SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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|X | Preliminary Proxy Statement
| | Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
| | Definitive Proxy Statement
| | Definitive Additional Materials
| | Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
The PBHG Funds, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
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|X| No fee required
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computed pursuant to Exchange Act rule 0-11 (Set forth the
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| | Fee paid perviously with preliminary materials.
| | Check box if any part of the fee is offset as provided by Exchange
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fee was paid previously. Identify the previous filing by registration
statement number, or the form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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<PAGE>
PBHG TECHNOLOGY & COMMUNICATIONS FUND
OF
THE PBHG FUNDS, INC.
P.O. BOX 219534
KANSAS CITY, MO 64121-9534
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
September __, 1999
TO THE SHAREHOLDERS:
A special meeting of the holders of shares of Common Stock of The PBHG
Funds, Inc. (the "Company") representing interests in the PBHG Technology &
Communications Fund (the "Fund") will be held on November 2, 1999, at 10:30
a.m., local time, at the law offices of Ballard Spahr Andrews & Ingersoll, LLP,
5th Floor, 800 Hudson Square, Camden, NJ 08102-1155. The meeting will be held
for the following purposes:
1. To approve or disapprove a change to the Fund's fundamental investment
restrictions to change the Fund's subclassification under the Investment
Company Act of 1940 from a diversified investment company to a
non-diversified investment company.
2. To approve or disapprove a change to the Fund's fundamental investment
restrictions to allow the Fund to concentrate its investments in one or
more particular industries in the technology and communications sectors.
Shareholders of record at the close of business on August 27, 1999, are
entitled to notice of, and to vote at, the special meeting and any adjournments.
If you attend the meeting, you may vote your shares in person. Regardless of
whether you plan to attend the meeting, PLEASE COMPLETE, SIGN AND RETURN
PROMPTLY THE ENCLOSED PROXY CARD so that a quorum will be present and the
maximum number of shares may be voted. Your vote is important no matter how many
shares you own. You can vote easily and quickly at the proxy solicitors' web
site, by toll-free telephone, by mail, by facsimile or in person. You may change
your vote by written notice to the Company, by submission of a subsequent proxy,
or by voting in person at the meeting.
By order of the Board of Directors,
Harold J. Baxter
Chairman
<PAGE>
PBHG TECHNOLOGY & COMMUNICATIONS FUND
OF
THE PBHG FUNDS, INC.
P.O. BOX 219534
KANSAS CITY, MO 64121-9534
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PROXY STATEMENT
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SPECIAL MEETING OF SHAREHOLDERS
NOVEMBER 2, 1999
The accompanying proxy is solicited by the Board of Directors of The PBHG
Funds, Inc. (the "Company"). A shareholder can revoke the proxy prior to its use
by appearing at the November 2, 1999 special meeting of shareholders (such
meeting and any adjournments thereof are hereinafter collectively called the
"Meeting") and voting in person, by giving written notice of such revocation to
the Secretary of the Company or by returning a subsequently dated proxy.
It is anticipated that the proxies will be solicited primarily by mail, but
may be supplemented by telephone calls, telegrams, facsimiles, personal
interviews and other communications by the officers and directors of the Company
and the Company's service providers. Authorization to execute proxies may be
obtained telephonically or by electronically transmitted instructions. The
Company may retain a proxy solicitation firm to assist in soliciting proxies.
The cost of soliciting proxies will be borne by the Company. The Company may
also pay persons holding stock in their names, or those of their nominees, for
their expenses in sending proxies and proxy materials to beneficial owners or
principals. It is expected that this proxy statement and accompanying proxy will
be first sent to shareholders on or about September __, 1999.
VOTING
At the Meeting, two proposals will be presented. The first proposal will be
to amend the fundamental investment restrictions of the PBHG Technology &
Communications Fund (the "Fund") to change the Fund's subclassification under
the Investment Company Act of 1940, as amended (the "1940 Act"), from a
diversified investment company to a non-diversified investment company
("Proposal 1"). The second proposal will be to amend the Fund's fundamental
investment restrictions to allow the Fund to concentrate its investments in one
or more particular industries in the technology and communications sectors of
the market ("Proposal 2" and, together with Proposal 1, the "Proposals"). The
affirmative vote of the holders of a "majority of the outstanding voting
securities" of the Fund, as defined in the 1940 Act, is required to approve each
Proposal. The 1940 Act defines a "majority of the outstanding voting securities"
to mean the lesser of (a) the vote of holders of 67% or more of the shares of
Common Stock of the Fund present in person or by proxy at the Meeting, if the
holders of more than 50% of the outstanding voting shares of the Fund are
present in person or represented by proxy, or (b) the vote of the holders of
more than 50% of the outstanding Common Stock of the Fund. The Board of
Directors knows of no matters other than the Proposals that will be presented at
the meeting.
Owners of record holding shares of Common Stock of the Company representing
interests in the Fund (the "Shares") at the close of business on August 27, 1999
(the "Record Date") will be entitled to vote at the Meeting. On the Record Date,
there were _________ Shares outstanding. Each shareholder is entitled to one
vote for each full Share held and a proportionate fractional vote for any
fractional Shares held.
<PAGE>
Abstentions and broker non-votes (i.e., proxies from brokers or nominees
indicating that such persons have not received instructions from the beneficial
owner or other person entitled to vote shares with respect to which the broker
or nominee does not have discretionary power) will be counted for purposes of
determining whether a quorum is present at the Meeting. Abstentions and broker
non-votes do not count as votes cast but have the same effect as casting a vote
against each Proposal, provided a quorum exists.
The Board of Directors has named Harold J. Baxter and John M. Zerr, and
each of them, with power of substitution as attorneys and proxies. Unless
otherwise directed by the accompanying proxy, the proxies will vote in favor of
each Proposal.
PROPOSAL 1
CHANGE OF SUBCLASSIFICATION OF THE FUND FROM A DIVERSIFIED INVESTMENT
COMPANY TO A NON-DIVERSIFIED INVESTMENT COMPANY
On September __, 1999, the Board of Directors, by unanimous written consent
in lieu of a meeting of the Board, approved and recommended that the
shareholders approve Proposal 1. Pursuant to Proposal 1, the fundamental
investment restrictions of the Fund will be amended to change the
subclassification of the Fund under Section 5(b) of the 1940 Act from a
diversified investment company to a non-diversified investment company. The
Fund's current fundamental investment restrictions subject the Fund to
investment limitations that are consistent with the subclassification of the
Fund as a diversified investment company. If Proposal 1 is approved, the Fund
will no longer be subject to these limitations.
Shareholders are being asked to vote on this change because the fundamental
investment restrictions of the Fund may be changed only with shareholder
approval.
The Fund's current fundamental investment restriction with regard to
diversification, which can be found in the Company's current Statement of
Additional Information and which also applies to other portfolios of the Company
(the "Portfolios"), is as follows:
"Each of the foregoing Portfolios may not:
Purchase more than 10% of the voting securities of any one issuer or
purchase securities of any one issuer if, at the time of purchase, more
than 5% of its total assets will be invested in that issuer, except
with respect to the Portfolio, up to 25% of its assets may be invested
without regard to these limits. This limitation does not apply to the
PBHG Large Cap 20 Fund or the PBHG Cash Reserves Fund.
In addition, for purposes of this investment limitation, the term
"issuer" does not include obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and repurchase agreements
collateralized by such obligations."
If Proposal 1 is approved, this restriction will be amended in the
Company's Statement of Additional Information by amending and restating the last
sentence of the first paragraph as follows:
"This limitation does not apply to the PBHG Technology & Communications
Fund, the PBHG Large Cap 20 Fund or the PBHG Cash Reserves Fund."
2
<PAGE>
REASONS FOR PROPOSED NON-DIVERSIFICATION POLICY
The Fund seeks to achieve its objective of long-term growth of capital by
investing a large percentage of its total assets in equity securities of
technology and communications companies that have a strong earnings growth
outlook and potential for capital appreciation. Currently, the Fund, with
respect to 25% of its total assets, may invest more than 5% of its assets in any
issuer or purchase more than 10% of that issuer's outstanding voting securities.
The proposed change would permit the Fund to invest up to 50% of its total
assets in such issuers. The Fund's investment adviser, Pilgrim Baxter &
Associates, Ltd. (the "Adviser"), has recommended that the Fund change its
current policy to provide the Adviser with greater flexibility to focus the
investment of the Fund's assets in a more limited number of such issuers. The
Adviser believes that the ability to focus investments in a limited number of
issuers will provide an enhanced opportunity to participate in any market
appreciation of these issuers. Currently, the Adviser, under certain
circumstances, may be precluded from purchasing additional securities of those
issuers which the Adviser believes offer the most attractive prospects for
future earnings growth and capital appreciation. Conversely, a higher percentage
of assets in a limited number of issuers will raise the Fund's risk and
volatility levels. The Adviser has advised the Fund that as of September 30,
1998, of the 38 mutual funds identified by Lipper Analytic Services (an
independent investment company monitoring service) as Science and Technology
Funds, 14 of those funds are non-diversified funds.
If Proposal 1 is approved, the Fund intends to continue to conduct its
operations so as to qualify as a "regulated investment company" for purposes of
the Internal Revenue Code of 1986, as amended, which requires that, at the end
of each quarter of the taxable year, (i) at least 50% of the market value of the
Fund's total assets be invested in cash, U.S. Government securities, the
securities of other regulated investment companies, and other securities, with
such other securities of any one issuer limited for the purposes of this
calculation to an amount not greater than 5% of the value of the Fund's total
assets, and (ii) not more than 25% of the value of its total assets be invested
in the securities of any one issuer (other than U.S. Government securities or
the securities of other regulated investment companies).
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL.
PROPOSAL 2
ALLOWING THE FUND TO CONCENTRATE ITS INVESTMENTS IN INDUSTRIES IN
THE TECHNOLOGY AND COMMUNICATIONS SECTORS
On September __, 1999, the Board of Directors, by unanimous written consent
in lieu of a meeting of the Board, approved and recommended that the
shareholders approve Proposal 2. Pursuant to Proposal 2, the fundamental
investment restrictions of the Fund will be amended to allow the Fund to
concentrate its investments in one or more particular industries in the
technology and communications sectors of the market. The Fund's current
fundamental investment restrictions do not allow the Fund to concentrate its
investments in any particular technology or communications industry even though
the Fund's investment objectives generally require the Fund to invest at least
65% of its total assets in such sectors. If Proposal 1 is approved, the Fund
will be able to concentrate its investments in particular industries in the
technology and communications sectors.
Shareholders are being asked to vote on this change because the fundamental
investment restrictions of the Fund may be changed only with shareholder
approval.
The Fund's current fundamental investment restriction with regard to
concentration, which can be found in the Company's current Statement of
Additional Information and which also applies to the Portfolios, is as follows:
"Each of the foregoing Portfolios may not:
3
<PAGE>
Invest 25% or more of its total assets at the time of purchase in
securities of one or more issuers (other than obligations issued or
guaranteed by the U.S. Government or its agencies and instrumentalities
and repurchase agreements collateralized by such obligations) whose
principal business activities are in the same industry. For purposes of
this limitation, supranational organizations are deemed to be issuers
conducting their principal business activities in the same industry;
state and municipal governments and their agencies and authorities are
not deemed to be industries; utility companies will be divided
according to their services, for example, gas distribution, gas
transmission, electric and telephone will each be considered a separate
industry; and financial service companies will be classified according
to the end users of their services (e.g. automobile finance, bank
finance and diversified finance)."
If Proposal 2 is approved, this restriction will be amended in the
Company's Statement of Additional Information by adding the following new
paragraph:
"This limitation does not apply to the PBHG Technology & Communications
Fund, which may invest more than 25% of its total assets in one or more
industries that compose the Technology and Communications Sectors."
REASONS FOR PROPOSED CONCENTRATION POLICY
As noted above, the Fund seeks to achieve its objective of long-term growth
of capital by investing a large percentage of its total assets in equity
securities of technology and communications companies that have a strong
earnings growth outlook and potential for capital appreciation. Under normal
market conditions, the Fund will invest at least 65% of its total assets in such
technology and communications companies. The Adviser has recommended that the
Fund change its current policy to provide the Adviser with greater flexibility
to concentrate the investment of the Fund's assets in selected industries in the
technology and communications sectors. The Adviser believes that the ability to
concentrate investments in one or more industries will provide an enhanced
opportunity to participate in any market appreciation of such industries.
Currently, the Adviser may be precluded from purchasing additional securities of
companies in those technology and communications industries which the Adviser
believes offer the most attractive prospects for future earnings growth and
capital appreciation. Conversely, the concentration of a higher percentage of
the Fund's assets in specific industries will raise the Fund's risk and
volatility levels. The Adviser has advised the Fund that as of September 30,
1998, of the 38 mutual funds identified by Lipper Analytic Services (an
independent investment company monitoring service) as Science and Technology
Funds, 20 of those funds are concentrated funds.
If Proposal 2 is approved, the Fund will invest more than 25% of its total
assets in one or more of the industries that compose the Technology &
Communications Sectors. As way of illustration, companies in the Technology and
Communications Sectors include, but are not limited to, computer software,
computer hardware, electronic components, electronic systems, network
broadcasting, cable broadcasting, telecommunications, multimedia, mobile
communications, satellite communications, defense and aerospace, transportation
systems, data storage and retrieval, biotechnology and medical, and
environmental companies.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL.
4
<PAGE>
OTHER INFORMATION
THE ADVISER
The Adviser has its principal business address at 825 Duportail Road,
Wayne, Pennsylvania 19087.
THE DISTRIBUTOR
The distributor of the Fund's Shares is SEI Investments Distribution Co.
(the "Distributor") which has its principal business address at One Freedom
Valley Road, Oaks, PA 19456.
THE ADMINISTRATOR AND SUB-ADMINISTRATOR
The Fund's administrator is PBHG Fund Services (the "Administrator"), a
wholly owned subsidiary of the Adviser, which has its principal business address
at 825 Duportail Road, Wayne, Pennsylvania 19087. SEI Mutual Fund Services (the
"Sub-Administrator"), an affiliate of the Distributor, assists the Administrator
in providing administrative services to the Fund. The Sub-Administrator has its
principal business address at One Freedom Valley Road, Oaks, PA 19456.
ANNUAL REPORTS
The Fund will furnish, without charge, a copy of the Fund's Annual Report
and the most recent Semi-Annual Report to a shareholder upon request. Copies of
the reports can be requested by calling 1-800-433-0051 or by writing to The PBHG
Funds, Inc., P.O. Box 219534, Kansas City, Missouri 64121-9534.
PRINCIPAL HOLDERS OF THE FUND'S OUTSTANDING COMMON STOCK
A single class of the Fund's Common Stock, known as the PBHG Class, is
currently outstanding. The following table sets forth as of August 27, 1999,
those persons known by the Company to be the owners of record of more than 5% of
any class of the Fund's outstanding Common Stock. The Company has no knowledge
regarding the beneficial ownership of such shares.
Percent of
Outstanding
Names and Addresses Number of Shares Shares of
of Record Owners Owned of Record Class Owned
- ------------------- ---------------- ------------
[TABLE TO BE COMPLETED]
OWNERSHIP OF THE COMPANY'S STOCK BY DIRECTORS AND OFFICERS
As of August 27, 1999, the officers and directors of the Company
beneficially owned less than 1% of the outstanding shares of the Fund.
5
<PAGE>
<TABLE>
<CAPTION>
Percent of
Outstanding
Class of Names and Addresses Number of Shares Shares of
Common Stock of Record Owners Owned of Record Class Owned
- ------------ ------------------- ---------------- ------------
<S> <C> <C> <C>
</TABLE>
SHAREHOLDER PROPOSALS
The Company does not hold annual meetings of shareholders except as
required by the 1940 Act or other applicable law. Any shareholder who wishes to
submit proposals for consideration at a shareholders' meeting should send such
proposals to the Fund at the address set forth on the first page of this Proxy
Statement. To be considered for presentation at the next shareholders' meeting,
proposals must be received a reasonable time before a solicitation is made.
By order of the Board of Directors,
Harold J. Baxter
Chairman
September __, 1999
<PAGE>
APPENDIX
PBHG TECHNOLOGY & COMMUNICATIONS FUND
A PORTFOLIO OF
THE PBHG FUNDS, INC.
SPECIAL MEETING OF SHAREHOLDERS
NOVEMBER 2, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Harold J. Baxter and John M. Zerr, and each
of them, attorneys and proxies, with power of substitution in each of them, to
vote and act on behalf of the undersigned at the Special Meeting of Shareholders
of the PBHG Technology & Communications Fund (the "Fund"), a portfolio of The
PBHG Funds, Inc., at 10:30 a.m., local time, on November 2, 1999, at the law
offices of Ballard Spahr Andrews & Ingersoll, LLP, 5th Floor, 800 Hudson Square,
Camden, NJ 08102-1155, and at all adjournments thereof, according to the number
of shares of Common Stock which the undersigned would be entitled to vote if
then personally present, upon such subjects as may properly come before the
meeting, as set forth in the notice of meeting and the proxy statement furnished
herewith. UNLESS OTHERWISE MARKED ON THE REVERSE HEREOF, THIS PROXY IS GIVEN
WITH AUTHORITY TO VOTE FOR THE PROPOSAL TO CHANGE THE SUBCLASSIFICATION OF THE
FUND FROM A DIVERSIFIED TO A NON-DIVERSIFIED COMPANY, FOR THE PROPOSAL TO ALLOW
THE FUND TO CONCENTRATE ITS INVESTMENTS IN ONE OR MORE PARTICULAR INDUSTRIES IN
THE TECHNOLOGY AND COMMUNICATIONS SECTORS, AND DISCRETION TO VOTE ON ANY OTHER
MATTERS THAT MAY BE PRESENTED AT THE MEETING.
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY TO ENSURE THAT A QUOROM IS
PRESENT AT THE SPECIAL MEETING. YOU CAN VOTE YOUR SHARES AT THE PROXY
SOLICITORS' WEB SITE, BY TOLL-FREE TELEPHONE, BY MAIL, BY FACSIMILE OR IN
PERSON. A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE, IF YOU CHOOSE TO VOTE BY MAIL.
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR THE PROPOSAL TO CHANGE THE
SUBCLASSIFICATION OF THE FUND FROM A DIVERSIFIED TO A NON-DIVERSIFIED COMPANY.
Proposal to change the subclassification of the Fund from a diversified
investment company to a non-diversified investment company.
FOR AGAINST ABSTAIN
| | | | | |
THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR THE PROPOSAL TO ALLOW THE FUND TO
CONCENTRATE ITS INVESTMENTS IN ONE OR MORE PARTICULAR INDUSTRIES IN THE
TECHNOLOGY AND COMMUNICATIONS SECTORS.
Proposal to allow the Fund to concentrate its investments in one or more
particular industries in the technology and communications sectors.
FOR AGAINST ABSTAIN
| | | | | |
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Signature _________________________________________ Date _____________________
Signature _________________________________________ Date _____________________
Please sign exactly as name appears hereon. When shares are held jointly, each
owner should sign. When signing as attorney or as executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
