/Face
Amount Market
Description (000) Value (000)
<S> <C> <C>
----------------------------------------------------------------------------
SEMICONDUCTOR
MANUFACTURING -- 7.4%
Altera* 5,400 $ 334
Atmel* 5,000 169
LSI Logic* 5,100 294
-------
797
-------
TELECOMMUNICATIONS EQUIPMENT -- 3.3%
Glenayre Technologies* 4,900 353
-------
TOTAL COMMON STOCK (Cost $8,901,599) 9,811
-------
REPURCHASE AGREEMENT -- 10.2%
Lehman Brothers 6.05%, dated 09/29/95, matures
10/02/95, repurchase price $1,089,326
(collateralized by a United States Treasury
Bond, par value $854,698, 11.125%, 08/15/03:
total market value $1,119,263) $1,089 1,089
-------
TOTAL REPURCHASE AGREEMENT (Cost $1,088,777) 1,089
-------
TOTAL INVESTMENTS -- 101.6% (Cost $9,990,376) 10,900
-------
OTHER ASSETS AND LIABILITIES -- (1.6%)
Payable for Securities Purchased (245)
Other Assets and Liabilities, net 77
-------
TOTAL OTHER ASSETS AND LIABILITIES, NET (168)
-------
</TABLE>
<TABLE>
-----------------------------------------------------------------------------
<CAPTION>
Market
Description Value (000)
<S> <C> <C>
-----------------------------------------------------------------------------
NET ASSETS:
Portfolio shares (authorized 200 million shares -- $0.001 par
value) based on 815,465 outstanding shares of beneficial
interest $ 9,293
Net investment loss (8)
Accumulated net realized gain on investments 537
Net unrealized appreciation on investments 910
-------
TOTAL NET ASSETS -- 100.0% $10,732
=======
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER
SHARE $13.16
=======
</TABLE>
*Non-income producing security
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
- --------------------------------------------------------------------------------
THE PBHG FUNDS, INC.
- --------------------------------------------------------------------------------
PBHG SELECT EQUITY FUND
- --------------------------------------------------------------------------------
A pie chart depicting industry breakdowns in the PBHG Select Equity Fund as a
percentage of Total Fund Investments. The breakdown is as follows:
Industry %
-------- -
Technology 49%
Health Care 17%
Repurchase Agreements 13%
Service 9%
Consumers 6%
Industrial/General
Manufacturing 3%
Financial 3%
[CHART APPEARS HERE]
<TABLE>
------------------------------------------------------------------------------
<CAPTION>
Market
Description Shares Value (000)
<S> <C> <C>
------------------------------------------------------------------------------
COMMON STOCK -- 88.3%
APPAREL -- 3.4%
Tommy Hilfiger* 79,000 $ 2,568
-------
BIOTECHNOLOGY -- 2.5%
Idexx Laboratories* 50,700 1,889
-------
COMMUNICATION
SERVICES -- 6.9%
Clear Channel Communications* 31,400 2,379
Worldcom* 87,400 2,807
-------
5,186
-------
COMPONENTS -- 5.6%
AVX* 56,400 1,889
Kemet* 67,400 2,309
-------
4,198
-------
COMPUTERS &
SERVICES -- 0.0%
Zycon* 2,400 29
-------
------------------------------------------------------------------------------
<CAPTION>
Market
Description Shares Value (000)
<S> <C> <C>
------------------------------------------------------------------------------
CONSUMER PRODUCTS -- MISCELLANEOUS -- 2.8%
Oakley* 70,500 $ 2,089
-------
DATA
COMMUNICATIONS -- 3.0%
Picturetel* 49,700 2,249
-------
DESIGN/MANUFACTURING AUTOMATION -- 3.8%
Cognex* 32,800 1,582
Parametric Technology* 21,100 1,298
-------
2,880
-------
DISTRIBUTED SOFTWARE/HARDWARE & PERIPHERALS -- 2.1%
Read-Rite* 44,000 1,606
-------
FINANCIAL SERVICES -- 3.0%
The Money Store 47,250 2,238
-------
GAMING -- 2.2%
Station Casinos* 110,000 1,691
-------
INFORMATION SYSTEMS -- 3.4%
HBO 41,700 2,606
-------
MEDICAL DEVICES -- 4.9%
Boston Scientific* 47,400 2,020
Medtronic 32,000 1,720
-------
3,740
-------
NETWORKING -- 6.6%
Ascend Communications* 32,300 2,584
Optical Data Systems* 61,400 2,395
-------
4,979
-------
PAPER & PAPER
PRODUCTS -- 2.9%
Willamette Industries 32,800 2,189
-------
PATIENT CARE --
HEALTH PLAN -- 3.8%
Oxford Health Plans* 39,700 2,888
-------
PHYSICIAN PRACTICE MANAGEMENT -- 2.7%
PhyCor* 59,700 2,045
-------
</TABLE>
*Non-income producing security
The accompanying notes are an integral part of the financial statements.
23
<PAGE>
As of September 30, 1995
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PBHG SELECT EQUITY FUND (CONTINUED)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
Shares/Face
Amount Market
Description (000) Value (000)
<S> <C> <C>
----------------------------------------------------------------------------
SEMICONDUCTOR
EQUIPMENT -- 9.0%
Integrated Process Equipment* 47,300 $ 1,883
Silicon Valley Group* 67,100 2,591
Ultratech Stepper* 55,800 2,358
-------
6,832
-------
SEMICONDUCTOR MANUFACTURING -- 15.8%
Altera* 37,000 2,308
Integrated Silicon Solutions* 39,200 1,460
LSI Logic* 47,100 2,720
Maxim Integrated Products* 38,000 2,814
Xilinx* 55,800 2,685
-------
11,987
-------
TELECOMMUNICATION EQUIPMENT -- 3.9%
Glenayre Technologies* 40,500 2,916
-------
TOTAL COMMON STOCK (Cost $62,468,008) 66,805
-------
REPURCHASE AGREEMENT -- 13.6%
Nomura 6.45%, dated 09/29/95, matures 10/02/95,
repurchase price $10,330,755 (collateralized by
various Federal Home Loan Mortgage Corporation
obligations, total par value $35,859,052.00,
7.00%-99.46%, 09/15/06-01/15/23: Federal
National Mortgage Association obligation total
par value $4,056,038, 0.00%, 10/25/22: total
market value $10,531,710) $10,325 10,325
-------
TOTAL REPURCHASE AGREEMENT (Cost $10,325,206) 10,325
-------
-------------------------------------------------------------------------------
<CAPTION>
Market
Description Value (000)
<S> <C> <C>
-------------------------------------------------------------------------------
TOTAL INVESTMENTS --
101.9%
(Cost $72,793,214) $77,130
-------
OTHER ASSETS AND
LIABILITIES, NET --
(1.9%) (1,443)
-------
NET ASSETS:
Portfolio shares
(authorized 200
million shares --
$0.001 par value)
based on 5,098,443
outstanding shares
of beneficial
interest 67,059
Net investment loss (35)
Accumulated net
realized gain on
investments 4,326
Net unrealized
appreciation on
investments 4,337
-------
TOTAL NET ASSETS --
100.0% $75,687
=======
NET ASSET VALUE,
OFFERING PRICE AND
REDEMPTION PRICE PER
SHARE $14.85
=======
</TABLE>
*Non-income producing security
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
- --------------------------------------------------------------------------------
THE PBHG FUNDS, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PBHG INTERNATIONAL FUND
- --------------------------------------------------------------------------------
A pie chart depicting country breakdown in the PBHG International Fund as a
percentage of Total Fund Investments. The breakdown is as follows:
Country %
------- -
Japan 28%
United Kingdom 17%
Other 17%
France 8%
Hong Kong 6%
Italy 5%
Spain 5%
Netherlands 4%
Singapore 4%
Germany 3%
Mexico 3%
[CHART APPEARS HERE]
% Total Fund Investments
<TABLE>
------------------------------------------------------------------------------
<CAPTION>
Market
Description Shares Value (000)
<S> <C> <C>
------------------------------------------------------------------------------
FOREIGN COMMON STOCKS -- 94.2%
ARGENTINA -- 1.7%
YPF ADR 7,500 $ 135
------
AUSTRALIA -- 2.3%
National Australia Bank 20,000 177
------
BRAZIL -- 0.3%
Manah 1,000,000 23
------
DENMARK -- 1.1%
Tele Danmark, Cl B 1,700 88
------
-------------------------------------------------------------------------------
<CAPTION>
Market
Description Shares Value (000)
<S> <C> <C>
-------------------------------------------------------------------------------
FRANCE -- 7.9%
Alcatel Alsthom 1,030 $ 87
Assurances Generales de France* 3,170 87
Hermes International 500 89
Legris Industries* 1,540 53
Lyonnaise des Eaux 970 89
Sommer Allibert 300 104
Technip 1,560 103
------
612
------
GERMANY -- 2.0%
Mannesmann 310 101
Veba 1,250 50
------
151
------
HONG KONG -- 5.7%
Cheung Kong 15,000 82
Consolidated Electric Power -- Asia 45,000 90
Peregrine Investment Holdings 100,000 150
Swire Pacific, Cl A 15,000 119
------
441
------
IRELAND -- 2.1%
CRH 15,000 102
Framlington Maghreb Fund* 7,500 62
Framlington Maghreb Fund Warrants* 1,500 1
------
165
------
ITALY -- 4.6%
Bulgari* 9,000 69
Olivetti* 69,000 59
Telecom Italia Mobile 58,000 97
Telecom Italia Mobile Di Risp 109,200 121
Zucchi 3,500 8
------
354
------
</TABLE>
*Non-income producing security
ADR--American Depository Receipts
Cl--Class
The accompanying notes are an integral part of the financial statements.
25
<PAGE>
As of September 30, 1995
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PBHG INTERNATIONAL FUND (CONTINUED)
<TABLE>
- --------------------------------------------------------------------------------
<CAPTION>
Market
Description Shares Value (000)
<S> <C> <C>
- --------------------------------------------------------------------------------
JAPAN -- 27.5%
Canon 6,000 $ 107
Itochu 27,000 167
Maeda Road Construction 8,000 149
Mitsubishi Materials 32,000 157
Mori Seiki 8,000 159
NEC 10,000 139
Nippon Telegraph & Telephone 19 164
Nissan Motors 22,000 159
NKK* 64,000 171
Nomura Securities 8,000 157
Sanwa Bank 7,000 131
Sumitomo Bank 8,000 155
TDK 3,000 154
Yamanouchi Pharmaceutical 7,000 151
------
2,120
------
MEXICO -- 2.9%
Interceramica 'Ub'* 40,000 50
Organizacion Soriana, Cl B 60,000 71
Telefonos de Mexico 3,300 105
------
226
------
NETHERLANDS -- 3.8%
Aegon 2,800 101
Hollandsche Beton Groep 540 81
Verenigde Nederlandse Uitgevbedri 830 110
------
292
------
NEW ZEALAND -- 2.0%
Telecom of New Zealand 40,000 156
------
NORWAY -- 2.1%
Tomra Systems 30,000 162
------
PHILIPPINES -- 0.1%
Benpres Holdings GDS 800 5
------
-------------------------------------------------------------------------------
<CAPTION>
Market
Description Shares Value (000)
<S> <C> <C>
-------------------------------------------------------------------------------
POLAND -- 2.5%
Bank Rozwoju Eksportu Sa* 5,000 $ 87
Mostostal Export 16,000 42
Polifarb Cieszyn 15,000 64
------
193
------
SINGAPORE -- 4.1%
DBS Land 50,000 149
Keppel 21,000 168
------
317
------
SOUTH AFRICA -- 0.0%
Southern Life 202 2
------
SPAIN -- 5.0%
Centros Comerciales Pryca 7,000 140
Gas Natural 1,000 126
Portland Valderrivas 1,750 121
------
387
------
UNITED KINGDOM -- 16.5%
3I Group 30,000 191
Argyll Group 20,000 106
Bank of Scotland 1,000 4
BTR 20,000 103
Cable & Wireless 16,000 105
Domnick Hunter 20,000 99
General Electric 22,000 110
Grand Metropolitan 17,000 120
Kingfisher 14,000 112
Mersey Docks 11,000 81
Smithkline Beecham, Cl A 12,000 121
Vinten Group 10,500 120
------
1,272
------
TOTAL FOREIGN COMMON STOCKS (Cost $7,054,958) 7,278
------
FOREIGN PREFERRED STOCKS -- 1.4%
BRAZIL -- 0.0%
Brahma 6,432 3
------
GERMANY -- 1.4%
Fresenius 140 109
------
TOTAL FOREIGN PREFERRED STOCKS (Cost $70,235) 112
------
</TABLE>
*Non-income producing security
GDS--Global Depository Shares
Cl--Class
The accompanying notes are an integral part of the financial statements.
26
<PAGE>
- --------------------------------------------------------------------------------
THE PBHG FUNDS, INC.
- --------------------------------------------------------------------------------
<TABLE>
-----------------------------------------------------------------------------
<CAPTION>
Face
Amount Market
Description (000) Value (000)
<S> <C> <C>
-----------------------------------------------------------------------------
TIME DEPOSIT -- 4.1%
UNITED STATES -- 4.1%
IBJ
6.187%, 10/02/95 $320 $ 320
------
TOTAL TIME DEPOSIT (Cost $320,307) 320
------
TOTAL INVESTMENTS -- 99.7% (Cost $7,445,500) 7,710
------
OTHER ASSETS AND LIABILITIES -- 0.3%
Payable for Securities Purchased (82)
Other Assets and Liabilities, net 101
------
TOTAL OTHER ASSETS AND LIABILITIES 19
------
</TABLE>
<TABLE>
------------------------------------------------------------------------------
<CAPTION>
Market
Description Value (000)
<S> <C>
------------------------------------------------------------------------------
NET ASSETS:
Portfolio Shares (authorized 200 million shares -- $0.001 Par
Value) based on 803,638 outstanding shares of beneficial
interest $8,170
Undistributed Net Investment Income 7
Accumulated Net Realized Loss on Investments (465)
Accumulated Net Realized Loss on Foreign Currency Transactions (247)
Net Unrealized Appreciation on Investments 264
------
TOTAL NET ASSETS -- 100.0% $7,729
======
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE $9.62
======
</TABLE>
The accompanying notes are an integral part of the financial statements.
27
<PAGE>
As of September 30, 1995
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PBHG CASH RESERVES FUND
- --------------------------------------------------------------------------------
A pie chart depicting the security breakdown in the PBHG Cash Reserves Fund as a
percentage of Total Fund Investments. The breakdown is as follows:
Industry %
-------- -
Commercial Paper 63%
Repurchases Agreements 31%
US Government Obligations 6%
[CHART APPEARS HERE]
<TABLE>
----------------------------------------------------------------------------
<CAPTION>
Face
Amount
Description (000) Value (000)
<S> <C> <C>
----------------------------------------------------------------------------
COMMERCIAL PAPER -- 62.8%
American Express Credit
5.680%, 11/03/95 $ 650 $ 647
5.680%, 12/05/95 850 841
American General Finance
5.680%, 12/04/95 850 841
American Home Products
5.730%, 11/10/95 1,500 1,490
Ameritech
5.560%, 02/23/96 500 489
Aon
5.680%, 11/10/95 689 685
Associates of North America
5.680%, 10/20/95 650 648
Bear Stearns Companies
5.750%, 10/20/95 650 648
Beneficial
5.670%, 10/16/95 850 848
5.680%, 12/04/95 650 643
---------------------------------------------------------------------------
<CAPTION>
Face
Amount
Description (000) Value (000)
<S> <C> <C>
---------------------------------------------------------------------------
Central & South West
5.700%, 11/21/95 $1,000 $ 992
Ciesco
5.670%, 11/20/95 1,000 992
CIT Group Holdings
5.700%, 10/20/95 850 847
Coca Cola Enterprises
5.900%, 11/03/95 1,000 995
Delaware Funding Group
5.660%, 11/20/95 1,000 992
Falcon Asset Securities
5.750%, 10/30/95 875 871
Ford Motor Credit
5.680%, 11/03/95 1,500 1,492
General Electric Capital
5.660%, 12/15/95 850 840
IBM Credit
5.680%, 12/04/95 1,500 1,485
John Deere Capital
5.680%, 11/21/95 850 843
Kellogg
5.750%, 10/10/95 1,536 1,536
McKenna Triangle
5.680%, 11/17/95 1,000 993
Merrill Lynch
5.750%, 10/12/95 650 649
5.850%, 10/27/95 850 846
Metlife Funding
6.000%, 10/23/95 500 498
Monsanto
5.800%, 10/16/95 500 499
Motorola Credit
5.850%, 10/17/95 814 812
5.710%, 10/20/95 600 598
PHH
5.830%, 10/23/95 500 498
5.700%, 10/27/95 700 697
PREFCO
5.730%, 10/12/95 1,100 1,098
Prudential Funding
5.690%, 10/16/95 1,500 1,496
Riverwood Funding
5.690%, 11/13/95 1,500 1,490
Sears Roebuck
5.650%, 10/06/95 800 799
5.650%, 01/03/96 700 690
</TABLE>
*Non-income producing security
FNMA-Federal National Mortgage Association
The accompanying notes are an integral part of the financial statements.
28
<PAGE>
- --------------------------------------------------------------------------------
THE PBHG FUNDS, INC.
- --------------------------------------------------------------------------------
<TABLE>
------------------------------------------------------------------------------
<CAPTION>
Face
Amount
Description (000) Value (000)
<S> <C> <C>
------------------------------------------------------------------------------
COMMERCIAL PAPER (continued)
Suntrust Bank
5.710%, 11/27/95 $ 500 $ 495
Toshiba America
5.870%, 11/13/95 850 844
-------
TOTAL COMMERCIAL PAPER (Cost $32,666,981) 32,667
-------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 5.6%
FNMA Discount Notes
5.720%, 10/03/95 185 185
5.710%, 10/10/95 750 749
5.580%, 02/22/96 2,000 1,955
-------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $2,889,230) 2,889
-------
REPURCHASE AGREEMENTS -- 31.3%
Aubrey Lanston 6.40%, dated 09/29/95, matures 10/02/95,
repurchase price $9,004,800 (collateralized by a
United States Treasury Note, par value $8,970,000,
6.00%, 10/15/99: total market value of $9,216,974) $9,000 9,000
Lehman Brothers 6.40%, dated 09/29/95, matures
10/02/95, repurchase price $1,254,669 (collateralized
by a United States Treasury Bill, par value
$1,310,000, 02/29/96: total market value of
$1,280,984) 1,254 1,254
------------------------------------------------------------------------------
<CAPTION>
Face
Amount
Description (000) Value (000)
<S> <C> <C>
------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (continued)
Lehman Brothers 6.40%, dated 09/29/95, matures
10/02/95, repurchase price $6,003,200
(collateralized by a United States Treasury Note,
par value $6,025,000, 6.00%, 12/31/97: total
market value of $6,126,631) $6,000 $ 6,000
-------
TOTAL REPURCHASE AGREEMENTS (Cost $16,254,000) 16,254
-------
TOTAL INVESTMENTS -- 99.7% (Cost $51,810,211) 51,810
-------
OTHER ASSETS AND
LIABILITIES, NET -- 0.3% 166
-------
NET ASSETS:
Portfolio shares (authorized 1.8 billion shares --
$0.001 par value) based on 51,976,429 outstanding
shares of beneficial interest 51,976
-------
TOTAL NET ASSETS -- 100.0% $51,976
=======
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE $1.00
=======
</TABLE>
FNMA-Federal National Mortgage Association
The accompanying notes are an integral part of the financial statements.
29
<PAGE>
For the period ended September 30, 1995 (Unaudited)
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (000)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
------ ------ ------
PBHG PBHG
PBHG EMERGING LARGE CAP
GROWTH GROWTH GROWTH
FUND FUND FUND
------ ------ ------
04/01/95 04/01/95 04/05/95/1/
to to to
09/30/95 09/30/95 09/30/95
------ ------ ------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 169 $ 53 $ 7
Interest 5,349 2,813 17
-------- -------- ------
Total Investment Income 5,518 2,866 24
-------- -------- ------
EXPENSES:
Investment Advisory Fees 5,921 2,211 16
Waiver of Investment Advisory Fees -- -- (16)
Contribution by Adviser -- -- (19)
Administrative Fees 1,393 520 36
Waiver of Administrative Fees -- -- (6)
Custodian Fees 39 21 2
Professional Fees 60 45 1
Transfer Agent Fees 2,475 850 11
Printing Fees 227 84 2
Directors' Fees 18 7 --
Registration and Filing Fees 250 51 4
Insurance and Other Fees 5 -- --
Amortization of Deferred Organizational
Costs -- 2 1
Pricing Fees 27 9 --
-------- -------- ------
Total Expenses 10,415 3,800 32
-------- -------- ------
NET INVESTMENT (LOSS) (4,897) (934) (8)
-------- -------- ------
Net Realized Gain from Security Transactions 11,367 16,913 537
Net Change in Unrealized Appreciation on
Investments 377,646 116,617 910
-------- -------- ------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS 389,013 133,530 1,447
-------- -------- ------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $384,116 $132,596 $1,439
======== ======== ======
</TABLE>
/1/The PBHG Large Cap Growth Fund, the PBHG Select Equity Fund and the PBHG Cash
Reserves Fund commenced operations on April 5, 1995
The accompanying notes are an integral part of the financial statements.
30
<PAGE>
- --------------------------------------------------------------------------------
THE PBHG FUNDS, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
------ ------ ------
PBHG PBHG
SELECT PBHG CASH
EQUITY INTERNATIONAL RESERVES
FUND FUND FUND
------ ------ ------
04/05/95/1/ 04/01/95 04/05/95/1/
to to to
09/30/95 09/30/95 09/30/95
------ ------ ------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 14 $132 $--
Interest 139 46 850
Less: Foreign Taxes Withheld -- (17) --
------ ---- ----
Total Investment Income 153 161 850
------ ---- ----
EXPENSES:
Investment Advisory Fees 108 70 42
Waiver of Investment Advisory Fees (39) (23) (42)
Administrative Fees 41 38 38
Waiver of Administrative Fees (6) -- (6)
Custodian Fees 5 14 5
Professional Fees 4 -- 3
Transfer Agent Fees 42 40 27
Printing Fees 4 1 12
Directors' Fees -- -- 1
Registration and Filing Fees 26 5 18
Insurance and Other Fees 1 -- --
Amortization of Deferred
Organizational Costs 2 5 2
Pricing Fees -- 4 --
------ ---- ----
Total Expenses 188 154 100
------ ---- ----
NET INVESTMENT INCOME (LOSS) (35) 7 750
------ ---- ----
Net Realized Gain from Security
Transactions 4,326 123 --
Net Realized Gain on Foreign Currency
Transactions -- 112 --
Net Change in Unrealized Appreciation
on Investments 4,337 635 --
------ ---- ----
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS 8,663 870 --
------ ---- ----
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $8,628 $877 $750
====== ==== ====
</TABLE>
/1/The PBHG Large Cap Growth Fund, the PBHG Select Equity Fund and the PBHG Cash
Reserves Fund commenced operations on April 5, 1995
The accompanying notes are an integral part of the financial statements.
31
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS (000) (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
--------- -------- ------
PBHG PBHG
PBHG EMERGING LARGE CAP
GROWTH GROWTH GROWTH
FUND FUND FUND
---------------------- --------------------- -----------
04/01/95 04/01/94 04/01/95 11/01/94/1/ 04/05/95/2/
to to to to to
09/30/95 03/31/95 09/30/95 3/31/95 09/30/95
---------- ---------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITIES:
Net Investment Loss $ (4,897) $ (4,140) $ (934) $ (66) $ (8)
Net Realized Gain
(Loss) from Security
Transactions 11,367 (28,033) 16,913 3,106 537
Net Change in
Unrealized
Appreciation on
Investments 377,646 141,836 116,617 24,756 910
---------- ---------- -------- --------- -------
Net Increase in Net
Assets Resulting from
Operations 384,116 109,663 132,596 27,796 1,439
---------- ---------- -------- --------- -------
DISTRIBUTIONS TO
SHAREHOLDERS:
Net Realized Gains -- (487) -- (347) --
---------- ---------- -------- --------- -------
Total Distributions -- (487) -- (347) --
---------- ---------- -------- --------- -------
CAPITAL SHARE
TRANSACTIONS:
Shares Issued 532,410 1,062,585 172,081 374,186 10,706
Shares Issued in Lieu
of Cash Distributions -- 464 -- 330 --
Shares Redeemed (201,622) (476,452) (96,503) (103,428) (1,413)
---------- ---------- -------- --------- -------
Increase in Net Assets
Derived from Capital
Share Transactions 330,788 586,597 75,578 271,088 9,293
---------- ---------- -------- --------- -------
Total Increase in Net
Assets 714,904 695,773 208,174 298,537 10,732
---------- ---------- -------- --------- -------
NET ASSETS:
Beginning of Period 1,014,832 319,059 411,866 113,329 --
---------- ---------- -------- --------- -------
End of Period $1,729,736 $1,014,832 $620,040 $ 411,866 $10,732
========== ========== ======== ========= =======
SHARES ISSUED AND
REDEEMED:
Shares Issued 29,455 71,046 9,520 24,830 932
Issued in Lieu of Cash
Distributions -- 31 -- 23 --
Shares Redeemed (10,812) (32,041) (5,316) (7,048) (117)
---------- ---------- -------- --------- -------
Net Increase in Share
Transactions 18,643 39,036 4,204 17,805 815
========== ========== ======== ========= =======
</TABLE>
/1/The PBHG Emerging Growth Fund acquired the assets and assumed the liabilities
of the Pilgrim Baxter Emerging Growth Fund on June 2, 1994. The PBHG Emerging
Growth Fund retained the October 31 fiscal year of its predecessor only for
fiscal year 1994. The Portfolio has changed its fiscal year end to March 31
in 1995 and has reported financial information for the fiscal period from
November 1, 1994 to March 31, 1995.
/2/The PBHG Large Cap Growth Fund, the PBHG Select Equity Fund, and the PBHG
Cash Reserves Fund commenced operations on April 5, 1995.
The accompanying notes are an integral part of the financial statements.
32
<PAGE>
- --------------------------------------------------------------------------------
THE PBHG FUNDS, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
--------- -------- -------
PBHG PBHG PBHG
SELECT EQUITY INTERNATIONAL CASH RESERVES
FUND FUND FUND
------------- --------------------- -------------
04/05/95/1/ 04/01/95 06/14/94/2/ 04/05/95/1/
to to to to
09/30/95 09/30/95 03/31/95 09/30/95
------------- -------- ----------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITIES:
Net Investment Income
(Loss) $ (35) $ 7 $ (47) $ 750
Net Realized Gain (Loss)
from Security Transactions 4,326 123 (497) --
Net Realized Gain (Loss) on
Foreign Currency
Transactions -- 112 (359) --
Net Change in Unrealized
Appreciation
(Depreciation) on
Investments 4,337 635 (371) --
-------- -------- ------- --------
Net Increase (Decrease) in
Net Assets Resulting from
Operations 8,628 877 (1,274) 750
-------- -------- ------- --------
DISTRIBUTIONS TO
SHAREHOLDERS:
Net Realized Gains -- -- (60) (750)
-------- -------- ------- --------
Total Distributions -- -- (60) (750)
-------- -------- ------- --------
CAPITAL SHARE TRANSACTIONS:
Shares Issued 84,434 4,735 18,835 105,034
Shares Issued in Lieu of
Cash Distributions -- -- 59 725
Shares Redeemed (17,375) (13,119) (2,324) (53,783)
-------- -------- ------- --------
Increase (Decrease) in Net
Assets Derived from
Capital Share Transactions 67,059 (8,384) 16,570 51,976
-------- -------- ------- --------
Total Increase (Decrease)
in Net Assets 75,687 (7,507) 15,236 51,976
-------- -------- ------- --------
NET ASSETS:
Beginning of Period -- 15,236 -- --
-------- -------- ------- --------
End of Period $ 75,687 $ 7,729 $15,236 $ 51,976
======== ======== ======= ========
SHARES ISSUED AND REDEEMED:
Shares Issued 6,357 502 1,908 105,034
Issued in Lieu of Cash
Distributions -- -- 6 725
Shares Redeemed (1,259) (1,368) (244) (53,783)
-------- -------- ------- --------
Net Increase (Decrease) in
Share Transactions 5,098 (866) 1,670 51,976
======== ======== ======= ========
</TABLE>
/1/The PBHG Large Cap Growth Fund, the PBHG Select Equity Fund, and the PBHG
Cash Reserves Fund commenced operations on April 5, 1995.
/2/The PBHG International Fund commenced operations on June 14, 1994.
The accompanying notes are an integral part of the financial statements.
33
<PAGE>
For the six month period ended September 30, 1995 (unaudited) and the periods
ended March 31.
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
Net Net Net
Asset Net Realized and Distributions Distributions Asset Assets Ratio
Value Investment Unrealized from Net from Value End of Expenses
Beginning Income Gains or Losses Investment Capital End Total of Period to Average
of Period (Loss) on Securities Income Gains of Period Return (000) Net Assets
---------- ---------- --------------- ------------- ------------- --------- ------ ---------- -----------
- ----------------
PBHG GROWTH FUND
- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995 $16.70 $(0.04) $5.12 -- -- $21.78 30.42%+ $1,729,736 1.50%*
1995 14.67 (0.05) 2.09 -- $(0.01) 16.70 13.92% 1,014,832 1.50%
1994 10.83 (0.03) 4.06 -- (0.19) 14.67 37.28% 319,059 1.55%
1993 10.37 (0.16) 3.07 -- (2.45) 10.83 34.47% 6,069 2.39%
1992 11.51 (0.06) 1.35 -- (2.43) 10.37 13.78% 7,339 1.52%
1991 10.86 (0.01) 1.45 -- (0.79) 11.51 16.94% 10,356 1.50%
1990 10.84 (0.05) 2.92 $(0.04) (2.81) 10.86 27.11% 18,849 1.32%
- -------------------------
PBHG EMERGING GROWTH FUND
- -------------------------
1995 $16.10 $(0.03) $4.75 -- -- $20.82 29.32%+ $620,040 1.46%*
1995/1/,/4/ 14.59 (0.01) 1.56 -- $(0.04) 16.10 10.64% 411,866 1.50%*
1994/1/ 13.22 (0.03) 2.38 -- (0.98) 14.59 19.64% 113,329 1.45%
1993/2/ 10.00 (0.03) 3.25 -- -- 13.22 32.20%+ 34,517 1.50%*
- -------------------------
PBHG LARGE CAP GROWTH FUND
- -------------------------
1995/5/ $10.00 $(0.01) $3.17 -- -- $13.16 31.60%+ $10,732 1.50%*
- ---------------------
PBHG SELECT EQUITY FUND
- ---------------------
1995/5/ $10.00 $(0.01) $4.86 -- -- $14.85 48.50%+ $75,687 1.48%*
- ---------------------
PBHG INTERNATIONAL FUND
- ---------------------
1995 $ 9.13 $(0.01) $0.50 -- -- $ 9.62 5.37 %+ $7,729 2.21%*
1995/3/ 10.00 (0.03) (0.80) -- $(0.04) 9.13 (8.33)%+ 15,236 2.25%*
- ----------------------
PBHG CASH RESERVES FUND
- ----------------------
1995/5/ $ 1.00 $ 0.03 -- $(0.03) -- $ 1.00 2.61%+ $51,976 0.70%*
<CAPTION>
Ratio
Ratio Ratio of Net
of Net of Expenses Income (Loss)
Income to Average to Average
(Loss) Net Assets Net Assets Portfolio
to Average (Excluding (Excluding Turnover
Net Assets Waivers) Waivers) Rate
----------- ----------- ------------- ---------
- ----------------
PBHG GROWTH FUND
- ----------------
<S> <C> <C> <C> <C>
1995 (0.70)%* 1.50%* (0.70)%* 23.09%
1995 (0.69)% 1.50% (0.69)% 118.75%
1994 (0.78)% 1.59% (0.82)% 94.28%
1993 (1.69)% 3.04% (2.34)% 209.24%
1992 (0.55)% 2.00% (1.03)% 114.54%
1991 (0.90)% 1.75% (0.34)% 228.02%
1990 (0.35)% 1.32% (0.35)% 219.41%
- -------------------------
PBHG EMERGING GROWTH FUND
- -------------------------
1995 (0.36)%* 1.46%* (0.36)%* 44.97%
1995/1/,/4/ (0.08)%* 1.50%* (0.08)%* 27.50%
1994/1/ (0.77)% 1.45% (0.77)% 95.75%
1993/2/ (0.72)%* 1.54%* (0.76)%* 71.18%
- -------------------------
PBHG LARGE CAP GROWTH FUND
- -------------------------
1995/5/ (0.37)%* 3.14%* (2.01)%* 81.71%
- ---------------------
PBHG SELECT EQUITY FUND
- ---------------------
1995/5/ (0.28)%* 1.78%* (0.58)%* 109.46%
- ---------------------
PBHG INTERNATIONAL FUND
- ---------------------
1995 0.09 %* 2.54%* (0.23)%* 80.23%
1995/3/ (0.43)%* 2.36%* (0.54)%* 81.72%
- ----------------------
PBHG CASH RESERVES FUND
- ----------------------
1995/5/ 5.28%* 0.98%* 5.00 %* --
</TABLE>
* Annualized.
+ Total returns have not been annualized.
/1/The information set forth in this table for the periods prior to June 2, 1994
is the financial data of the Pilgrim Baxter Emerging Growth Fund, a series of
the Advisors' Inner Circle Fund. The Emerging Growth Fund acquired the assets
and assumed the liabilities of the Pilgrim Baxter Emerging Growth Fund on
June 2, 1994. The PBHG Emerging Growth Fund retained the October 31 fiscal
year end of its predecessor only for fiscal year 1994. The Portfolio changed
its fiscal year end to March 31 in 1995. Accordingly, financial information
for the fiscal period from November 1, 1994 to March 31, 1995 has been
reported.
/2/The Pilgrim Baxter Emerging Growth Fund, the predecessor series to the PBHG
Emerging Growth Fund, commenced operations on June 15, 1993.
/3/The PBHG International Fund commenced operations on June 14, 1994.
/4/Per share calculations were performed using average shares for the period.
/5/The PBHG Large Cap Growth Fund, the PBHG Select Equity Fund, and the PBHG
Cash Reserves Fund commenced operations on April 5, 1995.
The accompanying notes are an integral part of the financial statements.
34
<PAGE>
As of September 30, 1995 (Unaudited)
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS THE PBHG FUNDS, INC.
- --------------------------------------------------------------------------------
1. ORGANIZATION
The PBHG Funds, Inc. (the "Fund"), a Maryland corporation, is registered
under the Investment Company Act of 1940, as amended, as a diversified open-
end management investment company with six funds: the PBHG Growth Fund (the
"Growth Fund"), the PBHG Emerging Growth Fund (the "Emerging Growth Fund"),
the PBHG Large Cap Growth Fund (the "Large Cap Growth Fund"), the PBHG Select
Equity Fund (the "Select Equity Fund"), the PBHG International Fund (the
"International Fund") (collectively referred to as the "Equity Funds"), and
the PBHG Cash Reserves Fund (the "Cash Reserves Fund") (together the "Funds").
The assets of each Fund are segregated, and a shareholder's interest is
limited to the Fund in which shares are held.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies followed
by the Fund.
Security Valuation--Investment securities of the Equity Funds which 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. Short term investments may be valued at amortized cost which
approximates market value. The value of investment securities held by the Cash
Reserves Fund are stated at amortized cost, which approximates market value.
Under this valuation method, purchase 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 net realized capital gains and losses on the sale of investment
securities are those of the specific securities sold.
Distributions--Distributions from net investment income for the Equity Funds
are made to shareholders annually. Distributions from net investment income
for the Cash Reserves Fund are declared daily and paid monthly. Distributions
of net realized capital gains are generally made to shareholders annually.
Distributions from net investment income and 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
principals. 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 in the period that the differences arise. These
reclassifications have no effect on net assets or net asset values per share.
Federal Income Taxes--It is the intention of the Fund to continue to qualify
as a regulated investment company by complying with appropriate provisions of
the Internal Revenue Code of 1986, as amended. Accordingly, no provision has
been made for Federal income taxes.
Net Asset Value Per Share--The net asset value per share is calculated on
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 or if the counterparty enters into an
insolvency proceedings, realization of the collateral by a Fund may be delayed
or limited.
35
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
Foreign Currency Translation--The books and records of the International
Fund are maintained in U.S. dollars. Foreign currency amounts are translated
into U.S. dollars on the following basis:
(I) market value of investment securities, other assets and liabilities at
the current rate of exchange; and
(II) purchases and sales of investment securities, income and expenses at
the relevant rates of exchange prevailing on the respective dates of
such transactions.
The International Fund does not isolate that portion of gains and losses on
investment securities which is due to changes in the foreign exchange rates
from that which is due to changes in market prices of such securities.
The International Fund reports gains and losses on foreign currency related
transactions as realized and unrealized gains and losses for financial
reporting purposes, whereas such gains and losses are treated as ordinary
income or loss for Federal income tax purposes.
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.
All organizational costs incurred with the start up of the Emerging Growth
Fund, the Large Cap Growth Fund, the Select Equity Fund, the International
Fund and the Cash Reserves Fund are being amortized on a straight line basis
over a period of sixty months.
3. INVESTMENT ADVISORY FEES, ADMINISTRATIVE FEES AND OTHER TRANSACTIONS WITH
AFFILIATES
The Fund and the Adviser are parties to an Investment Advisory Agreement
(the "Advisory Agreement"). Under the terms of the Advisory Agreement, the
Adviser is paid a monthly fee at an annual rate of .85% of the average daily
net assets of the Growth, Emerging Growth and Select Equity Funds and .30%,
.75% and 1.00% of the average daily net assets of the Cash Reserves, Large Cap
Growth and International Funds respectively.
Murray Johnstone International, Ltd. ("Murray Johnstone") serves as the Sub-
Adviser to the International Fund. For its services provided pursuant to its
Investment Sub-Advisory agreement with the Adviser and the Fund, Murray
Johnstone receives a fee from the Adviser at an annual rate of .50% of the
International Fund's average daily net assets. Murray Johnstone receives no
fees directly from the International Fund, and may periodically reduce its
sub-advisory fee.
Wellington Management Company ("WMC") serves as the investment Sub-Adviser
for the Cash Reserves Fund pursuant to a sub-advisory agreement (the "Sub-
Advisory Agreement") with the Fund and the Adviser. For its services provided
pursuant to its investment sub-advisory agreement with the Adviser and the
Fund, WMC is entitled to receive a fee from the Adviser, computed daily and
paid monthly, at an annual rate equal to .075% of the Cash Reserves Fund's
average daily net assets up to and including $500 million and .020% of the
Cash Reserves Fund's average daily net assets over $500 million, but subject
to a minimum annual fee of $50,000. WMC may, from time to time, waive all or a
portion of its fee from the Adviser. WMC receives no fees directly from the
Cash Reserves Fund.
36
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED) THE PBHG FUNDS, INC.
- --------------------------------------------------------------------------------
The Fund and SEI Financial Management Corporation (the "Administrator") are
parties to an Administration Agreement under which the Administrator provides
management and administrative services for an annual fee with respect to each
Fund equal to the greater of $75,000 or .20% of the average daily net assets
of the Fund.
The Fund and SEI Financial Services Company (the "Distributor") are parties
to a Distribution Agreement. The Distributor receives no fees for its
distribution services under this agreement.
DST Systems, Inc. serves as the transfer agent, dividend disbursing agent
and shareholder servicing agent of the Funds. CoresStates Bank, N.A. serves as
the Custodian for the Growth Fund, the Emerging Growth Fund, the Large Cap
Growth Fund, the Select Equity Fund and the Cash Reserves Fund. The Northern
Trust Company serves as the custodian for the International Fund.
Certain officers and directors of the Fund who are officers of the
Administrator and the Distributor received no compensation from the Fund.
4. INVESTMENT TRANSACTIONS
The cost of security purchases and the proceeds from security sales, other
than short-term investments, for the period ended September 30, 1995 were as
follows:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LARGE
EMERGING CAP SELECT
GROWTH GROWTH GROWTH EQUITY INTERNATIONAL
FUND FUND FUND FUND FUND
(000) (000) (000) (000) (000)
-------- -------- ------- ------- -------------
<S> <C> <C> <C> <C> <C>
Purchases $633,863 $259,748 $12,213 $88,016 $ 9,263
Sales 281,602 190,634 3,848 29,874 16,367
</TABLE>
- -------------------------------------------------------------------------------
At September 30, 1995 the total cost of securities and the net realized
gains or losses on securities sold for Federal income tax purposes, was not
materially different from amounts reported for financial reporting purposes.
The aggregate gross unrealized appreciation and depreciation for securities
held by the Funds at September 30, 1995 is as follows:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LARGE
EMERGING CAP SELECT
GROWTH GROWTH GROWTH EQUITY INTERNATIONAL
FUND FUND FUND FUND FUND
(000) (000) (000) (000) (000)
-------- -------- ------ ------- -------------
<S> <C> <C> <C> <C> <C>
Aggregate gross unrealized
appreciation $528,377 $165,211 $962 $ 6,800 $ 648
Aggregate gross unrealized
depreciation (14,878) (4,695) (52) (2,463) (384)
-------- -------- ---- ------- -----
Net unrealized
appreciation $513,499 $160,517 $910 $ 4,337 $ 264
======== ======== ==== ======= =====
</TABLE>
- -------------------------------------------------------------------------------
37
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONCLUDED) THE PBHG FUNDS, INC.
- --------------------------------------------------------------------------------
5. SHAREHOLDER VOTING RESULTS:
A. On April 13, 1995, there was a special meeting of the shareholders of each
of the PBHG Growth Fund, the PBHG Emerging Growth Fund and the PBHG
International Fund (together the "Portfolios") to approve a new advisory
agreement between the Fund, on behalf of each of the Portfolios, and PB Newco,
Inc., a Delaware corporation ("PB Newco") and a wholly-owned subsidiary of
United Asset Management Corporation ("UAM"), pursuant to which PB Newco would
act as adviser with respect to the assets of each of the Portfolios, effective
upon the acquisition of substantially all the assets of Pilgrim Baxter &
Associates, Ltd. ("Pilgrim Baxter"), the then-existing adviser, by UAM and the
contribution of such assets to PB Newco (the "Acquisition"). PB Newco would
carry on the business of Pilgrim Baxter under Pilgrim Baxter's name after the
Acquisition. The following were the results of the vote:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH FUND EMERGING GROWTH FUND INTERNATIONAL FUND
SHARES VOTED: SHARES VOTED: SHARES VOTED:
------------- -------------------- ------------------
<S> <C> <C> <C>
For 30,123,310 10,028,633 1,319,582
Against 1,433,859 500,590 16,065
Abstain 1,408,664 373,686 12,587
</TABLE>
- -------------------------------------------------------------------------------
In addition, at the meeting on April 13, 1995, the shareholders of the PBHG
International Fund were asked to approve a new sub-advisory agreement among
the Fund, on behalf of the PBHG International Fund, PB Newco and Akamai
International, L.P. ("Akamai"), the then-existing sub-adviser to the PBHG
International Fund, pursuant to which Akamai would act as sub-adviser with
respect to the assets of the PBHG International Fund, effective upon the
Acquisition. The following were the results of the vote:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL FUND
SHARES VOTED:
------------------
<S> <C>
For 1,322,538
Against 15,211
Abstain 10,485
</TABLE>
- -------------------------------------------------------------------------------
There were no broker non-votes submitted, and no other proposals voted on at
such meeting.
B. On October 6, 1995, there was a special meeting of the shareholders of the
PBHG International Fund to approve the selection of Murray Johnstone
International Limited ("Murray Johnstone") as investment sub-adviser of the
Portfolio and to approve the new investment sub-advisory agreement among
Pilgrim Baxter, the Fund, and Murray Johnstone. The following were the results
of the vote:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL FUND
SHARES VOTED:
------------------
<S> <C>
For 469,753
Against 3,939
Abstain 13,068
</TABLE>
- -------------------------------------------------------------------------------
There were no broker non-votes submitted, and no other proposals voted on at
such meeting.
38
<PAGE>
NOTES
<PAGE>
The PBHG Funds, Inc.
P.O. Box 419534
Kansas City, MO 64141-6534
Investment Adviser:
Pilgrim Baxter & Associates, Ltd.
Distributor:
SEI Financial Services Company
To open an account,
receive account information,
make inquiries or
request literature:
1-800-433-0051
This information must be preceded or
accompanied by a current prospectus.
[ARTWORK APPEARS HERE]
SEMI
ANNUAL
REPORT
September 30, 1995
---------------------------------------
PBHG
Growth Fund
PBHG
Emerging
Growth Fund
PBHG
Select Equity Fund
PBHG
Large Cap Growth
Fund
PBHG
International
Fund
PBHG
[LOGO OF THE PBHG Cash Reserves
FUNDS INC APPEARS HERE] Fund
---------------------------------------
