[LOGO]
- -------
PBHG
FUNDS
- -------
THE
PBHG
FUNDS,
INC.
SEMI-ANNUAL REPORT
SEPTEMBER 30, 1997
<PAGE>
TABLE OF CONTENTS
1 MESSAGE TO SHAREHOLDERS
PORTFOLIO HIGHLIGHTS AND STATEMENTS OF NET ASSETS
PBHG AGGRESSIVE GROWTH FUNDS
3 PBHG GROWTH FUND
7 PBHG EMERGING GROWTH FUND
11 PBHG LARGE CAP GROWTH FUND
14 PBHG SELECT EQUITY FUND
16 PBHG CORE GROWTH FUND
19 PBHG LIMITED FUND
22 PBHG LARGE CAP 20 FUND
PBHG VALUE FUNDS
24 PBHG LARGE CAP VALUE FUND
27 PBHG MID-CAP VALUE FUND
31 PBHG SMALL CAP VALUE FUND
PBHG SPECIALTY FUNDS
35 PBHG INTERNATIONAL FUND
37 PBHG CASH RESERVES FUND
39 PBHG TECHNOLOGY & COMMUNICATIONS FUND
42 PBHG STRATEGIC SMALL COMPANY FUND
49 STATEMENT OF ASSETS AND LIABILITIES
50 STATEMENT OF OPERATIONS
52 STATEMENT OF CHANGES IN NET ASSETS
54 FINANCIAL HIGHLIGHTS
56 NOTES TO FINANCIAL STATEMENTS
<PAGE>
====================================
MESSAGE TO SHAREHOLDERS
====================================
DEAR FELLOW SHAREHOLDERS:
We are pleased to send you the Semi-Annual Report for The PBHG Funds, Inc. for
the six months ended September 30, 1997. This has been a very active and
exciting time for The PBHG Funds, Inc. The addition of several new funds,
enhanced new fund services including our own Shareholder Services Center, and a
volatile market have all played a role in shaping our last half year.
NEW FUNDS
During the past six months we have added two new funds to our Value offerings,
so that our shareholders have the opportunity to make small, mid, and large cap
value investments through the PBHG Fund Family.
On May 1, 1997, we launched the PBHG Mid-Cap Value and the PBHG Small Cap Value
Funds, which, along with the PBHG Large Cap Value Fund that opened in January of
this year, bring our value offerings to three focused funds. Already, the Value
Funds have made great contributions to the Fund Family in terms of diversifying
performance for our investors, as well as broadening the overall company and
market information on which our fund managers are focused.
PBHG FUNDS SERVICES
In August, we activated a new automated telephone service system for our
shareholders -- PBHG FundLink. The system is an important step forward for our
customers, as it provides 24-hour access to current prices of the Funds as well
as total return and account balance information. Shareholders may also use
FundLink to purchase, redeem, or exchange shares in any of the PBHG Funds.
We have also begun implementation of an in-house Shareholder Services Center.
The new facility, which will be located at our new corporate headquarters, will
benefit our shareholders greatly as it will centrally locate our professionals
servicing our shareholders alongside those individuals producing investment
returns. The new Shareholder Services Center will begin operating in January
1998.
INVESTMENT REVIEW
With the economic backdrop of moderate growth, low interest rates, and little
threat of inflation accompanying us through the past two quarters, the equity
markets turned in strong performances. The bluest-chip, large cap names that led
the market during the previous twelve months began to slow, letting small cap
stocks gain back some ground they had lost during 1996 and early 1997. The last
two quarters were also witness to some of the highest volatility the markets
have experienced. We saw weeks crowded with 100-point-plus intra-day swings in
the Dow Jones Industrial Average, making the last few months an incredibly busy
and capricious time for investors.
1
<PAGE>
====================================
MESSAGE TO SHAREHOLDERS
====================================
The following Equity Style Portfolio Indexes published by Wilshire Associates
shows the returns of various investment disciplines during the six months ended
September 30, 1997:
<TABLE>
<CAPTION>
LARGE CAP GROWTH LARGE CAP VALUE MIDCAP GROWTH MID-CAP VALUE SMALL CAP GROWTH SMALL CAP VALUE
<S> <C> <C> <C> <C> <C>
28.33% 24.69% 31.19% 24.64% 40.58% 26.99%
</TABLE>
Our Funds performed well in this environment, a welcome improvement after a very
difficult period in the market for smaller stocks. The Portfolio and Financial
Highlights for the six months ended September 30, 1997, contains each Fund's
total return and expense data and can be found in the pages that follow. As we
head into the final months of 1997, we remain focused on companies with strong
businesses that they can grow and sustain during the coming quarters. Again, we
remind our shareholders, our investment strategy is considered high in risk, and
therefore, portfolio volatility may be relatively high in the short-term. As
investors, we make our decisions with the goal of long-term outperformance in
mind. We encourage our shareholders to make the same commitment to a long-term
investment strategy.
Once again, we thank you for choosing the PBHG Funds for your investment
portfolio. We appreciate your loyalty and commitment, and we look forward to
continuing a long-term relationship with you.
Sincerely,
[PHOTOGRAPH] [PHOTOGRAPH]
/s/ Harold J. Baxter /s/ Gary L. Pilgrim
Harold J. Baxter Gary L. Pilgrim
Chairman President
The PBHG Funds, Inc. The PBHG Funds, Inc.
2
<PAGE>
=============================================================
PORTFOLIO HIGHLIGHTS As of September 30, 1997 (Unaudited)
=============================================================
PBHG GROWTH FUND
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Cash 8%
Consumer 15%
Energy 9%
Financial 5%
Health 13%
Services 23%
Technology 27%
- --------------------------------------------------------------------------------
Objective -- Capital appreciation
Invests in -- Small to medium, high-growth companies in any field
Strategy -- While the Fund is currently making the majority of purchase
selections in the $500 million to $2.5 billion range, the
weighted average capitalization of the Fund has increased from
a year ago. This is attributable to the higher valuation
levels of a rising market, and our decision to maintain
positions in some companies exceeding $2 billion in market
capitalization as long as they meet our high-growth criteria.
However, approximately 60% of the Fund's investments have
annual revenues of under $400 million, still comfortably in
the small company category.
- ---------------------------------- ----------------------------------
Top Five Performers* Bottom Five Performers*
Citrix Systems Clarify(1)
Saville Systems ADR APAC Teleservices(1)
Varco International Pure Atria(1)
Sanmina Compdent(1)
Accustaff Chesapeake Energy
* During the six month period ended September 30, 1997
(1) This security was completely sold during the period
AVERAGE ANNUAL TOTAL RETURN(1)
- --------------------------------------------------------------------------------
6 Months(2) 1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------
PBHG Growth Fund-PBHG Class 31.91% -1.56% 30.70% 17.80%
- --------------------------------------------------------------------------------
PBHG Growth Fund-Advisor Class(3) 31.76% -1.77% 30.64% 17.77%
- --------------------------------------------------------------------------------
Comparison of Change in the Value of a $10,000 Investment in the PBHG Growth
Fund, versus the Russell 2000 Growth Index, and the Lipper Mid-Cap Funds Average
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
PBHG Russell Lipper Capital Lipper Mid-Cap
12/85 10000 10000 10000 10000
3/86 11510 11481 11627 11622
3/87 16870 13175 13758 14707
3/88 14665 10888 12425 13053
3/89 15249 11991 14097 14817
3/90 19383 13057 16078 17358
3/91 22667 14462 17816 20422
3/92 25781 17206 20942 24664
3/93 34668 17726 23745 27996
3/94 47592 19628 25948 30633
3/95 54217 21057 27845 33384
3/96 82139 27660 36101 43286
3/97 68372 26051 38440 45229
9/97 90190 35804 49634 59920
1 Performance is historical and not indicative of future results. 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 returns have not been annualized.
3 The performance shown for the Advisor Class (formerly known as the Trust
Class) prior to its inception on August 19, 1996, is based on the
performance and expenses of the PBHG Class. Subsequent to August 19, 1996,
the performance is that of the Advisor Class and reflects the expenses
specific to the Advisor Class, which will cause its returns to be less than
those of the PBHG Class. The aggregate total return of PBHG Growth
Fund-Advisor Class since its inception date was 7.98%.
4 The Russell 2000 Growth Index is an unmanaged index comprised of those
securities in the Russell 2000 Index with a greater-than-average growth
orientation. The Index reflects the reinvestment of income dividends and
capital gains distributions, if any, but does not reflect fees, brokerage
commissions, or other expenses of investing.
5 The Lipper Mid-Cap Funds Average is an equally weighted benchmark composed
of mutual funds, each of which limits its investments, by prospectus or
portfolio practice, to companies with average market capitalizations and/or
revenues between $800 million and the average market capitalization of the
Wilshire 4500 Index. The performance figures are based on changes in net
assets value of the funds in the category with all capital gains
distributions and income dividends reinvested.
<TABLE>
<CAPTION>
=================================================================
STATEMENT OF NET ASSETS As of September 30, 1997 (Unaudited)
=================================================================
Market
Description Shares Value (000)
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- 93.3%
Consumer -- 15.2%
Building Material Chains -- 0.4%
Eagle Hardware & Garden* 1,107,400 $ 21,802
- --------------------------------------------------------------------------------------
21,802
- --------------------------------------------------------------------------------------
Consumer Products Miscellaneous -- 0.8%
Blyth Industries* 1,860,650 52,098
- --------------------------------------------------------------------------------------
52,098
- --------------------------------------------------------------------------------------
Hotels/Resorts -- 3.1%
Doubletree* 1,679,100 81,016
Prime Hospitality* 2,933,100 66,178
Signature Resorts* 1,016,900 48,303
- --------------------------------------------------------------------------------------
195,497
- --------------------------------------------------------------------------------------
Packaged Goods/Cosmetics -- 1.5%
Rexall Sundown* 2,053,800 93,705
- --------------------------------------------------------------------------------------
93,705
- --------------------------------------------------------------------------------------
Retail-Apparel -- 0.3%
Goodys Family Clothing* 630,600 20,337
- --------------------------------------------------------------------------------------
20,337
- --------------------------------------------------------------------------------------
Retail-Catalog -- 2.2%
CDW Computer Centers* 1,089,200 70,526
MSC Industrial Direct* 1,466,500 67,459
- --------------------------------------------------------------------------------------
137,985
- --------------------------------------------------------------------------------------
Retail-Department Stores -- 1.6%
Proffitt's* 1,691,200 100,204
- --------------------------------------------------------------------------------------
100,204
- --------------------------------------------------------------------------------------
Retail-Discount Stores -- 1.3%
Dollar Tree Stores* 1,871,200 78,707
- --------------------------------------------------------------------------------------
78,707
- --------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
=================================================================
STATEMENT OF NET ASSETS As of September 30, 1997 (Unaudited)
=================================================================
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Market
Description Shares Value (000)
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- continued
Retail-Home Furnishing -- 1.1%
Bed Bath & Beyond* 2,034,000 $ 71,444
- --------------------------------------------------------------------------------------
71,444
- --------------------------------------------------------------------------------------
Retail-Specialty -- 2.0%
General Nutrition* 4,368,900 127,244
- --------------------------------------------------------------------------------------
127,244
- --------------------------------------------------------------------------------------
Retail-Supermarkets/Drug Stores -- 0.9%
Whole Foods Market* 1,519,200 58,679
- --------------------------------------------------------------------------------------
58,679
- --------------------------------------------------------------------------------------
Total Consumer
(Cost $689,154) 957,702
- --------------------------------------------------------------------------------------
Energy -- 9.2%
Contract Drilling -- 2.3%
Cliffs Drilling Company* 241,800 16,836
Global Marine* 2,174,500 72,302
Transocean Offshore 1,161,600 55,684
- --------------------------------------------------------------------------------------
144,822
- --------------------------------------------------------------------------------------
Exploration & Production -- 1.6%
Chesapeake Energy 6,523,008 74,199
Ocean Energy* 420,300 29,001
- --------------------------------------------------------------------------------------
103,200
- --------------------------------------------------------------------------------------
Service/Equipment -- 5.3%
Hvide Marine* 370,100 11,843
Input/Output* 1,837,500 54,436
National-Oilwell* 878,900 65,753
Pool Energy Services* 884,900 29,976
Tidewater 1,179,000 69,856
Tuboscope* 585,000 18,354
Varco International* 1,493,000 72,411
Veritas* 186,300 7,929
- --------------------------------------------------------------------------------------
330,558
- --------------------------------------------------------------------------------------
Total Energy
(Cost $523,386) 578,580
- --------------------------------------------------------------------------------------
Financial -- 4.6%
Consumer Finance -- 2.0%
Contifinancial* 1,969,100 63,996
Money Store (The) 2,126,600 60,608
- --------------------------------------------------------------------------------------
124,604
- --------------------------------------------------------------------------------------
Diversified Financial Service -- 0.4%
Amresco 711,400 26,411
- --------------------------------------------------------------------------------------
26,411
- --------------------------------------------------------------------------------------
Insurance -- 2.2%
HCC Insurance Holdings 2,351,700 62,467
Vesta Insurance Group 1,310,250 74,684
- --------------------------------------------------------------------------------------
137,151
- --------------------------------------------------------------------------------------
Total Financial
(Cost $235,069) 288,166
- --------------------------------------------------------------------------------------
Health -- 13.1%
Contract Research -- 1.8%
Quintiles Transnational* 1,369,000 115,338
- --------------------------------------------------------------------------------------
115,338
- --------------------------------------------------------------------------------------
Drugs/Pharmaceuticals -- 1.1%
Dura Pharmaceuticals* 1,591,900 69,447
- --------------------------------------------------------------------------------------
69,447
- --------------------------------------------------------------------------------------
Health Care Management Services -- 0.5%
Access Health Marketing* 816,000 28,152
- --------------------------------------------------------------------------------------
28,152
- --------------------------------------------------------------------------------------
Hospital -- 1.3%
Health Management Associates, Cl A* 2,556,200 80,840
- --------------------------------------------------------------------------------------
80,840
- --------------------------------------------------------------------------------------
Hospital/Nursing Management -- 2.5%
Genesis Health Ventures* 1,435,000 55,875
Multicare* 2,198,600 61,148
Sunrise Assisted Living* 1,085,000 39,196
- --------------------------------------------------------------------------------------
156,219
- --------------------------------------------------------------------------------------
Managed Care-Dental -- 0.4%
Orthodontic Centers of America* 1,352,700 27,054
- --------------------------------------------------------------------------------------
27,054
- --------------------------------------------------------------------------------------
Medical Devices -- 0.0%
Theragenics* 45,000 2,233
- --------------------------------------------------------------------------------------
2,233
- --------------------------------------------------------------------------------------
Miscellaneous-Health -- 0.2%
Incyte Pharmaceuticals* 152,000 12,768
- --------------------------------------------------------------------------------------
12,768
- --------------------------------------------------------------------------------------
Pharmaceutical Services -- 2.0%
Express Scripts, Cl A* 1,083,800 58,390
Omnicare 2,080,200 67,606
- --------------------------------------------------------------------------------------
125,996
- --------------------------------------------------------------------------------------
Physician Practice Management -- 1.7%
FPA Medical Management* 865,200 29,741
Pediatrix Medical Group* 851,100 37,555
Phycor* 1,403,612 40,793
- --------------------------------------------------------------------------------------
108,089
- --------------------------------------------------------------------------------------
Special Outpatient Facility -- 1.6%
Renal Treatment Centers* 774,700 27,550
Total Renal Care Holdings* 1,458,000 72,900
- --------------------------------------------------------------------------------------
100,450
- --------------------------------------------------------------------------------------
Total Health
(Cost $634,897) 826,586
- --------------------------------------------------------------------------------------
Services -- 23.6%
Advertising -- 0.2%
Lamar Advertising* 441,900 13,533
- --------------------------------------------------------------------------------------
13,533
- --------------------------------------------------------------------------------------
Commercial Services -- 0.5%
Caribiner International* 768,700 31,325
- --------------------------------------------------------------------------------------
31,325
- --------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
==============================================
THE PBHG FUNDS, INC.
==============================================
- ---------------------------------------------------------------------------------------
Market
Description Shares Value (000)
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- continued
Communications Services -- 0.5%
Premiere Technologies* 983,800 $ 33,572
- --------------------------------------------------------------------------------------
33,572
- --------------------------------------------------------------------------------------
Correctional Services -- 2.6%
Corrections Corp. of America* 3,771,000 164,039
- --------------------------------------------------------------------------------------
164,039
- --------------------------------------------------------------------------------------
Educational Services -- 4.4%
Apollo Group, Cl A* 2,610,300 110,611
CBT Group ADR* 1,376,500 110,464
Devry* 1,864,900 55,714
- --------------------------------------------------------------------------------------
276,789
- --------------------------------------------------------------------------------------
Electronic Commerce -- 2.4%
Sterling Commerce* 2,112,900 75,932
Transaction Systems Architects* 1,909,600 77,578
- --------------------------------------------------------------------------------------
153,510
- --------------------------------------------------------------------------------------
Employment Services -- 2.3%
Accustaff* 3,433,565 108,157
Corestaff* 1,194,700 38,679
- --------------------------------------------------------------------------------------
146,836
- --------------------------------------------------------------------------------------
Environmental -- 1.7%
Newpark Resources* 1,479,600 58,167
US Filter* 1,199,700 51,662
- --------------------------------------------------------------------------------------
109,829
- --------------------------------------------------------------------------------------
Radio/Television -- 0.8%
Clear Channel Communications* 788,200 51,134
- --------------------------------------------------------------------------------------
51,134
- --------------------------------------------------------------------------------------
Systems Integrator -- 3.7%
Cambridge Technology Partners* 2,820,800 101,020
Ciber* 955,300 45,138
Computer Horizons* 719,200 26,071
Computer Task Group 586,700 24,604
International Network Services* 839,500 17,210
Sapient* 335,800 17,084
- --------------------------------------------------------------------------------------
231,127
- --------------------------------------------------------------------------------------
Transactions Processing -- 4.5%
Affiliated Computer Services, Cl A* 969,900 24,005
Concord EFS* 2,842,225 76,740
National Data 1,848,300 75,780
Saville Systems ADR* 1,491,500 104,778
- --------------------------------------------------------------------------------------
281,303
- --------------------------------------------------------------------------------------
Total Services
(Cost $1,049,480) 1,492,997
- --------------------------------------------------------------------------------------
Technology -- 27.6%
Cables/Fiberoptics -- 1.0%
Kent Electronics* 1,562,500 61,719
- --------------------------------------------------------------------------------------
61,719
- --------------------------------------------------------------------------------------
Client/Server Help Desk -- 0.7%
Remedy* 1,267,800 43,660
- --------------------------------------------------------------------------------------
43,660
- --------------------------------------------------------------------------------------
Contract Manufacturing -- 2.7%
Jabil Circuit* 718,600 47,068
Sanmina* 1,379,200 119,387
- --------------------------------------------------------------------------------------
166,455
- --------------------------------------------------------------------------------------
Design Automation Software -- 0.8%
Cadence Design Systems* 978,700 52,360
- --------------------------------------------------------------------------------------
52,360
- --------------------------------------------------------------------------------------
Digital Video Related -- 0.4%
Gemstar* 1,075,900 26,898
- --------------------------------------------------------------------------------------
26,898
- --------------------------------------------------------------------------------------
Graphic/Image Processing -- 2.5%
Electronics For Imaging* 2,483,000 126,633
Splash Technologies Holdings* 834,400 32,646
- --------------------------------------------------------------------------------------
159,279
- --------------------------------------------------------------------------------------
Networking Security -- 1.1%
Checkpoint Software* 975,500 30,240
Security Dynamics Technology* 950,300 35,280
- --------------------------------------------------------------------------------------
65,520
- --------------------------------------------------------------------------------------
Networking Software -- 1.9%
McAfee Associates* 1,189,087 63,022
Veritas Software* 1,281,750 56,317
- --------------------------------------------------------------------------------------
119,339
- --------------------------------------------------------------------------------------
PC-Peripherals Manufacturing -- 0.1%
Neomagic* 321,900 6,498
- --------------------------------------------------------------------------------------
6,498
- --------------------------------------------------------------------------------------
Precision Instruments -- 2.4%
Cognex* 2,205,200 72,496
Waters* 1,740,700 76,917
- --------------------------------------------------------------------------------------
149,413
- --------------------------------------------------------------------------------------
Semi-Conductor Manufacturing -- 7.3%
ASE Test Limited* 208,400 17,662
Dallas Semiconductor 1,855,000 83,011
Lattice Semiconductor* 1,287,500 83,848
Linear Technology 974,600 67,004
Micrel* 668,000 28,265
Microchip Technology* 3,117,950 140,795
Unitrode* 520,700 38,597
- --------------------------------------------------------------------------------------
459,182
- --------------------------------------------------------------------------------------
Semi-Conductor Production Equipment -- 1.4%
Integrated Process Equipment* 736,700 33,639
Kulicke & Soffa Industries* 623,800 27,166
Orbotech Limited* 582,500 28,890
- --------------------------------------------------------------------------------------
89,695
- --------------------------------------------------------------------------------------
Software-Client/Server -- 2.4%
Arbor Software* 393,900 18,242
Citrix Systems* 1,907,800 96,046
Peoplesoft* 655,900 39,190
- --------------------------------------------------------------------------------------
153,478
- --------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
=================================================================
STATEMENT OF NET ASSETS As of September 30, 1997 (Unaudited)
=================================================================
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Shares/Face Market
Description Amount (000) Value (000)
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- continued
Software-Manufacturing -- 1.1%
Aspect Development* 356,100 $ 14,623
I2 Technologies* 530,000 21,995
Manugistics* 859,000 30,709
- --------------------------------------------------------------------------------------
67,327
- --------------------------------------------------------------------------------------
Software-Other -- 0.4%
Discreet Logic* 1,001,500 26,602
- --------------------------------------------------------------------------------------
26,602
- --------------------------------------------------------------------------------------
Telecommunications Equipment -- 0.1%
ADC Telecommunications* 150,000 4,875
- --------------------------------------------------------------------------------------
4,875
- --------------------------------------------------------------------------------------
Voice/Call Transaction Processing -- 1.3%
Comverse Technology* 1,590,000 83,873
- --------------------------------------------------------------------------------------
83,873
- --------------------------------------------------------------------------------------
Total Technology
(Cost $1,235,621) 1,736,173
- --------------------------------------------------------------------------------------
Total Common Stocks
(Cost $4,367,607) 5,880,204
- --------------------------------------------------------------------------------------
Repurchase Agreements -- 7.7%
Greenwich
6.05%, dated 09/30/97, matures
10/01/97, repurchase price
$132,952,366 (collateralized by
U.S. Government Obligations:
total market value $135,592,377) (A) $132,930 132,930
J.P. Morgan
6.05%, dated 09/30/97, matures
10/01/97, repurchase price
$313,677,680 (collateralized by
U.S. Government Obligations:
total market value $319,897,910) (A) 313,625 313,625
Morgan GNMA
6.05%, dated 09/30/97, matures
10/01/97, repurchase price
$36,771,179 (collateralized by
U.S. Government Obligations:
total market value $37,615,158) (A) 36,765 36,765
- --------------------------------------------------------------------------------------
Total Repurchase Agreements
(Cost $483,320) 483,320
- --------------------------------------------------------------------------------------
Total Investments -- 101.0%
(Cost $4,850,927) $6,363,524
- --------------------------------------------------------------------------------------
Other Assets and Liabilities -- (1.0%)
Other Assets and Liabilities, Net (63,211)
- --------------------------------------------------------------------------------------
Net Assets:
Fund Shares of PBHG Class (authorized 400 million shares --
$0.001 par value) based on 224,362,299 outstanding shares
of common stock 4,930,720
Fund Shares of Advisor Class (authorized 200 million shares --
$0.001 par value) based on 2,441,385 outstanding shares
of common stock 57,780
Accumulated net investment loss (18,823)
Accumulated net realized loss on investments (181,961)
Net unrealized appreciation on investments 1,512,597
- --------------------------------------------------------------------------------------
Total Net Assets-- 100.0% $6,300,313
======================================================================================
Net Asset Value, Offering and Redemption Price
Per Share -- PBHG Class $27.78
======================================================================================
Net Asset Value, Offering and Redemption Price
Per Share -- Advisor Class $27.71
======================================================================================
</TABLE>
* Non-income producing security
(A) -- Tri-party repurchase agreement
ADR -- American Depository Receipt
Cl -- Class
The accompanying notes are an integral part of the financial statements
6
<PAGE>
==============================================================
PORTFOLIO HIGHLIGHTS As of September 30, 1997 (Unaudited)
==============================================================
PBHG EMERGING GROWTH FUND
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Cash 6%
Consumer 15%
Energy 4%
Financial 2%
Health 10%
Industrial/Basic 2%
Industrial/General Manufacturing 1%
Services 17%
Technology 41%
Transportation 2%
- --------------------------------------------------------------------------------
Objective -- Long-term growth of capital
Invests in -- Small rapidly growing companies in any field
Strategy -- The Fund's strategy is to invest in young, rapidly growing
companies with prospects for continued growth. The Fund will
typically target the following sectors: Technology,
Healthcare, Consumer and Service. The Fund will remain
diversified over a large number of securities, with no one
security accounting for more than 3% of the portfolio.
- --------------------------------- ---------------------------------
Top Five Performers* Bottom Five Performers*
Smart Modular Technologies INSO(1)
Remec Forte Software(1)
Zoltek Project Software(1)
Romac International Clarify(1)
PRI Automation Videoserver(1)
* During the six month period ended September 30, 1997
(1) This security was completely sold during the period.
AVERAGE ANNUAL TOTAL RETURN(1)
- --------------------------------------------------------------------------------
Annualized
Inception
6 Months(2) 1 Year 3 Year to Date(3)
- --------------------------------------------------------------------------------
PBHG Emerging Growth Fund 38.01% 4.30% 28.35% 30.41%
- --------------------------------------------------------------------------------
Comparison of Change in the Value of a $10,000 Investment in the PBHG Emerging
Growth Fund, versus the Russell 2000 Growth Index, and the Lipper Small Cap
Funds Average
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
PBHG Russell Lipper
6/30/93 10000 10000 10000
3/94 13100 10763 10839
3/95 17290 11547 11707
3/96 25963 15168 15464
3/97 22403 14285 16217
9/97 30919 19634 22135
1 Performance is historical and not indicative of future results. 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.
3 The PBHG Emerging Growth Fund commenced operations on June 15, 1993.
4 The Russell 2000 Growth Index is an unmanaged index comprised of those
securities in the Russell 2000 Index with a greater-than-average growth
orientation. The Index reflects the reinvestment of income dividends and
capital gains distributions, if any, but does not reflect fees, brokerage
commissions, or other expenses of investing.
5 The Lipper Small Cap Funds Average is an equally weighted benchmark
composed of mutual funds, each of which limits its investments, by
prospectus or portfolio practice, to companies on the basis of the size of
the company. The performance figures are based on changes in net asset
value of the funds in the category with all capital gains distributions and
income dividends reinvested.
<TABLE>
<CAPTION>
================================================================
STATEMENT OF NET ASSETS As of September 30, 1997 (Unaudited)
================================================================
Market
Description Shares Value (000)
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- 92.9%
Consumer -- 15.3%
Consumer Products Miscellaneous -- 0.8%
Suiza Foods* 276,800 $ 14,255
- --------------------------------------------------------------------------------------
14,255
- --------------------------------------------------------------------------------------
Entertainment/Movies -- 0.9%
Cinar Films, Cl B* 177,500 6,767
Regal Cinemas* 353,600 9,503
- --------------------------------------------------------------------------------------
16,270
- --------------------------------------------------------------------------------------
Hotels/Resorts -- 0.8%
Capstar Hotel* 144,900 4,863
Fairfield Communities* 263,700 9,905
- --------------------------------------------------------------------------------------
14,768
- --------------------------------------------------------------------------------------
Packaged Goods/Cosmetics -- 1.2%
NBTY* 1,024,300 21,638
- --------------------------------------------------------------------------------------
21,638
- --------------------------------------------------------------------------------------
Restaurants -- 4.4%
CKE Restaurants 622,500 26,145
Logan's Roadhouse* 486,950 12,661
Papa John's International* 773,100 26,430
Showbiz Pizza Time* 666,300 15,325
- --------------------------------------------------------------------------------------
80,561
- --------------------------------------------------------------------------------------
Retail-Apparel -- 2.3%
Goodys Family Clothing* 315,900 10,188
North Face* 422,900 11,365
Pacific Sunwear of California* 321,300 13,174
Stage Stores* 195,600 8,435
- --------------------------------------------------------------------------------------
43,162
- --------------------------------------------------------------------------------------
Retail-Catalog -- 1.3%
Insight Enterprises* 84,150 2,788
Wilmar Industries* 769,600 20,779
- --------------------------------------------------------------------------------------
23,567
- --------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
=================================================================
STATEMENT OF NET ASSETS As of September 30, 1997 (Unaudited)
=================================================================
- ---------------------------------------------------------------------------------------
Market
Description Shares Value (000)
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- continued
Retail-Office Products -- 1.4%
US Office Products* 757,000 $ 26,684
- --------------------------------------------------------------------------------------
26,684
- --------------------------------------------------------------------------------------
Shoe Manufacturing -- 1.0%
Wolverine World Wide 748,350 18,896
- --------------------------------------------------------------------------------------
18,896
- --------------------------------------------------------------------------------------
Specialty Food/Candy -- 0.2%
Morningstar Group* 77,800 3,345
- --------------------------------------------------------------------------------------
3,345
- --------------------------------------------------------------------------------------
Toys -- 1.0%
Action Performance* 604,400 17,603
- --------------------------------------------------------------------------------------
17,603
- --------------------------------------------------------------------------------------
Total Consumer
($236,377) 280,749
- --------------------------------------------------------------------------------------
Energy -- 4.4%
Contract Drilling -- 2.0%
Atwood Oceanic* 121,600 13,695
Patterson Energy* 230,200 12,057
UTI Energy* 265,200 10,956
- --------------------------------------------------------------------------------------
36,708
- --------------------------------------------------------------------------------------
Service/Equipment -- 2.4%
Maverick Tube* 250,100 10,317
Pool Energy Services* 348,200 11,795
Trico Marine Services* 553,800 19,245
Tuboscope* 87,800 2,754
- --------------------------------------------------------------------------------------
44,111
- --------------------------------------------------------------------------------------
Total Energy
(Cost $51,130) 80,819
- --------------------------------------------------------------------------------------
Financial -- 1.7%
Brokerage/Investment Bank -- 0.6%
E*Trade Group* 241,400 11,346
- --------------------------------------------------------------------------------------
11,346
- --------------------------------------------------------------------------------------
Investment Firms -- 0.8%
Sirrom Capital 267,200 13,861
- --------------------------------------------------------------------------------------
13,861
- --------------------------------------------------------------------------------------
Miscellaneous-Financial -- 0.3%
New Century Financial* 300,000 5,119
- --------------------------------------------------------------------------------------
5,119
- --------------------------------------------------------------------------------------
Total Financial
(Cost $21,265) 30,326
- --------------------------------------------------------------------------------------
Health -- 9.5%
Biotechnology -- 0.4%
Serologicals* 300,050 6,826
- --------------------------------------------------------------------------------------
6,826
- --------------------------------------------------------------------------------------
Contract Research -- 1.1%
Parexel International* 529,700 20,923
- --------------------------------------------------------------------------------------
20,923
- --------------------------------------------------------------------------------------
Drugs/Pharmaceuticals -- 1.1%
Medicis Pharmaceutical, Cl A* 428,200 19,644
- --------------------------------------------------------------------------------------
19,644
- --------------------------------------------------------------------------------------
Health Care-Services -- 0.8%
Rural/Metro* 501,100 15,284
- --------------------------------------------------------------------------------------
15,284
- --------------------------------------------------------------------------------------
Home Health Care -- 0.4%
Pediatric Services of America* 364,700 8,525
- --------------------------------------------------------------------------------------
8,525
- --------------------------------------------------------------------------------------
Information Systems -- 0.6%
DAOU Systems* 51,500 1,609
Impath* 259,200 7,582
Medquist* 112,050 2,619
- --------------------------------------------------------------------------------------
11,810
- --------------------------------------------------------------------------------------
Managed Care-Dental -- 0.2%
First Commonwealth* 211,100 3,140
- --------------------------------------------------------------------------------------
3,140
- --------------------------------------------------------------------------------------
Medical Devices -- 3.3%
Minimed* 364,500 14,307
Sabratek* 464,500 16,896
Spine-Tech* 287,300 10,810
Theragenics* 367,000 18,212
- --------------------------------------------------------------------------------------
60,225
- --------------------------------------------------------------------------------------
Pharmaceutical Services -- 0.5%
NCS Healthcare* 369,500 9,422
- --------------------------------------------------------------------------------------
9,422
- --------------------------------------------------------------------------------------
Special Outpatient Facility -- 1.1%
National Surgery Centers* 544,950 11,853
Renal Treatment Centers* 220,100 7,827
- --------------------------------------------------------------------------------------
19,680
- --------------------------------------------------------------------------------------
Total Health
(Cost $144,800) 175,479
- --------------------------------------------------------------------------------------
Industrial/Basic -- 1.9%
Plastic/Carbon -- 1.9%
Zoltek* 537,800 34,218
- --------------------------------------------------------------------------------------
34,218
- --------------------------------------------------------------------------------------
Total Industrial/Basic
(Cost $18,245) 34,218
- --------------------------------------------------------------------------------------
Industrial/General Manufacturing -- 0.5%
Railroad -- 0.5%
Motivepower Industries* 340,900 8,863
- --------------------------------------------------------------------------------------
8,863
- --------------------------------------------------------------------------------------
Total Industrial/General Manufacturing
(Cost $8,078) 8,863
- --------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
==========================
THE PBHG FUNDS, INC.
==========================
- ---------------------------------------------------------------------------------------
Market
Description Shares Value (000)
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- continued
Services -- 16.9%
Educational Services -- 1.5%
Apollo Group, Cl A* 555,850 $ 23,554
Edutrek International* 130,300 3,469
- --------------------------------------------------------------------------------------
27,023
- --------------------------------------------------------------------------------------
Employment Service -- 3.7%
ABR Information Services* 789,600 21,813
Romac International* 832,100 36,300
Source Services* 25,000 744
Vincam Group* 328,100 9,433
- --------------------------------------------------------------------------------------
68,290
- --------------------------------------------------------------------------------------
Engineering/Construction -- 0.4%
LCC International* 300,000 6,563
- --------------------------------------------------------------------------------------
6,563
- --------------------------------------------------------------------------------------
Environmental -- 1.1%
Superior Services* 544,600 15,521
Tetra Tech* 215,625 5,283
- --------------------------------------------------------------------------------------
20,804
- --------------------------------------------------------------------------------------
Information/Computer Services -- 1.3%
Computer Management Sciences* 276,200 6,353
Forrester Research* 241,700 6,556
Meta Group* 428,000 10,593
- --------------------------------------------------------------------------------------
23,502
- --------------------------------------------------------------------------------------
Marketing Information -- 0.8%
Abacus Direct* 463,400 14,887
- --------------------------------------------------------------------------------------
14,887
- --------------------------------------------------------------------------------------
Marketing Services -- 0.7%
CKS Group* 365,800 13,718
- --------------------------------------------------------------------------------------
13,718
- --------------------------------------------------------------------------------------
Printing Services/Forms -- 1.8%
Consolidated Graphics* 493,900 24,572
Mail-Well* 290,200 7,872
- --------------------------------------------------------------------------------------
32,444
- --------------------------------------------------------------------------------------
Systems Integrator -- 4.2%
Ciber* 378,600 17,889
Deltek Systems* 259,800 5,391
Pomeroy Computer Resources* 206,900 8,845
Registry* 123,020 5,674
Technology Solutions* 696,150 22,451
Whittman-Hart* 548,700 16,735
- --------------------------------------------------------------------------------------
76,985
- --------------------------------------------------------------------------------------
Telemarketing -- 1.4%
Sykes Enterprises* 960,850 25,703
- --------------------------------------------------------------------------------------
25,703
- --------------------------------------------------------------------------------------
Total Services
(Cost $243,307) 309,919
- --------------------------------------------------------------------------------------
Technology -- 41.0%
Automated Data Collection -- 0.9%
Eltron International* 491,800 16,875
- --------------------------------------------------------------------------------------
16,875
- --------------------------------------------------------------------------------------
Client/Server Help Desk--1.5%
Great Plains Software* 232,000 6,496
Pegasystems* 693,900 21,077
- --------------------------------------------------------------------------------------
27,573
- --------------------------------------------------------------------------------------
Data Storage -- 1.5%
Box Hill Systems* 270,600 4,736
Network Appliance* 414,100 22,465
- --------------------------------------------------------------------------------------
27,201
- --------------------------------------------------------------------------------------
Design Automation Software -- 1.1%
Tecnomatix Technologies Limited* 208,700 7,983
Viewlogic Systems* 528,100 12,575
- --------------------------------------------------------------------------------------
20,558
- --------------------------------------------------------------------------------------
Digital Video Related -- 0.5%
Gemstar International* 400,400 10,010
- --------------------------------------------------------------------------------------
10,010
- --------------------------------------------------------------------------------------
Electronic Components -- 0.2%
Power-One* 57,300 802
WPI Group* 301,100 3,651
- --------------------------------------------------------------------------------------
4,453
- --------------------------------------------------------------------------------------
Embedded Software -- 1.8%
Wind River Systems* 817,350 33,716
- --------------------------------------------------------------------------------------
33,716
- --------------------------------------------------------------------------------------
Graphic/Image Process -- 0.2%
Splash Technologies Holdings* 73,300 2,868
- --------------------------------------------------------------------------------------
2,868
- --------------------------------------------------------------------------------------
Networking Security -- 1.2%
Security Dynamics Technology* 572,300 21,247
- --------------------------------------------------------------------------------------
21,247
- --------------------------------------------------------------------------------------
Networking Services -- 0.4%
Apex PC Solutions* 208,700 7,905
- --------------------------------------------------------------------------------------
7,905
- --------------------------------------------------------------------------------------
PC-Peripherals Manufacturing -- 1.0%
Neomagic* 815,500 16,463
Trident International* 93,600 1,591
- --------------------------------------------------------------------------------------
18,054
- --------------------------------------------------------------------------------------
Precision Instruments -- 2.3%
Cognex* 536,000 17,621
Faro Technology* 30,000 491
II-VI* 570,600 15,121
Remec* 226,100 8,253
- --------------------------------------------------------------------------------------
41,486
- --------------------------------------------------------------------------------------
Semi-Conductor Manufacturing -- 4.7%
Level One Communications* 381,800 15,367
Micrel* 390,000 16,502
Sipex* 851,600 27,038
Smart Modular Technologies* 322,100 26,734
- --------------------------------------------------------------------------------------
85,641
- --------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
=================================================================
STATEMENT OF NET ASSETS As of September 30, 1997 (Unaudited)
=================================================================
- ---------------------------------------------------------------------------------------
Market
Description Shares Value (000)
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- continued
Semi-Conductor Production Equipment -- 4.3%
Advanced Energy Industries* 276,100 $ 7,817
Asyst Technologies* 235,600 10,462
CFM Technologies* 33,600 1,317
Helix Technology 245,300 15,186
Photronics* 181,800 11,010
PRI Automation* 493,200 28,852
Speedfam International* 66,500 4,015
- --------------------------------------------------------------------------------------
78,659
- --------------------------------------------------------------------------------------
Semi-Conductor Testing Equipment -- 1.0%
ADE Corporation* 110,700 4,442
Lecroy* 326,700 14,456
- --------------------------------------------------------------------------------------
18,898
- --------------------------------------------------------------------------------------
Software-Client/Server -- 3.2%
Advent Software* 319,600 8,789
Documentum* 288,600 9,596
HNC Software* 287,000 11,408
Legato Systems* 837,300 29,724
- --------------------------------------------------------------------------------------
59,517
- --------------------------------------------------------------------------------------
Software-Desktop -- 1.8%
Visio* 777,100 32,444
- --------------------------------------------------------------------------------------
32,444
- --------------------------------------------------------------------------------------
Software-Manufacturing -- 2.5%
Aspect Development* 385,300 15,821
Aspen Technology* 415,900 14,608
Manugistics* 436,200 15,594
- --------------------------------------------------------------------------------------
46,023
- --------------------------------------------------------------------------------------
Software-Other -- 1.8%
Discreet Logic* 673,000 17,877
Edify* 408,500 5,872
Hummingbird Communications Limited* 105,900 4,130
Radiant Systems* 281,300 5,907
- --------------------------------------------------------------------------------------
33,786
- --------------------------------------------------------------------------------------
Telecommunications Equipment -- 7.3%
DSP Group* 452,800 17,772
Geotel Communications* 745,600 14,073
P-COM Industries* 675,200 16,163
Powerwave Technologies* 190,500 7,382
Sawtek* 750,500 34,711
Tekelec* 343,400 11,697
Teledata Communication* 375,600 16,949
World Access* 500,500 16,266
- --------------------------------------------------------------------------------------
135,013
- --------------------------------------------------------------------------------------
Voice/Call Transaction Processing -- 1.8%
Davox* 453,150 15,181
Natural Microsystems* 452,400 17,190
- --------------------------------------------------------------------------------------
32,371
- --------------------------------------------------------------------------------------
Total Technology
(Cost $523,628) 754,298
- --------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------------
Shares/Face Market
Description Amount (000) Value (000)
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- continued
Transportation -- 1.7%
Logistics -- 1.7%
Eagle USA Airfreight* 944,400 $ 31,637
- --------------------------------------------------------------------------------------
31,637
- --------------------------------------------------------------------------------------
Total Transportation
(Cost $16,679) 31,637
- --------------------------------------------------------------------------------------
Total Common Stocks
(Cost $1,263,509) 1,706,308
- --------------------------------------------------------------------------------------
Repurchase Agreements -- 6.3%
Greenwich
6.05%, dated 09/30/97, matures
10/01/97, repurchase price
$14,494,607 (collateralized by
U.S. Government Obligations:
total market value $14,782,387) (A) $ 14,492 14,492
J.P. Morgan
6.05%, dated 09/30/97, matures
10/01/97, repurchase price $102,272
(collateralized by U.S. Government
Obligations: total market
value $104,301,050) (A) 102,255 102,255
- --------------------------------------------------------------------------------------
Total Repurchase Agreements
(Cost $116,747) 116,747
- --------------------------------------------------------------------------------------
Total Investments -- 99.2%
(Cost $1,380,256) 1,823,055
- --------------------------------------------------------------------------------------
Other Assets and Liabilities -- 0.8%
Other Assets and Liabilities, Net 14,453
- --------------------------------------------------------------------------------------
Net Assets:
Fund Shares of PBHG Class (authorized 400 million shares --
$0.001 par value) based on 69,123,590 outstanding
shares of common stock 1,433,155
Accumulated net investment loss (5,409)
Accumulated net realized loss on investments (33,037)
Net unrealized appreciation on investments 442,799
- --------------------------------------------------------------------------------------
Total Net Assets -- 100.0% $1,837,508
======================================================================================
Net Asset Value, Offering and Redemption Price
Per Share $26.58
======================================================================================
</TABLE>
* Non-income producing security
(A) -- Tri-party repurchase agreement
Cl -- Class
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
==============================================================
PORTFOLIO HIGHLIGHTS As of September 30, 1997 (Unaudited)
==============================================================
PBHG LARGE CAP GROWTH FUND
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Cash 3%
Consumer 12%
Energy 5%
Financial 7%
Health 19%
Industrial/General Manufacturing 4%
Services 24%
Technology 26%
- --------------------------------------------------------------------------------
Objective -- Long-term growth of capital
Invests in -- High-growth companies, with above $1 billion market
capitalization, offering attractive capital appreciation
opportunities
Strategy -- The Fund's larger company focus is intended to provide reduced
short-term volatility while still generating superior returns. As
currently constructed, the Fund's 60 holdings range from roughly
$1 billion (Computer Horizons) to $158 billion (Microsoft) in
market capitalization, with a weighted average capitalization of
$12.8 billion. The stock selection approach remains focused on the
fundamental analysis of individual companies, the strength of
their products and/or services and their competitive positioning.
Sector exposure is determined solely by the selection of the most
attractive individual stocks.
- ------------------------------------ ------------------------------------
Top Five Performers* Bottom Five Performers*
Dell Computer Tommy Hilfiger
Applied Materials Ocwen Financial(1)
Accustaff Parametric Technology
Corrections Corp. of America Diamond Offshore Drilling(1)
Harley-Davidson Baker-Hughes(1)
* During the six month period ended September 30, 1997
(1) This security was purchased during the period
AVERAGE ANNUAL TOTAL RETURN(1)
- --------------------------------------------------------------------------------
Annualized Inception
6 Months(2) 1 Year to Date(3)
- --------------------------------------------------------------------------------
PBHG Large Cap Growth Fund 36.75% 19.38% 32.50%
- --------------------------------------------------------------------------------
Comparison of Change in the Value of a $10,000 Investment in the PBHG Large Cap
Growth Fund, versus the Russell 1000 Growth Index, and the Lipper Growth Funds
Average
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
PBHG Russell Lipper
4/30/95 10000 10000 10000
6/95 10920 10748 10745
9/95 13160 11724 11670
12/95 13382 12259 11953
3/96 14992 12917 12610
6/96 16158 13739 13179
9/96 16871 14234 13569
12/96 16515 15093 14293
3/97 14728 15175 14126
6/97 18198 18044 16366
9/97 20139 19401 18103
1 Performance is historical and not indicative of future results. 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.
3 The PBHG Large Cap Growth Fund commenced operations on April 5, 1995.
4 The Russell 1000 Growth Index is an unmanaged index comprised of those
securities in the Russell 1000 Index with a greater-than-average growth
orientation. The Index reflects the reinvestment of income dividends and
capital gains distributions, if any, but does not reflect fees, brokerage
commissions, or other expenses of investing.
5 The Lipper Growth Funds Average is an equally weighted bench-mark composed
of mutual funds, each of which normally invests in companies whose
long-term earnings are expected to grow significantly faster than the
earnings of the stocks represented in the major unmanaged stock indexes.
The performance figures are based on changes in net asset value of the
funds in the category with all capital gains distributions and income
dividends reinvested.
<TABLE>
<CAPTION>
=================================================================
STATEMENT OF NET ASSETS As of September 30, 1997 (Unaudited)
=================================================================
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- 95.9%
Consumer -- 12.4%
Consumer Products Miscellaneous -- 2.0%
CUC International* 90,200 $ 2,796
- --------------------------------------------------------------------------------------
2,796
- --------------------------------------------------------------------------------------
Funeral Services -- 1.8%
Service Corp. International 80,000 2,575
- --------------------------------------------------------------------------------------
2,575
- --------------------------------------------------------------------------------------
Hotels/Resorts -- 3.2%
HFS* 38,800 2,888
Marriott Corp. International 23,100 1,642
- --------------------------------------------------------------------------------------
4,530
- --------------------------------------------------------------------------------------
Retail-Apparel -- 3.7%
Jones Apparel Group* 51,800 2,797
Tommy Hilfiger* 50,000 2,497
- --------------------------------------------------------------------------------------
5,294
- --------------------------------------------------------------------------------------
Retail-Office Products -- 1.7%
Staples* 90,000 2,486
- --------------------------------------------------------------------------------------
2,486
- --------------------------------------------------------------------------------------
Total Consumer
(Cost $13,840) 17,681
- --------------------------------------------------------------------------------------
Energy -- 5.3%
Contract Drilling -- 3.6%
Diamond Offshore Drilling 12,600 695
Ensco International 69,800 2,753
Nabors Industries* 25,900 1,008
Santa Fe International* 13,800 642
- --------------------------------------------------------------------------------------
5,098
- --------------------------------------------------------------------------------------
Service/Equipment -- 1.7%
Baker-Hughes 16,700 731
Schlumberger Limited 20,000 1,684
- --------------------------------------------------------------------------------------
2,415
- --------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
=================================================================
STATEMENT OF NET ASSETS As of September 30, 1997 (Unaudited)
=================================================================
- --------------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- continued
- --------------------------------------------------------------------------------------
Total Energy
(Cost $6,361) $ 7,513
- --------------------------------------------------------------------------------------
Financial -- 6.5%
Brokerage/Investment Bank -- 0.5%
Ocwen Financial* 16,900 712
- --------------------------------------------------------------------------------------
712
- --------------------------------------------------------------------------------------
Consumer Finance -- 3.3%
Associates First Capital 60,000 3,735
Money Store (The) 35,500 1,012
- --------------------------------------------------------------------------------------
4,747
- --------------------------------------------------------------------------------------
Mortgage Related -- 2.7%
MGIC Investment 68,200 3,909
- --------------------------------------------------------------------------------------
3,909
- --------------------------------------------------------------------------------------
Total Financial
(Cost $6,303) 9,368
- --------------------------------------------------------------------------------------
Health -- 18.6%
Contract Research -- 2.2%
Quintiles Transnational* 37,200 3,134
- --------------------------------------------------------------------------------------
3,134
- --------------------------------------------------------------------------------------
Drugs/Pharmaceuticals -- 5.2%
Lilly (Eli) & Co. 21,800 2,626
Merck 22,300 2,229
Pfizer 43,100 2,589
- --------------------------------------------------------------------------------------
7,444
- --------------------------------------------------------------------------------------
Hospital -- 2.2%
Health Management Associates, Cl A* 97,800 3,093
- --------------------------------------------------------------------------------------
3,093
- --------------------------------------------------------------------------------------
Information Systems -- 2.5%
HBO & Company 93,400 3,526
- --------------------------------------------------------------------------------------
3,526
- --------------------------------------------------------------------------------------
Managed Health Care -- 2.6%
Oxford Health Plans* 49,400 3,699
- --------------------------------------------------------------------------------------
3,699
- --------------------------------------------------------------------------------------
Pharmaceutical Services -- 1.8%
Omnicare 81,200 2,639
- --------------------------------------------------------------------------------------
2,639
- --------------------------------------------------------------------------------------
Special Outpatient Facility -- 2.1%
HealthSouth* 115,400 3,080
- --------------------------------------------------------------------------------------
3,080
- --------------------------------------------------------------------------------------
Total Health
(Cost $18,215) 26,615
- --------------------------------------------------------------------------------------
Industrial/General Manufacturing -- 3.9%
Auto-Related -- 2.3%
Harley-Davidson 112,800 3,292
- --------------------------------------------------------------------------------------
3,292
- --------------------------------------------------------------------------------------
Multi-Industry -- 1.6%
Danaher 39,400 2,285
- --------------------------------------------------------------------------------------
2,285
- --------------------------------------------------------------------------------------
Total Industrial/General Manufacturing
(Cost $3,938) 5,577
- --------------------------------------------------------------------------------------
Services -- 23.8%
Commercial Services -- 1.7%
DST Systems* 43,900 1,624
Pittston Brinks Group 22,100 885
- --------------------------------------------------------------------------------------
2,509
- --------------------------------------------------------------------------------------
Communications Services -- 1.3%
Panamsat* 7,300 315
Worldcom* 43,400 1,535
- --------------------------------------------------------------------------------------
1,850
- --------------------------------------------------------------------------------------
Correctional Services -- 1.1%
Corrections Corp. of America* 37,100 1,614
- --------------------------------------------------------------------------------------
1,614
- --------------------------------------------------------------------------------------
Educational Services -- 2.4%
Apollo Group, Cl A* 36,025 1,527
CBT Group ADR* 23,100 1,854
- --------------------------------------------------------------------------------------
3,381
- --------------------------------------------------------------------------------------
Electronic Commerce -- 1.6%
Sterling Commerce* 62,300 2,239
- --------------------------------------------------------------------------------------
2,239
- --------------------------------------------------------------------------------------
Employment Services -- 1.9%
Accustaff* 84,400 2,659
- --------------------------------------------------------------------------------------
2,659
- --------------------------------------------------------------------------------------
Environmental -- 4.9%
Allied Waste Industries* 114,000 2,180
Thermo Electron* 51,400 2,056
USA Waste Services* 71,317 2,844
- --------------------------------------------------------------------------------------
7,080
- --------------------------------------------------------------------------------------
Information/Computer Services -- 1.6%
Gartner Group, Cl A* 76,800 2,304
- --------------------------------------------------------------------------------------
2,304
- --------------------------------------------------------------------------------------
Radio/Television -- 2.6%
Clear Channel Communication* 57,000 3,698
- --------------------------------------------------------------------------------------
3,698
- --------------------------------------------------------------------------------------
Systems Integrator -- 4.7%
Cambridge Technology* 71,400 2,557
Computer Horizons* 40,400 1,465
Computer Sciences* 37,400 2,646
- --------------------------------------------------------------------------------------
6,668
- --------------------------------------------------------------------------------------
Total Services
(Cost $28,806) 34,002
- --------------------------------------------------------------------------------------
Technology -- 25.4%
Computer-Manufacturing -- 2.8%
Dell Computer* 40,600 3,933
- --------------------------------------------------------------------------------------
3,933
- --------------------------------------------------------------------------------------
Design Automation Software -- 1.3%
Parametric Technology* 42,000 1,853
- --------------------------------------------------------------------------------------
1,853
- --------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
=========================
THE PBHG FUNDS, INC.
=========================
- --------------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- continued
Semi-Conductor Manufacturing -- 4.1%
Altera* 32,100 $ 1,645
Intel 17,200 1,588
Linear Technology 38,300 2,633
- --------------------------------------------------------------------------------------
5,866
- --------------------------------------------------------------------------------------
Semi-Conductor Production Equipment -- 3.7%
Applied Materials* 36,200 3,448
ASM Lithography Holdings* 18,700 1,847
- --------------------------------------------------------------------------------------
5,295
- --------------------------------------------------------------------------------------
Software-Client/Server -- 2.4%
Peoplesoft* 56,400 3,370
- --------------------------------------------------------------------------------------
3,370
- --------------------------------------------------------------------------------------
Software-Desktop -- 2.5%
Microsoft* 27,100 3,586
- --------------------------------------------------------------------------------------
3,586
- --------------------------------------------------------------------------------------
Software-Enterprise Resource Planning -- 0.8%
J.D. Edwards & Company* 34,500 1,156
- --------------------------------------------------------------------------------------
1,156
- --------------------------------------------------------------------------------------
Software-Internet -- 1.1%
America Online* 21,200 1,599
- --------------------------------------------------------------------------------------
1,599
- --------------------------------------------------------------------------------------
Software-System/Mainframe -- 2.3%
BMC Software* 51,700 3,348
- --------------------------------------------------------------------------------------
3,348
- --------------------------------------------------------------------------------------
Telecommunications Equipment -- 4.4%
ADC Telecommunications* 87,500 2,844
Lucent Technologies 7,400 602
Tellabs* 56,600 2,911
- --------------------------------------------------------------------------------------
6,357
- --------------------------------------------------------------------------------------
Total Technology
(Cost $22,397) 36,363
- --------------------------------------------------------------------------------------
Total Common Stocks
(Cost $99,860) 137,119
- --------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------
Face Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreement -- 2.7%
J.P. Morgan
6.05%, dated 09/30/97, matures 10/01/97,
repurchase price $3,949,106 (collateralized
by U.S. Government Obligations: total market
value $4,027,411) (A) $3,949 $ 3,949
- --------------------------------------------------------------------------------------
Total Repurchase Agreement
(Cost $3,949) 3,949
- --------------------------------------------------------------------------------------
Total Investments -- 98.6%
(Cost $103,809) 141,068
- --------------------------------------------------------------------------------------
Other Assets and Liabilities -- 1.4%
Other Assets and Liabilities, Net 1,940
- --------------------------------------------------------------------------------------
Net Assets:
Fund Shares of PBHG Class (authorized 200 million shares --
$0.001 par value) based on 7,333,614 outstanding shares
of common stock 105,593
Accumulated net investment loss (535)
Accumulated net realized gain on investments 691
Net unrealized appreciation on investments 37,259
- --------------------------------------------------------------------------------------
Total Net Assets-- 100.0% $143,008
======================================================================================
Net Asset Value, Offering and Redemption Price
Per Share $19.50
======================================================================================
</TABLE>
* Non-income producing security
(A) -- Tri-party repurchase agreement
ADR -- American Depository Receipt
Cl -- Class
The accompanying notes are an integral part of the financial statements
13
<PAGE>
==============================================================
PORTFOLIO HIGHLIGHTS As of September 30, 1997 (Unaudited)
==============================================================
PBHG SELECT EQUITY FUND
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Cash 1%
Consumer 7%
Energy 4%
Health 21%
Services 27%
Technology 40%
- --------------------------------------------------------------------------------
Objective -- Long-term growth of capital
Invests in -- 25 to 30 companies of all sizes -- selected from many fields and
sectors -- that show outstanding promise
Strategy -- The Fund concentrates its investments in what we view as the best
opportunities in our universe of approximately 1000 companies. At
the end of the period, the Fund held the maximum number of 30
stocks ranging in size from $450 million (Nice Systems) to $52
billion (Lucent Technologies). The weighted average market
capitalization was $7.3 billion. The Fund's size characteristics
may vary dramatically from one time period to another, reflecting
the inherent sensitivity to changes in holdings of a highly
concentrated portfolio.
- ------------------------------------ ------------------------------------
Top Five Performers* Bottom Five Performers*
Dell Computer Forte Software(2)
Visio Pairgain Technologies(2)
Advanced Fibre Communications(1) Teletech Holdings(2)
Accustaff(2) Tommy Hilfiger(2)
Corrections Corp. of America Fore Systems(1)
* During the six month period ended September 30, 1997
(1) This security was purchased during the period.
(2) This security was completely sold during the period.
AVERAGE ANNUAL TOTAL RETURN(1)
- --------------------------------------------------------------------------------
Annualized Inception
6 Months(2) 1 Year to Date(3)
- --------------------------------------------------------------------------------
PBHG Select Equity Fund 38.53% 5.76% 39.29%
- --------------------------------------------------------------------------------
Comparison of Change in the Value of a $10,000 Investment in the PBHG Select
Equity Fund, versus the Russell 3000 Growth Index, and the Lipper Capital
Appreciation Funds Average
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
PBHG Russell Lipper
4/30/95 10000 10000 10000
6/95 11686 10757 10737
9/95 14546 11758 11788
12/95 15512 12257 12123
3/96 17329 12920 12854
6/96 19606 13735 13488
9/96 21121 14165 13762
12/96 19854 14938 14162
3/97 16123 14858 13706
6/97 19569 17649 15636
9/97 22336 19135 17678
1 Performance is historical and not indicative of future results. 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.
3 The PBHG Select Equity Fund commenced operations on April 5, 1995.
4 The Russell 3000 Growth Index is an unmanaged index comprised of those
securities in the Russell 1000 and Russell 2000 Indexes with greater-than
average growth orientation. The Index reflects the reinvestment of income
dividends and capital gains distributions, if any, but does not reflect
fees, brokerage commissions, or other expenses of investing.
5 The Lipper Capital Appreciation Funds Average is an equally weighted
benchmark composed of mutual funds with the investment objective of maximum
capital appreciation. The performance figures are based on changes in net
asset value of the funds in the category with all capital gains
distributions and income dividends reinvested.
<TABLE>
<CAPTION>
=================================================================
STATEMENT OF NET ASSETS As of September 30, 1997 (Unaudited)
=================================================================
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- 97.7%
Consumer -- 7.0%
Hotels/Resorts -- 4.3%
HFS* 238,600 $ 17,761
- --------------------------------------------------------------------------------------
17,761
- --------------------------------------------------------------------------------------
Retail-Apparel -- 2.7%
Jones Apparel Group* 209,700 11,324
- --------------------------------------------------------------------------------------
11,324
- --------------------------------------------------------------------------------------
Total Consumer
(Cost $22,202) 29,085
- --------------------------------------------------------------------------------------
Energy -- 4.4%
Contract Drilling -- 2.4%
Ensco International 254,400 10,033
- --------------------------------------------------------------------------------------
10,033
- --------------------------------------------------------------------------------------
Service/Equipment -- 2.0%
Camco International 119,000 8,300
- --------------------------------------------------------------------------------------
8,300
- --------------------------------------------------------------------------------------
Total Energy
(Cost $15,367) 18,333
- --------------------------------------------------------------------------------------
Health -- 20.5%
Contract Research -- 5.7%
Quintiles Transnational* 278,400 23,455
- --------------------------------------------------------------------------------------
23,455
- --------------------------------------------------------------------------------------
Drugs/Pharmaceuticals -- 4.9%
Dura Pharmaceuticals* 467,400 20,390
- --------------------------------------------------------------------------------------
20,390
- --------------------------------------------------------------------------------------
Information Systems -- 5.2%
HBO & Company 572,300 21,604
- --------------------------------------------------------------------------------------
21,604
- --------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
=========================
THE PBHG FUNDS, INC.
=========================
- --------------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- continued
Managed Health Care -- 4.7%
Oxford Health Plans* 261,900 $ 19,610
- --------------------------------------------------------------------------------------
19,610
- --------------------------------------------------------------------------------------
Total Health
(Cost $63,636) 85,059
- --------------------------------------------------------------------------------------
Services -- 26.6%
Correctional Services -- 4.1%
Corrections Corp. of America* 387,200 16,843
- --------------------------------------------------------------------------------------
16,843
- --------------------------------------------------------------------------------------
Educational Services -- 4.8%
CBT Group ADR* 245,000 19,661
- --------------------------------------------------------------------------------------
19,661
- --------------------------------------------------------------------------------------
Environmental -- 4.1%
Allied Waste Industries* 274,100 5,242
Superior Services* 223,000 6,356
US Filter* 120,300 5,180
- --------------------------------------------------------------------------------------
16,778
- --------------------------------------------------------------------------------------
Information/Computer Services -- 2.9%
Gartner Group, Cl A* 393,700 11,811
- --------------------------------------------------------------------------------------
11,811
- --------------------------------------------------------------------------------------
Radio/Television -- 5.4%
Clear Channel Communications* 346,700 22,492
- --------------------------------------------------------------------------------------
22,492
- --------------------------------------------------------------------------------------
Systems Integrator -- 3.4%
Computer Horizons* 123,100 4,462
Keane* 296,200 9,404
- --------------------------------------------------------------------------------------
13,866
- --------------------------------------------------------------------------------------
Transactions Processing -- 1.9%
Saville Systems ADR* 112,100 7,875
- --------------------------------------------------------------------------------------
7,875
- --------------------------------------------------------------------------------------
Total Services
(Cost $86,568) 109,326
- --------------------------------------------------------------------------------------
Technology -- 39.2%
Client/Server Help Desk -- 2.6%
Remedy* 313,900 10,810
- --------------------------------------------------------------------------------------
10,810
- --------------------------------------------------------------------------------------
Computer-Manufacturing -- 5.7%
Dell Computer* 243,100 23,550
- --------------------------------------------------------------------------------------
23,550
- --------------------------------------------------------------------------------------
Networking Software -- 4.4%
McAfee Associates* 345,500 18,312
- --------------------------------------------------------------------------------------
18,312
- --------------------------------------------------------------------------------------
Semi-Conductor Production Equipment -- 3.3%
ASM Lithography Holdings* 137,900 13,618
- --------------------------------------------------------------------------------------
13,618
- --------------------------------------------------------------------------------------
Software-Client/Server -- 5.8%
Peoplesoft* 404,800 24,187
- --------------------------------------------------------------------------------------
24,187
- --------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------
Shares/Face Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- continued
Software-Desktop -- 5.1%
Visio* 507,700 $ 21,196
- --------------------------------------------------------------------------------------
21,196
- --------------------------------------------------------------------------------------
Software-Enterprise Resource Planning -- 1.6%
J.D. Edwards & Company* 201,100 6,737
- --------------------------------------------------------------------------------------
6,737
- --------------------------------------------------------------------------------------
Software-Other -- 3.6%
Viasoft* 300,900 14,895
- --------------------------------------------------------------------------------------
14,895
- --------------------------------------------------------------------------------------
Telecommunications Equipment -- 6.4%
Advanced Fibre Communications* 255,200 10,463
Lucent Technologies 185,700 15,111
RSL Communications Limited, Cl A* 39,100 860
- --------------------------------------------------------------------------------------
26,434
- --------------------------------------------------------------------------------------
Voice/Call Transaction Processing -- 0.7%
Nice Systems Limited ADR* 49,500 2,786
- --------------------------------------------------------------------------------------
2,786
- --------------------------------------------------------------------------------------
Total Technology
(Cost $107,249) 162,525
- --------------------------------------------------------------------------------------
Total Common Stocks
(Cost $295,022) 404,328
- --------------------------------------------------------------------------------------
Repurchase Agreement -- 0.7%
J.P. Morgan
6.05%, dated 09/30/97, matures 10/01/97,
repurchase price $2,766,541 (collateralized
by GNMA obligations: total market value
$2,821,398) (A) $2,766 2,766
- --------------------------------------------------------------------------------------
Total Repurchase Agreement
(Cost $2,766) 2,766
- --------------------------------------------------------------------------------------
Total Investments -- 98.4%
(Cost $297,788) 407,094
- --------------------------------------------------------------------------------------
Other Assets and Liabilities -- 1.6%
Other Assets and Liabilities, Net 6,523
- --------------------------------------------------------------------------------------
Net Assets:
Fund Shares of PBHG Class (authorized 200 million shares --
$0.001 par value) based on 18,769,927 outstanding shares
of common stock 326,688
Accumulated net investment loss (2,312)
Accumulated net realized loss on investments (20,065)
Net unrealized appreciation on investments 109,306
- --------------------------------------------------------------------------------------
Total Net Assets -- 100.0% $413,617
======================================================================================
Net Asset Value, Offering and Redemption Price
Per Share $22.04
======================================================================================
</TABLE>
* Non-income producing security
(A) -- Tri-party repurchase agreement
ADR -- American Depository Receipt
Cl -- Class
The accompanying notes are an integral part of the financial statements
15
<PAGE>
==============================================================
PORTFOLIO HIGHLIGHTS As of September 30, 1997 (Unaudited)
==============================================================
PBHG CORE GROWTH FUND
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Cash 3%
Consumer 9%
Energy 6%
Financial 4%
Health 15%
Industrial/General Manufacturing 4%
Services 26%
Technology 33%
- --------------------------------------------------------------------------------
Objective -- Long-term capital appreciation
Invests in -- A diversified portfolio of small, mid-size and large
capitalization companies in all fields that offer attractive
capital appreciation opportunities
Strategy -- The Fund's holdings currently range from roughly $220 million
(Microtouch Systems) to $150 billion (Intel) in market
capitalization, with a weighted average size of $5.2 billion.
While future changes in holdings will create some variability, we
do not expect the company size features of the Fund to differ
substantially from what they are presently. Stock selection is
exclusively "bottom up", focusing on individual companies and the
strength of their fundamental business characteristics. Sector
exposure is not predetermined, but follows from the selection of
the most attractive individual stocks.
- ------------------------------------- -------------------------------------
Top Five Performers* Bottom Five Performers*
Dell Computer APAC Teleservices(2)
Advanced Fibre Communications(1) Videoserver(2)
Signature Resorts Scopus Technology
Varco International West Marine(2)
Corrections Corp. of America Forte Software(2)
* During the six month period ended September 30, 1997
(1) This security was purchased during the period.
(2) This security was completely sold during the period.
AVERAGE ANNUAL TOTAL RETURN(1)
- --------------------------------------------------------------------------------
Annualized
6 Months(2) 1 Year Inception to Date(3)
- --------------------------------------------------------------------------------
PBHG Core Growth Fund 24.66% -9.23 15.55%
- --------------------------------------------------------------------------------
Comparison of Change in the Value of a $10,000 Investment in the PBHG Core
Growth Fund, versus the Russell 3000 Growth Index, and the Lipper Growth Funds
Average
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
PBHG Russell Lipper
12/31/95 10000 10000 10000
3/96 11820 10541 10550
6/96 13800 11206 11026
9/96 14200 11557 11352
12/96 13280 12188 11958
3/97 10340 12122 11818
6/97 12230 14400 13693
9/97 12890 15612 15146
1 Performance is historical and not indicative of future results. 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.
3 The PBHG Core Growth Fund commenced operations on January 2, 1996.
4 The Russell 3000 Growth Index is an unmanaged index comprised of those
securities in the Russell 1000 and Russell 2000 Indexes with a greater-than
average growth orientation. The Index reflects the reinvestment of income
dividends and capital gains distributions, if any, but does not reflect
fees, brokerage commissions, or other expenses of investing.
5 The Lipper Growth Funds Average is an equally weighted bench-mark composed
of mutual funds, each of which normally invests in companies whose
long-term earnings are expected to grow significantly faster than the
earnings of the stocks represented in the major unmanaged stock indexes.
The performance figures are based on changes in net asset value of the
funds in the category with all capital gains distributions and income
dividends reinvested.
<TABLE>
<CAPTION>
=================================================================
STATEMENT OF NET ASSETS As of September 30, 1997 (Unaudited)
=================================================================
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- 96.9%
Consumer -- 8.6%
Consumer Products Miscellaneous -- 1.9%
Blyth Industries* 139,400 $ 3,903
Suiza Foods* 18,100 932
- --------------------------------------------------------------------------------------
4,835
- --------------------------------------------------------------------------------------
Entertainment/Movies -- 1.0%
Cinar Films, Cl B* 36,400 1,388
Regal Cinemas* 49,550 1,331
- --------------------------------------------------------------------------------------
2,719
- --------------------------------------------------------------------------------------
Hotels/Resorts -- 2.5%
Capstar Hotel* 52,900 1,775
HFS* 19,400 1,444
Signature Resorts* 71,300 3,387
- --------------------------------------------------------------------------------------
6,606
- --------------------------------------------------------------------------------------
Retail-Apparel -- 0.6%
St. John Knits 32,200 1,447
- --------------------------------------------------------------------------------------
1,447
- --------------------------------------------------------------------------------------
Retail-Catalog -- 2.0%
CDW Computer Centers* 81,149 5,255
- --------------------------------------------------------------------------------------
5,255
- --------------------------------------------------------------------------------------
Shoe Manufacturing -- 0.6%
Wolverine World Wide 61,900 1,563
- --------------------------------------------------------------------------------------
1,563
- --------------------------------------------------------------------------------------
Total Consumer
(Cost $21,154) 22,425
- --------------------------------------------------------------------------------------
Energy -- 5.9%
Contract Drilling -- 1.2%
Ensco International 75,400 2,974
- --------------------------------------------------------------------------------------
2,974
- --------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
=========================
THE PBHG FUNDS, INC.
=========================
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- continued
Service/Equipment -- 4.7%
Camco International 42,800 $ 2,985
Global Industries Limited* 17,800 710
Hvide Marine* 61,700 1,974
Varco International* 134,300 6,514
- --------------------------------------------------------------------------------------
12,183
- --------------------------------------------------------------------------------------
Total Energy
(Cost $10,728) 15,157
- --------------------------------------------------------------------------------------
Financial -- 3.9%
Consumer Finance -- 3.9%
Associates First Capital 86,100 5,360
Money Store (The) 169,925 4,843
- --------------------------------------------------------------------------------------
10,203
- --------------------------------------------------------------------------------------
Total Financial
(Cost $7,276) 10,203
- --------------------------------------------------------------------------------------
Health -- 15.6%
Contract Research -- 2.2%
Quintiles Transnational* 68,600 5,779
- --------------------------------------------------------------------------------------
5,779
- --------------------------------------------------------------------------------------
Drugs/Pharmaceuticals -- 2.2%
Dura Pharmaceuticals* 131,500 5,737
- --------------------------------------------------------------------------------------
5,737
- --------------------------------------------------------------------------------------
Hospital -- 0.8%
Health Management Associates, Cl A* 66,000 2,087
- --------------------------------------------------------------------------------------
2,087
- --------------------------------------------------------------------------------------
Information Systems -- 2.4%
DAOU Systems* 35,200 1,100
HBO & Company 135,600 5,119
- --------------------------------------------------------------------------------------
6,219
- --------------------------------------------------------------------------------------
Medical Equipment -- 2.1%
Thermo CardioSystems* 200,000 5,525
- --------------------------------------------------------------------------------------
5,525
- --------------------------------------------------------------------------------------
Pharmaceutical Services -- 2.3%
Omnicare 181,500 5,899
- --------------------------------------------------------------------------------------
5,899
- --------------------------------------------------------------------------------------
Physician Practice Management -- 1.8%
FPA Medical Management* 43,600 1,499
Phycor* 106,800 3,104
- --------------------------------------------------------------------------------------
4,603
- --------------------------------------------------------------------------------------
Special Outpatient Facility -- 1.8%
HealthSouth* 176,100 4,699
- --------------------------------------------------------------------------------------
4,699
- --------------------------------------------------------------------------------------
Total Health
(Cost $34,527) 40,548
- --------------------------------------------------------------------------------------
Industrial/General Manufacturing -- 3.8%
Auto-Related -- 3.1%
Harley-Davidson 199,800 5,832
Miller Industries* 193,200 2,306
- --------------------------------------------------------------------------------------
8,138
- --------------------------------------------------------------------------------------
Railroad -- 0.7%
Motivepower Industries* 66,600 1,732
- --------------------------------------------------------------------------------------
1,732
- --------------------------------------------------------------------------------------
Total Industrial/General Manufacturing
(Cost $9,171) 9,870
- --------------------------------------------------------------------------------------
Services -- 26.1%
Commercial Services -- 1.8%
DST Systems* 129,100 4,777
- --------------------------------------------------------------------------------------
4,777
- --------------------------------------------------------------------------------------
Communications Services -- 0.7%
LCI International* 70,900 1,888
- --------------------------------------------------------------------------------------
1,888
- --------------------------------------------------------------------------------------
Correctional Services -- 2.2%
Corrections Corp. of America* 131,100 5,703
- --------------------------------------------------------------------------------------
5,703
- --------------------------------------------------------------------------------------
Educational Services -- 0.6%
Apollo Group, Cl A* 37,800 1,602
- --------------------------------------------------------------------------------------
1,602
- --------------------------------------------------------------------------------------
Employment Service -- 0.3%
Romac International* 18,100 790
- --------------------------------------------------------------------------------------
790
- --------------------------------------------------------------------------------------
Environmental -- 6.2%
Comfort Systems USA* 41,600 796
Thermo Electron* 137,550 5,502
US Filter* 133,100 5,732
USA Waste Services* 103,197 4,114
- --------------------------------------------------------------------------------------
16,144
- --------------------------------------------------------------------------------------
Information/Computer Services -- 2.2%
Gartner Group, Cl A* 187,000 5,610
- --------------------------------------------------------------------------------------
5,610
- --------------------------------------------------------------------------------------
Marketing Information -- 0.1%
Abacus Direct* 6,200 199
- --------------------------------------------------------------------------------------
199
- --------------------------------------------------------------------------------------
Radio/Television -- 3.4%
Clear Channel Communications* 85,900 5,573
Jacor Communications* 75,000 3,314
- --------------------------------------------------------------------------------------
8,887
- --------------------------------------------------------------------------------------
Systems Integrator -- 2.9%
Cambridge Technology Partners 147,900 5,297
International Network Services 48,500 994
RWD Technologies* 53,800 1,237
- --------------------------------------------------------------------------------------
7,528
- --------------------------------------------------------------------------------------
Telemarketing -- 0.3%
Teletech Holdings* 50,400 709
- --------------------------------------------------------------------------------------
709
- --------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
=================================================================
STATEMENT OF NET ASSETS As of September 30, 1997 (Unaudited)
=================================================================
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- continued
Transactions Processing -- 5.4%
First Data 57,800 $ 2,171
International Telecommunications Data Systems* 47,400 1,303
Paychex 143,700 5,012
Saville Systems ADR* 76,600 5,381
- --------------------------------------------------------------------------------------
13,867
- --------------------------------------------------------------------------------------
Total Services
(Cost $56,561) 67,704
- --------------------------------------------------------------------------------------
Technology -- 32.7%
Client/Server Help Desk -- 2.4%
Remedy* 73,600 2,535
Scopus Technology* 233,200 3,702
- --------------------------------------------------------------------------------------
6,237
- --------------------------------------------------------------------------------------
Computer-Manufacturing -- 2.4%
Dell Computer* 65,000 6,297
- --------------------------------------------------------------------------------------
6,297
- --------------------------------------------------------------------------------------
Data Storage -- 0.1%
Box Hill Systems* 17,200 301
- --------------------------------------------------------------------------------------
301
- --------------------------------------------------------------------------------------
Design Automation Software -- 2.5%
Cadence Design Systems* 29,700 1,589
Parametric Technology* 111,400 4,915
- --------------------------------------------------------------------------------------
6,504
- --------------------------------------------------------------------------------------
Graphic/Image Process -- 2.4%
Electronics For Imaging* 119,600 6,100
- --------------------------------------------------------------------------------------
6,100
- --------------------------------------------------------------------------------------
Networking Software -- 1.9%
McAfee Associates* 93,350 4,948
- --------------------------------------------------------------------------------------
4,948
- --------------------------------------------------------------------------------------
PC-Peripherals Manufacturing -- 0.6%
Microtouch Systems* 55,000 1,533
- --------------------------------------------------------------------------------------
1,533
- --------------------------------------------------------------------------------------
Precision Instruments -- 0.9%
Cognex* 72,800 2,393
- --------------------------------------------------------------------------------------
2,393
- --------------------------------------------------------------------------------------
Semi-Conductor Manufacturing -- 3.3%
Altera* 21,700 1,112
Intel 20,600 1,902
Microchip Technology* 120,700 5,450
- --------------------------------------------------------------------------------------
8,464
- --------------------------------------------------------------------------------------
Semi-Conductor Production Equipment -- 1.2%
Helix Technology 11,700 724
KLA--Tencor* 37,100 2,507
- --------------------------------------------------------------------------------------
3,231
- --------------------------------------------------------------------------------------
Software-Client/Server -- 4.4%
BEA Systems* 64,300 1,149
HNC Software* 123,700 4,917
Peoplesoft* 89,100 5,324
- --------------------------------------------------------------------------------------
11,390
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
Shares/Face Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- continued
Software-Desktop -- 0.8%
Visio* 51,400 $ 2,146
- --------------------------------------------------------------------------------------
2,146
- --------------------------------------------------------------------------------------
Software-Enterprise Resource Planning -- 0.6%
J.D. Edwards & Company* 45,500 1,524
- --------------------------------------------------------------------------------------
1,524
- --------------------------------------------------------------------------------------
Software-Manufacturing -- 4.4%
Aspen Technology* 170,500 5,989
Manugistics* 151,800 5,427
- --------------------------------------------------------------------------------------
11,416
- --------------------------------------------------------------------------------------
Software-Other -- 0.6%
Summit Design* 79,900 1,418
- --------------------------------------------------------------------------------------
1,418
- --------------------------------------------------------------------------------------
Telecommunications Equipment -- 4.2%
ADC Telecommunications* 170,800 5,551
Advanced Fibre Communications* 118,400 4,854
RSL Communications Limited, Cl A* 24,600 541
- --------------------------------------------------------------------------------------
10,946
- --------------------------------------------------------------------------------------
Total Technology
(Cost $67,517) 84,848
- --------------------------------------------------------------------------------------
Transportation -- 0.3%
Surface -- 0.3%
Coach USA* 21,300 640
- --------------------------------------------------------------------------------------
640
- --------------------------------------------------------------------------------------
Total Transportation
(Cost $640) 640
- --------------------------------------------------------------------------------------
Total Common Stocks
(Cost $207,574) 251,395
- --------------------------------------------------------------------------------------
Repurchase Agreement -- 3.0%
J.P. Morgan
6.05%, dated 09/30/97, matures 10/01/97,
repurchase price $7,840,944 (collateralized
by U.S. Government Obligations: total market
value $7,996,420) (A) $7,839 7,839
- --------------------------------------------------------------------------------------
Total Repurchase Agreement
(Cost $7,839) 7,839
- --------------------------------------------------------------------------------------
Total Investments -- 99.9%
(Cost $215,413) 259,234
- --------------------------------------------------------------------------------------
Other Assets and Liabilities -- 0.1%
Other Assets and Liabilities, Net 180
- --------------------------------------------------------------------------------------
Net Assets:
Fund Shares of PBHG Class (authorized 200 million shares --
$0.001 par value) based on 20,133,039 outstanding shares
of common stock 281,476
Accumulated net investment loss (1,587)
Accumulated net realized loss on investments (64,296)
Net unrealized appreciation on investments 43,821
- --------------------------------------------------------------------------------------
Total Net Assets-- 100.0% $259,414
======================================================================================
Net Asset Value, Offering and Redemption Price
Per Share $12.89
======================================================================================
</TABLE>
* Non-income producing security
(A) -- Tri-party repurchase agreement
ADR -- American Depository Receipt
Cl -- Class
The accompanying notes are an integral part of the financial statements
18
<PAGE>
==============================================================
PORTFOLIO HIGHLIGHTS As of September 30, 1997 (Unaudited)
==============================================================
PBHG LIMITED FUND
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Cash 11%
Consumer 13%
Energy 2%
Financial 1%
Health 17%
Industrial/General Manufacturing 2%
Services 20%
Technology 34%
- --------------------------------------------------------------------------------
Objective -- Long-term capital appreciation
Invests in -- Some of the smallest, rapidly growing companies in any field
Strategy -- The Fund invests in companies under $250 million in market
capitalization or annual revenues. The Fund is currently closed to
investment by new shareholders in order to protect its investment
objective.
- ---------------------------------- ----------------------------------
Top Five Performers* Bottom Five Performers*
Patterson Energy Desktop Data(1)
Smart Modular Technologies Interlink Computer Sciences(1)
Remec Ultrak(1)
Romac International Meridian Diagnostics(1)
Radiant Systems Kenneth Cole Productions(1)
* During the six month period ended September 30, 1997
(1) This security was completely sold during the period.
AVERAGE ANNUAL TOTAL RETURN(1)
- --------------------------------------------------------------------------------
Annualized
6 Months(2) 1 Year Inception to Date(3)
- --------------------------------------------------------------------------------
PBHG Limited Fund 49.94% 23.72% 27.86%
- --------------------------------------------------------------------------------
Comparison of Change in the Value of a $10,000 Investment in the PBHG Limited
Fund, versus the Russell 2000 Growth Index, and the Lipper Small Cap Funds
Average
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
PBHG Russell Lipper
6/30/96 10000 10000 10000
9/96 11010 9914 10198
12/96 11083 9941 10439
3/97 9084 8898 9735
6/97 11454 10460 11395
9/97 13622 12229 13281
1 Performance is historical and not indicative of future results. 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.
3 The PBHG Limited Fund commenced operations on July 1, 1996.
4 The Russell 2000 Growth Index is an unmanaged index comprised of those
securities in the Russell 2000 Index with a greater-than-average growth
orientation. The Index reflects the reinvestment of income dividends and
capital gains distributions, if any, but does not reflect fees, brokerage
commissions, or other expenses of investing.
5 The Lipper Small Cap Funds Average is an equally weighted benchmark
composed of mutual funds, each of which limits its investments, by
prospectus or portfolio practice, to companies on the basis of the size of
the company. The performance figures are based on changes in net asset
value of the Funds in the category with all capital gains distributions and
income dividends revinested.
<TABLE>
<CAPTION>
=================================================================
STATEMENT OF NET ASSETS As of September 30, 1997 (Unaudited)
=================================================================
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- 89.7%
Consumer -- 12.7%
Restaurants -- 3.6%
Logan's Roadhouse* 111,600 $ 2,902
PJ America* 118,000 2,035
Schlotzsky's* 99,100 1,877
- --------------------------------------------------------------------------------------
6,814
- --------------------------------------------------------------------------------------
Retail-Apparel -- 1.3%
North Face* 87,800 2,360
- --------------------------------------------------------------------------------------
2,360
- --------------------------------------------------------------------------------------
Retail-Catalog -- 3.2%
Insight Enterprises* 116,400 3,856
Wilmar Industries* 79,800 2,154
- --------------------------------------------------------------------------------------
6,010
- --------------------------------------------------------------------------------------
Retail-Specialty -- 2.2%
Hibbet Sporting Goods* 143,500 4,000
- --------------------------------------------------------------------------------------
4,000
- --------------------------------------------------------------------------------------
Shoe Manufacturing -- 1.1%
Rocky Shoes* 117,000 2,113
- --------------------------------------------------------------------------------------
2,113
- --------------------------------------------------------------------------------------
Specialty Food/Candy -- 1.3%
Worthington Foods 104,899 2,426
- --------------------------------------------------------------------------------------
2,426
- --------------------------------------------------------------------------------------
Total Consumer
(Cost $17,959) 23,723
- --------------------------------------------------------------------------------------
Energy -- 2.4%
Contract Drilling -- 2.4%
Patterson Energy* 87,000 4,557
- --------------------------------------------------------------------------------------
4,557
- --------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
=================================================================
STATEMENT OF NET ASSETS As of September 30, 1997 (Unaudited)
=================================================================
- --------------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- continued
- --------------------------------------------------------------------------------------
Total Energy
(Cost $1,373) $ 4,557
- --------------------------------------------------------------------------------------
Financial -- 1.4%
Miscellaneous-Financial -- 1.4%
New Century Financial* 153,000 2,610
- --------------------------------------------------------------------------------------
2,610
- --------------------------------------------------------------------------------------
Total Financial
(Cost $2,485) 2,610
- --------------------------------------------------------------------------------------
Health -- 16.7%
Biotechnology -- 0.4%
Serologicals* 30,900 703
- --------------------------------------------------------------------------------------
703
- --------------------------------------------------------------------------------------
Drugs/Pharmaceuticals -- 1.1%
Medicis Pharmaceutical, Cl A* 45,050 2,067
- --------------------------------------------------------------------------------------
2,067
- --------------------------------------------------------------------------------------
Health Care Management Services -- 1.2%
Hooper Holmes 99,600 1,214
Horizon Health* 41,300 1,032
- --------------------------------------------------------------------------------------
2,246
- --------------------------------------------------------------------------------------
Home Health Care -- 1.6%
Lifeline Systems* 104,100 1,900
Pediatric Services of America* 50,300 1,176
- --------------------------------------------------------------------------------------
3,076
- --------------------------------------------------------------------------------------
Hospital/Nursing Management -- 1.1%
Assisted Living Concepts* 125,900 2,014
- --------------------------------------------------------------------------------------
2,014
- --------------------------------------------------------------------------------------
Information Systems -- 5.2%
DAOU Systems* 87,900 2,747
Impath* 82,500 2,413
Medquist* 105,600 2,469
Quadramed* 123,900 2,137
- --------------------------------------------------------------------------------------
9,766
- --------------------------------------------------------------------------------------
Managed Care-Dental -- 0.2%
First Commonwealth* 21,600 321
- --------------------------------------------------------------------------------------
321
- --------------------------------------------------------------------------------------
Medical Devices -- 3.0%
Resmed* 101,400 2,636
Sabratek* 83,600 3,041
- --------------------------------------------------------------------------------------
5,677
- --------------------------------------------------------------------------------------
Medical Equipment -- 1.7%
Molecular Dynamics* 120,000 3,240
- --------------------------------------------------------------------------------------
3,240
- --------------------------------------------------------------------------------------
Pharmaceutical Services -- 0.5%
NCS Healthcare* 38,100 972
- --------------------------------------------------------------------------------------
972
- --------------------------------------------------------------------------------------
Special Outpatient Facility -- 0.7%
National Surgery Centers* 57,150 1,243
- --------------------------------------------------------------------------------------
1,243
- --------------------------------------------------------------------------------------
Total Health
(Cost $22,967) 31,325
- --------------------------------------------------------------------------------------
Industrial/General Manufacturing -- 2.5%
Aerospace -- 2.5%
Ducommun* 85,600 3,226
Kellstrom* 74,900 1,545
- --------------------------------------------------------------------------------------
4,771
- --------------------------------------------------------------------------------------
Total Industrial/General Manufacturing
(Cost $3,224) 4,771
- --------------------------------------------------------------------------------------
Services -- 19.9%
Commercial Services -- 1.3%
Healthcare Recoveries* 108,000 2,430
- --------------------------------------------------------------------------------------
2,430
- --------------------------------------------------------------------------------------
Document Processing -- 1.0%
Lason* 65,000 1,796
- --------------------------------------------------------------------------------------
1,796
- --------------------------------------------------------------------------------------
Educational Services -- 0.1%
Edutrek International* 7,000 186
- --------------------------------------------------------------------------------------
186
- --------------------------------------------------------------------------------------
Electronic Commerce -- 0.9%
Quickresponse Services* 50,900 1,743
- --------------------------------------------------------------------------------------
1,743
- --------------------------------------------------------------------------------------
Employment Services -- 3.4%
Romac International* 101,200 4,415
Vincam Group* 65,300 1,877
- --------------------------------------------------------------------------------------
6,292
- --------------------------------------------------------------------------------------
Environmental -- 0.9%
Superior Services* 59,200 1,687
- --------------------------------------------------------------------------------------
1,687
- --------------------------------------------------------------------------------------
Information/Computer Services -- 2.6%
Computer Management* 28,550 657
Forrester Research* 117,800 3,195
Meta Group* 43,800 1,084
- --------------------------------------------------------------------------------------
4,936
- --------------------------------------------------------------------------------------
Marketing Information -- 1.9%
Abacus Direct* 68,000 2,185
Market Facts 60,200 1,418
- --------------------------------------------------------------------------------------
3,603
- --------------------------------------------------------------------------------------
Printing Services/Forms -- 1.5%
Consolidated Graphics* 57,400 2,856
- --------------------------------------------------------------------------------------
2,856
- --------------------------------------------------------------------------------------
Systems Integrator -- 6.3%
Intelligroup* 198,600 4,270
Pomeroy Computer Resources* 80,000 3,420
PSW Technologies* 140,100 1,804
Registry* 13,040 602
Whittman-Hart* 56,500 1,723
- --------------------------------------------------------------------------------------
11,819
- --------------------------------------------------------------------------------------
Total Services
(Cost $24,963) 37,348
- --------------------------------------------------------------------------------------
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
================================================================
THE PBHG FUNDS, INC.
================================================================
- --------------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- continued
Technology -- 34.1%
Automated Data Collection -- 1.3%
Eltron International* 67,700 $ 2,323
- --------------------------------------------------------------------------------------
2,323
- --------------------------------------------------------------------------------------
Client/Server Help Desk -- 1.0%
Cybex Computer Products* 5,300 143
Great Plains Software* 57,000 1,596
- --------------------------------------------------------------------------------------
1,739
- --------------------------------------------------------------------------------------
Data Storage -- 2.0%
Advanced Digital Information* 92,900 1,893
Box Hill Systems* 6,000 105
Procom Technology* 111,500 1,756
- --------------------------------------------------------------------------------------
3,754
- --------------------------------------------------------------------------------------
Design Automation Software -- 1.2%
Tecnomatix Technologies Limited* 60,100 2,299
- --------------------------------------------------------------------------------------
2,299
- --------------------------------------------------------------------------------------
Digital Video Related -- 1.6%
Engineering Animation* 80,400 3,065
- --------------------------------------------------------------------------------------
3,065
- --------------------------------------------------------------------------------------
Electronic Components -- 2.6%
Vivid Technologies* 93,400 1,448
WPI Group* 283,100 3,432
- --------------------------------------------------------------------------------------
4,880
- --------------------------------------------------------------------------------------
Graphic/Image Process -- 0.2%
Splash Technologies Holdings* 8,200 321
- --------------------------------------------------------------------------------------
321
- --------------------------------------------------------------------------------------
Networking Services -- 0.9%
Apex PC Solutions* 45,800 1,735
- --------------------------------------------------------------------------------------
1,735
- --------------------------------------------------------------------------------------
PC-Peripherals Manufacturing -- 0.1%
Trident International* 9,600 163
- --------------------------------------------------------------------------------------
163
- --------------------------------------------------------------------------------------
Precision Instruments -- 1.5%
II-VI* 77,000 2,041
Remec* 23,100 843
- --------------------------------------------------------------------------------------
2,884
- --------------------------------------------------------------------------------------
Semi-Conductor Manufacturing -- 1.5%
Smart Modular Technologies* 33,000 2,739
- --------------------------------------------------------------------------------------
2,739
- --------------------------------------------------------------------------------------
Semi-Conductor Testing Equipment -- 1.7%
Lecroy* 70,400 3,115
- --------------------------------------------------------------------------------------
3,115
- --------------------------------------------------------------------------------------
Software-Client/Server -- 5.1%
Advent Software* 57,400 1,579
Documentum* 30,300 1,007
Legato Systems* 87,500 3,106
Smallworldwide PLC* 102,000 2,091
Symix Systems* 98,500 1,835
- --------------------------------------------------------------------------------------
9,618
- --------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------
Shares/Face Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- continued
Software-Other -- 3.0%
Radiant Systems* 163,200 $ 3,427
Summit Design* 123,600 2,194
- --------------------------------------------------------------------------------------
5,621
- --------------------------------------------------------------------------------------
Telecommunications Equipment -- 4.6%
DSP Group* 46,900 1,841
Geotel Communications* 81,700 1,542
MAS Technology Limited ADR* 37,200 846
RF Monolithics* 90,000 2,273
Tollgrade Communications* 42,100 989
World Access* 36,900 1,199
- --------------------------------------------------------------------------------------
8,690
- --------------------------------------------------------------------------------------
Voice/Call Transaction Processing -- 5.8%
Applied Voice Technology* 168,700 4,829
Davox* 74,550 2,497
Natural Microsystems* 31,700 1,205
Nice Systems Limited ADR* 42,400 2,385
- --------------------------------------------------------------------------------------
10,916
- --------------------------------------------------------------------------------------
Total Technology
(Cost $43,619) 63,862
- --------------------------------------------------------------------------------------
Total Common Stocks
(Cost $116,590) 168,196
- --------------------------------------------------------------------------------------
Repurchase Agreements -- 10.6%
Greenwich Agency
6.04%, dated 09/30/97, matures 10/01/97,
repurchase price $5,561,334 (collateralized
by U.S. Government Obligations: total market
value $5,674,018) (A) $ 5,561 5,561
J.P. Morgan
6.04%, dated 09/30/97, matures 10/01/97,
repurchase price $14,295,623 (collateralized
by U.S. Government Obligations: total market
value $14,579,091) (A) 14,293 14,293
- --------------------------------------------------------------------------------------
Total Repurchase Agreements
(Cost $19,854) 19,854
- --------------------------------------------------------------------------------------
Total Investments -- 100.3%
(Cost $136,444) 188,050
- --------------------------------------------------------------------------------------
Other Assets and Liabilities -- (0.3%)
Other Assets and Liabilities, Net (495)
- --------------------------------------------------------------------------------------
Net Assets:
Fund Shares of PBHG Class (authorized 200 million shares --
$0.001 par value) based on 13,819,838 outstanding
shares of common stock 136,043
Accumulated net investment loss (630)
Accumulated net realized gain on investments 536
Net unrealized appreciation on investments 51,606
- --------------------------------------------------------------------------------------
Total Net Assets-- 100.0% $187,555
======================================================================================
Net Asset Value, Offering and Redemption
Price Per Share $13.57
======================================================================================
</TABLE>
* Non-income producing security
(A) -- Tri-party repurchase agreement
ADR -- American Depository Receipt
Cl -- Class
The accompanying notes are an integral part of the financial statements
21
<PAGE>
==============================================================
PORTFOLIO HIGHLIGHTS As of September 30, 1997 (Unaudited)
==============================================================
PBHG LARGE CAP 20 FUND
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Cash 5%
Consumer 4%
Energy 11%
Financial 9%
Health 18%
Services 9%
Technology 44%
- --------------------------------------------------------------------------------
Objective -- Long-term growth of capital
Invests in -- A limited number of larger capitalization companies (no more than
20) that have above average potential for capital appreciation.
Strategy -- The Fund concentrates its investments in what we view as the best
opportunities in our universe of high growth companies with market
capitalizations in excess of $1 billion. At the end of the period,
the Fund held the desired number of 20 stocks ranging in market
capitalization from $5.6 billion (HBO & Company) to $158 billion
(Microsoft). The weighted average market capitalization was $23.3
billion. The Fund's size characteristics may vary dramatically
from one time period to another reflecting the inherent
sensitivity to changes in holdings of a highly concentrated
portfolio.
- ---------------------------------- ----------------------------------
Top Five Performers* Bottom Five Performers*
Dell Computer Parametric Technology(1)
Applied Materials NIKE(1)
EMC Service Corp. International(2)
HBO & Company America Online(2)
Peoplesoft Oxford Health Plans(2)
* During the six month period ended September 30, 1997
(1) This security was completely sold during the period.
(2) This security was purchased during the period.
AGGREGATE TOTAL RETURN(1)
- --------------------------------------------------------------------------------
Cumulative Inception
6 Months(2) to Date(3)
- --------------------------------------------------------------------------------
PBHG Large Cap 20 Fund 39.46% 29.14%
- --------------------------------------------------------------------------------
Comparison of Change in the Value of a $10,000 Investment in the PBHG Large Cap
20 Fund, versus the Russell Top 200 Growth Index, and the Lipper Growth Funds
Average
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
PBHG Russell Lipper
11/30/96 10000 10000 10000
12/96 9841 9793 9848
1/97 10462 10580 10353
2/97 10002 10571 10210
3/97 9261 10008 9732
4/97 9881 10830 10106
5/97 10913 11545 10849
6/97 11524 12059 11276
7/97 12856 13097 12223
8/97 12235 12120 11816
9/97 12915 12710 12472
1 Past performance of the period is not predictive of future 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.
3 The PBHG Large Cap 20 Fund commenced operations on December 2, 1996.
4 The Russell Top 200 Growth Index is an unmanaged index comprised of those
securities in the Russell Top 200 Index with a greater-than-average growth
orientation. The Index reflects the reinvestment of income dividends and
capital gains distributions, if any, but does not reflect fees, brokerage
commissions, or other expenses of investing.
5 The Lipper Growth Funds Average is an equally weighted bench-mark composed
of mutual funds, each of which normally invests in companies whose
long-term earnings are expected to grow significantly faster than the
earnings of the stocks represented in the major unmanaged stock indexes.
The performance figures are based on changes in net asset value of the
funds in the category with all capital gains distributions and income
dividends reinvested.
<TABLE>
<CAPTION>
=================================================================
STATEMENT OF NET ASSETS As of September 30, 1997 (Unaudited)
=================================================================
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- 95.6%
Consumer -- 4.1%
Funeral Services -- 4.1%
Service Corp. International 137,400 $ 4,423
- --------------------------------------------------------------------------------------
4,423
- --------------------------------------------------------------------------------------
Total Consumer
(Cost $4,557) 4,423
- --------------------------------------------------------------------------------------
Energy -- 10.9%
Contract Drilling -- 5.7%
Ensco International 157,400 6,207
- --------------------------------------------------------------------------------------
6,207
- --------------------------------------------------------------------------------------
Service/Equipment -- 5.2%
Schlumberger Limited 67,700 5,699
- --------------------------------------------------------------------------------------
5,699
- --------------------------------------------------------------------------------------
Total Energy
(Cost $10,237) 11,906
- --------------------------------------------------------------------------------------
Financial -- 9.6%
Consumer Finance -- 4.1%
Associates First Capital 72,400 4,507
- --------------------------------------------------------------------------------------
4,507
- --------------------------------------------------------------------------------------
Mortgage Related -- 5.5%
MGIC Investment 105,300 6,035
- --------------------------------------------------------------------------------------
6,035
- --------------------------------------------------------------------------------------
Total Financial
(Cost $8,501) 10,542
- --------------------------------------------------------------------------------------
Health -- 17.8%
Drugs/Pharmaceuticals -- 3.3%
Lilly (Eli) & Co. 29,600 3,565
- --------------------------------------------------------------------------------------
3,565
- --------------------------------------------------------------------------------------
Information Systems -- 5.1%
HBO & Company 146,200 5,519
- --------------------------------------------------------------------------------------
5,519
- --------------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
==============================================================
THE PBHG FUNDS, INC.
==============================================================
- --------------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- continued
Managed Health Care -- 4.9%
Oxford Health Plans* 72,000 $ 5,391
- --------------------------------------------------------------------------------------
5,391
- --------------------------------------------------------------------------------------
Special Outpatient Facility -- 4.5%
HealthSouth* 184,500 4,924
- --------------------------------------------------------------------------------------
4,924
- --------------------------------------------------------------------------------------
Total Health
(Cost $16,010) 19,399
- --------------------------------------------------------------------------------------
Services -- 9.3%
Communications Services -- 4.3%
Worldcom* 132,900 4,701
- --------------------------------------------------------------------------------------
4,701
- --------------------------------------------------------------------------------------
Environmental -- 5.0%
USA Waste Services* 138,000 5,503
- --------------------------------------------------------------------------------------
5,503
- --------------------------------------------------------------------------------------
Total Services
(Cost $10,346) 10,204
- --------------------------------------------------------------------------------------
Technology -- 43.9%
Computer-Manufacturing -- 5.4%
Dell Computer* 61,200 5,929
- --------------------------------------------------------------------------------------
5,929
- --------------------------------------------------------------------------------------
Data Storage -- 5.4%
EMC* 101,500 5,925
- --------------------------------------------------------------------------------------
5,925
- --------------------------------------------------------------------------------------
Semi-Conductor Product Equipment -- 5.4%
Applied Materials* 61,800 5,886
- --------------------------------------------------------------------------------------
5,886
- --------------------------------------------------------------------------------------
Software-Client/Server -- 5.9%
Peoplesoft* 107,900 6,447
- --------------------------------------------------------------------------------------
6,447
- --------------------------------------------------------------------------------------
Software-Desktop -- 3.6%
Microsoft* 30,000 3,969
- --------------------------------------------------------------------------------------
3,969
- --------------------------------------------------------------------------------------
Software-Internet -- 4.1%
America Online* 59,500 4,489
- --------------------------------------------------------------------------------------
4,489
- --------------------------------------------------------------------------------------
Software-System/Mainframe -- 4.7%
BMC Software* 78,100 5,057
- --------------------------------------------------------------------------------------
5,057
- --------------------------------------------------------------------------------------
Telecommunications Equipment -- 9.4%
Lucent Technologies 66,300 5,395
Tellabs* 95,000 4,893
- --------------------------------------------------------------------------------------
10,288
- --------------------------------------------------------------------------------------
Total Technology
(Cost $34,534) 47,990
- --------------------------------------------------------------------------------------
Total Common Stocks
(Cost $84,185) 104,464
- --------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------
Face Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreements -- 4.9%
J.P. Morgan
6.05%, dated 09/30/97, matures 10/01/97,
repurchase price $3,684,297 (collateralized by
U.S. Government Obligations: total market
value $3,757,351) (A) $ 3,684 $ 3,684
Morgan
6.05%, dated 09/30/97, matures 10/01/97,
repurchase price $1,652,905 (collateralized by
U.S. Government Obligations: total market value
$1,695,862) (A) 1,652 1,652
- --------------------------------------------------------------------------------------
Total Repurchase Agreements
(Cost $5,336) 5,336
- --------------------------------------------------------------------------------------
Total Investments -- 100.5%
(Cost $89,521) 109,800
- --------------------------------------------------------------------------------------
Other Assets and Liabilities -- (0.5%)
Other Assets and Liabilities, Net (547)
- --------------------------------------------------------------------------------------
Net Assets:
Fund Shares PBHG Class (authorized 200 million shares --
$0.01 par value) based on 8,466,357 outstanding shares
of common stock 88,368
Accumulated net investment loss (399)
Accumulated net realized gain on investments 1,005
Net unrealized appreciation on investments 20,279
- --------------------------------------------------------------------------------------
Total Net Assets-- 100.0% $109,253
======================================================================================
Net Asset Value, Offering and Redemption Price
Per Share $12.90
======================================================================================
</TABLE>
* Non-income producing security
(A) -- Tri-party repurchase agreement
The accompanying notes are an integral part of the financial statements
23
<PAGE>
==============================================================
PORTFOLIO HIGHLIGHTS As of September 30, 1997 (Unaudited)
==============================================================
PBHG LARGE CAP VALUE FUND
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Cash 4%
Basic Materials 5%
Capital Goods 13%
Communication Services 5%
Consumer Cyclical 9%
Consumer Staples 2%
Energy 13%
Finance 33%
Healthcare 7%
Transportation 5%
Technology 4%
- --------------------------------------------------------------------------------
Objective -- Long-term growth of capital and income.
Invests in -- A diversified portfolio of equity securities of large
capitalization companies.
Strategy -- The Fund invests in companies with market capitalizations in
excess of $1 billion which, in the Advisers' opinion, are
undervalued or overlooked by the market. In selecting investments
for the Fund, the Advisers emphasize fundamental investment value
and consider factors such as the relationship of a company's
potential earning power to the current market price of its stock;
continuing dividend income and the potential for increased
dividend growth; low price/earnings ratio relative to either that
company's historical results or the current ratios for other
similar companies; and potential for favorable business
developments.
- ------------------------------------- -------------------------------------
Top Five Performers* Bottom Five Performers*
Noble Drilling Columbia HCA Healthcare
Reading & Bates Nine West Group
Parker Hannifin LTV
International Business Machines Harnischfeger Industries
ITT Industries Aetna
*During the six month period ended September 30, 1997
AGGREGATE TOTAL RETURN(1)
- --------------------------------------------------------------------------------
Cumulative Inception
6 Months(2) to Date(3)
- --------------------------------------------------------------------------------
PBHG Large Cap Value Fund 23.15% 24.50%
- --------------------------------------------------------------------------------
Comparison of Change in the Value of a $10,000 Investment in the PBHG Large Cap
Value Fund, versus the Russell 1000 Value Index, and the Lipper Growth & Income
Funds Average
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
PBHG Russell Lipper
12/31/96 10000 10000 10000
1/97 10240 10485 10430
2/97 10430 10639 10484
3/97 10110 10256 10113
4/97 10380 10687 10473
5/97 11080 11284 11128
6/97 11560 11768 11556
7/97 12400 12653 12405
8/97 11999 12203 11991
9/97 12449 12940 12599
1 Performance is historical and not indicative of future results. 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.
3 The PBHG Large Cap Value Fund commenced operations on January 2, 1997.
4 The Russell 1000 Value Index is an unmanaged index comprised of those
securities in the Russell 1000 Index with lower price-to-book ratios and
lower forecasted growth values. The Index reflects the reinvestment of
income dividends and capital gains distributions, if any, but does not
reflect fees, brokerage commissions, or other expenses of investing.
5 The Lipper Growth and Income Funds Average is an equally weighted benchmark
composed mutual funds, each of which combines growth of earnings with an
income requirement for level and/or rising dividends. The performance
figures are based on changes in net asset value of the Funds in the
category with all capital gains distributions and income dividends
reinvested.
<TABLE>
<CAPTION>
=================================================================
STATEMENT OF NET ASSETS As of September 30, 1997 (Unaudited)
=================================================================
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- 95.7%
Basic Materials -- 4.9%
Chemicals & Allied Products -- 1.5%
Rohm & Haas 11,300 $ 1,084
- --------------------------------------------------------------------------------------
1,084
- --------------------------------------------------------------------------------------
Non-Ferrous Metals & Mining -- 1.3%
Reynolds Metals 13,000 921
- --------------------------------------------------------------------------------------
921
- --------------------------------------------------------------------------------------
Paper -- 1.6%
Fort James 9,000 412
Union Camp 11,900 734
- --------------------------------------------------------------------------------------
1,146
- --------------------------------------------------------------------------------------
Steel -- 0.5%
LTV 27,700 351
- --------------------------------------------------------------------------------------
351
- --------------------------------------------------------------------------------------
Total Basic Materials
(Cost $3,174) $3,502
- --------------------------------------------------------------------------------------
Capital Goods -- 13.0%
Building & Construction -- 0.6%
Fluor 7,500 402
- --------------------------------------------------------------------------------------
402
- --------------------------------------------------------------------------------------
Machinery & Instrumentation -- 12.4%
Agco 44,900 1,423
Case 26,600 1,772
Elsag Bailey Process* 61,800 1,043
Flowserve 24,500 732
Harnischfeger Industries 60,800 2,599
Parker Hannifin 28,000 1,260
- --------------------------------------------------------------------------------------
8,829
- --------------------------------------------------------------------------------------
Total Capital Goods
(Cost $8,661) 9,231
- --------------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
========================================================
THE PBHG FUNDS, INC.
========================================================
- --------------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- continued
Communications Services -- 4.7%
Utilities-Telephone -- 4.7%
Bell Atlantic 23,808 $ 1,915
GTE 31,200 1,416
- --------------------------------------------------------------------------------------
3,331
- --------------------------------------------------------------------------------------
Total Communications Services
(Cost $3,027) 3,331
- --------------------------------------------------------------------------------------
Consumer Cyclical -- 8.8%
Auto & Related -- 2.3%
Borg-Warner Automotive 15,700 893
ITT Industries 22,300 740
- --------------------------------------------------------------------------------------
1,633
- --------------------------------------------------------------------------------------
Retail-Department Stores -- 4.9%
Dillards, Cl A 52,300 2,291
J.C. Penney 21,000 1,223
- --------------------------------------------------------------------------------------
3,514
- --------------------------------------------------------------------------------------
Retail-Specialty -- 1.6%
Claire's Stores 15,200 340
Nine West Group* 20,700 814
- --------------------------------------------------------------------------------------
1,154
- --------------------------------------------------------------------------------------
Total Consumer Cyclical
(Cost $5,466) 6,301
- --------------------------------------------------------------------------------------
Consumer Staples -- 2.5%
Tobacco -- 2.5%
RJR Nabisco 51,000 1,753
- --------------------------------------------------------------------------------------
1,753
- --------------------------------------------------------------------------------------
Total Consumer Staples
(Cost $1,703) 1,753
- --------------------------------------------------------------------------------------
Energy -- 12.6%
Oil & Gas Services -- 4.7%
Noble Drilling* 47,500 1,532
Reading & Bates* 43,200 1,796
- --------------------------------------------------------------------------------------
3,328
- --------------------------------------------------------------------------------------
Oils--Domestic -- 4.2%
Amoco 15,350 1,479
USX-Marathon Group 40,000 1,488
- --------------------------------------------------------------------------------------
2,967
- --------------------------------------------------------------------------------------
Oils--International -- 3.7%
Repsol S.A. ADR 33,700 1,462
Texaco 19,200 1,180
- --------------------------------------------------------------------------------------
2,642
- --------------------------------------------------------------------------------------
Total Energy
(Cost $6,818) 8,937
- --------------------------------------------------------------------------------------
Finance -- 32.9%
Finance-Insurance -- 12.6%
Allstate 18,000 1,447
Hartford Financial Services 22,500 1,936
Loews 20,800 2,349
Nationwide Financial Services 40,000 1,115
Penncorp Financial Group 38,400 1,190
PMI Group 16,000 917
- --------------------------------------------------------------------------------------
8,954
- --------------------------------------------------------------------------------------
Finance-Money Center Banks -- 3.0%
Chase Manhattan 18,000 2,124
- --------------------------------------------------------------------------------------
2,124
- --------------------------------------------------------------------------------------
Finance-Other -- 2.4%
Capital One Financial 9,600 439
Travelers 19,000 1,297
- --------------------------------------------------------------------------------------
1,736
- --------------------------------------------------------------------------------------
Finance-Regional Banks -- 7.7%
Banc One 19,300 1,077
BankBoston 14,000 1,238
First Union 37,800 1,892
Nationsbank 20,400 1,262
- --------------------------------------------------------------------------------------
5,469
- --------------------------------------------------------------------------------------
Real Estate/REITS -- 7.2%
Equity Residential Properties Trust 34,000 1,855
Meditrust 27,100 1,125
Nationwide Health Property 22,300 537
Simon Debartolo Group 48,500 1,601
- --------------------------------------------------------------------------------------
5,118
- --------------------------------------------------------------------------------------
Total Finance
(Cost $20,992) 23,401
- --------------------------------------------------------------------------------------
Healthcare -- 7.0%
Drugs & Health Care -- 4.3%
Aetna 20,000 1,629
Foundation Health Systems* 24,000 768
Medpartners* 31,400 673
- --------------------------------------------------------------------------------------
3,070
- --------------------------------------------------------------------------------------
For Profit Hospitals -- 2.7%
Columbia/HCA Healthcare 65,700 1,889
- --------------------------------------------------------------------------------------
1,889
- --------------------------------------------------------------------------------------
Total Healthcare
(Cost $5,339) 4,959
- --------------------------------------------------------------------------------------
Technology -- 3.9%
Electronics & Instruments -- 2.1%
Avnet 23,500 1,494
- --------------------------------------------------------------------------------------
1,494
- --------------------------------------------------------------------------------------
Office Equipment & Supplies -- 1.8%
International Business Machines 12,500 1,324
- --------------------------------------------------------------------------------------
1,324
- --------------------------------------------------------------------------------------
Total Technology
(Cost $2,443) 2,818
- --------------------------------------------------------------------------------------
Transportation -- 5.2%
Transportation -- 5.2%
Burlington Northern Santa Fe 14,000 1,353
Delta Airlines 7,800 735
Southwest Airlines 49,800 1,590
- --------------------------------------------------------------------------------------
3,678
- --------------------------------------------------------------------------------------
Total Transportation
(Cost $3,095) 3,678
- --------------------------------------------------------------------------------------
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
=================================================================
STATEMENT OF NET ASSETS As of September 30, 1997 (Unaudited)
=================================================================
- --------------------------------------------------------------------------------------
Shares/Face Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- continued
Utilities -- 0.2%
Utilities-Electrical -- 0.2%
Duke Energy 3,080 $ 152
- --------------------------------------------------------------------------------------
152
- --------------------------------------------------------------------------------------
Total Utilities
(Cost $81) 152
- --------------------------------------------------------------------------------------
Total Common Stocks
(Cost $60,799) 68,063
- --------------------------------------------------------------------------------------
Repurchase Agreement -- 3.9%
J.P. Morgan
6.05%, dated 09/30/97, matures 10/01/97,
repurchase price $2,769,269 (collateralized by
U.S. Government Obligations: total market
value $2,824,180) (A) $2,769 2,769
- --------------------------------------------------------------------------------------
Total Repurchase Agreement
(Cost $2,769) 2,769
- --------------------------------------------------------------------------------------
Total Investments -- 99.6%
(Cost $63,568) 70,832
- --------------------------------------------------------------------------------------
Other Assets and Liabilities -- 0.4%
Other Assets and Liabilities, Net 257
- --------------------------------------------------------------------------------------
Net Assets:
Fund Shares of PBHG Class (authorized 200 million shares --
$0.001 par value) based on 5,711,929 outstanding shares
of common stock 61,860
Undistributed net investment income 218
Accumulated net realized gain on investments 1,747
Net unrealized appreciation on investments 7,264
- --------------------------------------------------------------------------------------
Total Net Assets -- 100.0% $ 71,089
======================================================================================
Net Asset Value, Offering and Redemption Price
Per Share $12.45
======================================================================================
</TABLE>
* Non-income producing security
(A) -- Tri-party repurchase agreement
ADR -- American Depository Receipt
Cl -- Class
The accompanying notes are an integral part of the financial statements
26
<PAGE>
==============================================================
PORTFOLIO HIGHLIGHTS As of September 30, 1997 (Unaudited)
==============================================================
PBHG MID-CAP VALUE FUND
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Cash 6%
Basic Materials 11%
Capital Goods 21%
Consumer Cyclical 9%
Consumer Staples 2%
Energy 9%
Finance 11%
Healthcare 5%
Miscellaneous 2%
Technology 15%
Transportation 5%
Utilities 4%
Objective -- To achieve above-average total return over a market cycle of three
to five years, consistent with reasonable risk.
Invests in -- Common stocks and other equity securities of companies with
market capitalizations in the range of companies represented by
the Standard & Poor's Mid-Cap 400 Index (S&P 400), which are
considered to be undervalued based on certain proprietary
measures of value.
Strategy -- The Fund invests in equity securities of companies with between
$200 million and $5 billion in market capitalization. In selecting
investments for the Fund, the Adviser emphasizes fundamental
investment value and considers the following factors, among
others, in identifying and analyzing a security's fundamental
value and capital appreciation potential: the relationship of a
company's potential earning power to the current price of its
stock; current dividend income and the potential for dividend
growth; low price/earnings ratio relative to either that company's
historical results or the current ratios for other similar
companies; strong competitive advantages; and potential for
favorable business developments.
- ----------------------------------- -----------------------------------
Top Five Performers* Bottom Five Performers*
Arterial Vascular Engineer INSO
Tandem Computers Software Artistry
Essex International National Data
Lone Star Industries Jetfax
Foodmaker Vivid Technologies
* During the six month period ended September 30, 1997
AGGREGATE TOTAL RETURN(1)
- --------------------------------------------------------------------------------
Cumulative Inception to Date(2)
- --------------------------------------------------------------------------------
PBHG Mid-Cap Value Fund 43.00%
- --------------------------------------------------------------------------------
Comparison of Change in the Value of a $10,000 Investment in the PBHG Mid-Cap
Value Fund, versus the S&P Mid-Cap 400 Index, and the Lipper Mid-Cap Funds
Average
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
PBHG S&P LIPPER
4/97 10000 10000 10000
5/97 10740 10874 11005
6/97 11410 11180 11420
7/97 12890 12285 12338
8/97 13241 12270 12295
9/97 14301 12976 13078
1 Performance is historical and not indicative of future results. 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 Total return has not been annualized. The PBHG Mid-Cap Value Fund commenced
operations on May 1, 1997.
3 The S&P Mid-Cap 400 Index is an unmanaged capitalization-weighted index
that measures the performance of the mig-range sector of the U.S. stock
market. The Index reflects the reinvestment of income dividends and capital
gains distributions, if any, but does not reflect fees, brokerage
commissions, or other expenses of investing.
4 The Lipper Mid-Cap Funds Average is an equally weighted benchmark composed
of mutual funds, each of which by prospectus or portfolio practice invests
primarily in companies with market capitalizations less than $5 billion at
the time of purchase. The performance figures are based on changes in net
asset value of the Funds in the category with all capital gains
distributions and income dividends reinvested.
<TABLE>
<CAPTION>
=================================================================
SCHEDULE OF INVESTMENTS As of September 30, 1997 (Unaudited)
=================================================================
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- 94.4%
Basic Materials -- 11.0%
Chemicals & Allied Products -- 1.2%
Arco Chemical 7,600 $ 346
- --------------------------------------------------------------------------------------
346
- --------------------------------------------------------------------------------------
Non-Ferrous Metals & Mining -- 2.4%
Commonwealth Industries 30,000 578
Titanium Metals* 4,000 149
- --------------------------------------------------------------------------------------
727
- --------------------------------------------------------------------------------------
Paper -- 0.7%
Jefferson Smurfit* 10,000 200
- --------------------------------------------------------------------------------------
200
- --------------------------------------------------------------------------------------
Specialty Chemicals -- 1.5%
Lubrizol 10,600 445
- --------------------------------------------------------------------------------------
445
- --------------------------------------------------------------------------------------
Steel -- 5.2%
British Steel PLC ADR 13,900 405
NS Group* 27,000 874
Oregon Steel Mills 10,100 274
- --------------------------------------------------------------------------------------
1,553
- --------------------------------------------------------------------------------------
Total Basic Materials
(Cost $3,144) 3,271
- --------------------------------------------------------------------------------------
Capital Goods -- 21.7%
Aerospace & Equipment -- 1.6%
AAR 4,500 150
Precision Castparts 3,300 215
RMI Titanium* 2,400 60
Sundstrand 800 46
- --------------------------------------------------------------------------------------
471
- --------------------------------------------------------------------------------------
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
=================================================================
SCHEDULE OF INVESTMENTS As of September 30, 1997 (Unaudited)
=================================================================
- --------------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- continued
Building & Construction -- 5.3%
Centex 4,900 $ 286
Lafarge 16,100 519
Lone Star Industries 6,800 367
USG* 8,500 408
- --------------------------------------------------------------------------------------
1,580
- --------------------------------------------------------------------------------------
Electrical & Electronic -- 5.7%
AVX 1,500 49
Essex International* 40,000 1,540
Tektronix 1,400 94
- --------------------------------------------------------------------------------------
1,683
- --------------------------------------------------------------------------------------
Machinery & Instrumentation -- 7.4%
Chicago Bridge & Iron-NY SHR 4,200 87
Coltec Industries* 12,400 268
Denison International PLC ADR* 23,000 437
Ingersoll Rand 11,500 495
JLK Direct Distribution, Cl A* 5,400 162
MSC Industrial Direct* 1,900 87
Parker-Hannifin 8,850 398
Trinity Industries 5,800 280
- --------------------------------------------------------------------------------------
2,214
- --------------------------------------------------------------------------------------
Pollution Controls -- 1.7%
Kennametal 10,300 500
- --------------------------------------------------------------------------------------
500
- --------------------------------------------------------------------------------------
Total Capital Goods
(Cost $6,123) 6,448
- --------------------------------------------------------------------------------------
Consumer Cyclical -- 9.4%
Auto & Related -- 1.5%
Dana 4,400 217
Eaton 800 74
International Total Services* 10,000 153
- --------------------------------------------------------------------------------------
444
- --------------------------------------------------------------------------------------
Furniture/Appliances -- 0.2%
O'Sullivan Industries Holdings* 5,600 70
- --------------------------------------------------------------------------------------
70
- --------------------------------------------------------------------------------------
Leisure Time -- 1.4%
Royal Caribbean Cruises Limited 9,400 411
- --------------------------------------------------------------------------------------
411
- --------------------------------------------------------------------------------------
Printing & Publishing -- 1.4%
Safeguard Scientifics* 3,000 88
Scripps (E.W.), Cl A 3,300 145
Washington Post, Cl B 400 179
- --------------------------------------------------------------------------------------
412
- --------------------------------------------------------------------------------------
Retail-Department Stores -- 1.3%
Dillards, Cl A 4,600 202
Meyer (Fred)* 3,300 176
- --------------------------------------------------------------------------------------
378
- --------------------------------------------------------------------------------------
Retail-Specialty -- 1.8%
Proffitts* 1,600 95
Ross Stores 4,000 136
TJX Companies 10,100 309
- --------------------------------------------------------------------------------------
540
- --------------------------------------------------------------------------------------
Rubber -- 1.8%
Cooper Tire and Rubber 19,900 529
- --------------------------------------------------------------------------------------
529
- --------------------------------------------------------------------------------------
Total Consumer Cyclical
(Cost $2,597) 2,784
- --------------------------------------------------------------------------------------
Consumer Staples -- 2.3%
Food, House & Personal Products -- 1.7%
Pilgrims Pride 32,000 476
Tyson Foods 2,000 47
- --------------------------------------------------------------------------------------
523
- --------------------------------------------------------------------------------------
Tobacco -- 0.6%
Universal - Virginia 4,600 167
- --------------------------------------------------------------------------------------
167
- --------------------------------------------------------------------------------------
Total Consumer Staples
(Cost $617) 690
- --------------------------------------------------------------------------------------
Energy -- 8.8%
Geophysical Service Company -- 0.6%
Veritas* 4,100 174
- --------------------------------------------------------------------------------------
174
- --------------------------------------------------------------------------------------
Natural Gas Pipelines -- 0.9%
Cal Dive International* 7,000 261
- --------------------------------------------------------------------------------------
261
- --------------------------------------------------------------------------------------
Oil & Gas Domestic -- 0.3%
Montery Resources 4,700 99
- --------------------------------------------------------------------------------------
99
- --------------------------------------------------------------------------------------
Oil & Gas Pipelines -- 1.5%
Valero Energy 13,300 436
- --------------------------------------------------------------------------------------
436
- --------------------------------------------------------------------------------------
Oil & Gas Services -- 3.3%
BJ Services* 5,200 386
Offshore Logistics* 13,000 234
Tidewater 1,800 107
Tuboscope* 4,000 125
Weatherford Enterra* 2,700 144
- --------------------------------------------------------------------------------------
996
- --------------------------------------------------------------------------------------
Oil Well Contract Drilling -- 0.5%
Ensco International 3,600 142
- --------------------------------------------------------------------------------------
142
- --------------------------------------------------------------------------------------
Oils-Domestic -- 1.7%
Ocean Energy* 2,500 172
Oceaneering International* 3,900 93
Sun Company 5,400 237
- --------------------------------------------------------------------------------------
502
- --------------------------------------------------------------------------------------
Total Energy
(Cost $2,121) 2,610
- --------------------------------------------------------------------------------------
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
=========================
THE PBHG FUNDS, INC.
=========================
- --------------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- continued
Finance -- 11.0%
Finance-Insurance -- 4.6%
CMAC Investment 5,300 $ 284
Liberty Financial Companies 3,200 168
Mercury General 3,000 262
Mid Ocean Limited 3,300 209
Old Republic International 8,500 332
Torchmark 2,900 114
- --------------------------------------------------------------------------------------
1,369
- --------------------------------------------------------------------------------------
Finance-Investment -- 2.5%
AMVESCAP PLC ADR* 2,500 169
Arm Financial Group* 1,900 45
Bear Stearns 900 40
Edwards A.G. 2,800 144
GATX 4,200 284
MGIC Investment 1,300 74
- --------------------------------------------------------------------------------------
756
- --------------------------------------------------------------------------------------
Finance-Money Center Banks -- 1.6%
Bank Plus* 4,000 51
Coast Savings Financial* 1,300 68
Dime Bancorp 16,600 348
- --------------------------------------------------------------------------------------
467
- --------------------------------------------------------------------------------------
Finance-Regional Banks -- 1.1%
Australia & New Zealand Banking Group-ADR* 900 37
First of America Bank 900 48
National City 1,100 68
Westamerica Bancorporation 1,000 87
Wilmington Trust 1,500 82
- --------------------------------------------------------------------------------------
322
- --------------------------------------------------------------------------------------
Real Estate/REITS -- 1.2%
LaSalle Partners* 10,700 374
- --------------------------------------------------------------------------------------
374
- --------------------------------------------------------------------------------------
Total Finance
(Cost $2,921) 3,288
- --------------------------------------------------------------------------------------
Healthcare -- 4.6%
Drugs & Health Care -- 4.6%
Bergen Brunswig 4,200 170
Beverly Enterprises* 5,800 101
Bindley Western Industries 3,200 89
Hillenbrand Industries 1,000 45
ICN Pharmaceuticals 5,600 275
Ocular Sciences* 7,000 162
Sulzer Medica ADR* 7,500 198
Vivus* 3,000 113
Xomed Surgical Products* 11,000 218
- --------------------------------------------------------------------------------------
1,371
- --------------------------------------------------------------------------------------
Total Healthcare
(Cost $1,138) 1,371
- --------------------------------------------------------------------------------------
Miscellaneous -- 2.5%
Diversified Companies -- 2.5%
Accustaff* 1,800 56
Sequent Computer Systems* 28,000 695
- --------------------------------------------------------------------------------------
751
- --------------------------------------------------------------------------------------
Total Miscellaneous
(Cost $815) 751
- --------------------------------------------------------------------------------------
Technology -- 14.7%
Computers/Networking -- 4.6%
Bay Networks* 11,600 448
Box Hill Systems* 8,000 140
Iomega* 7,600 198
Silicon Graphics* 7,000 184
Structural Dynamics Research* 5,000 128
Viewlogic Systems* 11,200 267
- --------------------------------------------------------------------------------------
1,365
- --------------------------------------------------------------------------------------
Electronics & Instruments -- 3.1%
Flextronics International Limited* 5,000 238
Galileo International* 11,700 327
Jetfax* 11,000 94
Kent Electronics* 5,100 201
Tech Data* 1,000 46
Vivid Technologies* 2,000 31
- --------------------------------------------------------------------------------------
937
- --------------------------------------------------------------------------------------
Office Equipment & Supplies -- 3.5%
Aehr Test Systems* 5,000 89
Cadence Design Systems* 1,800 96
HMT Technology* 5,000 78
Hon Industries 1,000 58
Ingram Micro* 3,100 84
Pierce Leahy* 2,900 79
Storage Technology* 4,700 225
Sun Microsystems* 4,000 187
Wallace Computer Services 4,100 151
- --------------------------------------------------------------------------------------
1,047
- --------------------------------------------------------------------------------------
Software/Software Service -- 3.5%
At Home Corporation-- Series A* 1,000 23
Axent Technologies* 3,000 62
Electronic Arts* 4,000 155
INSO* 4,000 50
Intuit* 8,000 256
Simulation Sciences* 3,000 59
Software Artistry* 2,000 27
Symantec* 18,000 409
- --------------------------------------------------------------------------------------
1,041
- --------------------------------------------------------------------------------------
Total Technology
(Cost$4,124) 4,390
- --------------------------------------------------------------------------------------
Transportation -- 4.7%
Transportation -- 4.7%
Arnold Industries 5,000 117
CNF Transportation 4,500 196
Roadway Express 4,000 109
Seacor Holdings* 600 37
Southwest Airlines 15,400 492
USFreightways 10,000 336
Yellow* 3,000 98
- --------------------------------------------------------------------------------------
1,385
- --------------------------------------------------------------------------------------
Total Transportation
(Cost $1,251) 1,385
- --------------------------------------------------------------------------------------
Utilities -- 3.7%
Utilities-Electrical -- 0.3%
Houston Industries 3,800 83
- --------------------------------------------------------------------------------------
83
- --------------------------------------------------------------------------------------
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
=================================================================
SCHEDULE OF INVESTMENTS As of September 30, 1997 (Unaudited)
=================================================================
- --------------------------------------------------------------------------------------
Shares/Face Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- continued
Utilities-Natural Gas Utilities -- 3.4%
Columbia Gas System 3,400 $ 238
Nicor 10,300 386
Peoples Energy 10,800 407
- --------------------------------------------------------------------------------------
1,031
- --------------------------------------------------------------------------------------
Total Utilities
(Cost $1,087) 1,114
- --------------------------------------------------------------------------------------
Total Common Stocks
(Cost $25,938) 28,102
- --------------------------------------------------------------------------------------
Repurchase Agreement -- 6.1%
Lehman Brothers
5.36%, dated 09/30/97, matures 10/01/97,
repurchase price $1,817,747 (collateralized
by U.S. Government Obligations: total market
value $1,873,443) $1,817 1,817
- --------------------------------------------------------------------------------------
Total Repurchase Agreement
(Cost $1,817) 1,817
- --------------------------------------------------------------------------------------
Total Investments -- 100.5%
(Cost $27,755) 29,919
======================================================================================
</TABLE>
* Non-income producing security
(A) -- Tri-party repurchase agreement
ADR -- American Depository Receipt
Cl -- Class
PLC -- Public Limited Company
NY SHR -- New York Shares
The accompanying notes are an integral part of the financial statements
30
<PAGE>
==============================================================
PORTFOLIO HIGHLIGHTS As of September 30, 1997 (Unaudited)
==============================================================
PBHG SMALL CAP VALUE FUND
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Cash 7%
Basic Materials 9%
Capital Goods 17%
Communication Services 1%
Consumer Cyclical 12%
Energy 2%
Consumer Staples 2%
Finance 17%
Healthcare 6%
Miscellaneous 3%
Technology 14%
Transportation 8%
Utilities 2%
Objective -- To achieve above-average total return over a market cycle of three
to five years, consistent with reasonable risk.
Invests in -- A diversified portfolio of common stocks of small companies with
market capitalizations in the range of companies represented by
the Russell 2000 Index, which are considered to be relatively
undervalued based on certain proprietary measures of value.
Strategy -- The Fund invests in equity securities of companies with between
$57 million and $610 million in market capitalization. In
selecting investments for the Fund, the Adviser emphasizes
fundamental investment value and considers the following factors,
among others, in identifying and analyzing a security's
fundamental value and capital appreciation potential: the
relationship of a company's potential earning power to the current
price of its stock; current dividend income and the potential for
dividend growth; low price/earnings ratio relative to either that
company's historical results or the current ratios for other
similar companies; strong competitive advantages; and potential
for favorable business developments.
- ------------------------------------ ------------------------------------
Top Five Performers* Bottom Five Performers*
NS Group INSO
Tandem Computers Barringer Technologies
Arterial Vascular Engineer Standard Commercial
DAOU Systems California Micro Devices
Summit Design Furniture Brands International
* During the six month period ended September 30, 1997
AGGREGATE TOTAL RETURN(1)
- --------------------------------------------------------------------------------
Cumulative Inception to Date(2)
- --------------------------------------------------------------------------------
PBHG Small Cap Value Fund 45.50%
- --------------------------------------------------------------------------------
Comparison of Change in the Value of a $10,000 Investment in the PBHG Small Cap
Value Fund, versus the Russell 2000 Index, and the Lipper Small Cap Funds
Average
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
PBHG S&P Lipper
4/97 10000 10000 10000
5/97 10880 11113 11196
6/97 11800 11590 11791
7/97 13070 12129 12532
8/97 13371 12406 12751
9/97 14551 13315 13725
1 Performance is historical and not indicative of future results. 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 Total return has not been annualized. The PBHG Small Cap Value Fund
commenced operations on May 1, 1997.
3 The Russell 2000 Index is an unmanaged index comprised of the 2,000
smallest securities in the Russell 3000 Index. The Index reflects the
reinvestment of income dividends and capital gains distributions, if any,
but does not reflect fees, brokerage commissions, or other expenses of
investing.
4 The Lipper Small Cap Funds Average is an equally weighted benchmark
composed of mutual funds, each of which limits its investments, by
prospectus or portfolio practice, to companies on the basis of the size of
the company. The performance figures are based on changes in net assets
value of the Funds in the Index with all capital gains distributions and
income dividends reinvested.
<TABLE>
<CAPTION>
==================================================================
SCHEDULE OF INVESTMENTS As of September 30, 1997 (Unaudited)
==================================================================
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- 88.6%
Basic Materials -- 9.0%
Non-Ferrous Metals & Mining -- 3.7%
Commonwealth Industries 70,000 $ 1,348
Mueller Industries* 14,100 641
Titanium Metals* 5,000 186
- --------------------------------------------------------------------------------------
2,175
- --------------------------------------------------------------------------------------
Paper --0.2%
Jefferson Smurfit* 5,600 112
- --------------------------------------------------------------------------------------
112
- --------------------------------------------------------------------------------------
Specialty Chemicals -- 0.4%
Lubrizol 6,100 256
- --------------------------------------------------------------------------------------
256
- --------------------------------------------------------------------------------------
Steel -- 4.7%
NS Group* 34,600 1,120
Oregon Steel Mills 34,600 938
Schnitzer Steel Industries, Cl A 14,000 471
Steel-- continued
Shaw Group* 12,800 $ 281
- --------------------------------------------------------------------------------------
2,810
- --------------------------------------------------------------------------------------
Total Basic Materials
(Cost $5,114) 5,353
- --------------------------------------------------------------------------------------
Capital Goods -- 15.8%
Aerospace & Equipment -- 3.3%
AAR 34,800 1,161
Precision Castparts 1,500 98
RMI Titanium* 10,900 273
Wyman-Gordan* 17,000 446
- --------------------------------------------------------------------------------------
1,978
- --------------------------------------------------------------------------------------
Building & Construction -- 2.4%
Centex 3,800 222
Lone Star Industries 12,700 686
USG* 10,800 517
- --------------------------------------------------------------------------------------
1,425
- --------------------------------------------------------------------------------------
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
==================================================================
SCHEDULE OF INVESTMENTS As of September 30, 1997 (Unaudited)
==================================================================
- --------------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Electrical & Electronic -- 6.5%
Barringer Technologies* 89,400 $ 950
Essex International* 75,000 2,887
- --------------------------------------------------------------------------------------
3,837
- --------------------------------------------------------------------------------------
Machinery & Instrumentation -- 3.2%
Chicago Bridge & Iron-NY SHR 8,400 174
Denison International PLC-ADR* 12,000 228
Gorman-Rupp 2,300 46
Jlk Direct Distribution, Cl A* 14,200 425
Manitowoc 10,200 364
MSC Industrial Direct* 6,800 313
Trinity Industries 7,100 343
- --------------------------------------------------------------------------------------
1,893
- --------------------------------------------------------------------------------------
Pollution Controls -- 0.4%
Kennametal 5,100 247
- --------------------------------------------------------------------------------------
247
- --------------------------------------------------------------------------------------
Total Capital Goods
(Cost $9,172) 9,380
- --------------------------------------------------------------------------------------
Communications Services -- 0.8%
Utilities-Telecommunications -- 0.8%
Tower Semiconductor Limited* 22,400 445
- --------------------------------------------------------------------------------------
445
- --------------------------------------------------------------------------------------
Total Communications Services
(Cost $397) 445
- --------------------------------------------------------------------------------------
Consumer Cyclical -- 11.3%
Auto & Related -- 0.6%
International Total Services* 18,000 275
Superior Industries International 4,200 116
- --------------------------------------------------------------------------------------
391
- --------------------------------------------------------------------------------------
Furniture/Appliances -- 0.5%
O'Sullivan Industries Holdings* 22,900 286
- --------------------------------------------------------------------------------------
286
- --------------------------------------------------------------------------------------
Leisure Time -- 0.6%
Royal Caribbean Cruises Limited 6,000 262
Servico* 3,900 67
- --------------------------------------------------------------------------------------
329
- --------------------------------------------------------------------------------------
Printing & Publishing -- 0.5%
Safeguard Scientifics* 10,400 304
- --------------------------------------------------------------------------------------
304
- --------------------------------------------------------------------------------------
Restaurants -- 0.5%
Sonic* 11,000 308
- --------------------------------------------------------------------------------------
308
- --------------------------------------------------------------------------------------
Retail-Department Stores -- 2.5%
Cross-Continent Auto Retailers* 17,700 238
Footstar* 19,200 517
Meyer (Fred)* 5,500 293
Novel Denim Holdings* 6,000 162
Stein Mart* 8,000 262
- --------------------------------------------------------------------------------------
1,472
- --------------------------------------------------------------------------------------
Retail-Specialty -- 5.4%
Claire's Stores 3,200 72
Family Dollar Stores 5,600 128
Hancock Fabrics 22,250 299
Mac Frugals Bargains Close-outs* 22,200 677
Maxim Group* 26,900 437
Proffitt's* 3,200 190
Ross Stores 3,000 102
Shopko Stores 30,300 788
Windmere 20,600 490
- --------------------------------------------------------------------------------------
3,183
- --------------------------------------------------------------------------------------
Rubber -- 0.2%
Cooper Tire and Rubber 4,700 125
- --------------------------------------------------------------------------------------
125
- --------------------------------------------------------------------------------------
Textiles & Apparel -- 0.5%
Tefron Limited* 15,000 300
- --------------------------------------------------------------------------------------
300
- --------------------------------------------------------------------------------------
Total Consumer Cyclical
(Cost $6,176) 6,698
- --------------------------------------------------------------------------------------
Consumer Staples -- 2.1%
Food, House & Personal Products -- 0.8%
Pilgrims Pride 12,800 190
Prime Medical Services* 18,000 252
- --------------------------------------------------------------------------------------
442
- --------------------------------------------------------------------------------------
Tobacco -- 1.3%
JR Cigar* 16,300 570
Universal - Virginia 6,000 218
- --------------------------------------------------------------------------------------
788
- --------------------------------------------------------------------------------------
Total Consumer Staples
(Cost $980) 1,230
- --------------------------------------------------------------------------------------
Energy -- 1.7%
Geophysical Service Company -- 0.3%
Veritas* 3,900 166
- --------------------------------------------------------------------------------------
166
- --------------------------------------------------------------------------------------
Natural Gas Pipelines -- 0.1%
Cal Dive International* 2,000 74
- --------------------------------------------------------------------------------------
74
- --------------------------------------------------------------------------------------
Oil & Gas Pipelines -- 0.5%
Valero Energy* 10,000 328
- --------------------------------------------------------------------------------------
328
- --------------------------------------------------------------------------------------
Oil & Gas Services -- 0.5%
Comstock Resources* 10,900 126
Midcoast Energy Resources 5,400 111
Tuboscope* 2,000 63
- --------------------------------------------------------------------------------------
300
- --------------------------------------------------------------------------------------
Oil Refining & Marketing -- 0.1%
Tesoro Petroleum* 2,600 47
- --------------------------------------------------------------------------------------
47
- --------------------------------------------------------------------------------------
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
==========================
THE PBHG FUNDS, INC.
==========================
- --------------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- continued
Oils-Domestic -- 0.2%
Oceaneering International* 4,700 $ 112
- --------------------------------------------------------------------------------------
112
- --------------------------------------------------------------------------------------
Total Energy
(Cost $874) 1,027
- --------------------------------------------------------------------------------------
Finance -- 16.3%
Finance-Insurance -- 4.2%
Allied Group 6,200 315
CMAC Investment 4,200 225
Exel Limited 4,400 262
HCC Insurance Holdings 1,700 45
HSB Group 9,000 501
Liberty Financial Companies 13,700 719
Mercury General 5,000 438
- --------------------------------------------------------------------------------------
2,505
- --------------------------------------------------------------------------------------
Finance-Investment -- 0.6%
Arm Financial Group* 14,200 338
- --------------------------------------------------------------------------------------
338
- --------------------------------------------------------------------------------------
Finance-Money Center Banks -- 6.2%
Bayonne Bancshares 34,000 425
City National 3,200 102
Coast Savings Financial* 8,900 467
First Commonwealth Financial 7,200 157
First Essex Bancorp 28,000 571
First International Bancorp* 15,000 269
ML Bancorp 35,000 958
Provident Bankshares 11,300 644
Sovereign Bancorp 5,000 88
- --------------------------------------------------------------------------------------
3,681
- --------------------------------------------------------------------------------------
Finance-Other -- 0.8%
Orion Capital 3,000 136
SIS Bancorp 10,100 351
- --------------------------------------------------------------------------------------
487
- --------------------------------------------------------------------------------------
Finance-Regional Banks -- 2.5%
Albank Financial 5,300 224
Colonial Bancgroup 2,700 78
FFY Financial 9,000 251
Hamilton Bank* 4,400 121
Jacksonville Bancorp 20,000 345
Medford Savings Bank 7,700 277
Prime Bancshares* 8,500 161
Trustco Bank 1,200 33
- --------------------------------------------------------------------------------------
1,490
- --------------------------------------------------------------------------------------
Real Estate/REITS -- 2.0%
Colonial Properties Trust 10,700 320
Crossman Communities* 31,000 701
LaSalle Partners* 4,000 140
- --------------------------------------------------------------------------------------
1,161
- --------------------------------------------------------------------------------------
Total Finance
(Cost $8,427) 9,662
- --------------------------------------------------------------------------------------
Healthcare -- 6.3%
Drugs & Health Care -- 6.3%
Beverly Enterprises* 37,700 655
Bindley Western Industries 13,500 377
Eagle Geophysical* 3,000 59
Jones Medical Industries 14,000 441
Ocular Sciences* 13,000 301
Phymatrix* 35,000 525
Respironics * 13,000 357
Sulzer Medica-ADR* 5,000 132
Vivus* 14,000 525
Xomed Surgical Products* 18,000 358
- --------------------------------------------------------------------------------------
3,730
- --------------------------------------------------------------------------------------
Total Healthcare
(Cost $3,323) 3,730
- --------------------------------------------------------------------------------------
Miscellaneous -- 3.2%
Diversified Companies -- 1.6%
Sequent Computer Systems* 39,000 968
- --------------------------------------------------------------------------------------
968
- --------------------------------------------------------------------------------------
Miscellaneous -- 1.6%
Party City* 4,000 105
Prime Hospitality* 37,300 841
- --------------------------------------------------------------------------------------
946
- --------------------------------------------------------------------------------------
Total Miscellaneous
(Cost $1,840) 1,914
- --------------------------------------------------------------------------------------
Technology -- 13.0%
Computers/Networking -- 0.5%
Structural Dynamics Research* 5,000 128
Viewlogic Systems* 6,000 143
- --------------------------------------------------------------------------------------
271
- --------------------------------------------------------------------------------------
Electronics & Instruments -- 5.0%
Cable Design Technologies* 6,800 259
Flextronics International Limited* 13,000 619
Jetfax* 42,000 357
Kent Electronics* 13,900 549
Melita International* 12,000 141
Methode Electronics, Cl A 3,500 90
Metrika Systems* 8,300 132
S3* 9,000 106
Summit Design* 13,000 231
Tracor* 12,000 369
Vivid Technologies* 7,000 109
- --------------------------------------------------------------------------------------
2,962
- --------------------------------------------------------------------------------------
Office Equipment & Supplies -- 3.8%
Aehr Test Systems* 28,000 495
Daisytek International* 2,000 88
HMT Technology* 30,000 471
Hon Industries 4,000 232
Pierce Leahy* 17,100 464
Wallace Computer Services 14,100 519
- --------------------------------------------------------------------------------------
2,269
- --------------------------------------------------------------------------------------
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
==================================================================
SCHEDULE OF INVESTMENTS As of September 30, 1997 (Unaudited)
==================================================================
- --------------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- continued
Software/Software Service -- 3.7%
American Power Conversion* 4,000 $ 113
At Home Corporation - Series A* 1,000 23
Axent Technologies* 3,700 77
Compucom Systems* 39,000 361
INSO* 7,000 88
Simulation Sciences* 13,000 256
Software Artistry* 13,750 184
Symantec* 31,600 719
Vanstar* 23,500 357
- --------------------------------------------------------------------------------------
2,178
- --------------------------------------------------------------------------------------
Total Technology
(Cost $7,012) 7,680
- --------------------------------------------------------------------------------------
Transportation -- 7.5%
Transportation -- 7.5%
Airborne Freight 2,400 145
American Freightways* 21,000 399
Arkansas Best* 16,500 187
Arnold Industries 7,000 164
Avondale Industries* 3,000 79
CNF Transportation 6,500 283
Consolidated Freightways* 2,500 44
Covenant Transportation, Cl A* 35,000 630
Greenbrier Companies 53,900 903
Gulfmark Offshore* 11,000 380
Roadway Express 14,000 383
Seacor Holdings* 2,000 124
USFreightways 16,000 538
Yellow* 5,000 163
- --------------------------------------------------------------------------------------
4,422
- --------------------------------------------------------------------------------------
Total Transportation
(Cost $3,948) 4,422
- --------------------------------------------------------------------------------------
Utilities -- 1.6%
Utilities-Natural Gas Utilities -- 1.6%
Bay State Gas 7,000 204
CTG Resources 7,900 183
Peoples Energy 11,900 448
Wicor 2,100 91
- --------------------------------------------------------------------------------------
926
- --------------------------------------------------------------------------------------
Total Utilities
(Cost $916) 926
- --------------------------------------------------------------------------------------
Total Common Stocks
(Cost $48,179) 52,467
- --------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------
Face Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreement -- 6.3%
Greenwich Agency
6.03%, dated 09/30/97, matures 10/01/97,
repurchase price $3,773,999 (collateralized
by U.S. Government obligations: total market
value $3,850,942) (A) $3,774 3,774
- --------------------------------------------------------------------------------------
Total Repurchase Agreement
(Cost $3,774) 3,774
- --------------------------------------------------------------------------------------
Total Investments -- 94.9%
(Cost $51,953) 56,241
======================================================================================
</TABLE>
* Non-income producing security
(A) -- Tri-party repurchase agreement
ADR -- American Depository Receipt
Cl -- Class
NY SHR --New York Shares
The accompanying notes are an integral part of the financial statements
34
<PAGE>
==============================================================
PORTFOLIO HIGHLIGHTS As of September 30, 1997 (Unaudited)
==============================================================
PBHG INTERNATIONAL FUND
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Japan 17%
United Kingdom 16%
Italy 8%
France 7%
Germany 6%
Switzerland 5%
Australia 4%
Chile 4%
Hong Kong 4%
Singapore 3%
Other 26%
- --------------------------------------------------------------------------------
Objective -- Long-term capital appreciation
Invests in -- A diversified portfolio of equity securities of non-U.S. issuers
Strategy -- The Sub-Adviser, Murray Johnstone International Ltd., determines
the most attractive non-U.S. countries in which to invest in by
employing a quantitative process that considers 20 macroeconomic
factors that are used to score and rank each market. Fundamental
analysis is then used to search for superior companies with strong
growth records, solid balance sheets, and high cash flow
generation within each market.
- ------------------------------------------ -----------------------------------
Top Five Performers* Bottom Five Performers*
Cifra Mexico City Developments Singapore
Telecom Italia SPA Italy Keppel Singapore
SGS - Thomson Microelectronics France Eaux (Generale Des) France
Fuji Machine Manufacturing Japan Singapore Land Singapore
Zurich Insurance Switzerland Hitachi Japan
* During the six month period ended September 30, 1997
AVERAGE ANNUAL TOTAL RETURN(1)
- --------------------------------------------------------------------------------
Six 1 Year 3 Year Annualized Inception
Months(2) Return Return to Date(3)
- --------------------------------------------------------------------------------
PBHG International Fund 12.85% 17.67% 8.30% 7.53%
- --------------------------------------------------------------------------------
Comparison of Change in the Value of a $10,000 Investment in the
PBHG International Fund, versus the F.T. S&P World Index,
Non-U.S., in U.S. Dollars
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
PBHG Intl FTActuaries Morgan
6/30/94 10000 10000 10000
3/95 9203 10007 10094
3/96 10634 11274 11339
3/97 11350 11466 11504
9/97 12751 12865 12906
1 Performance is historical and not indicative of future results. 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.
3 The PBHG International Fund commenced operations on June 14, 1994.
4 The F.T. S&P World Index, Non-U.S., in U.S. Dollars consists of 1,749 of
the largest international companies which have been selected based on
market capitalization, ability to be purchased by international investors
and the degree to which the companies reflect the weightings of industries
within their respective countries. The returns of the Index reflect the
reinvestment of income dividends and capital gains distributions.
<TABLE>
<CAPTION>
=================================================================
STATEMENT OF NET ASSETS As of September 30, 1997 (Unaudited)
=================================================================
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Foreign Common Stocks -- 96.2%
Argentina -- 3.3%
Banco Frances del Rio ADS 8,500 $ 278
Telecom Argentina 14,000 426
- --------------------------------------------------------------------------------------
704
- --------------------------------------------------------------------------------------
Australia -- 4.0%
Australia & New Zealand Bank 60,000 491
Commonwealth Bank of Australia 30,000 371
- --------------------------------------------------------------------------------------
862
- --------------------------------------------------------------------------------------
Belgium -- 2.2%
Fortis 2,390 479
- --------------------------------------------------------------------------------------
479
- --------------------------------------------------------------------------------------
Chile -- 3.9%
Madeco ADR 8,500 208
Quimica Minera ADR 5,000 295
Telecom de Chile ADR 10,000 324
- --------------------------------------------------------------------------------------
827
- --------------------------------------------------------------------------------------
Finland -- 2.5%
Nokia AB, Cl A 5,520 525
- --------------------------------------------------------------------------------------
525
- --------------------------------------------------------------------------------------
France -- 7.0%
AXA 436 29
Lyonnaise des Eaux 3,081 344
Michelin, Cl B 1,463 83
SGS-Thomson Microelectronics* 4,700 443
Total, Cl B 5,290 606
- --------------------------------------------------------------------------------------
1,505
- --------------------------------------------------------------------------------------
Germany -- 5.9%
Allianz 2,220 537
Continental 8,430 217
Linde 201 141
Mannesmann 770 366
- --------------------------------------------------------------------------------------
1,261
- --------------------------------------------------------------------------------------
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
=================================================================
STATEMENT OF NET ASSETS As of September 30, 1997 (Unaudited)
=================================================================
- --------------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Foreign Common Stocks -- continued
Hong Kong -- 4.4%
Cheung Kong 20,000 $ 225
Dah Sing Financial 40,000 168
Hongkong Land 50,000 170
Hutchison Whampoa 20,000 197
Swire Pacific, Cl A 25,000 191
- --------------------------------------------------------------------------------------
951
- --------------------------------------------------------------------------------------
Hungary -- 0.6%
Mol Magyar Olaj 6,500 141
- --------------------------------------------------------------------------------------
141
- --------------------------------------------------------------------------------------
Ireland -- 2.1%
Allied Irish Bank 30,103 266
Bank of Ireland 15,070 187
- --------------------------------------------------------------------------------------
453
- --------------------------------------------------------------------------------------
Italy -- 8.0%
ENI SPA 65,230 411
Istituto Mobiliare Italia 48,500 521
Telecom Italia Mobile 71,200 283
Telecom Italia SPA 74,020 493
- --------------------------------------------------------------------------------------
1,708
- --------------------------------------------------------------------------------------
Japan -- 16.9%
Canon Sales 15,000 296
Dai-Ichi Kangyo Bank 17,000 193
Eisai 15,000 269
Fuji Machine Manufacturing 8,000 290
Fuji Photo Film 8,000 330
Hitachi 25,000 218
Keyence 1,600 224
Matsushita Communications 8,000 255
Murata Manufacturing 7,000 303
Namco 8,000 295
Nippon Zeon 68,000 229
Ricoh 17,000 255
Shin Etsu Chemical 8,000 220
Sumitomo Electric 17,000 244
- --------------------------------------------------------------------------------------
3,621
- --------------------------------------------------------------------------------------
Mexico -- 2.7%
Cifra 92,000 216
Empresas la Moderna 7,500 164
Grupo Industrial Durango* 11,000 193
- --------------------------------------------------------------------------------------
573
- --------------------------------------------------------------------------------------
Netherlands -- 3.1%
ING Groep 7,340 337
VNU 13,750 319
- --------------------------------------------------------------------------------------
656
- --------------------------------------------------------------------------------------
New Zealand -- 1.5%
Lion Nathan 60,000 147
Telecom Corp of New Zealand 33,000 167
- --------------------------------------------------------------------------------------
314
- --------------------------------------------------------------------------------------
Portugal -- 0.6%
Portugal Telecom 3,250 141
- --------------------------------------------------------------------------------------
141
- --------------------------------------------------------------------------------------
Singapore -- 2.5%
City Developments 40,000 259
Keppel 43,750 175
Singapore Land 25,000 111
- --------------------------------------------------------------------------------------
545
- --------------------------------------------------------------------------------------
South Africa -- 2.3%
Standard Bank 11,000 490
- --------------------------------------------------------------------------------------
490
- --------------------------------------------------------------------------------------
Spain -- 2.3%
Prosegur Comp Seguridad 9,990 123
Telefonica de Espana 11,590 364
- --------------------------------------------------------------------------------------
487
- --------------------------------------------------------------------------------------
Switzerland -- 4.9%
ABB 160 236
Novartis* 140 215
Zurich Insurance 1,373 598
- --------------------------------------------------------------------------------------
1,049
- --------------------------------------------------------------------------------------
United Kingdom -- 15.5%
Abbey National 15,000 231
BAA 12,200 118
Barclays 8,800 237
British Aerospace 8,700 233
British Petroleum 14,091 212
Cadbury Schweppes 21,000 202
Carlton Communications 24,700 205
Grand Metropolitan 21,600 206
Halifax* 16,975 201
Kingfisher 16,900 231
Ladbroke 49,800 219
Norwich Union* 28,900 157
Safeway 32,700 212
Smithkline Beecham 22,200 215
Williams 34,800 207
Wolseley 27,100 224
- --------------------------------------------------------------------------------------
3,310
- --------------------------------------------------------------------------------------
Total Foreign Common Stocks
(Cost $17,718) 20,602
- --------------------------------------------------------------------------------------
Foreign Preferred Stocks
Brazil -- 0.0%
Brahma 6,432 5
- --------------------------------------------------------------------------------------
Total Foreign Preferred Stocks
(Cost $2) 5
- --------------------------------------------------------------------------------------
Total Investments -- 96.2%
(Cost $17,720) 20,607
- --------------------------------------------------------------------------------------
Other Assets and Liabilities -- 3.8%
Other Assets and Liabilities, Net 813
- --------------------------------------------------------------------------------------
Net Assets:
Fund Shares of PBHG Class (authorized 200 million shares --
$0.001 par value) based on 1,693,395 outstanding shares
of common stock 16,847
Undistributed net investment income 9
Accumulated net realized gain on investments 1,709
Accumulated net realized loss on foreign currency transactions (32)
Net unrealized appreciation on investments 2,887
- --------------------------------------------------------------------------------------
Total Net Assets - 100% $21,420
======================================================================================
Net Asset Value, Offering and Redemption Price
Per Share $12.65
======================================================================================
</TABLE>
*Non income producing security
ADS--American Depository Share
ADR--American Depository Receipt
Cl--Class
The accompanying notes are an integral part of the financial statements
36
<PAGE>
==============================================================
PORTFOLIO HIGHLIGHTS As of September 30, 1997 (Unaudited)
==============================================================
PBHG CASH RESERVES FUND
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Corporate Obligations 15%
Commercial Paper 65%
Banker's Acceptance 2%
Certificates of Deposit 18%
Objective -- Capital preservation, liquidity, and current income
Invests in -- Money market securities
Strategy -- The Fund's strategy is to be fully invested in a diversified
portfolio of short-term, high-quality money market securities.
Comparison of the total return, as of September 30. 1997 for the PBHG Cash
Reserves Fund and the Lipper Money Market Average(1)
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
Cash Reserves One Year: 5.02%
Lipper Money Market Average One Year: 4.86%
(1) Performance is historical and not indicative of future results.
<TABLE>
<CAPTION>
=================================================================
STATEMENT OF NET ASSETS As of September 30, 1997 (Unaudited)
=================================================================
Face
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Banker's Acceptances -- 1.5%
Bank of Hawaii
5.550%, 12/17/97 $2,605 $ 2,574
- --------------------------------------------------------------------------------------
Total Banker's Acceptances
(Cost $2,574) 2,574
- --------------------------------------------------------------------------------------
Certificates of Deposit -- 18.5%
Bank of Tokyo Mitsubishi
5.940%, 11/17/97 5,000 5,000
Bankers Trust New York
5.950%, 09/09/98 6,000 5,997
Chase Manhattan
5.750%, 02/11/98 3,000 3,000
Regions Bank
5.820%, 04/17/98 5,000 5,001
Societe Generale NY
5.875%, 11/24/97 7,000 7,000
Wilmington Trust
5.900%, 11/19/97 5,000 5,000
- --------------------------------------------------------------------------------------
Total Certificates of Deposit
(Cost $30,998) 30,998
- --------------------------------------------------------------------------------------
Commercial Paper -- 64.8%
American Express
5.500%, 10/20/97 6,000 5,982
Aon
5.550%, 10/03/97 4,250 4,249
BCI Funding
5.570%, 12/05/97 6,000 5,940
Coca-Cola
5.530%, 10/17/97 5,000 4,988
Fina Oil & Chemical
5.550%, 11/26/97 5,000 4,957
Fleet Funding
5.530%, 10/31/97 2,875 2,862
General Electric Capital Corporation
5.500%, 10/20/97 6,000 5,982
GMAC
5.800%, 11/10/97 7,000 6,955
Government Development Bank of Puerto Rico
5.550%, 12/02/97 4,000 3,962
Greenwich Funding
5.570%, 10/15/97 5,000 4,989
Hitachi America
5.580%, 11/14/97 6,330 6,287
Kitty Hawk Funding
5.550%, 12/01/97 5,000 4,953
KFW International Finance
5.500%, 10/01/97 6,000 6,000
New Center Asset Trust
5.540%, 12/15/97 5,000 4,942
Prudential Funding
5.550%, 01/20/98 5,000 4,914
Rank Xerox Capital PLC
5.510%, 10/02/97 4,845 4,844
Svenska Handels New York
5.540%, 01/12/98 5,000 4,921
Total International
5.540%, 10/20/97 6,000 5,982
Unifunding
5.600%, 12/15/97 5,000 4,942
Wells Fargo & Company
5.530%, 10/09/97 5,000 4,994
Yale University
5.530%, 10/24/97 5,000 4,982
- --------------------------------------------------------------------------------------
Total Commercial Paper
(Cost $108,627) 108,627
- --------------------------------------------------------------------------------------
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
=================================================================
STATEMENT OF NET ASSETS As of September 30, 1997 (Unaudited)
=================================================================
- --------------------------------------------------------------------------------------
Face
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Corporate Obligations -- 15.2%
Asset Backed Securities Investment
Trust 1996-M
5.652%, 10/15/97 $ 2,500 $ 2,500
Bank of America
5.650%, 04/16/98 10,000 9,997
Bank One
5.650%, 12/24/97 8,000 7,998
PNC Bank NA
5.600%, 09/23/98 5,000 4,997
- --------------------------------------------------------------------------------------
Total Corporate Obligations
(Cost $25,492) 25,492
- --------------------------------------------------------------------------------------
Total Investments -- 100.0%
(Cost $167,691) 167,691
- --------------------------------------------------------------------------------------
Other Assets and Liabilities -- 0.0%
Other Assets and Liabilities, Net 80
- --------------------------------------------------------------------------------------
Net Assets:
Fund Shares of PBHG Class (authorized 1 billion,
800 million shares -- $0.001 par value) based
on 167,785,537 outstanding shares
of common stock 167,785
Accumulated net investment loss (1)
Accumulated net realized loss on investments (13)
- --------------------------------------------------------------------------------------
Total Net Assets -- 100.0% $167,771
======================================================================================
Net Asset Value, Offering and Redemption Price
Per Share $1.00
======================================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements
38
<PAGE>
==============================================================
PORTFOLIO HIGHLIGHTS As of September 30, 1997 (Unaudited)
==============================================================
PBHG TECHNOLOGY & COMMUNICATIONS FUND
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Cash 3%
Energy 1%
Health 7%
Services 18%
Technology 71%
- --------------------------------------------------------------------------------
Objective -- Long-term growth of capital
Invests in -- Companies in all fields which rely extensively on technology or
communications in their product development and operations,
Strategy -- The Fund's strategy is to be invested in technology and related
companies exhibiting extraordinary rates of growth in earnings and
revenues with high profitability levels. The portfolio's 84
holdings as of September 30, range in market capitalization from
119 million to $10.3 billion, with current average and median
market capitalizations of $1.7 billion and $858 million,
respectively.
- ------------------------------------ ------------------------------------
Top Five Performers* Bottom Five Performers*
Nice Systems Limited ADR Quickturn Design Systems
Remec Scopus Technology
Advanced Fibre Communications Ultrak
Teledata Communications ESS Technology
ASM Lithography Claremont Technology Group
* During the six month period ended September 30, 1997
1 The security was completely sold during the period.
AVERAGE ANNUAL TOTAL RETURN1
- --------------------------------------------------------------------------------
Annualized
Inception
6 Months(2) 1 Year to Date(3)
- --------------------------------------------------------------------------------
PBHG Technology &
Communications Fund 50.17% 34.69% 49.64%
Comparison of Change in the Value of a $10,000 Investment in the PBHG Technology
& Communications Fund, versus the Pacific Stock Exchange High Technology Index,
and the Lipper Science & Technology Funds Average
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
<TABLE>
<CAPTION>
9/30/95 Dec-95 Mar-96 Jun-96 Sep-96 Dec-96 Mar-97 Jun-97 Sep-97
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PBHG Technology & Communication Fund $10,000 $11,602 $12,483 $14,973 $16,644 $17,917 $14,927 $18,641 $22,415
Pacific High Technology Index $10,000 $9,919 $9,899 $10,245 $10,945 $11,955 $11,955 $13,958 $16,638
Lipper Science & Technology Funds
Average $10,000 $9,440 $9,493 $10,174 $10,802 $11,342 $10,320 $12,199 $14,536
</TABLE>
1 Performance is historical and not indicative of future results. 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.
3 The PBHG Technology & Communications Fund commenced operations on October
2, 1995.
4 The Pacific Stock Exchange High Technology Index is a price-weighted index
of the top 100 U.S. technology stocks. The Index reflects the reinvestment
of income dividends and capital gains distributions, if any, but does not
reflect fees, brokerage commissions, or other expenses of investing.
5 The Lipper Science & Technology Funds Average is an equally weighted
benchmark composed of mutual funds, each of which normally invests more
than 65% of its equity portfolio in science and technology stocks. The
performance figures are based on changes in net asset value of the funds in
the category with all capital gains distributions and income dividends
reinvested.
<TABLE>
<CAPTION>
=================================================================
STATEMENT OF NET ASSETS As of September 30, 1997 (Unaudited)
=================================================================
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- 95.9%
Energy -- 0.8%
Service/Equipment -- 0.8%
Input/Output* 198,300 $ 5,875
- --------------------------------------------------------------------------------------
5,875
- --------------------------------------------------------------------------------------
Total Energy
(Cost $5,734) 5,875
- --------------------------------------------------------------------------------------
Health -- 6.9%
Contract Research -- 1.8%
Applied Analytical* 171,300 3,469
Parexel International* 102,800 4,061
Quintiles Transnational* 66,700 5,619
- --------------------------------------------------------------------------------------
13,149
- --------------------------------------------------------------------------------------
Drugs/Pharmaceuticals -- 1.2%
Dura Pharmaceuticals* 194,400 8,481
- --------------------------------------------------------------------------------------
8,481
- --------------------------------------------------------------------------------------
Information Systems -- 1.7%
HBO & Company 329,600 12,442
- --------------------------------------------------------------------------------------
12,442
- --------------------------------------------------------------------------------------
Medical Devices -- 1.2%
Arterial Vascular Engineer* 155,000 8,603
- --------------------------------------------------------------------------------------
8,603
- --------------------------------------------------------------------------------------
Medical Equipment -- 1.0%
ESC Medical Systems Limited* 206,400 7,766
- --------------------------------------------------------------------------------------
7,766
- --------------------------------------------------------------------------------------
Total Health
(Cost $37,152) 50,441
- --------------------------------------------------------------------------------------
Services -- 17.7%
Communication Services -- 0.2%
RSL Communications Limited, Cl A* 69,700 1,533
- --------------------------------------------------------------------------------------
1,533
- --------------------------------------------------------------------------------------
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
=================================================================
STATEMENT OF NET ASSETS As of September 30, 1997 (Unaudited)
=================================================================
- --------------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- continued
Employment Services -- 0.6%
Accustaff* 132,400 $ 4,171
- --------------------------------------------------------------------------------------
4,171
- --------------------------------------------------------------------------------------
Environmental -- 0.8%
US Filter* 136,900 5,895
- --------------------------------------------------------------------------------------
5,895
- --------------------------------------------------------------------------------------
Information/Computer Services -- 0.8%
Gartner Group, Cl A* 199,800 5,994
- --------------------------------------------------------------------------------------
5,994
- --------------------------------------------------------------------------------------
Printing Services/Forms -- 1.6%
Consolidated Graphics* 224,700 11,179
- --------------------------------------------------------------------------------------
11,179
- --------------------------------------------------------------------------------------
Systems Integrator -- 9.4%
Cambridge Technology* 645,100 23,103
Computer Horizons* 151,000 5,474
Ecsoft Group ADR* 545,400 9,613
Intelligroup* 475,200 10,217
Keane* 263,000 8,350
Registry* 75,840 3,498
Technology Solutions* 256,200 8,262
- --------------------------------------------------------------------------------------
68,517
- --------------------------------------------------------------------------------------
Transactions Processing -- 4.3%
Ace*Comm* 113,300 2,464
Concord EFS* 314,900 8,502
National Data 149,100 6,113
Saville Systems ADR* 208,300 14,633
- --------------------------------------------------------------------------------------
31,712
- --------------------------------------------------------------------------------------
Total Services
(Cost $97,896) 129,001
- --------------------------------------------------------------------------------------
Technology -- 70.5%
Automated Software Quality -- 0.2%
Mercury Interactive* 88,300 1,689
- --------------------------------------------------------------------------------------
1,689
- --------------------------------------------------------------------------------------
Cables/Fiberoptics -- 2.2%
Cable Design Technologies* 434,150 16,525
- --------------------------------------------------------------------------------------
16,525
- --------------------------------------------------------------------------------------
Client/Server Help Desk -- 1.6%
Great Plains Software* 32,800 918
Pegasystems* 164,800 5,006
Scopus Technology* 364,900 5,793
- --------------------------------------------------------------------------------------
11,717
- --------------------------------------------------------------------------------------
Contract Manufacturing -- 1.4%
Elexsys International* 93,800 2,638
Sanmina* 88,500 7,661
- --------------------------------------------------------------------------------------
10,299
- --------------------------------------------------------------------------------------
Data Storage -- 2.1%
Box Hill Systems* 257,600 4,508
Network Appliance* 199,800 10,839
- --------------------------------------------------------------------------------------
15,347
- --------------------------------------------------------------------------------------
Design Automation Software -- 5.5%
Cadence Design Systems* 327,200 17,505
Tecnomatix Technologies* 587,100 22,457
- --------------------------------------------------------------------------------------
39,962
- --------------------------------------------------------------------------------------
Graphic/Image Process -- 4.4%
Electronics For Imaging* 629,100 32,084
- --------------------------------------------------------------------------------------
32,084
- --------------------------------------------------------------------------------------
Networking Hardware -- 0.0%
3Com* 100 5
- --------------------------------------------------------------------------------------
5
- --------------------------------------------------------------------------------------
PC-Peripherals Manufacturing -- 1.9%
Adaptec* 259,900 12,150
Neomagic* 74,100 1,496
- --------------------------------------------------------------------------------------
13,646
- --------------------------------------------------------------------------------------
Precision Instruments -- 2.1%
Remec* 422,650 15,427
- --------------------------------------------------------------------------------------
15,427
- --------------------------------------------------------------------------------------
Satellite/Cable Equipment -- 1.0%
Spectrian* 110,000 7,054
- --------------------------------------------------------------------------------------
7,054
- --------------------------------------------------------------------------------------
Semi-Conductor Manufacturing -- 10.9%
ASE Test Limited* 183,300 15,535
C.P. Clare* 102,900 2,032
Galileo Technology* 18,400 607
Integrated Circuit System* 143,300 5,302
Linear Technology 106,700 7,336
Maxim Integrated Products* 142,300 10,166
Microchip Technology* 461,900 20,858
PMC-Sierra* 234,100 5,970
Vitesse Semiconductor* 233,100 11,553
- --------------------------------------------------------------------------------------
79,359
- --------------------------------------------------------------------------------------
Semi-Conductor Production Equipment -- 6.6%
CFM Technologies* 79,700 3,123
KLA-Tencor* 234,900 15,870
Kulicke & Soffa Industries* 200,400 9,281
Novellus Systems* 52,000 6,552
PRI Automation* 149,400 8,740
Speedfam International* 74,900 4,522
- --------------------------------------------------------------------------------------
48,088
- --------------------------------------------------------------------------------------
Semi-Conductor Testing Equipment -- 2.5%
ADE Corporation* 157,200 6,308
Lecroy* 274,200 12,133
- --------------------------------------------------------------------------------------
18,441
- --------------------------------------------------------------------------------------
Software-Client/Server -- 4.6%
Citrix Systems* 403,200 20,299
Documentum* 215,200 7,155
Peoplesoft* 85,000 5,079
Rogue Wave Software* 77,400 1,064
- --------------------------------------------------------------------------------------
33,597
- --------------------------------------------------------------------------------------
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
=========================
THE PBHG FUNDS, INC.
=========================
- --------------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- continued
Software-Enterprise Resource Planning -- 0.1%
J.D. Edwards & Company* 23,300 $ 781
- --------------------------------------------------------------------------------------
781
- --------------------------------------------------------------------------------------
Software-Manufacturing -- 0.7%
Aspen Technology* 145,300 5,104
- --------------------------------------------------------------------------------------
5,104
- --------------------------------------------------------------------------------------
Software-Other -- 2.7%
JDA Software Group* 198,800 7,256
Lernout & Hauspie* 54,900 2,402
Oshap Technology* 284,900 2,885
Viasoft* 142,300 7,044
- --------------------------------------------------------------------------------------
19,587
- --------------------------------------------------------------------------------------
Telecommunications Equipment -- 17.1%
ADC Telecommunications* 268,100 8,713
Advanced Fibre Communications* 447,400 18,343
Ciena* 50,100 2,482
Geotel Communications* 230,500 4,351
MAS Technology Limited ADR* 184,800 4,204
P-Com* 741,400 17,747
Pairgain Technologies* 119,900 3,417
Powerwave Technology* 129,800 5,030
Sawtek* 221,000 10,221
Teledata Communication* 648,600 29,268
Tellabs* 307,900 15,857
World Access* 167,200 5,434
- --------------------------------------------------------------------------------------
125,067
- --------------------------------------------------------------------------------------
Voice/Call Transaction Processing -- 2.9%
Comverse Technology* 76,500 4,035
NACT Telecommunication* 25,000 395
Nice Systems Limited ADR* 299,600 16,850
- --------------------------------------------------------------------------------------
21,280
- --------------------------------------------------------------------------------------
Total Technology
(Cost $382,967) 515,059
- --------------------------------------------------------------------------------------
Total Common Stocks
(Cost $523,749) 700,376
- --------------------------------------------------------------------------------------
<CAPTION>
Face Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreement -- 3.1%
J.P. Morgan
6.05%, dated 09/30/97, matures 10/01/97,
repurchase price $22,898,584 (collateralized
by GNMA obligations: total market value
$23,352,631) (A) $ 22,895 $ 22,895
- --------------------------------------------------------------------------------------
Total Repurchase Agreement
(Cost $22,895) 22,895
- --------------------------------------------------------------------------------------
Total Investments -- 99.0%
(Cost $546,644) 723,271
- --------------------------------------------------------------------------------------
Other Assets and Liabilities -- 1.0%
Other Assets and Liabilities, Net 7,062
- --------------------------------------------------------------------------------------
Net Assets:
Fund Shares of PBHG Class (authorized 200 million shares --
$0.001 par value) based on 33,233,475 outstanding shares
of common stock 527,497
Accumulated net investment loss (2,866)
Accumulated net realized gain on investments 29,075
Net unrealized appreciation on investments 176,627
- --------------------------------------------------------------------------------------
Total Net Assets-- 100.0% $730,333
======================================================================================
Net Asset Value, Offering and Redemption Price
Per Share $21.98
======================================================================================
</TABLE>
* Non-income producing security
(A) -- Tri-party repurchase agreement
ADR -- American Depository Receipt
Cl -- Class
The accompanying notes are an integral part of the financial statements
41
<PAGE>
==============================================================
PORTFOLIO HIGHLIGHTS As of September 30, 1997 (Unaudited)
==============================================================
PBHG STRATEGIC SMALL COMPANY FUND
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Cash 3%
Basic Materials 4%
Capital Goods 9%
Consumer 16%
Energy 8%
Finance 13%
Healthcare 5%
Industrial/Basic 1%
Miscellaneous 2%
Services 8%
Industrial/General Manufacturing 0%
Technology 27%
Transportation 4%
Objective -- Growth of capital.
Invests in -- Small companies having a market capitalization or annual revenues
of up to $750 million.
Strategy -- The Fund invests in securities poised for rapid and dynamic growth
("growth companies") or securities that are undervalued or
overlooked by the market ("value securities") depending on the
Advisers' view of current economic or market conditions and their
long-term investment outlook.
- ------------------------------------ ------------------------------------
Top Five Performers* Bottom Five Performers*
DAOU Systems INSO
Brightpoint Forte Software(1)
Tandem Computers Project Software(1)
Remec Clarify(1)
Advanced Fibre Communications Gasonics International(1)
* During the six month period ended September 30, 1997
(1) This security was completely sold during the period
AGGREGATE TOTAL RETURN1
- --------------------------------------------------------------------------------
Cumulative Inception
6 Months(2) to Date(3)
- --------------------------------------------------------------------------------
PBHG Strategic Small Company Fund 51.69% 34.40%
- --------------------------------------------------------------------------------
Comparison of Change in the Value of a $10,000 Investment in the PBHG Strategic
Small Company Fund, versus the Russell 2000 Growth Index, and the Lipper Small
Cap Funds Average
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
PBHG Russell Lipper
12/31/96 10000 10000 10000
1/97 10120 10250 10250
2/97 9350 9631 9834
3/97 8860 8951 9326
4/97 8750 8847 9261
5/97 10270 10177 10369
6/97 11130 10522 10919
7/97 12169 11061 11606
8/97 12409 11392 11815
9/97 13439 12301 12711
1 Performance is historical and not indicative of future results. 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.
3 The PBHG Strategic Small Company Fund commenced operations on January 2,
1997.
4 The Russell 2000 Growth Index is an unmanaged index comprised of those
securities in the Russell 2000 Index with a greater-than-average growth
orientation. The Index reflects the reinvestment of income dividends and
capital gains distributions, if any, but does not reflect fees, brokerage
commissions, or other expenses of investing.
5 The Lipper Small Cap Funds Average is an equally weighted benchmark
composed mutual funds, each of which limits its investments, by prospectus
or portfolio practice, to companies on the basis of the size of the
company. The performance figures are based on changes in net asset value of
the Funds in the category with all capital gains distributions and income
dividends reinvested.
<TABLE>
<CAPTION>
=================================================================
STATEMENT OF NET ASSETS As of September 30, 1997 (Unaudited)
=================================================================
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- 95.9%
Basic Materials -- 3.4%
Chemicals & Allied Products -- 0.2%
Buckeye Cellulose * 4,700 $ 190
- --------------------------------------------------------------------------------------
190
- --------------------------------------------------------------------------------------
Non-Ferrous Metals & Mining -- 1.3%
Commonwealth Industries 85,000 1,636
Mueller Industries* 1,100 50
Titanium Metals* 1,000 37
- --------------------------------------------------------------------------------------
1,723
- --------------------------------------------------------------------------------------
Steel -- 1.9%
NS Group* 50,300 1,628
Oregon Steel Mills 17,300 469
Schnitzer Steel Industries, Cl A 3,000 101
Shaw Group* 14,700 323
- --------------------------------------------------------------------------------------
2,521
- --------------------------------------------------------------------------------------
Total Basic Materials
(Cost $4,122) 4,434
- --------------------------------------------------------------------------------------
Capital Goods -- 9.1%
Aerospace & Equipment -- 1.3%
AAR 11,300 377
First Aviation* 43,000 360
Mercury Air Group 33,400 246
RMI Titanium* 3,600 90
SPS Technologies* 2,600 122
Wyman-Gordan* 18,000 473
- --------------------------------------------------------------------------------------
1,668
- --------------------------------------------------------------------------------------
Building & Construction -- 1.1%
Lone Star Industries 16,800 907
USG* 12,800 614
- --------------------------------------------------------------------------------------
1,521
- --------------------------------------------------------------------------------------
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
=========================
THE PBHG FUNDS, INC.
=========================
- --------------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- continued
Electrical & Electronic -- 3.3%
Barringer Technologies* 62,000 $ 659
Essex International* 93,000 3,581
- --------------------------------------------------------------------------------------
4,240
- --------------------------------------------------------------------------------------
Machinery & Instrumentation -- 3.3%
Chicago Bridge & Iron--NY SHR 6,600 137
Denison International PLC-ADR* 90,000 1,710
Gorman-Rupp 4,300 85
JLK Direct Distribution, Cl A* 18,700 560
MSC Industrial Direct* 11,200 515
Manitowoc Company 2,900 104
Stewart and Stevenson Services 12,400 298
Watts Industries, Cl A 29,800 827
- --------------------------------------------------------------------------------------
4,236
- --------------------------------------------------------------------------------------
Pollution Controls -- 0.1%
Tetra Technologies* 6,800 157
- --------------------------------------------------------------------------------------
157
- --------------------------------------------------------------------------------------
Total Capital Goods
(Cost $11,338) 11,822
- --------------------------------------------------------------------------------------
Consumer -- 6.0%
Consumer Product Miscellaneous -- 0.5%
Suiza Foods* 12,500 644
- --------------------------------------------------------------------------------------
644
- --------------------------------------------------------------------------------------
Entertainment/Movies -- 0.4%
Cinar Films, Cl B* 10,000 381
Regal Cinemas* 7,200 193
- --------------------------------------------------------------------------------------
574
- --------------------------------------------------------------------------------------
Hotels/Resorts -- 0.3%
Capstar Hotel* 10,000 336
- --------------------------------------------------------------------------------------
336
- --------------------------------------------------------------------------------------
Packaged Goods/Cosmetics -- 0.3%
NBTY* 21,400 452
- --------------------------------------------------------------------------------------
452
- --------------------------------------------------------------------------------------
Restaurants -- 1.2%
CKE Restaurants 19,050 800
PJ America* 17,500 302
Showbiz Pizza Time* 20,000 460
- --------------------------------------------------------------------------------------
1,562
- --------------------------------------------------------------------------------------
Retail-Apparel -- 0.4%
Stage Stores* 11,700 505
- --------------------------------------------------------------------------------------
505
- --------------------------------------------------------------------------------------
Retail-Catalog -- 1.2%
CDW Computer Centers* 7,500 486
Coldwater Creek* 10,000 290
Insight Enterprises* 22,500 745
- --------------------------------------------------------------------------------------
1,521
- --------------------------------------------------------------------------------------
Retail-Discount Stores -- 0.4%
Dollar Tree Stores* 12,600 530
- --------------------------------------------------------------------------------------
530
- --------------------------------------------------------------------------------------
Retail-Supermarkets/Drug Stores -- 0.4%
Wild Oates Markets* 17,500 523
- --------------------------------------------------------------------------------------
523
- --------------------------------------------------------------------------------------
Specialty Food/Candy -- 0.5%
Morningstar Group* 15,000 645
- --------------------------------------------------------------------------------------
645
- --------------------------------------------------------------------------------------
Toys -- 0.4%
Action Performance* 17,000 495
- --------------------------------------------------------------------------------------
495
- --------------------------------------------------------------------------------------
Total Consumer
(Cost $6,520) 7,787
- --------------------------------------------------------------------------------------
Consumer Cyclical -- 8.8%
Auto & Related -- 0.3%
International Total Services* 22,000 336
- --------------------------------------------------------------------------------------
336
- --------------------------------------------------------------------------------------
Leisure Time -- 0.3%
Servico* 22,400 384
- --------------------------------------------------------------------------------------
384
- --------------------------------------------------------------------------------------
Printing & Publishing -- 0.4%
Journal Register* 24,600 483
- --------------------------------------------------------------------------------------
483
- --------------------------------------------------------------------------------------
Restaurants -- 0.1%
Sonic* 3,000 84
- --------------------------------------------------------------------------------------
84
- --------------------------------------------------------------------------------------
Retail-Department Stores -- 0.3%
Meyer (Fred)* 7,100 378
- --------------------------------------------------------------------------------------
378
- --------------------------------------------------------------------------------------
Retail-Specialty -- 4.8%
Claire's Stores 47,700 1,067
Family Dollar Stores 20,000 456
GT Bicycles* 20,100 165
Hancock Fabrics 23,400 314
Mac Frugals Bargains Close-Outs* 48,200 1,470
Proffitt's* 13,000 770
Ross Stores 6,000 205
Shopko Stores 57,200 1,487
Windmere 13,600 324
- --------------------------------------------------------------------------------------
6,258
- --------------------------------------------------------------------------------------
Textiles & Apparel -- 2.6%
Tefron* 20,000 400
Kaynar Technologies* 102,000 3,047
- --------------------------------------------------------------------------------------
3,447
- --------------------------------------------------------------------------------------
Total Consumer Cyclical
(Cost $9,205) 11,370
- --------------------------------------------------------------------------------------
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
=================================================================
STATEMENT OF NET ASSETS As of September 30, 1997 (Unaudited)
=================================================================
- --------------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- continued
Consumer Staples -- 1.4%
Tobacco -- 1.4%
JR Cigar* 24,700 $ 864
Standard Commercial 40,100 677
Universal - Virginia 6,500 236
- --------------------------------------------------------------------------------------
1,777
- --------------------------------------------------------------------------------------
Total Consumer Staples
(Cost $1,309) 1,777
- --------------------------------------------------------------------------------------
Energy -- 8.1%
Contract Drilling -- 0.6%
UTI Energy* 18,000 743
- --------------------------------------------------------------------------------------
743
- --------------------------------------------------------------------------------------
Oil & Gas Pipelines -- 1.8%
Valero Energy* 73,700 2,418
- --------------------------------------------------------------------------------------
2,418
- --------------------------------------------------------------------------------------
Oil & Gas Services -- 1.7%
American Oilfield Divers* 15,000 232
Comstock Resources* 34,200 395
Midcoast Energy Resources 47,100 968
Tuboscope* 20,000 628
- --------------------------------------------------------------------------------------
2,223
- --------------------------------------------------------------------------------------
Oils-Domestic -- 0.0%
Oceaneering International* 600 14
- --------------------------------------------------------------------------------------
14
- --------------------------------------------------------------------------------------
Service/Equipment -- 4.0%
EVI* 13,000 832
Friede Goldman International* 7,500 450
Gulf Island Fabrication* 14,000 700
Hvide Marine* 12,700 406
Key Energy Group* 17,500 570
Maverick Tube* 23,000 949
Pool Energy Services* 17,500 593
Varco International* 14,200 689
- --------------------------------------------------------------------------------------
5,189
- --------------------------------------------------------------------------------------
Total Energy
(Cost $7,939) 10,587
- --------------------------------------------------------------------------------------
Finance -- 12.5%
Consumer Finance -- 0.4%
Metris 11,000 476
- --------------------------------------------------------------------------------------
476
- --------------------------------------------------------------------------------------
Diversified Financial Services -- 0.5%
Amresco 17,400 646
- --------------------------------------------------------------------------------------
646
- --------------------------------------------------------------------------------------
Finance-Insurance -- 4.6%
American Heritage Life Investments 9,400 376
CMAC Investment 17,100 917
HCC Insurance Holdings 6,100 162
Liberty Financial 63,400 3,328
Nymagic 47,500 1,235
- --------------------------------------------------------------------------------------
6,018
- --------------------------------------------------------------------------------------
Finance-Investment -- 3.0%
AMVESCAP PLC ADR* 10,200 688
Arm Financial Group* 29,000 690
E*Trade Group* 14,100 663
Investment Technology Group* 28,300 771
Life Financial* 10,000 184
Raymond James Financial 5,600 202
Sirrom Capital 15,000 778
- --------------------------------------------------------------------------------------
3,976
- --------------------------------------------------------------------------------------
Finance-Money Center Banks -- 2.1%
Bayonne Bancshares 39,000 487
City National 9,900 317
Coast Savings Financial* 9,600 503
First International Bancorp* 15,000 269
North Fork Bancorporation New York 23,300 676
Sovereign Bancorp 25,000 438
- --------------------------------------------------------------------------------------
2,690
- --------------------------------------------------------------------------------------
Finance-Other -- 0.1%
Orion Capital 4,100 186
- --------------------------------------------------------------------------------------
186
- --------------------------------------------------------------------------------------
Finance-Regional Banks -- 1.5%
Albank Financial 13,000 549
Hamilton Bankcorp* 22,000 605
Mechanics Savings Bank* 15,000 394
Prime Bancshares* 11,500 219
Trustco Bank 6,000 163
- --------------------------------------------------------------------------------------
1,930
- --------------------------------------------------------------------------------------
Real Estate/REITS -- 0.3%
Colonial Properties Trust 11,300 338
- --------------------------------------------------------------------------------------
338
- --------------------------------------------------------------------------------------
Total Finance
(Cost $13,385) 16,260
- --------------------------------------------------------------------------------------
Health -- 5.0%
Contract Research -- 0.5%
Parexel International* 15,900 628
- --------------------------------------------------------------------------------------
628
- --------------------------------------------------------------------------------------
Drug & Health Care -- 2.9%
Beverly Enterprises* 54,200 942
Jones Medical Industries 13,000 410
Medicis Pharmaceutical, Cl A* 11,800 541
Ocular Sciences* 17,000 393
Sulzer Medica ADR* 27,500 725
Vivus* 10,000 375
Xomed Surgical Products* 17,000 338
- --------------------------------------------------------------------------------------
3,724
- --------------------------------------------------------------------------------------
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
=========================
THE PBHG FUNDS, INC.
=========================
- --------------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- continued
Information Systems -- 0.4%
DAOU Systems* 17,500 $ 547
- --------------------------------------------------------------------------------------
547
- --------------------------------------------------------------------------------------
Medical Devices -- 1.2%
Osteotech* 15,000 302
Sabratek* 15,500 564
Theragenics* 12,400 615
- --------------------------------------------------------------------------------------
1,481
- --------------------------------------------------------------------------------------
Total Health
(Cost $5,147) 6,380
- --------------------------------------------------------------------------------------
Industrial/Basic -- 0.6%
Plastic/Carbon -- 0.6%
Zoltek* 12,400 789
- --------------------------------------------------------------------------------------
789
- --------------------------------------------------------------------------------------
Total Industrial/Basic
(Cost $445) 789
- --------------------------------------------------------------------------------------
Industrial/General Manufacturing -- 0.3%
Home Building -- 0.3%
Crossman Communities* 20,000 453
- --------------------------------------------------------------------------------------
453
- --------------------------------------------------------------------------------------
Total Industrial/General Manufacturing
(Cost $444) 453
- --------------------------------------------------------------------------------------
Miscellaneous -- 2.1%
Diversified Companies -- 1.5%
Sequent Computer Systems* 81,000 2,010
- --------------------------------------------------------------------------------------
2,010
- --------------------------------------------------------------------------------------
Miscellaneous -- 0.6%
Prime Hospitality* 34,300 774
- --------------------------------------------------------------------------------------
774
- --------------------------------------------------------------------------------------
Total Miscellaneous
(Cost $2,856) 2,784
- --------------------------------------------------------------------------------------
Services -- 8.1%
Commercial Services -- 0.5%
Caribiner International* 16,200 660
- --------------------------------------------------------------------------------------
660
- --------------------------------------------------------------------------------------
Communications Services -- 0.6%
Pacific Gateway Exchange* 12,300 481
RSL Communications Limited, Cl A* 5,200 114
Tower Semiconductor* 14,000 278
- --------------------------------------------------------------------------------------
873
- --------------------------------------------------------------------------------------
Distribution -- 1.1%
Brightpoint* 18,625 864
CHS Electronics* 18,750 513
- --------------------------------------------------------------------------------------
1,377
- --------------------------------------------------------------------------------------
Educational Services -- 0.4%
Computer Learning Centers* 12,500 488
- --------------------------------------------------------------------------------------
488
- --------------------------------------------------------------------------------------
Employment Service -- 0.4%
Administaff* 10,000 233
Vincam Group* 9,500 273
- --------------------------------------------------------------------------------------
506
- --------------------------------------------------------------------------------------
Environmental -- 0.4%
American Disposal Services* 18,600 581
- --------------------------------------------------------------------------------------
581
- --------------------------------------------------------------------------------------
Information/Computer Services -- 0.4%
Forrester Research* 18,500 502
- --------------------------------------------------------------------------------------
502
- --------------------------------------------------------------------------------------
Marketing Information -- 0.4%
Abacus Direct* 14,700 472
- --------------------------------------------------------------------------------------
472
- --------------------------------------------------------------------------------------
Printing Services/Forms -- 0.8%
Consolidated Graphics* 12,500 622
Mail-Well* 17,500 475
- --------------------------------------------------------------------------------------
1,097
- --------------------------------------------------------------------------------------
Systems Integrator -- 2.6%
Cambridge Technology Partners* 13,400 480
Ciber* 10,500 496
Deltek Systems* 24,100 500
Keane* 17,000 540
The Registry* 8,600 397
Technology Solutions* 20,100 648
Whittman-Hart* 10,000 305
- --------------------------------------------------------------------------------------
3,366
- --------------------------------------------------------------------------------------
Transactions Processing -- 0.5%
Saville Systems ADR* 9,200 646
- --------------------------------------------------------------------------------------
646
- --------------------------------------------------------------------------------------
Total Services
(Cost $8,552) 10,568
- --------------------------------------------------------------------------------------
Technology -- 26.9%
Client/Server Help Desk -- 1.1%
Pegasystems* 12,400 377
Remedy* 10,000 344
Siebel Systems* 15,000 638
- --------------------------------------------------------------------------------------
1,359
- --------------------------------------------------------------------------------------
Computers/Networking -- 0.3%
Box Hill Systems* 12,000 210
Viewlogic Systems* 5,000 119
- --------------------------------------------------------------------------------------
329
- --------------------------------------------------------------------------------------
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
=================================================================
STATEMENT OF NET ASSETS As of September 30, 1997 (Unaudited)
=================================================================
- --------------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- continued
Data Storage -- 0.4%
Network Appliance* 10,700 $ 580
- --------------------------------------------------------------------------------------
580
- --------------------------------------------------------------------------------------
Electronics & Instruments -- 2.0%
Cable Design Technologies* 5,000 190
Envoy* 2,000 57
Flextronics International* 17,000 810
Jetfax* 25,000 213
Kent Electronics* 9,700 383
Power-One* 1,900 27
S3* 10,000 117
Tech Data* 2,500 115
Tracor* 18,000 553
Vivid Technologies* 10,000 155
- --------------------------------------------------------------------------------------
2,620
- --------------------------------------------------------------------------------------
Embedded Software -- 0.7%
Peerless Systems* 20,000 280
Wind River Systems* 14,350 592
- --------------------------------------------------------------------------------------
872
- --------------------------------------------------------------------------------------
Graphic/Image Process -- 0.8%
Electronics For Imaging* 7,300 372
Splash Technologies Holdings* 16,400 642
- --------------------------------------------------------------------------------------
1,014
- --------------------------------------------------------------------------------------
Networking Hardware -- 0.4%
Yurie Systems* 15,000 544
- --------------------------------------------------------------------------------------
544
- --------------------------------------------------------------------------------------
Networking Services -- 0.5%
Apex PC Solutions* 17,500 663
- --------------------------------------------------------------------------------------
663
- --------------------------------------------------------------------------------------
Office Equipment & Supplies -- 2.3%
AEHR Test Systems* 19,000 336
Daisytek International* 11,000 481
HMT Technology* 55,000 863
Hon Industries 15,000 870
Pierce Leahy* 13,100 355
Wallace Computer Services 1,600 59
- --------------------------------------------------------------------------------------
2,964
- --------------------------------------------------------------------------------------
PC-Peripherals Manufacturing -- 0.5%
Neomagic* 17,400 351
Xeikon NV ADR* 25,000 334
- --------------------------------------------------------------------------------------
685
- --------------------------------------------------------------------------------------
Precision Instruments -- 1.0%
Cognex* 14,800 487
Remec* 21,600 788
- --------------------------------------------------------------------------------------
1,275
- --------------------------------------------------------------------------------------
Satellite/Cable Equipment -- 0.6%
Spectrian* 12,500 802
- --------------------------------------------------------------------------------------
802
- --------------------------------------------------------------------------------------
Semi-Conductor Manufacturing -- 2.0%
DSP Communications* 17,500 366
Sipex* 18,000 572
Smart Modular Technologies* 11,500 955
Vitesse Semiconductor* 15,000 743
- --------------------------------------------------------------------------------------
2,636
- --------------------------------------------------------------------------------------
Semi-Conductor Production Equipment -- 2.4%
Advanced Energy* 20,000 566
Asyst Technologies* 15,000 666
Helix Technology 8,500 526
PRI Automation* 11,400 667
Speedfam International* 11,900 719
- --------------------------------------------------------------------------------------
3,144
- --------------------------------------------------------------------------------------
Semi-Conductor Testing Equipment -- 0.9%
Electro Scientific* 10,000 610
Uniphase* 7,000 557
- --------------------------------------------------------------------------------------
1,167
- --------------------------------------------------------------------------------------
Software-Client/Server -- 1.3%
HNC Software* 10,000 398
Industri-Matematik International* 25,000 613
Legato Systems* 17,700 628
- --------------------------------------------------------------------------------------
1,639
- --------------------------------------------------------------------------------------
Software-Desktop -- 1.3%
Datastream Systems* 12,500 468
Motivepower* 25,000 650
Visio* 15,000 626
- --------------------------------------------------------------------------------------
1,744
- --------------------------------------------------------------------------------------
Software-Manufacturing -- 0.4%
Manugistics* 14,300 511
- --------------------------------------------------------------------------------------
511
- --------------------------------------------------------------------------------------
Software-Other -- 1.0%
Lernout & Hauspie Speech* 11,000 481
Summit Design* 30,000 533
Viasoft* 6,800 337
- --------------------------------------------------------------------------------------
1,351
- --------------------------------------------------------------------------------------
Software/Software Service -- 2.3%
Axent Technologies* 13,000 270
Compucom Systems* 25,000 231
INSO* 25,000 312
Intuit* 7,000 224
Microage* 13,300 386
Simulation Sciences* 4,000 79
Software Artistry* 6,750 90
Symantec* 53,000 1,206
Vanstar* 9,900 151
- --------------------------------------------------------------------------------------
2,949
- --------------------------------------------------------------------------------------
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
=========================
THE PBHG FUNDS, INC.
=========================
- --------------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- continued
Telecommunications Equipment -- 3.8%
Advanced Fibre Communication* 13,000 $ 533
Datum* 12,100 552
Geotel Communications* 25,000 472
P-Com* 19,800 474
Powerwave Technologies* 10,700 415
RF Monolithics* 22,500 568
Sawtek* 10,800 499
Tekelec* 25,000 851
World Access* 17,500 569
- --------------------------------------------------------------------------------------
4,933
- --------------------------------------------------------------------------------------
Voice/Call Transaction Processing -- 0.9%
Davox* 13,950 467
Nact Telecommunications* 27,500 435
Natural Microsystems* 7,500 285
- --------------------------------------------------------------------------------------
1,187
- --------------------------------------------------------------------------------------
Total Technology
(Cost $27,775) 34,968
- --------------------------------------------------------------------------------------
Transportation -- 3.4%
Transportation -- 3.4%
Airborne Freight 2,300 139
Arkansas Best* 5,000 57
Arnold Industries 5,000 117
Avondale Industries* 10,000 264
CNF Transportation 6,000 261
Coach USA* 17,500 526
Covenant Transportation, Cl A* 16,000 288
Eagle USA Airfreight* 20,100 673
Greenbrier Companies 1,700 28
Gulfmark Offshore* 11,000 380
Roadway Express 3,000 82
Seacor Holdings* 3,700 229
USFreightways 35,000 1,177
Werner 7,000 170
- --------------------------------------------------------------------------------------
4,391
- --------------------------------------------------------------------------------------
Total Transportation
(Cost $3,942) 4,391
- --------------------------------------------------------------------------------------
Utilities -- 0.2%
Utilities-Natural Gas Utilities -- 0.2%
CTG Resources 2,200 51
Peoples Energy 3,200 121
Wicor 1,900 82
- --------------------------------------------------------------------------------------
254
- --------------------------------------------------------------------------------------
Total Utilities
(Cost $248) 254
Total Common Stocks
(Cost $103,227) 124,624
- --------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------
Face Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreement -- 2.8%
J.P. Morgan
6.05%, dated 09/30/97, matures 10/01/97,
repurchase price $ (collateralized by
U.S. Government Obligations: total
market value $) (A) $3,595 $ 3,595
- --------------------------------------------------------------------------------------
Total Repurchase Agreement
(Cost $3,595) 3,595
- --------------------------------------------------------------------------------------
Total Investments -- 98.7%
(Cost $106,822) 128,219
- --------------------------------------------------------------------------------------
Other Assets and Liabilities -- 1.3%
Other Assets and Liabilities, Net 1,715
- --------------------------------------------------------------------------------------
Net Assets:
Fund Shares of PBHG Class (authorized 200 million shares --
$0.001 par value) based on 9,664,315 outstanding shares
of common stock 102,663
Accumulated net investment loss (330)
Accumulated net realized gain on investments 6,204
Net unrealized appreciation on investments 21,397
- --------------------------------------------------------------------------------------
Total Net Asset-- 100.0% $129,934
======================================================================================
Net Asset Value, Offering and
Redemption Price Per Share $13.44
======================================================================================
</TABLE>
* Non-income producing security
(A) -- Tri-party repurchase agreement
ADR -- American Depository Receipt
Cl -- Class
PLC -- Public Limited Company
NY SHR -- New York Shares
The accompanying notes are an integral part of the financial statements
47
<PAGE>
=========================
THE PBHG FUNDS, INC.
=========================
[This page intentionally left blank]
48
<PAGE>
========================================
STATEMENT OF ASSETS AND LIABILITIES
========================================
September 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
------------------ -----------------
PBHG PBHG
Mid-Cap Value Small Cap Value
Fund Fund
(000) (000)
------------------ -----------------
<S> <C> <C>
Assets:
Investment securities (Cost $27,755 and $51,953) $ 29,919 $ 56,241
Accrued Income 23 57
Receivable for capital shares sold 1,265 3,815
Receivable for investment securities sold 1,027 2,745
-------- --------
Total assets 32,234 62,858
-------- --------
Liabilities:
Payable for investment securities purchased 2,447 3,579
Payable for capital shares purchased 2 31
Bank Overdraft 8 12
Accrued Expenses 8 --
-------- --------
Total liabilities 2,465 3,622
-------- --------
Net Assets:
Portfolio shares (authorized 200 million shares for each of the PBHG
Mid-Cap Value and PBHG Small Cap Value Funds -- $0.001 par value) based
on 2,081,818 and 4,070,626 outstanding shares of beneficial interest 26,473 52,562
Accumulated net investment income (loss) (4) 1
Accumulated net realized gain on investments 1,136 2,385
Net unrealized appreciation on investments 2,164 4,288
-------- --------
Net assets $ 29,769 $ 59,236
-------- --------
Net Asset Value, Offering and Redemption Price Per Share $ 14.30 $ 14.55
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
49
<PAGE>
=======================================
STATEMENTS OF OPERATIONS (000)
=======================================
For a Share Outstanding Throughout each Fiscal Year or Period
For the period ended September 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
----------- ----------- ----------- ----------- ----------- ----------- -----------
PBHG PBHG PBHG
PBHG Emerging Large Cap PBHG PBHG PBHG Large Cap
Growth Growth Growth Select Equity Core Growth Limited 20
Fund Fund Fund Fund Fund Fund Fund
----------- ----------- ----------- ----------- ----------- ----------- -----------
04/01/97 04/01/97 04/01/97 04/01/97 04/01/97 04/01/97 04/01/97
to to to to to to to
09/30/97 09/30/97 09/30/97 09/30/97 09/30/97 09/30/97 09/30/97
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment Income:
Dividends $ 1,539 $ 328 $ 141 $ 52 $ 119 $ 7 $ 101
Interest 14,738 3,843 150 400 278 473 206
Less: Foreign Taxes Withheld -- -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total Investment Income 16,277 4,171 291 452 397 480 307
----------- ----------- ----------- ----------- ----------- ----------- -----------
Expenses:
Investment Advisory Fees 23,836 6,411 509 1,740 1,269 793 393
Waiver of Investment
Advisory Fees -- -- -- -- -- -- --
Administrative Fees 4,206 1,131 104 307 224 119 69
Transfer Agent Fees 5,298 1,548 171 554 410 138 166
Registration and Filing Fees 579 171 6 52 13 22 19
Printing Fees 381 101 12 46 21 9 12
Professional Fees 269 80 9 16 14 6 11
Custodian Fees 271 81 10 31 19 13 12
Insurance and Other Fees 30 9 1 4 2 1 2
Directors' Fees 26 7 2 2 3 1 1
Amortization of Deferred
Organizational Costs -- 2 1 1 1 4 2
Line of Credit 146 39 1 11 8 4 2
Distribution Fees 1 58 -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total Expenses 35,100 9,580 826 2,764 1,984 1,110 689
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Investment Income (Loss) (18,823) (5,409) (535) (2,312) (1,587) (630) (382)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Realized Gain (Loss) from
Security Transactions 130,479 18,067 6,432 13,610 (14,808) 180 3,544
Net Realized Loss on Foreign
Currency Transactions -- -- -- -- -- -- --
Net Change in Unrealized
Appreciation (Depreciation)
on Investments 1,423,486 482,635 35,142 120,871 83,549 64,633 25,115
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Realized and Unrealized
Gain (Loss) on Investments
and Foreign Currency
Transactions 1,553,965 500,702 41,574 134,481 68,741 64,813 28,659
----------- ----------- ----------- ----------- ----------- ----------- -----------
Increase (Decrease) in
Net Assets Resulting
from Operations $ 1,535,142 $ 495,293 $ 41,039 $ 132,169 $ 67,154 $ 64,183 $ 28,277
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
1. All distribution fees are incurred in the Advisor Class.
2. The PBHG Mid-Cap Value and PBHG Small Cap Value funds commenced
operations on May 1, 1997.
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
50
<PAGE>
========================================
THE PBHG FUNDS, INC.
========================================
<TABLE>
<CAPTION>
----------- ----------- ----------- ----------- ----------- ----------- -----------
PBHG PBHG PBHG PBHG PBHG PBHG
Large Cap Mid-Cap Small Cap PBHG Cash Technology & Strategic
Value Value Value International Reserves Communications Small Company
Fund Fund 2 Fund 2 Fund Fund Fund Fund
----------- ----------- ----------- ----------- ----------- ----------- -----------
04/01/97 05/01/97 05/01/97 04/01/97 04/01/97 04/01/97 04/01/97
to to to to to to to
09/30/97 09/30/97 09/30/97 09/30/97 09/30/97 09/30/97 09/30/97
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment Income:
Dividends $ 399 $ 37 $ 77 $ 298 $ -- $ 55 $ 186
Interest 28 22 42 12 6,124 1,213 88
Less: Foreign Taxes Withheld -- -- -- (22) -- -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total Investment Income 427 59 119 288 6,124 1,268 274
----------- ----------- ----------- ----------- ----------- ----------- -----------
Expenses:
Investment Advisory Fees 142 36 79 117 325 2,703 436
Waiver of Investment
Advisory Fees -- (1) (1) -- -- -- --
Administrative Fees 32 6 12 18 162 477 65
Transfer Agent Fees 54 12 14 44 178 699 71
Registration and Filing Fees 7 4 7 8 12 85 15
Printing Fees 4 2 1 2 21 63 9
Professional Fees 3 -- -- 1 13 38 5
Custodian Fees 14 3 5 24 19 46 27
Insurance and Other Fees 9 1 1 12 4 3 1
Directors' Fees -- -- -- -- 1 3 --
Amortization of Deferred
Organizational Costs 3 -- -- 8 1 1 1
Line of Credit 1 -- -- -- -- 16 2
Distribution Fees 1 -- -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total Expenses 269 63 118 234 736 4,134 632
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Investment Income (Loss) 158 (4) 1 54 5,388 (2,866) (358)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Realized Gain (Loss) from
Security Transactions 1,747 1,136 2,385 1,581 (12) 23,430 8,252
Net Realized Loss on Foreign
Currency Transactions -- -- -- (32) -- -- --
Net Change in Unrealized
Appreciation (Depreciation)
on Investments 8,064 2,164 4,288 1,218 -- 228,809 27,667
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Realized and Unrealized
Gain (Loss) on Investments
and Foreign Currency
Transactions 9,811 3,300 6,673 2,767 (12) 252,239 35,919
----------- ----------- ----------- ----------- ----------- ----------- -----------
Increase (Decrease) in
Net Assets Resulting
from Operations $ 9,969 $ 3,296 $ 6,674 $ 2,821 $ 5,376 $ 249,373 $ 35,561
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
51
<PAGE>
==============================================
STATEMENTS OF CHANGES IN NET ASSETS (000)
==============================================
For the six month period ended September 30, 1997 (unaudited)
and the period ending March 31, 1997.
<TABLE>
<CAPTION>
-------------------------- -------------------------- --------------------------
PBHG PBHG PBHG
Growth Emerging Growth Large Cap Growth
Fund Fund Fund
-------------------------- -------------------------- --------------------------
04/01/97 04/01/96 04/01/97 04/01/96 04/01/97 04/01/96
to to to to to to
09/30/97 03/31/97 09/30/97 03/31/97 09/30/97 03/31/97
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment Activities:
Net Investment Income (Loss) $ (18,823) $ (35,923) $ (5,409) $ (4,549) $ (535) $ (581)
Net Realized Gain (Loss) from
Security Transactions 130,479 (244,650) 18,067 (51,106) 6,432 (5,730)
Net Realized Gain (Loss) on
Foreign Currency
Transactions -- -- -- -- -- --
Net Change in Unrealized
Appreciation (Depreciation)
on Investments and Foreign
Currency Transactions 1,423,486 (840,002) 482,635 (232,763) 35,142 (1,449)
----------- ----------- ----------- ----------- ----------- -----------
Net Increase (Decrease) in
Net Assets Resulting
from Operations 1,535,142 (1,120,575) 495,293 (288,418) 41,039 (7,760)
----------- ----------- ----------- ----------- ----------- -----------
Distributions to Shareholders From:
Net Investment Income -- -- -- -- -- --
Net Realized Gains from
Security Transactions -- -- -- (49,616) -- (146)
----------- ----------- ----------- ----------- ----------- -----------
Total Distributions -- -- -- (49,616) -- (146)
----------- ----------- ----------- ----------- ----------- -----------
Capital Share Transactions (A):
PBHG Class
Shares Issued 1,381,369 5,020,812 876,668 1,925,528 46,703 259,520
Shares Transfer(6) -- -- -- -- -- --
Shares Issued upon Reinvestment
of Distributions -- -- -- 47,297 -- 135
Shares Redeemed (1,305,264) (2,567,916) (730,073) (1,128,876) (64,705) (185,537)
----------- ----------- ----------- ----------- ----------- -----------
Total PBHG Class Transactions 76,105 2,452,896 146,595 843,949 (18,002) 74,118
----------- ----------- ----------- ----------- ----------- -----------
Advisor Class
Shares Issued 46,728 15,962 -- -- -- --
Shares Issued upon Reinvestment
of Distributions -- -- -- -- -- --
Shares Redeemed (4,791) (79) -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total Advisor Class Transactions 41,937 15,883 -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Increase (Decrease) in Net Assets
Derived from Capital
Share Transactions 118,042 2,468,779 146,595 843,949 (18,002) 74,118
----------- ----------- ----------- ----------- ----------- -----------
Total Increase (Decrease) in
Net Assets 1,653,184 1,348,204 641,888 505,915 23,037 66,212
----------- ----------- ----------- ----------- ----------- -----------
Net Assets:
Beginning of Period 4,647,129 3,298,925 1,195,620 689,705 119,971 53,759
----------- ----------- ----------- ----------- ----------- -----------
End of Period $ 6,300,313 $ 4,647,129 $ 1,837,508 $ 1,195,620 $ 143,008 $ 119,971
=========== =========== =========== =========== =========== ===========
(A)Shares Issued and Redeemed:
PBHG Class
Shares Issued 57,481 189,736 39,372 77,652 2,613 16,415
Shares Transfer(6) -- -- -- -- -- --
Shares Issued upon Reinvestment
of Distributions -- -- -- 1,921 -- 8
Shares Redeemed (53,170) (100,103) (32,326) (47,388) (3,692) (11,712)
----------- ----------- ----------- ----------- ----------- -----------
Total PBHG Class Share
Transactions 4,311 89,633 7,046 32,185 (1,079) 4,711
----------- ----------- ----------- ----------- ----------- -----------
Advisor Class 5
Shares Issued 2,017 621 -- -- -- --
Shares Issued upon Reinvestment
of Distributions -- -- -- -- -- --
Shares Redeemed (193) (3) -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total Advisor Class Share
Transactions 1,824 618 -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Net Increase (Decrease) in
Shares Outstanding 6,135 90,251 7,046 32,185 (1,079) 4,711
=========== =========== =========== =========== =========== ===========
<CAPTION>
-------------------------- -------------------------- --------------------------
PBHG PBHG PBHG
Select Equity Core Growth Limited
Fund Fund Fund
-------------------------- -------------------------- --------------------------
04/01/97 04/01/96 04/01/97 04/01/96 04/01/97 07/01/96(1)
to to to to to to
09/30/97 03/31/97 09/30/97 03/31/97 09/30/97 03/31/97
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment Activities:
Net Investment Income (Loss) $ (2,312) $ (3,667) $ (1,587) $ (2,598) $ (630) $ 464
Net Realized Gain (Loss) from
Security Transactions 13,610 (32,999) (14,808) (49,445) 180 641
Net Realized Gain (Loss) on
Foreign Currency
Transactions -- -- -- -- -- --
Net Change in Unrealized
Appreciation (Depreciation)
on Investments and Foreign
Currency Transactions 120,871 (31,600) 83,549 (41,122) 64,633 (13,027)
----------- ----------- ----------- ----------- ----------- -----------
Net Increase (Decrease) in
Net Assets Resulting
from Operations 132,169 (68,266) 67,154 (93,165) 64,183 (11,922)
----------- ----------- ----------- ----------- ----------- -----------
Distributions to Shareholders From:
Net Investment Income -- -- -- -- -- (464)
Net Realized Gains from
Security Transactions -- (6,009) -- -- -- (285)
----------- ----------- ----------- ----------- ----------- -----------
Total Distributions -- (6,009) -- -- -- (749)
----------- ----------- ----------- ----------- ----------- -----------
Capital Share Transactions (A):
PBHG Class
Shares Issued 56,039 828,376 63,316 804,054 8,723 198,852
Shares Transfer(6) -- -- -- -- -- --
Shares Issued upon Reinvestment
of Distributions -- 5,665 -- -- -- 720
Shares Redeemed (147,077) (590,076) (155,051) (457,986) (22,871) (49,381)
----------- ----------- ----------- ----------- ----------- -----------
Total PBHG Class Transactions (91,038) 243,965 (91,735) 346,068 (14,148) 150,191
----------- ----------- ----------- ----------- ----------- -----------
Advisor Class
Shares Issued -- -- -- -- -- --
Shares Issued upon Reinvestment
of Distributions -- -- -- -- -- --
Shares Redeemed -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total Advisor Class Transactions -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Increase (Decrease) in Net Assets
Derived from Capital
Share Transactions (91,038) 243,965 (91,735) 346,068 (14,148) 150,191
----------- ----------- ----------- ----------- ----------- -----------
Total Increase (Decrease) in
Net Assets 41,131 169,690 (24,581) 252,903 50,035 137,520
----------- ----------- ----------- ----------- ----------- -----------
Net Assets:
Beginning of Period 372,486 202,796 283,995 31,092 137,520 --
----------- ----------- ----------- ----------- ----------- -----------
End of Period $ 413,617 $ 372,486 $ 259,414 $ 283,995 $ 187,555 $ 137,520
=========== =========== =========== =========== =========== ===========
(A)Shares Issued and Redeemed:
PBHG Class
Shares Issued 2,989 42,146 5,594 60,034 713 19,868
Shares Transfer(6) -- -- -- -- -- --
Shares Issued upon Reinvestment
of Distributions -- 284 -- -- -- 66
Shares Redeemed (7,632) (30,763) (12,915) (35,211) (2,088) (4,739)
----------- ----------- ----------- ----------- ----------- -----------
Total PBHG Class Share
Transactions (4,643) 11,667 (7,321) 24,823 (1,375) 15,195
----------- ----------- ----------- ----------- ----------- -----------
Advisor Class 5
Shares Issued -- -- -- -- -- --
Shares Issued upon Reinvestment
of Distributions -- -- -- -- -- --
Shares Redeemed -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total Advisor Class Share
Transactions -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Net Increase (Decrease) in
Shares Outstanding (4,643) 11,667 (7,321) 24,823 (1,375) 15,195
=========== =========== =========== =========== =========== ===========
</TABLE>
1. The PBHG Limited Fund commenced operations on July 1, 1996.
2. The PBHG Large Cap 20 Fund commenced operations on December 1. 1996.
3. The PBHG Large Cap Value and PBHG Strategic Small Company Funds commenced
operations on January 2, 1997.
4. The PBHG Mid-Cap Value and PBHG Small-Cap Value Funds commenced operations
on May 1, 1997.
5. The PBHG Growth Fund-Advisor Class commenced operations on August19, 1996.
6. Net asset value of shares issued in connection with the transfer of the
Newbold Equity Fund Nets Assets. Reference notes to Financial Statements.
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
52
<PAGE>
==============================
THE PBHG FUNDS, INC.
==============================
<TABLE>
<CAPTION>
---------------------- --------------------- -------------- -------------
PBHG PBHG PBHG PBHG
Large Cap 20 Large Cap Value Mid-Cap Value Small Cap Value
Fund Fund Fund Fund
---------------------- --------------------- ------------- -------------
04/01/97 12/01/96(2) 04/01/97 01/02/97(3) 05/01/97(4) 05/01/97(4)
to to to to to to
09/30/97 03/31/97 09/30/97 03/31/97 09/30/97 09/30/97
--------- --------- --------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Investment Activities:
Net Investment Income (Loss) $ (382) $ 36 $ 158 $ 60 $ (4) $ 1
Net Realized Gain (Loss) from
Security Transactions 3,544 (2,539) 1,747 -- 1,136 2,385
Net Realized Gain (Loss) on
Foreign Currency
Transactions -- -- -- -- -- --
Net Change in Unrealized
Appreciation (Depreciation)
on Investments and Foreign
Currency Transactions 25,115 (4,836) 8,064 (800) 2,164 4,288
--------- --------- --------- --------- --------- ---------
Net Increase (Decrease) in
Net Assets Resulting
from Operations 28,277 (7,339) 9,969 (740) 3,296 6,674
--------- --------- --------- --------- --------- ---------
Distributions to Shareholders From
Net Investment Income -- (53) -- -- -- --
Net Realized Gains from
Security Transactions -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
Total Distributions -- (53) -- -- -- --
--------- --------- --------- --------- --------- ---------
Capital Share Transactions (A):
PBHG Class
Shares Issued 66,621 109,566 45,340 35,206 41,630 70,904
Shares Transfer(6) -- -- 10,076 -- -- --
Shares Issued upon Reinvestment
of Distributions -- 50 -- -- -- --
Shares Redeemed (55,464) (32,405) (20,558) (8,204) (15,157) (18,342)
--------- --------- --------- --------- --------- ---------
Total PBHG Class Transactions 11,157 77,211 34,858 27,002 26,473 52,562
--------- --------- --------- --------- --------- ---------
Advisor Class
Shares Issued -- -- -- -- -- --
Shares Issued upon Reinvestment
of Distributions -- -- -- -- -- --
Shares Redeemed -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
Total Advisor Class Transactions -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
Increase (Decrease) in Net Assets
Derived from Capital
Share Transactions 11,157 77,211 34,858 27,002 26,473 52,562
--------- --------- --------- --------- --------- ---------
Total Increase (Decrease) in
Net Assets 39,434 69,819 44,827 26,262 29,769 59,236
--------- --------- --------- --------- --------- ---------
Net Assets:
Beginning of Period 69,819 -- 26,262 -- -- --
--------- --------- --------- --------- --------- ---------
End of Period $ 109,253 $ 69,819 $ 71,089 $ 26,262 $ 29,769 $ 59,236
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
(A)Shares Issued and Redeemed:
PBHG Class
Shares Issued 5,626 10,798 3,959 3,381 3,249 5,460
Shares Transfer(6) -- -- 989 -- -- --
Shares Issued upon Reinvestment
of Distributions -- 5 -- -- -- --
Shares Redeemed (4,708) (3,255) (1,833) (784) (1,167) (1,389)
--------- --------- --------- --------- --------- ---------
Total PBHG Class Share
Transactions 918 7,548 3,115 2,597 2,082 4,071
--------- --------- --------- --------- --------- ---------
Advisor Class 5
Shares Issued -- -- -- -- -- --
Shares Issued upon Reinvestment
of Distributions -- -- -- -- -- --
Shares Redeemed -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
Total Advisor Class Share
Transactions -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
Net Increase (Decrease) in
Shares Outstanding 918 7,548 3,115 2,597 2,082 4,071
========= ========= ========= ========= ========= =========
<CAPTION>
------------------ ---------------------- ---------------------- --------------------
PBHG PBHG PBHG PBHG
International Cash Reserves Tech & Comm Strategic Small Co
Fund Fund Fund Fund
------------------ ---------------------- ---------------------- --------------------
04/01/97 04/01/96 04/01/97 04/01/96 04/01/97 04/01/96 04/01/97 01/02/97(3)
to to to to to to to to
09/30/97 03/31/97 09/30/97 03/31/97 09/30/97 03/31/97 09/30/97 03/31/97
-------- -------- --------- ---------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Activities:
Net Investment Income (Loss) $ 54 $ (57) $ 5,388 $ 10,844 $ (2,866) $ (2,047) $ (358) $ 28
Net Realized Gain (Loss) from
Security Transactions 1,581 451 (12) (2) 23,430 18,009 8,252 (2,048)
Net Realized Gain (Loss) on
Foreign Currency
Transactions (32) (34) -- -- -- -- -- --
Net Change in Unrealized
Appreciation (Depreciation)
on Investments and Foreign
Currency Transactions 1,218 779 -- -- 228,809 (56,036) 27,667 (6,270)
-------- -------- --------- ---------- --------- --------- -------- --------
Net Increase (Decrease) in
Net Assets Resulting
from Operations 2,821 1,139 5,376 10,842 249,373 (40,074) 35,561 (8,290)
-------- -------- --------- ---------- --------- --------- -------- --------
Distributions to Shareholders
From
Net Investment Income -- -- (5,389) (10,844) -- -- -- --
Net Realized Gains from
Security Transactions -- -- -- -- -- (10,050) -- --
-------- -------- --------- ---------- --------- --------- -------- --------
Total Distributions -- -- (5,389) (10,844) -- (10,050) -- --
-------- -------- --------- ---------- --------- --------- -------- --------
Capital Share Transactions (A):
PBHG Class
Shares Issued 32,394 39,195 818,661 1,393,768 461,585 1,278,462 74,335 87,204
Shares Transfer(6) -- -- -- -- -- -- -- --
Shares Issued upon Reinvestment
of Distributions -- -- 5,376 8,942 -- 9,213 -- --
Shares Redeemed (35,060) (30,312) (997,829) (1,160,133) (473,781) (806,167) (41,344) (17,532)
-------- -------- --------- ---------- --------- --------- -------- --------
Total PBHG Class Transactions (2,666) 8,883 (173,792) 242,577 (12,196) 481,508 32,991 69,672
-------- -------- --------- ---------- --------- --------- -------- --------
Advisor Class
Shares Issued -- -- -- -- -- -- -- --
Shares Issued upon Reinvestment
of Distributions -- -- -- -- -- -- -- --
Shares Redeemed -- -- -- -- -- -- -- --
-------- -------- --------- ---------- --------- --------- -------- --------
Total Advisor Class Transactions -- -- -- -- -- -- -- --
-------- -------- --------- ---------- --------- --------- -------- --------
Increase (Decrease) in Net Assets
Derived from Capital
Share Transactions (2,666) 8,883 (173,792) 242,577 (12,196) 481,508 32,991 69,672
-------- -------- --------- ---------- --------- --------- -------- --------
Total Increase (Decrease) in
Net Assets 155 10,022 (173,805) 242,575 237,177 431,384 68,552 61,382
-------- -------- --------- ---------- --------- --------- -------- --------
Net Assets:
Beginning of Period 21,265 11,243 341,576 99,001 493,156 61,772 61,382 --
-------- -------- --------- ---------- --------- --------- -------- --------
End of Period $ 21,420 $ 21,265 $ 167,771 $ 341,576 $ 730,333 $ 493,156 $129,934 $ 61,382
======== ======== ========= ========== ========= ========= ======== ========
(A)Shares Issued and Redeemed:
PBHG Class
Shares Issued 2,665 3,602 818,661 1,393,768 25,185 77,511 6,398 8,740
Shares Transfer(6) -- -- -- -- -- -- -- --
Shares Issued upon Reinvestment
of Distributions -- -- 5,376 8,942 -- 525 -- --
Shares Redeemed (2,861) (2,778) (997,829) (1,160,133) (25,671) (49,269) (3,659) (1,815)
-------- -------- --------- ---------- --------- --------- -------- --------
Total PBHG Class Share
Transactions (196) 824 (173,792) 242,577 (486) 28,767 2,739 6,925
-------- -------- --------- ---------- --------- --------- -------- --------
Advisor Class 5
Shares Issued -- -- -- -- -- -- -- --
Shares Issued upon Reinvestment
of Distributions -- -- -- -- -- -- -- --
Shares Redeemed -- -- -- -- -- -- -- --
-------- -------- --------- ---------- --------- --------- -------- --------
Total Advisor Class Share
Transactions -- -- -- -- -- -- -- --
-------- -------- --------- ---------- --------- --------- -------- --------
Net Increase (Decrease) in
Shares Outstanding (196) 824 (173,792) 242,577 (486) 28,767 2,739 6,925
======== ======== ========= ========== ========= ========= ======== ========
</TABLE>
53
<PAGE>
=========================
FINANCIAL HIGHLIGHTS
=========================
For a Share Outstanding Throughout each Fiscal Year or Period
For the period ended September 30, 1997
<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
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------
PBHG Growth Fund
- ----------------
PBHG Class
1997** $21.06 $(0.08) $6.80 -- -- $27.78 31.91%+ $6,232,655 1.25%*
1997 25.30 (0.10) (4.14) -- -- 21.06 (16.76)% 4,634,138 1.25%
1996 16.70 (0.06) 8.66 -- -- 25.30 51.50% 3,298,666 1.48%
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%
PBHG Advisor Class
1997** $21.03 $(0.04) $6.72 -- -- $27.71 31.76%+ $67,658 1.50%*
1997(1) 25.42 (0.06) (4.33) -- -- 21.03 (17.27)%+ 12,991 1.53%*
- -------------------------
PBHG Emerging Growth Fund
- -------------------------
PBHG Class
1997** $19.26 $(0.07) $7.39 -- -- $26.58 38.01%+ $1,837,508 1.27%*
1997 23.07 (0.11) (2.87) -- $(0.83) 19.26 (13.71)% 1,195,620 1.28%
1996 16.10 (0.07) 8.03 -- (0.99) 23.07 50.16% 689,705 1.47%
1995(2),(3)14.59 (0.01) 1.56 -- (0.04) 16.10 10.64%+ 411,866 1.50%*
1994(2) 13.22 (0.03) 2.38 -- (0.98) 14.59 19.64% 113,329 1.45%
1993(4) 10.00 (0.03) 3.25 -- -- 13.22 32.20%+ 34,517 1.50%*
- --------------------------
PBHG Large Cap Growth Fund
- --------------------------
PBHG Class
1997** $14.26 $(0.08) $5.32 -- -- $19.50 36.75%+ $143,008 1.22%*
1997 14.53 (0.05) (0.21) -- $(0.01) 14.26 (1.77)% 119,971 1.23%
1996(6) 10.00 (0.03) 4.97 -- (0.41) 14.53 50.47%* 53,759 1.50%*
- -----------------------
PBHG Select Equity Fund
- -----------------------
PBHG Class
1997** $15.91 $(0.17) $6.30 -- -- $22.04 38.53%+ $413,617 1.35%*
1997 17.27 (0.13) (1.03) -- $(0.20) 15.91 (6.94)% 372,486 1.26%
1996(6) 10.00 (0.05) 7.68 -- (0.36) 17.27 77.75%* 202,796 1.50%*
- ---------------------
PBHG Core Growth Fund
- ---------------------
PBHG Class
1997** $10.34 $(0.11) $2.66 -- -- $12.89 24.66%+ $259,414 1.33%*
1997 11.82 (0.09) (1.39) -- -- 10.34 (12.52)% 283,995 1.36%
1996(5) 10.00 -- 1.82 -- -- 11.82 18.20%+ 31,092 1.50%*
- -----------------
PBHG Limited Fund
- -----------------
PBHG Class
1997** $9.05 $(0.05) $4.57 -- -- $13.57 49.94%+ $187,555 1.40%*
1997(8) 10.00 0.02 (0.93) $(0.03) $(0.01) 9.05 (9.15)%+ 137,520 1.42%*
<CAPTION>
Ratio
Ratio of Net
of Net Ratio Investment
Investment of Expenses Income (Loss)
Income to Average to Average
(Last) Net Assets Net Assets Portfolio Average
to Average (Excluding (Excluding Turnover Commision
Net Assets Waivers) Waivers) Rate Rate 13
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ----------------
PBHG Growth Fund
- ----------------
PBHG Class
1997** (0.67)%* 1.25%* (0.67)%* 44.44% $0.0526
1997 (0.69)% 1.25% (0.69)% 64.89% 0.0493
1996 (0.79)% 1.48% (0.79)% 44.64% n/a
1995 (0.69)% 1.50% (0.69)% 118.75% n/a
1994 (0.78)% 1.59% (0.82)% 94.28% n/a
1993 (1.69)% 3.04% (2.34)% 209.24% n/a
PBHG Advisor Class
1997** (0.92)%* 1.50%* (0.92)%* 44.44% $0.0526
1997(1) (1.11)%* 1.53%* (1.11)%* 64.89% 0.0493
- -------------------------
PBHG Emerging Growth Fund
- -------------------------
PBHG Class
1997** (0.72)%* 1.27%* (0.72)%* 48.07% $0.0421
1997 (0.36)% 1.28% (0.36)% 47.75% 0.0328
1996 (0.42)% 1.47% (0.42)% 97.05% n/a
1995(2),(3) (0.08)%* 1.50%* (0.08)%* 27.50% n/a
1994(2) (0.77)% 1.45% (0.77)% 95.75% n/a
1993(4) (0.72)%* 1.54%* (0.76)%* 71.18% n/a
- --------------------------
PBHG Large Cap Growth Fund
- ---------------------------
PBHG Class
1997** (0.79)%* 1.22%* (0.79)%* 20.59% $0.0511
1997 (0.47)% 1.23% (0.47)% 51.70% 0.0547
1996(6) (0.66)%* 2.07%* (1.23)%* 116.75% n/a
- -----------------------
PBHG Select Equity Fund
- -----------------------
PBHG Class
1997** (1.13)%* 1.35%* (1.13)%* 37.35% $0.0563
1997 (0.76)% 1.26% (0.76)% 71.70% 0.0443
1996(6) (0.74)%* 1.73%* (0.97)%* 206.22% n/a
- --------------------
PBHG Core Growth Fund
- ---------------------
PBHG Class
1997** (1.06)%* 1.33%* (1.06)%* 25.20% $0.0550
1997 (0.77)% 1.36% (0.77)% 46.75% 0.0437
1996(5) (0.18)%* 2.92%* (1.60)%* 17.00% n/a
- -----------------
PBHG Limited Fund
- -----------------
PBHG Class
1997** (0.79)%* 1.40%* (0.79)%* 44.01% $0.0379
1997(8) 0.33%* 1.42%* 0.33%* 75.46% 0.0304
</TABLE>
* Annualized
** For the six month period ended September 30, 1997 (unaudited)
+ Total returns have not been annualized.
1 The PBHG Growth Fund Advisor Class commenced operations on August 19, 1996.
2 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
and reported financial information for the fiscal period from November 1,
1994 to March 31, 1995.
3 Per share calculations were performed using average shares for the period.
4 The Pilgrim Baxter Emerging Growth Fund, the predecessor series to the PBHG
Emerging Growth Fund, commenced operations on June 15, 1993.
5 The PBHG Core Growth Fund commenced operations on January 2, 1996.
6 The PBHG Large Cap Growth Fund, the PBHG Select Equity Fund, and the PBHG
Cash Reserves Fund commenced operations on April 5, 1995.
7 The PBHG Technology & Communications Fund commenced operations on October
2, 1995.
8 The PBHG Limited Fund commenced operations on July 1, 1996.
9 The PBHG Large Cap 20 Fund commenced operations on December 1, 1996.
10 The PBHG Large Cap Value Fund and the PBHG Strategic Small Company Fund
commenced operations on January 2, 1997.
11 The PBHG International Fund commenced operations on June 14, 1994.
12 The PBHG Mid-Cap Value and the PBHG Small Cap Value Funds commenced
operations May 1, 1997.
13 Average commision rate paid per share for security purchases and sales
during the period. Presentation of the rate is only required for fiscal
years beginning after September 1, 1995.
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
54
<PAGE>
==========================
THE PBHG FUNDS, INC.
==========================
<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
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------
PBHG Large Cap 20 Fund
- ----------------------
PBHG Class
1997** $9.25 $(0.04) $3.69 -- -- $12.90 39.46%+ $109,253 1.49%*
1997(9) 10.00 (0.01) (0.73) $(0.01) -- 9.25 (7.40)%+ 69,819 1.50%*
- -------------------------
PBHG Large Cap Value Fund
- -------------------------
PBHG Class
1997** $10.11 $0.02 $2.32 -- -- $12.45 23.15%+ $71,089 1.27%*
1997(10) 10.00 0.02 0.09 -- -- 10.11 1.10%+ 26,262 1.50%*
- -----------------------
PBHG Mid-Cap Value Fund
- -----------------------
PBHG Class
1997(12)** $10.00 -- $4.30 -- -- $14.30 43.00%+ $29,769 1.50%*
- -------------------------
PBHG Small Cap Value Fund
- -------------------------
PBHG Class
1997(12)** $10.00 -- $4.55 -- -- $14.55 45.50%+ $59,236 1.50%*
- -----------------------
PBHG International Fund
- -----------------------
PBHG Class
1997** $11.26 $0.02 $1.37 -- -- $12.65 12.85%+ $21,420 1.99%*
1997 10.55 -- 0.71 -- -- 11.26 6.73% 21,265 2.22%
1996 9.13 (0.04) 1.46 -- -- 10.55 15.55% 11,243 2.25%
1995(11) 10.00 (0.03) (0.80) -- $(0.04) 9.13 (8.33)%+ 15,236 2.25%*
- -----------------------
PBHG Cash Reserves Fund
- -----------------------
PBHG Class
1997** $1.00 $0.03 -- $(0.03) -- $1.00 5.02%* $167,771 0.68%*
1997 1.00 0.05 -- (0.05) -- 1.00 4.89% 341,576 0.68%
1996(6) 1.00 0.05 -- (0.05) -- 1.00 5.24%* 99,001 0.70%*
- -------------------------------------
PBHG Technology & Communications Fund
- -------------------------------------
PBHG Class
1997** $14.63 $(0.09) $7.44 -- -- $21.98 50.17%+ $730,333 1.30%*
1997 12.48 (0.05) 2.55 -- $(0.35) 14.63 19.59% 493,156 1.33%
1996(7) 10.00 (0.02) 2.50 -- -- 12.48 24.82%+ 61,772 1.50%*
- ---------------------------------
PBHG Strategic Small Company Fund
- ---------------------------------
PBHG Class
1997** $8.86 $(0.01) $4.59 -- -- $13.44 51.69%+ $129,934 1.45%*
1997(10) 10.00 -- (1.14) -- -- 8.86 (11.40)%+ 61,382 1.50%*
<CAPTION>
Ratio
Ratio of Net
of Net Ratio Investment
Investment of Expenses Income (Loss)
Income to Average to Average
(Loss) Net Assets Net Assets Portfolio Average
to Average (Excluding (Excluding Turnover Commision
Net Assets Waivers) Waivers) Rate Rate 13
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ----------------------
PBHG Large Cap 20 Fund
- ----------------------
PBHG Class
1997** (0.83)%* 1.49%* (0.83)%* 56.75% $0.0593
1997(9) 0.17%* 1.50%* 0.17%* 43.98% 0.0550
- -------------------------
PBHG Large Cap Value Fund
- -------------------------
PBHG Class
1997** 0.74%* 1.27%* 0.74%* 46.43% $0.0375
1997(10) 1.61%* 1.74%* 1.37%* 0.00% 0.0588
- -----------------------
PBHG Mid-Cap Value Fund
- -----------------------
PBHG Class
1997(12)** (0.10)%* 1.52%* (0.12)%* 144.93% $0.0545
- -------------------------
PBHG Small Cap Value Fund
- -------------------------
PBHG Class
1997(12)** 0.01%* 1.51%* 0.00%* 97.58% $0.0530
- -----------------------
PBHG International Fund
- -----------------------
PBHG Class
1997** (0.46)%* 1.99%* (0.46)%* 46.80% $0.0304
1997 (0.32)% 2.22% (0.32)% 74.82% 0.0287
1996 (0.22)% 3.03% (1.00)% 140.26% n/a
1995(11) (0.43)%* 2.36%* (0.54)%* 81.72% n/a
- -----------------------
PBHG Cash Reserves Fund
- -----------------------
PBHG Class
1997** 4.98%* 0.68%* 4.98%* n/a n/a
1997 4.79% 0.68% 4.79% n/a n/a
1996(6) 5.05%* 0.88%* 4.87%* n/a n/a
- -------------------------------------
PBHG Technology & Communications Fund
- -------------------------------------
PBHG Class
1997** (0.90)%* 1.30%* (0.90)%* 141.77% $0.0434
1997 (0.59)% 1.33% (0.59)% 289.91% 0.0365
1996(7) (0.50)%* 2.00%* (1.00)%* 125.99% n/a
- ---------------------------------
PBHG Strategic Small Company Fund
- ---------------------------------
PBHG Class
1997** (0.82)%* 1.45%* (0.82)%* 123.14% $0.0435
1997(10) 0.18%* 1.50%* 0.18%* 88.88% 0.0562
</TABLE>
55
<PAGE>
===========================================================
NOTES TO FINANCIAL STATEMENTS As of September 30, 1997
===========================================================
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 fourteen series: the PBHG Growth Fund (the
"Growth Fund"), the PBHG Emerging Growth Fund (the "Emerging Growth Fund"), the
PBHG Core Growth Fund (the "Core Growth Fund"), the PBHG Select Equity Fund (the
"Select Equity Fund"), the PBHG Large Cap Growth Fund (the "Large Cap Growth
Fund"), the PBHG Technology & Communications Fund (the "Technology &
Communications Fund"), the PBHG Limited Fund (the "Limited Fund"), the PBHG
Large Cap 20 Fund (the "Large Cap 20 Fund"), the PBHG Large Cap Value Fund (the
"Large Cap Value Fund"), the PBHG Mid-Cap Value Fund (the "Mid-Cap Value Fund"),
the PBHG Small Cap Value Fund (the "Small Cap Value Fund"), the PBHG Strategic
Small Company Fund ("the Strategic Small Company Fund"), the PBHG International
Fund (the "International Fund"), (collectively referred to as the "Equity
Portfolios"), and the PBHG Cash Reserves Fund (the "Cash Reserves Fund") (each a
"Portfolio" and, collectively, the "Portfolios"). The Portfolio's prospectus
provides a description of the Portfolio's investment objectives, policies and
investment strategies. The Fund is registered to offer two classes of shares,
PBHG Class and Advisor Class, formerly known as the "Trust Class." Currently the
Advisor Class of shares is only offered by the Growth Fund. The assets of each
Portfolio are segregated, and a shareholder's interest is limited to the
Portfolio in which shares are held.
2. Significant Accounting Policies
The following is a summary of the significant accounting policies followed by
the Portfolios.
Security Valuation -- Investment securities of the Equity Portfolios that are
listed on a securities exchange for which market quotations are available are
valued at the last quoted sales price on each business day. If there is no such
reported sale, these securities and unlisted securities for which market
quotations are readily available, are valued at the last bid price. Short-term
investments may be valued at amortized cost which approximates market value.
Foreign securities in the International Fund are valued based upon quotations
from the primary market in which they are traded. The values of investment
securities held by the Cash Reserves Fund are stated at amortized cost, which
approximates market value. Under this valuation method, acquisition discounts
and premiums are accreted and amortized ratably to maturity and are included in
interest income.
Security Transactions and Investment Income --Security transactions are
accounted for on the date the securities are purchased or sold (trade date).
Dividend income and distributions to shareholders are recognized on the
ex-dividend date; interest income is recognized on the accrual basis. Costs used
in determining realized capital gains and losses on the sale of investment
securities are those of the specific securities sold adjusted for the accretion
and amortization of acquisition discounts and premiums during the respective
holding periods.
Dividends --Dividends from net investment income for the Equity Portfolios are
declared annually, if available. Dividends from net investment income for the
Cash Reserves Fund are declared daily and paid monthly. Distributions of net
realized capital gains, for all portfolios, are generally made to shareholders
annually.
Dividends from net investment income and distributions from net realized capital
gains are determined in accordance with U.S. Federal income tax regulations,
which may differ from those amounts determined under generally accepted
accounting principles. These book/tax differences are either temporary or
permanent in nature. To the extent these differences are permanent, they are
charged or credited to paid-in-capital or accumulated net realized gain, as
appropriate, in the period that the differences arise. Accordingly, the
following permanent differences as of March 31, 1997, primarily attributable to
certain net operating losses, which for tax purposes, are not available to
offset future income or have been used to offset net short-term capital gains,
have been reclassified to the following accounts:
Accumulated Net
Paid-In-Capital Realized Gain
(000) (000)
--------------- ---------------
Growth Fund $35,930 $ --
Emerging Growth Fund 4,584 --
Core Growth Fund 2,603 --
Select Equity Fund 3,669 --
Large Cap Growth Fund 581 --
Technology & Communications Fund -- 2,047
Limited Fund -- 285
International Fund 98 --
In addition, the International Fund had $51,000 of permanent differences
primarily attributable to realized foreign exchange gains and losses, which have
been reclassified from accumulated net realized gain (loss) on foreign currency
transactions to undistributed net investment income.
These reclassifications have no effect on net assets or net asset values per
share.
Federal Income Taxes -- It is each Portfolio's intention to qualify or continue
to qualify as a regulated investment company for Federal income tax purposes and
to distribute all of its taxable income and net capital gains. Accordingly, no
provision has been made for Federal income taxes.
Net Asset Value Per Share -- The net asset value per share is calculated each
business day by dividing the total value of each Portfolio'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 insolvency
proceedings, realization of the collateral by a Portfolio may be delayed or
limited.
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 that is due to changes in the foreign exchange rates from
that which is due to changes in market prices of such securities.
56
<PAGE>
====================================================
THE PBHG FUNDS, INC.
====================================================
The International Fund reports gains and losses on foreign currency related
transactions as components of realized gains for financial reporting purposes,
whereas such components are treated as ordinary income or loss for Federal
income tax purposes.
Forward Foreign Currency Exchange Contracts -- In connection with portfolio
purchases and sales of securities denominated in a foreign currency, the
International Fund may enter into forward foreign currency exchange contracts.
Foreign currency exchange contracts are recorded at market value. Certain risks
may arise upon entering into these contracts from the potential inability of
counterparties to meet the terms of their contracts. Realized gains or losses
arising from such transactions are included in net realized gain (loss) from
foreign currency transactions.
Other -- Expenses that are directly related to one of the Portfolios are charged
directly to that Portfolio. Other operating expenses are prorated to the
Portfolios on the basis of relative net assets. Class specific expenses, such as
12b-1 service fees, are borne by that class. Income, other expenses and realized
and unrealized gains and losses of a Portfolio are allocated to the respective
class on the basis of the relative net assets each day.
All organizational costs incurred with the start up of the Emerging Growth Fund,
the Core Growth Fund, the Select Equity Fund, the Large Cap Growth Fund, the
Technology & Communications Fund, the Limited Fund, the Large Cap 20 Fund, the
Large Cap Value Fund, the Mid-Cap Value Fund, the Small Cap Value Fund, the
Strategic Small Company Fund, the International Fund and the Cash Reserves Fund
are being amortized on a straight line basis over a period of sixty months. In
the event that any of the initial shares of the Portfolio are redeemed by any
holder thereof during the period that the Portfolio is amortizing its
organizational costs, the redemption proceeds payable to the holder thereof will
be reduced by the unamortized organizational costs in the same ratio as the
number of initial shares being redeemed bears to the number of initial shares
outstanding at the time of redemption.
Use of Estimates in the Preparation of Financial Statements -- The preparation
of financial statements, in conformity with generally accepted accounting
principles, requires management to make estimates and assumptions that affect
the reported amount of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reporting period. Actual results
could differ from those estimates.
3. Investment Advisory Fees, Administrative Fees and Other Transactions with
Affiliates
The Fund and the Adviser are parties to an Investment Advisory Agreement (the
"Advisory Agreement"). Under the terms of the Advisory Agreement, the Adviser is
paid a monthly fee at an annual rate of 0.85% of the average daily net assets of
the Growth, Emerging Growth, Core Growth, Select Equity, Technology &
Communications, Large Cap 20, and Mid-Cap Value Funds, 0.75% of the average
daily net assets of the Large Cap Growth Fund, 0.65% of the Large Cap Value
Fund, 1.00% of the average daily net assets of the Limited, Small Cap Value,
Strategic Small Company and International Funds, and 0.30% of the average daily
net assets of the Cash Reserves Fund.
In the interest of limiting expenses of the Portfolios, the Adviser has entered
into expense limitation agreements with the Fund ("Expense Limitation
Agreements"), with respect to the Core Growth, Technology & Communications,
Limited, Large Cap 20, Large Cap Value, Mid-Cap Value, Small Cap Value,
Strategic Small Company and International Funds, pursuant to which the Adviser
has agreed to waive or limit its fees and to assume other expenses of the
Portfolios to the extent necessary to limit the total annual expenses (expressed
as a percentate of the Portfolios' average daily net assets) to 1.50% for the
Core Growth, Limited, Large Cap 20, Large Cap Value, Mid-Cap Value, Small Cap
Value, and Strategic Small Company Funds and 2.25% for the International Fund.
Reimbursement by the Portfolios of the advisory fees waived or limited and other
expenses paid by the Adviser pursuant to the Expense Limitation Agreements may
be made at a later date when the Portfolios have reached a sufficient asset size
to permit reimbursement to be made without causing the total annual expense rate
of each Portfolio to exceed 1.50% for the Core Growth, Limited, Large Cap 20,
Large Cap Value, Mid-Cap Value, Small Cap Value, and Strategic Small Company
Funds and 2.25% for the International Fund. Consequently, no reimbursement by a
Portfolio will be made unless: (i) the Portfolio's assets exceed $75 million;
(ii) the Portfolio's total annual expense ratio is less than 1.50% Core Growth,
Technology & Communications, Limited, Large Cap 20, Large Cap Value, Mid-Cap
Value, Small Cap Value and Strategic Small Company Funds and 2.25% for the
International Fund, and (iii) the payment of such reimbursement was approved by
the Board of Directors on a quarterly basis.
Newbold's Asset Management, Inc. ("Newbold"), a wholly-owned subsidiary of the
Adviser serves as the sub-adviser to the Large Cap Value Fund, Mid-Cap Value
Fund, Small Cap Value Fund and the Strategic Small Company Fund. For its
services provided pursuant to its Investment Sub-Advisory Agreement with the
Adviser and the Fund, Newbold receives a fee from the Adviser at an annual rate
of 0.40%, 0.50%, 0.65% and 0.30%, respectively, of the average daily net assets
of the Large Cap Value Fund, Mid-Cap Value Fund, Small Cap Value Fund and the
Strategic Small Company Fund. Newbold receives no fees directly from the Large
Cap Value Fund, Mid-Cap Value Fund, Small Cap Value Fund or the Strategic Small
Company Fund.
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 0.50% 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, LLP ("WMC") serves as the sub-adviser to the Cash
Reserves Fund. For its services provided pursuant to the Investment Sub-Advisory
Agreement with the Adviser and the Fund, WMCis entitled to receive a fee from
the Adviser, computed daily and paid monthly, at an annual rate equal to 0.075%
of the Cash Reserves Fund's average daily net assets up to and including $500
million and 0.020% 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.
PBHG Fund Services (the "Administrator"), a wholly-owned subsidiary of the
Adviser, provides the Fund with administrative services, including regulatory
reporting and all necessary office space, equipment, personnel and facilities.
For these administrative services, the Administrator receives a fee, which is
calculated daily and paid monthly, at an annual rate of 0.15% of the average
daily net assets of each Portfolio.
SEI Financial Management Corporation, a wholly-owned subsidiary of
SEI Investments Company, is the owner of all beneficial interest in SEI Fund
Resources (the "Sub-Administrator"). The Sub-Administrator is an affiliate of
the Fund's distributor and assists the Administrator in providing administrative
services to the Fund. For acting in this capacity, the Administrator pays the
Sub-Administrator a fee at the annual rate of 0.07% of the
57
<PAGE>
===========================================================
NOTES TO FINANCIAL STATEMENTS As of September 30, 1997
===========================================================
total average daily net assets of the Fund, and a fee at the annual rate of
0.025% of the average daily net assets of each Portfolio with respect to the
total daily net assets of the Fund in excess of $2.5 billion.
Prior to July 1, 1996, SEI Fund Resources acted as Administrator to the Funds.
For it services prior to July 1, 1996, SEI Fund Resources received an annual fee
with respect to each Portfolio equal to the greater of $75,000 or 0.20% of the
average daily net assets of the Portfolio.
The Fund and SEI Investments Distribution Co. (the "Distributor") are parties to
a Distribution Agreement. The Distributor receives no fees for its distribution
services. The Fund has adopted a Service Plan (the "Plan") on behalf of the
Advisor Class shares pursuant to Rule 12b-1 under the Investment Company Act of
1940. The Plan provides for the payment by the Fund of up to 0.25% of the
average daily net assets of the Advisor Class shares for certain distribution
and shareholder services. Currently only the Growth Fund has Advisor Class
shareholders.
DST Systems, Inc. serves as the transfer agent, dividend disbursing agent and
shareholder servicing agent of the Fund. From time to time, the Fund may pay
amounts to third parties that provide sub-transfer agency and other
administrative services relating to the Fund to persons who beneficially own
interests in the Fund. CoreStates Bank, N.A. serves as the custodian for the
Growth Fund, the Emerging Growth Fund, the Core Growth Fund, the Select Equity
Fund, the Large Cap Growth Fund, the Technology & Communications Fund, the
Limited Fund, the Large Cap 20 Fund, the Large Cap Value Fund, the Mid-Cap Value
Fund, the Small Cap Value Fund, the Strategic Small Company Fund, and the Cash
Reserves Fund. The Northern Trust Company serves as the custodian for the
International Fund.
Officers and directors of the Fund who are or were officers of the Adviser,
Administrator, Sub-Administrator and the Distributor received no compensation
from the Fund.
4. Investment Transactions
The cost of securities purchased and the proceeds from securities sold, other
than short-term investments, for the Equity Portfolios for the period ended
September 30, 1997 were as follows:
Purchases Sales
(000) (000)
--------- ---------
Growth Fund 2,298,277 2,252,655
Emerging Growth Fund 812,616 662,204
Core Growth Fund 71,208 162,550
Select Equity Fund 146,042 235,951
Large Cap Growth Fund 26,378 46,635
Technology & Communications Fund 840,458 843,360
Limited Fund 61,909 74,981
Large Cap 20 Fund 57,583 47,173
Large Cap Value Fund 41,351 19,079
Mid-Cap Value Fund 39,399 14,598
Small Cap Value Fund 65,097 19,303
Strategic Small Company Fund 134,570 104,903
International Fund 9,512 10,954
The aggregate gross unrealized appreciation and depreciation of securities held
by the Portfolios and the total cost of securities for Federal income tax
purposes at September 30, 1997 are as follows:
Total Cost
Net of Securities
Unrealized for Federal
Unrealized Unrealized Appreciation/ Income Tax
Appreciation Depreciation (Depreciation) Purposes
(000) (000) (000) (000)
------------ ------------ -------------- -------------
Growth Fund 1,628,526 (115,929) 1,512,597 4,850,927
Emerging Growth
Fund 474,208 (31,409) 442,799 1,380,256
Core Growth
Fund 52,276 (8,455) 43,821 215,413
Select Equity
Fund 113,914 (4,608) 109,306 297,788
Large Cap Growth
Fund 37,910 (651) 37,259 103,809
Technology &
Communications
Fund 186,065 (9,438) 176,627 546,644
Limited Fund 53,086 (1,480) 51,606 136,444
Large Cap 20
Fund 20,955 (676) 20,279 89,521
Large Cap Value
Fund 8,400 (1,136) 7,264 63,568
Mid-Cap Value Fund 2,425 (261) 2,164 27,755
Small Cap Value Fund 4,938 (650) 4,288 51,953
Strategic Small
Company Fund 23,149 (1,752) 21,397 106,822
International Fund 3,468 (581) 2,887 17,720
Subsequent to October 31, 1996, the following Portfolios had recognized net
capital losses that have been deferred to 1998 for tax purposes and can be used
to offset future capital gains at March 31, 1998. The Portfolios also had
capital loss carryforwards at March 31, 1997, that can be used to offset future
capital gains.
Post Capital Loss Capital Loss
10/31/96 Carryovers Carryovers
Loss Deferral Expiring 2003 Expiring 2005
------------- ------------- -------------
Growth Fund 135,849,361 26,625,248 135,427,740
Emerging Growth Fund -- -- 47,805,236
Core Growth Fund 34,525,185 -- 14,962,879
Select Equity Fund 33,676,908 -- --
Large Cap Growth Fund 1,823,244 -- 3,917,935
Cash Reserves Fund -- -- 1,488
58
<PAGE>
========================================================
NOTES TO FINANCIAL STATEMENTS
========================================================
5. Concentration of Credit Risk
The Cash Reserves Fund invests primarily in a portfolio of money market
instruments maturing in 397 days or less whose ratings are within one of the two
highest ratings categories assigned by a nationally recognized statistical
rating agency, or, if not rated, are believed to be of comparable quality. The
ability of the issuers of the securities held by the Portfolio to meet their
obligations may be affected by economic developments in a specific industry,
state or region.
The International Fund invests in securities of foreign issuers in various
countries. These investments may involve certain considerations and risks not
typically associated with investments in the United States, as a result of,
among other factors, the possibility of future political and economic
developments and the level of governmental supervision and regulation of
securities markets in the respective countries.
6. Transfer of Assets
On September 29, 1997 the net assets of the Newbold Equity Fund of the UAM Funds
Trust were acquired by the PBHG Large Cap Value Fund pursuant to an agreement
and plan of reorganization dated June 26, 1997. The transaction was structured
for tax purposes to qualify as a tax-free reorganization under the Internal
Revenue code. The Newbold Equity Fund had net assets of $12,288,371. Directly
after the acquisition the combined net assets of the PBHG Large Cap Value Fund
were $70,925,600.
59
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[LOGO]
------
PBHG
FUNDS
------
THE PBHG FUNDS, INC.
P.O. Box 419534
Kansas City, MO 64141-6534
Investment Adviser:
PILGRIM BAXTER & ASSOCIATES, LTD.
Distributor:
SEI INVESTMENTS DISTRIBUTION CO.
To open an account, receive account information
or request literature, call
1-800-433-0051
