PBHG FUNDS INC /, 497, 2000-10-16

PBHG FUNDS INC /
497, 2000-10-16

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[PBHG LOGO OMITTED]
THE PBHG FUNDS, INC.

PROSPECTUS
July 31, 2000
(as Supplemented October 16, 2000)

PBHG Growth Fund
PBHG Emerging Growth Fund
PBHG Large Cap Growth Fund
PBHG Select Equity Fund
PBHG Core Growth Fund
PBHG Limited Fund
PBHG Large Cap 20 Fund
PBHG New Opportunities Fund
PBHG Large Cap Value Fund
PBHG Mid-Cap Value Fund
PBHG Small Cap Value Fund
PBHG Focused Value Fund
PBHG International Fund
PBHG Cash Reserves Fund
PBHG Technology & Communications Fund
PBHG Strategic Small Company Fund
PBHG Global Technology & Communications Fund

As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved any Fund shares or determined whether this prospectus is
truthful or complete. Anyone who tells you otherwise is committing a crime.
<PAGE>
[This page intentionally left blank]
<PAGE>
AN INTRODUCTION TO THE PBHG FUNDS(R) AND THIS PROSPECTUS
The PBHG Funds, Inc. is a mutual fund that offers a convenient and economical
means of investing in professionally managed portfolios of securities, called
Funds. This prospectus offers PBHG Class Shares of each Fund listed on the
cover.

Each Fund has its own investment goal and strategies for reaching that goal.
Before investing, make sure the Fund's goal matches your own.

o PBHG Cash Reserves Fund is designed for conservative investors who want
to receive current income from their investments. This Fund may be suitable
for investors who require stability of principal or who are pursuing a
short-term investment goal, such as investing emergency reserves.

o Other PBHG Funds are generally designed for long-term investors, such as
those saving for retirement, or investors that want a fund that seeks to
outperform the market in which it invests over the long-term. These other
Funds may not be suitable for investors who require regular income or
stability of principal, or who are pursuing a short-term investment goal,
such as investing emergency reserves.

INVESTMENT ADVISER

Pilgrim Baxter & Associates, Ltd. ("Pilgrim Baxter") is the investment adviser
for each Fund. Pilgrim Baxter has retained certain sub-advisers to assist in
managing the Funds. For information about the sub advisers, see page 61 of the
prospectus.

This Prospectus contains important information you should know before investing
in any Fund and as a shareholder in a Fund. This information is arranged into
different sections for easy reading and future reference. To obtain more
information about the Funds, please refer to the back cover of this Prospectus.

1
<PAGE>
[This page intentionally left blank]

2
<PAGE>
CONTENTS
FUND SUMMARIES
--------------------------------------------------------------------------------

PBHG Growth Fund ................................ 4
PBHG Emerging Growth Fund ....................... 7
PBHG Large Cap Growth Fund ...................... 10
PBHG Select Equity Fund ......................... 13
PBHG Core Growth Fund ........................... 16
PBHG Limited Fund ............................... 19
PBHG Large Cap 20 Fund .......................... 22
PBHG New Opportunities Fund ..................... 25
PBHG Large Cap Value Fund ....................... 27
PBHG Mid-Cap Value Fund ......................... 30
PBHG Small Cap Value Fund ....................... 33
PBHG Focused Value Fund ......................... 36
PBHG International Fund ......................... 38
PBHG Cash Reserves Fund ......................... 41
PBHG Technology & Communications Fund ........... 44
PBHG Strategic Small Company Fund ............... 48
PBHG Global Technology &
Communications Fund ........................ 51

MORE ABOUT THE FUNDS
--------------------------------------------------------------------------------
Risks & Returns ................................. 54

THE INVESTMENT ADVISER
& SUB-ADVISERS
--------------------------------------------------------------------------------
The Investment Adviser .......................... 60
Pilgrim Baxter & Associates, Ltd.
The Sub-Advisers ................................ 61
Pilgrim Baxter Value Investors, Inc.
("Value Investors")
Murray Johnstone International Limited
("Murray Johnstone")
Wellington Management Company, Ltd.
("Wellington Management")

YOUR INVESTMENT
--------------------------------------------------------------------------------
Pricing Fund Shares ............................. 65
Buying Shares ................................... 66
Selling Shares .................................. 67
General Policies ................................ 68
Distribution & Taxes ............................ 71

FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Financial Highlights ............................ 72

3
<PAGE>
PBHG Growth Fund

[GRAPHIC OMITTED] GOAL
The Fund seeks to provide investors with capital appreciation.

[GRAPHIC OMITTED] MAIN INVESTMENT STRATEGIES
Under normal market conditions, the Fund invests at least 65% of its total
assets in growth securities, such as common stocks, of small and medium sized
companies. These companies generally have market capitalizations or annual
revenues of up to $2 billion. The growth securities in the Fund are primarily
common stocks that Pilgrim Baxter believes have strong business momentum,
earnings growth and capital appreciation potential. Pilgrim Baxter uses its own
fundamental research, computer models and proprietary measures of growth in
determining which securities to buy and when to sell them for this Fund. The
Fund may sell a security for a variety of reasons, such as to invest in a
company with more attractive growth prospects.

[GRAPHIC OMITTED] MAIN INVESTMENT RISKS
The value of your investment in the Fund will go up and down, which means you
could lose money.

The price of the securities in the Fund will fluctuate. These price movements
may occur because of changes in the financial markets, the company's individual
situation, or industry changes. These risks are greater for companies with
smaller market capitalizations because they tend to have more limited product
lines, markets and financial resources and may be dependent on a smaller
management group than larger, more established companies.

The Fund emphasizes small and medium sized growth companies, so it is likely to
be more volatile than the stock market in general, as measured by the S&P 500(R)
Index. In addition, the growth securities in the Fund may never reach what
Pilgrim Baxter believes are their full earnings growth potential and may go down
in price.

Although the Fund strives to achieve its goal, it cannot guarantee that the goal
will be achieved.

Your investment in the Fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency.

[GRAPHIC OMITTED]
For more information on this Fund's investment strategies and the associated
risks, please refer to the More About the Funds section beginning on page 54.

4 PBHG GROWTH FUND
<PAGE>
[GRAPHIC OMITTED] PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. The bar chart shows you how the Fund's
performance has varied from year to year. The performance table compares the
Fund's performance over time to that of the Russell 2000 Growth Index, a widely
recognized, unmanaged index that tracks the performance of those securities in
the Russell 2000 Index with greater-than-average growth characteristics. The
Russell 2000 Index is an unmanaged index that measures the performance of 2,000
small cap companies. Both the chart and the table assume reinvestment of
dividends and distributions. Of course, the Fund's past performance does not
indicate how it will perform in the future.

CALENDAR YEAR TOTAL RETURNS

[BAR CHART OMITTED]
1990 -9.64%
1991 51.63%
1992 28.39%
1993 46.71%
1994 4.75%
1995 50.35%
1996 9.82%
1997 -3.35%
1998 0.59%
1999 92.45%

The Fund's year-to-date return as of 6/30/00 was 13.42%.

BEST QUARTER: Q4 1999 64.55%
WORST QUARTER: Q3 1990 -29.05%

--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99

Past 1 Year Past 5 Years Past 10 Years
--------------------------------------------------------------------------------
PBHG CLASS 92.45% 25.31% 23.64%
Russell 2000 Growth Index 43.10% 18.99% 13.51%

Note: The inception date of the Growth Fund was December 19, 1985.

PBHG GROWTH FUND 5
<PAGE>
[GRAPHIC OMITTED] FEES AND EXPENSES
This table summarizes the shareholder fees and annual operating expenses you
would pay as an investor in the Fund. Shareholder fees are paid directly from
your account. Annual operating expenses are paid out of the Fund's assets. The
expenses listed below are based on the Fund's last fiscal year, ended March 31,
2000.

--------------------------------------------------------------------------------
FEES AND EXPENSES TABLE

SHAREHOLDER FEES None
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
Management Fees 0.85%
Distribution and/or Service (12b-1) Fees None
Other Expenses 0.38%
--------------------------------------------------------------------------------
Total Annual Operating Expenses 1.23%
--------------------------------------------------------------------------------

[GRAPHIC OMITTED] EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds. This example makes four
assumptions: 1) you invest $10,000 in the Fund for the time periods shown; 2)
you redeem all your shares at the end of those time periods; 3) you earn a 5%
return on your investment each year; and 4) the Fund's operating expenses remain
the same for the time periods shown. The example is hypothetical. Your actual
costs may be higher or lower.

--------------------------------------------------------------------------------
YOUR COST OVER
1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------
PBHG Class $125 $390 $676 $1,489

6 PBHG GROWTH FUND
<PAGE>
PBHG Emerging Growth Fund

[GRAPHIC OMITTED] GOAL
The Fund seeks to provide investors with long-term growth of capital.

[GRAPHIC OMITTED] MAIN INVESTMENT STRATEGIES
Under normal market conditions, the Fund invests at least 65% of its total
assets in growth securities, such as common stocks, of small sized companies.
These companies generally have market capitalizations or annual revenues of up
to $500 million. The growth securities in the Fund are primarily common stocks
that Pilgrim Baxter believes have strong historical earnings growth and expected
earnings higher than the U.S. market as a whole, as measured by the S&P 500(R)
Index. Pilgrim Baxter uses its own fundamental research, computer models and
proprietary measures of growth in determining which securities to buy and when
to sell them for this Fund. The Fund may sell a security for a variety of
reasons, such as to invest in a company with more attractive growth prospects.

[GRAPHIC OMITTED] MAIN INVESTMENT RISKS
The value of your investment in the Fund will go up and down, which means you
could lose money.

The price of the securities in the Fund will fluctuate. These price movements
may occur because of changes in the financial markets, the company's individual
situation, or industry changes. These risks are greater for companies with
smaller market capitalizations because they tend to have more limited product
lines, markets and financial resources and may be dependent on a smaller
management group than larger, more established companies.

The Fund emphasizes small sized growth companies, so it is likely to be more
volatile than the stock market in general, as measured by the S&P 500(R) Index.
In addition, the growth securities in the Fund may never reach what Pilgrim
Baxter believes are their full earnings growth potential and may go down in
price.

Although the Fund strives to achieve its goal, it cannot guarantee that the goal
will be achieved.

Your investment in the Fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency.

[GRAPHIC OMITTED] For more information on this Fund's investment strategies and
the associated risks, please refer to the More About the Funds section beginning
on page 54.

PBHG EMERGING GROWTH FUND 7
<PAGE>
[GRAPHIC OMITTED] PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. The bar chart shows you how the Fund's
performance has varied from year to year. The performance table compares the
Fund's performance over time to that of the Russell 2000 Growth Index, a widely
recognized, unmanaged index that tracks the performance of those securities in
the Russell 2000 Index with greater-than-average growth orientation. The Russell
2000 Index is an unmanaged index that measures the performance of 2,000 small
cap companies. Both the chart and the table assume reinvestment of dividends and
distributions. Of course, the Fund's past performance does not indicate how it
will perform in the future.

CALENDAR YEAR TOTAL RETURNS
[BAR CHART OMITED]
1994 23.78%
1995 48.45%
1996 17.08%
1997 -3.67%
1998 3.00%
1999 48.34%

The Fund's year-to-date return as of 6/30/00 was 13.20%.

BEST QUARTER: Q4 1999 45.85%
WORST QUARTER: Q1 1997 -20.51%

AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
Since Inception
Past 1 Year Past 5 Years (6/14/93)
--------------------------------------------------------------------------------
Emerging Growth Fund 48.34% 20.67% 24.48%
Russell 2000 Growth Index 43.10% 18.99% 15.74%*

* The since inception return for the Russell 2000 Growth Index was calculated
from May 31, 1993.

8 PBHG EMERGING GROWTH FUND
<PAGE>
[GRAPHIC OMITTED] FEES AND EXPENSES
This table summarizes the shareholder fees and annual operating expenses you
would pay as an investor in the Fund. Shareholder fees are paid directly from
your account. Annual operating expenses are paid out of the Fund's assets. The
expenses listed below are based on the Fund's last fiscal year, ended March 31,
2000.

--------------------------------------------------------------------------------
FEES AND EXPENSES TABLE

SHAREHOLDER FEES None
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
Management Fees 0.85%
Distribution and/or Service (12b-1) Fees None
Other Expenses 0.39%
--------------------------------------------------------------------------------
Total Annual Operating Expenses 1.24%
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
YOUR COST OVER

1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------
$126 $393 $681 $1,500

PBHG EMERGING GROWTH FUND 9
<PAGE>
PBHG Large Cap Growth Fund
[GRAPHIC OMITTED] GOAL
The Fund seeks to provide investors with long-term growth of capital.

[GRAPHIC OMITTED] MAIN INVESTMENT STRATEGIES
Under normal market conditions, the Fund invests at least 65% of its total
assets in growth securities, such as common stocks, of large capitalization
companies. These companies generally have market capitalizations over $1
billion. The growth securities in the Fund are primarily common stocks that
Pilgrim Baxter believes have strong business momentum, earnings growth and
capital appreciation potential. Pilgrim Baxter uses its own fundamental
research, computer models and proprietary measures of growth in determining
which securities to buy and when to sell them for this Fund. The Fund may sell a
security for a variety of reasons, such as to invest in a company with more
attractive growth prospects.

[GRAPHIC OMITTED] MAIN INVESTMENT RISKS
The value of your investment in the Fund will go up and down, which means you
could lose money.

The price of the securities in the Fund will fluctuate. These price movements
may occur because of changes in financial markets, the company's individual
situation or industry changes.

While the growth securities in the Fund may never reach what Pilgrim Baxter
believes are their full earnings growth and capital appreciation potential and
may go down in price, the Fund's emphasis on large company securities may limit
some of the risk associated with growth investing because large company
securities tend to be less volatile than smaller company securities.

Although the Fund strives to achieve its goal, it cannot guarantee that the goal
will be achieved.

Your investment in the Fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency.

[GRAPHIC OMITTED]
For more information on this Fund's investment strategies and the associated
risks, please refer to the More About the Funds section beginning on page 54.

10 PBHG LARGE CAP GROWTH FUND
<PAGE>
[GRAPHIC OMITTED] PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. The bar chart shows you how the Fund's
performance has varied from year to year. The performance table compares the
Fund's performance over time to that of the S&P 500(R) Index, a widely
recognized, unmanaged index that measures the performance of large cap stocks
across all major industries. Both the chart and the table assume reinvestment of
dividends and distributions. Of course, the Fund's past performance does not
indicate how it will perform in the future.

CALENDAR YEAR TOTAL RETURNS
[BAR CHART OMITTED]
1996 23.40%
1997 22.36%
1998 30.42%
1999 67.06%
The Fund's year-to-date return as of 6/30/00 was 20.01%.

BEST QUARTER: Q4 1999 59.55%
WORST QUARTER: Q3 1998 -13.69%

--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
Since Inception
Past 1 Year (4/5/95)
--------------------------------------------------------------------------------
Large Cap Growth Fund 67.06% 36.81%
S&P 500(R) Index 21.04% 27.74%*

*The since inception return for the S&P 500[R] Index was calculated from March
31, 1995.

PBHG LARGE CAP GROWTH FUND 11
<PAGE>

[GRAPHIC OMITTED] FEES AND EXPENSES
This table summarizes the shareholder fees and annual operating expenses you
would pay as an investor in the Fund. Shareholder fees are paid directly from
your account. Annual operating expenses are paid out of the Fund's assets. The
expenses listed below are based on the Fund's last fiscal year, ended March 31,
2000.

--------------------------------------------------------------------------------
YOUR COST OVER
--------------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------
$119 $372 $644 $1,420

12 PBHG LARGE CAP GROWTH FUND

<PAGE>
PBHG Select Equity Fund

[GRAPHIC OMITTED] GOAL
The Fund seeks to provide investors with long-term growth of capital.

[GRAPHIC OMITTED] MAIN INVESTMENT STRATEGIES
Under normal market conditions, the Fund will invest at least 65% of its total
assets in growth securities, such as common stocks, of no more than 30 small,
medium or large capitalization companies. The growth securities in the Fund are
primarily common stocks that Pilgrim Baxter believes have strong business
momentum, earnings growth and capital appreciation potential. Pilgrim Baxter
uses its own fundamental research, computer models and proprietary measures of
growth in determining which securities to buy and when to sell them for this
Fund. The Fund may sell a security for a variety of reasons, such as to invest
in a company with more attractive growth prospects.

[GRAPHIC OMITTED] MAIN INVESTMENT RISKS
The Fund invests in a limited number of stocks in order to achieve a potentially
greater investment return than a more widely diversified fund. As a result, the
price change of a single security, positive or negative, has a greater impact on
the Fund's net asset value and will cause its shares to fluctuate in value more
than it would in a more widely diversified fund. The value of your investment in
the Fund will go up and down, which means you could lose money. The price of the
securities in the Fund will fluctuate. These price movements may occur because
of changes in financial markets, company's individual situation, or industry
changes. These risks are greater for companies with smaller market
capitalizations because they tend to have more limited product lines, markets
and financial resources and may be dependent on a smaller management group than
larger, more established companies. The growth securities in the Fund may never
reach what Pilgrim Baxter believes are their full earnings growth and capital
appreciation potential and may go down in price. In addition, the Fund may
emphasize small, medium or large sized growth companies. An investment in small
or medium sized growth companies is likely to make the Fund more volatile than
the stock market in general, as measured by the S&P 500(R) Index. However, the
Fund may also emphasize large company securities which may limit some of the
risks associated with growth investing because large company securities tend to
be less volatile than smaller company securities. Although the Fund strives to
achieve its goal, it cannot guarantee that the goal will be achieved. Your
investment in the Fund is not a bank deposit. It is not insured or guaranteed by
the FDIC or any other government agency.

[GRAPHIC OMITTED]
For more information on this Fund's investment strategies and the associated
risks, please refer to the More About the Funds section beginning on page 54.

PBHG SELECT EQUITY FUND 13
<PAGE>
[GRAPHIC OMITTED] PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. The bar chart shows you how the Fund's
performance has varied from year to year. The performance table compares the
Fund's performance over time to that of the S&P 500(R) Index, a widely
recognized, unmanaged index that measures the performance of large cap stocks
across all major industries. Both the chart and the table assume reinvestment of
dividends and distributions. Of course, the Fund's past performance does not
indicate how it will perform in the future.

CALENDAR YEAR TOTAL RETURNS
[BAR CHART OMITTED]
1996 27.99%
1997 6.84%
1998 19.02%
199 160.89%

The Fund's year-to-date return as of 6/30/00 was 28.33%.
BEST QUARTER: Q4 1999 130.62%
WORST QUARTER: Q3 1998 -18.80%

--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
Since Inception
Past 1 Year (4/5/95)
--------------------------------------------------------------------------------
Select Equity Fund 160.89% 49.62%
S&P 500(R) Index 21.04% 27.74%*

* The since inception return for the S&P 500(R) Index was calculated from March
31, 1995.

14 PBHG SELECT EQUITY FUND
<PAGE>
[GRAPHIC OMITTED] FEES AND EXPENSES
This table summarizes the shareholder fees and annual operating expenses you
would pay as an investor in the Fund. Shareholder fees are paid directly from
your account. Annual operating expenses are paid out of the Fund's assets. The
expenses listed below are based on the Fund's last fiscal year, ended March 31,
2000.

PBHG SELECT EQUITY FUND 15
<PAGE>
PBHG Core Growth Fund

[GRAPHIC OMITTED] GOAL
The Fund seeks to provide investors with capital appreciation.

[GRAPHIC OMITTED] MAIN INVESTMENT STRATEGIES

Under normal market conditions, the fund invests at least 65% of its total
assets in growth securities, such as common stocks, of small, medium or large
capitalization companies. The growth securities in the Fund are primarily common
stocks that Pilgrim Baxter believes have strong business momentum, earnings
growth and capital appreciation potential. Pilgrim Baxter uses its own
fundamental research, computer models and proprietary measures of growth in
determining which securities to buy and when to sell them for this Fund. The
Fund may sell a security for a variety of reasons, such as to invest in a
company with more attractive growth prospects.

[GRAPHIC OMITTED] MAIN INVESTMENT RISKS
The value of your investment in the Fund will go up and down, which means you
could lose money.

The price of the securities in the Fund will fluctuate. These price movements
may occur because of changes in financial markets, the company's individual
situation or industry changes. These risks are greater for companies with
smaller market capitalizations because they tend to have more limited product
lines, markets and financial resources and may be dependent on a smaller
management group than larger, more established companies.

The growth securities in the Fund may never reach what Pilgrim Baxter believes
are their full earnings growth and capital appreciation potential and may go
down in price. In addition, the fund may emphasize small, medium or large sized
companies. An investment in small and medium sized companies is likely to make
the Fund more volatile than the stock market in general, as measured by the S&P
500(R) Index. However, the Fund may also emphasize large company securities
which may limit some of the risk associated with growth investing because large
company securities tend to be less volatile than smaller company securities.

Although the Fund strives to achieve its goal, it cannot guarantee that the goal
will be achieved.

Your investment in the Fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency.

[GRAPHIC OMITTED]
For more information on this Fund's investment strategies and the associated
risks, please refer to the More About the Funds section beginning on page 54.

16 PBHG CORE GROWTH FUND
<PAGE>

[GRAPHIC OMITTED] PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. The bar chart shows you how the Fund's
performance has varied from year to year. The performance table compares the
Fund's performance over time to that of the Russell Midcap Growth Index. The
Russell Midcap Growth Index is a widely recognized, unmanaged index that
measures the performance of the 800 smallest issuers in the Russell 1000 Index
with greater-than-average growth characteristics. The Russell 1000 Index is an
unmanaged index that measures the performance of 1,000 large cap companies. Both
the chart and the table assume reinvestment of dividends and distributions. Of
course, the Fund's past performance does not indicate how it will perform in the
future.

CALENDAR YEAR TOTAL RETURNS
[BAR CHART OMITTED]
1996 32.80%
1997 -9.71%
1998 7.42%
1999 97.59%

The Fund's year-to-date return as of 6/30/00 was 17.49%.

BEST QUARTER: Q4 1999 54.71%
WORST QUARTER: Q1 1997 -22.14%

--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
Since Inception
Past 1 Year (12/29/95)
--------------------------------------------------------------------------------
Core Growth Fund 97.59% 26.33%
Russell Midcap Growth Index 51.30% 26.58%

PBHG CORE GROWTH FUND 17
<PAGE>
[GRAPHIC OMITTED] FEES AND EXPENSES
This table summarizes the shareholder fees and annual operating expenses you
would pay as an investor in the Fund. Shareholder fees are paid directly from
your account. Annual operating expenses are paid out of the Fund's assets. The
expenses listed below are based on the Fund's last fiscal year, ended March 31,
2000.

--------------------------------------------------------------------------------
FEES AND EXPENSES TABLE
SHAREHOLDER FEES None
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
Management Fees 0.85%
Distribution and/or Service (12b-1) Fees None
Other Expenses 0.48%
--------------------------------------------------------------------------------
Total Annual Operating Expenses 1.33%*
--------------------------------------------------------------------------------
* THESE ARE THE EXPENSES YOU SHOULD EXPECT TO PAY AS AN INVESTOR IN THIS FUND
FOR THE FISCAL YEAR ENDING MARCH 31, 2001. HOWEVER, YOU SHOULD KNOW THAT FOR
THE FISCAL YEAR ENDING MARCH 31, 2001, PILGRIM BAXTER HAS CONTRACTUALLY AGREED
TO WAIVE THAT PORTION, IF ANY, OF THE ANNUAL MANAGEMENT FEES PAYABLE BY THE
FUND AND TO PAY CERTAIN EXPENSES OF THE FUND TO THE EXTENT NECESSARY TO ENSURE
THAT THE TOTAL ANNUAL FUND OPERATING EXPENSES DO NOT EXCEED 1.50%. YOU SHOULD
ALSO KNOW THAT IN ANY FISCAL YEAR IN WHICH THE FUND'S ASSETS ARE GREATER THAN
$75 MILLION AND ITS TOTAL ANNUAL FUND OPERATING EXPENSES ARE LESS THAN 1.50%,
THE FUND'S BOARD OF DIRECTORS MAY ELECT TO REIMBURSE PILGRIM BAXTER FOR ANY
FEES IT WAIVED OR EXPENSES IT REIMBURSED ON THE FUND'S BEHALF DURING THE
PREVIOUS TWO FISCAL YEARS. THE BOARD MADE NO REIMBURSEMENT ELECTION DURING THE
FISCAL YEAR ENDED MARCH 31, 2000.

18 PBHG CORE GROWTH FUND

<PAGE>
PBHG Limited Fund
THIS FUND IS CURRENTLY OFFERED ONLY TO EXISTING SHAREHOLDERS. EXISTING
SHAREHOLDERS MAY OPEN NEW ACCOUNTS, PROVIDED THAT ANY NEW ACCOUNT IS REGISTERED
IN THE SAME NAME OR HAS THE SAME SOCIAL SECURITY OR TAXPAYER IDENTIFICATION
NUMBER AS THE EXISTING SHAREHOLDER'S ACCOUNT.

[GRAPHIC OMITTED] GOAL
The Fund seeks to provide investors with long-term capital appreciation.

[GRAPHIC OMITTED] MAIN INVESTMENT STRATEGIES
Under normal market conditions, the Fund invests at least 65% of its total
assets in growth securities, such as common stocks, of small sized companies.
These companies generally have market capitalizations or annual revenues of up
to $250 million. The growth securities in the Fund are primarily common stocks
that Pilgrim Baxter believes have strong historical earnings growth and expected
earnings higher than the U.S. market as a whole, as measured by the S&P 500(R)
Index. Pilgrim Baxter uses its own fundamental research, computer models and
proprietary measures of growth in determining which securities to buy and when
to sell them for this Fund. The Fund may sell a security for a variety of
reasons, such as to invest in a company with more attractive growth prospects.

[GRAPHIC OMITTED] MAIN INVESTMENT RISKS
The value of your investment in the Fund will go up and down, which means you
could lose money.
The price of the securities in the Fund will fluctuate. These price movements
may occur because of changes in the financial markets, the company's individual
situation, or industry changes. These risks are greater for companies with
smaller market capitalizations because they tend to have more limited product
lines, markets and financial resources and may be dependent on a smaller
management group than larger, more established companies. The Fund emphasizes
small sized growth companies, so it is likely to be more volatile than the stock
market in general, as measured by the S&P 500(R) Index. In addition, the growth
securities in the Fund may never reach what Pilgrim Baxter believes are their
full earnings growth potential and may go down in price. Although the Fund
strives to achieve its goal, it cannot guarantee that the goal will be achieved.
Your investment in the Fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency.

[GRAPHIC OMITTED]
For more information on this Fund's investment strategies and the associated
risks, please refer to the More About the Funds section beginning on page 54.

PBHG LIMITED FUND 19
<PAGE>
[GRAPHIC OMITTED] PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. The bar chart shows you how the Fund's
performance has varied from year to year. The performance table compares the
Fund's performance over time to that of the Russell 2000 Growth Index, a widely
recognized, unmanaged index that tracks the performance of those securities in
the Russell 2000 Index with greater-than-average growth characteristics. The
Russell 2000 Index is an unmanaged index that measures the performance of 2,000
small cap stocks. Both the chart and the table assume reinvestment of dividends
and distributions. Of course, the Fund's past performance does not indicate how
it will perform in the future.

CALENDAR YEAR TOTAL RETURNS
[BAR CHART OMITTED]
1997 16.07%
1998 13.05%
1999 71.70%
The Fund's year-to-date return as of 6/30/00 was 19.94%.

BEST QUARTER: Q4 1999 49.84%
WORST QUARTER: Q1 1997 -18.03%

--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
Since Inception
Past 1 Year (6/28/96)
--------------------------------------------------------------------------------
Limited Fund 71.70% 29.79%
Russell 2000 Growth Index* 43.10% 14.91%
* The since inception returns for the Russell 2000 Growth Index was calculated
as of June 30, 1996.

20 PBHG LIMITED FUND

<PAGE>
[GRAPHIC OMITTED] FEES AND EXPENSES
This table summarizes the shareholder fees and annual operating expenses you
would pay as an investor in the Fund. Shareholder fees are paid directly from
your account. Annual operating expenses are paid out of the Fund's assets. The
expenses listed below are based on the Fund's last fiscal year, ended March 31,
2000.

--------------------------------------------------------------------------------
FEES AND EXPENSES TABLE
SHAREHOLDER FEES NONE
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
Management Fees 1.00%
Distribution and/or Service (12b-1) Fees None
Other Expenses 0.32%
--------------------------------------------------------------------------------
Total Annual Operating Expenses 1.32%*
--------------------------------------------------------------------------------
* THESE ARE THE EXPENSES YOU SHOULD EXPECT TO PAY AS AN INVESTOR IN THIS FUND
FOR THE FISCAL YEAR ENDING MARCH 31, 2001. HOWEVER, YOU SHOULD KNOW THAT FOR
THE FISCAL YEAR ENDING MARCH 31, 2001, PILGRIM BAXTER HAS CONTRACTUALLY AGREED
TO WAIVE THAT PORTION, IF ANY, OF THE ANNUAL MANAGEMENT FEES PAYABLE BY THE
FUND AND TO PAY CERTAIN EXPENSES OF THE FUND TO THE EXTENT NECESSARY TO ENSURE
THAT THE TOTAL ANNUAL FUND OPERATING EXPENSES DO NOT EXCEED 1.50%. YOU SHOULD
ALSO KNOW THAT IN ANY FISCAL YEAR IN WHICH THE FUND'S ASSETS ARE GREATER THAN
$75 MILLION AND ITS TOTAL ANNUAL FUND OPERATING EXPENSES ARE LESS THAN 1.50%,
THE FUND'S BOARD OF DIRECTORS MAY ELECT TO REIMBURSE PILGRIM BAXTER FOR ANY
FEES IT WAIVED OR EXPENSES IT REIMBURSED ON THE FUND'S BEHALF DURING THE
PREVIOUS TWO FISCAL YEARS. THE BOARD MADE NO REIMBURSEMENT ELECTION DURING THE
FISCAL YEAR ENDED MARCH 31, 2000.

PBHG LIMITED FUND 21
<PAGE>
PBHG Large Cap 20 Fund

[GRAPHIC OMITTED] GOAL
The Fund seeks to provide investors with long-term growth of capital.

[GRAPHIC OMITTED] MAIN INVESTMENT STRATEGIES
Under normal market conditions, the Fund, a non-diversified fund, will invest at
least 65% of its total assets in growth securities, such as common stocks, of no
more than 20 large capitalization companies. These companies generally have
market capitalizations over $1 billion. The growth securities in the Fund are
primarily common stocks that Pilgrim Baxter believes have strong business
momentum earnings growth and capital appreciation potential. Pilgrim Baxter uses
its own fundamental research, computer models and proprietary measures of growth
in determining which securities to buy and when to sell them for this Fund. The
Fund may sell a security for a variety of reasons, such as to invest in a
company with more attractive growth prospects.

[GRAPHIC OMITTED] MAIN INVESTMENT RISKS
The Fund is non-diversified which means as compared to a diversified fund, it
invests a higher percentage of its assets in a limited number of stocks in order
to achieve a potentially greater investment return than a more diversified fund.
As a result, the price change of a single security, positive or negative, has a
greater impact on the Fund's net asset value and will cause its shares to
fluctuate in value more than it would in a diversified fund. The value of your
investment in the Fund will go up and down, which means you could lose money.
The price of the securities in the Fund will fluctuate. These price movements
may occur because of changes in financial markets, company's individual
situation, or industry changes. While the growth securities in the Fund may
never reach what Pilgrim Baxter believes are their full earnings growth and
capital appreciation potential and may go down in price, the Fund's emphasis on
large company securities may limit some of the risks associated with growth
investing because large company securities tend to be less volatile than smaller
company securities. Although the Fund strives to achieve its goal, it cannot
guarantee that the goal will be achieved. Your investment in the Fund is not a
bank deposit. It is not insured or guaranteed by the FDIC or any other
government agency.

[GRAPHIC OMITTED]
For more information on this Fund's investment strategies and the associated
risks, please refer to the More About the Funds section beginning on page 54.

22 PBHG LARGE CAP 20 FUND
<PAGE>
[GRAPHIC OMITTED] PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. The bar chart shows you how the Fund's
performance has varied from year to year. The performance table compares the
Fund's performance over time to that of the S&P(R) 500 Index, a widely
recognized, unmanaged index that measures the performance of large cap stocks
across all major industries. Both the chart and the table assume reinvestment of
dividends and distributions. Of course, the Fund's past performance does not
indicate how it will perform in the future.

CALENDAR YEAR TOTAL RETURNS
[BAR CHART OMITTED]
1997 32.96%
1998 67.83%
1999 102.94%

The Fund's year-to-date return as of 6/30/00 was 12.03%.
BEST QUARTER: Q4 1999 75.65%
WORST QUARTER: Q1 1997 -5.90%

--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
Since Inception
Past 1 Year (11/29/96)
--------------------------------------------------------------------------------
Large Cap 20 Fund 102.94% 62.25%
S&P 500(R)Index* 21.04% 25.91%

* The since inception returns for the S&P 500(R) Index was calculated as of
November 30, 1996.

PBHG LARGE CAP 20 FUND 23
<PAGE>
[GRAPHIC OMITTED] FEES AND EXPENSES
This table summarizes the shareholder fees and annual operating expenses you
would pay as an investor in the Fund. Shareholder fees are paid directly from
your account. Annual operating expenses are paid out of the Fund's assets. The
expenses listed below are based on the Fund's last fiscal year, ended March 31,
2000.

--------------------------------------------------------------------------------
FEES AND EXPENSES TABLE
SHAREHOLDER FEES None
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
Management Fees 0.85%
Distribution and/or Service (12b-1) Fees None
Other Expenses 0.38%
--------------------------------------------------------------------------------
Total Annual Operating Expenses 1.23%*
--------------------------------------------------------------------------------
* THESE ARE THE EXPENSES YOU SHOULD EXPECT TO PAY AS AN INVESTOR IN THIS FUND
FOR THE FISCAL YEAR ENDING MARCH 31, 2001. HOWEVER, YOU SHOULD KNOW THAT FOR
THE FISCAL YEAR ENDING MARCH 31, 2001, PILGRIM BAXTER HAS CONTRACTUALLY AGREED
TO WAIVE THAT PORTION, IF ANY, OF THE ANNUAL MANAGEMENT FEES PAYABLE BY THE
FUND AND TO PAY CERTAIN EXPENSES OF THE FUND TO THE EXTENT NECESSARY TO ENSURE
THAT THE TOTAL ANNUAL FUND OPERATING EXPENSES DO NOT EXCEED 1.50%. YOU SHOULD
ALSO KNOW THAT IN ANY FISCAL YEAR IN WHICH THE FUND'S ASSETS ARE GREATER THAN
$75 MILLION AND ITS TOTAL ANNUAL FUND OPERATING EXPENSES ARE LESS THAN 1.50%,
THE FUND'S BOARD OF DIRECTORS MAY ELECT TO REIMBURSE PILGRIM BAXTER FOR ANY
FEES IT WAIVED OR EXPENSES IT REIMBURSED ON THE FUND'S BEHALF DURING THE
PREVIOUS TWO FISCAL YEARS. THE BOARD MADE NO REIMBURSEMENT ELECTION DURING THE
FISCAL YEAR ENDED MARCH 31, 2000.

24 PBHG LARGE CAP 20 FUND
<PAGE>
PBHG New Opportunities Fund
THIS FUND IS CURRENTLY OFFERED ONLY TO THE FOLLOWING INVESTORS: (1) SUBSEQUENT
INVESTMENTS BY PERSONS WHO WERE SHAREHOLDERS ON OR BEFORE NOVEMBER 12, 1999; (B)
NEW AND SUBSEQUENT INVESTMENTS MADE BY CERTAIN CLIENTS AND EMPLOYEES OF PILGRIM
BAXTER AND ITS AFFILIATES; AND (C) NEW AND SUBSEQUENT INVESTMENTS BY CERTAIN
PENSIONS PLANS.

[GRAPHIC OMITTED] GOAL
The Fund seeks to provide investors with capital appreciation.

[GRAPHIC OMITTED] MAIN INVESTMENT STRATEGIES
Under normal market conditions, the Fund invests at least 65% of its total
assets in growth securities, such as common stocks, of companies in economic
sectors which the Adviser believes have above-average long-term growth
potential. These companies generally have market capitalizations or annual
revenues under $1 billion. The growth securities in the Fund are primarily
common stocks. The sectors that the Adviser believes have above-average
long-term growth potential will change as the economy changes. As a result, the
Fund may or may not be invested in these or other sectors at any time. In
addition, the Fund may emphasize one or more sectors. For example, the Fund may
invest 100% of its total assets in one sector. Pilgrim Baxter uses its own
fundamental research, computer models and proprietary measures of growth in
determining which securities to buy and when to sell them for this Fund. The
Fund may sell a security for a variety of reasons, such as to invest in a
company with more attractive growth prospects.

[GRAPHIC OMITTED] MAIN INVESTMENT RISKS
The value of your investment in the Fund will go up and down, which means you
could lose money.
The price of the securities in the Fund will fluctuate. These price movements
may occur because of changes in the financial markets, the company's individual
situation, or industry changes. These risks are greater for companies with
smaller market capitalizations because they tend to have more limited product
lines, markets and financial resources and may be dependent on a smaller
management group than larger, more established companies. The Fund's emphasis on
certain sectors of the economy may make the Fund's performance more susceptible
to economic, political or regulatory developments in that sector. As a result,
the Fund's net asset value may fluctuate more than other equity investments. The
Fund may emphasize companies with market capitalizations under $1 billion, so it
may be more volatile than the stock market in general, as measured by the S&P
500(R) Index. In addition, the growth securities in the Fund may never reach
what Pilgrim Baxter believes are their full long-term growth potential and may
go down in price. Although the Fund strives to achieve its goal, it cannot
guarantee that the goal will be achieved. Your investment in the Fund is not a
bank deposit. It is not insured or guaranteed by the FDIC or any other
government agency.

[GRAPHIC OMITTED]
For more information on this Fund's investment strategies and the associated
risks, please refer to the More About the Funds section beginning on page 54.

PBHG NEW OPPORTUNITIES FUND 25
<PAGE>
[GRAPHIC OMITTED] PERFORMANCE INFORMATION
Performance information for the Fund will be presented once the Fund has
completed investment operations for a full calendar year.

--------------------------------------------------------------------------------
FEES AND EXPENSES TABLE
SHAREHOLDER FEES None
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
Management Fees 1.00%
Distribution and/or Service (12b-1) Fees None
Other Expenses 0.34%
--------------------------------------------------------------------------------
Total Annual Operating Expenses 1.34%*
--------------------------------------------------------------------------------
* THESE ARE THE EXPENSES YOU SHOULD EXPECT TO PAY AS AN INVESTOR IN THIS FUND
FOR THE FISCAL YEAR ENDING MARCH 31, 2001. HOWEVER, YOU SHOULD KNOW THAT FOR
THE FISCAL YEAR ENDING MARCH 31, 2001, PILGRIM BAXTER HAS CONTRACTUALLY AGREED
TO WAIVE THAT PORTION, IF ANY, OF THE ANNUAL MANAGEMENT FEES PAYABLE BY THE
FUND AND TO PAY CERTAIN EXPENSES OF THE FUND TO THE EXTENT NECESSARY TO ENSURE
THAT THE TOTAL ANNUAL FUND OPERATING EXPENSES DO NOT EXCEED 1.50%. YOU SHOULD
ALSO KNOW THAT IN ANY FISCAL YEAR IN WHICH THE FUND'S ASSETS ARE GREATER THAN
$75 MILLION AND ITS TOTAL ANNUAL FUND OPERATING EXPENSES ARE LESS THAN 1.50%,
THE FUND'S BOARD OF DIRECTORS MAY ELECT TO REIMBURSE PILGRIM BAXTER FOR ANY
FEES IT WAIVED OR EXPENSES IT REIMBURSED ON THE FUND'S BEHALF DURING THE
PREVIOUS TWO FISCAL YEARS. THE BOARD MADE NO REIMBURSEMENT ELECTION DURING THE
FISCAL YEAR ENDED MARCH 31, 2000.

26 PBHG NEW OPPORTUNITIES FUND
<PAGE>
PBHG Large Cap Value Fund

[GRAPHIC OMITTED] GOAL
The Fund seeks to provide investors with long-term growth of capital and income.
Current income is a secondary objective.

[GRAPHIC OMITTED] MAIN INVESTMENT STRATEGIES
Under normal market conditions, the Fund invests at least 65% of its total
assets in value securities, such as common stocks, issued by companies with
large market capitalizations. These companies generally have market
capitalizations greater than $1 billion. The value securities in the Fund are
primarily common stocks that Pilgrim Baxter and Value Investors believe are
currently underpriced using certain financial measurements, such as their
price-to-earnings ratios, dividend income potential and earnings power. Pilgrim
Baxter and Value Investors use their own fundamental research, computer models
and proprietary measures of value in managing this Fund. The Fund may sell a
security for a variety of reasons, such as when it becomes overvalued or shows
deteriorating fundamentals.

[GRAPHIC OMITTED] For more information on this Fund's investment strategies and
the associated risks, please refer to the More About the Funds section beginning
on page 54.

PBHG LARGE CAP VALUE FUND 27
<PAGE>

[GRAPHIC OMITTED] PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. The bar chart shows you how the Fund's
performance has varied from year to year. The performance table compares the
Fund's performance over time to that of the S&P 500(R) Index, a widely
recognized, unmanaged index that measures the performance of large cap stocks
across all major industries. Both the chart and the table assume reinvestment of
dividends and distributions. Of course, the Fund's past performance does not
indicate how it will perform in the future.

CALENDAR YEAR TOTAL RETURNS
[BAR CHART OMITTED]
1997 25.62%
1998 34.74%
1999 11.06%

The Fund's year-to-date return as of 6/30/00 was 7.84%.

BEST QUARTER: Q4 1998 28.21%
WORST QUARTER: Q3 1998 -7.94%

--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
Since Inception
Past 1 Year (12/31/96)
--------------------------------------------------------------------------------
Large Cap Value Fund 11.06% 23.41%
S&P 500(R)Index 21.04% 27.56%

28 PBHG LARGE CAP VALUE FUND
<PAGE>
[GRAPHIC OMITTED] FEES AND EXPENSES
This table summarizes the shareholder fees and annual operating expenses you
would pay as an investor in the Fund. Shareholder fees are paid directly from
your account. Annual operating expenses are paid out of the Fund's assets. The
expenses listed below are based on the Fund's last fiscal year, ended March 31,
2000.

--------------------------------------------------------------------------------
FEES AND EXPENSES TABLE
SHAREHOLDER FEES None
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
Management Fees 0.65%
Distribution and/or Service (12b-1) Fees None
Other Expenses 0.46%
--------------------------------------------------------------------------------
Total Annual Operating Expenses 1.11%*
--------------------------------------------------------------------------------
* THESE ARE THE EXPENSES YOU SHOULD EXPECT TO PAY AS AN INVESTOR IN THIS FUND
FOR THE FISCAL YEAR ENDING MARCH 31, 2001. HOWEVER, YOU SHOULD KNOW THAT FOR
THE FISCAL YEAR ENDING MARCH 31, 2001, PILGRIM BAXTER HAS CONTRACTUALLY AGREED
TO WAIVE THAT PORTION, IF ANY, OF THE ANNUAL MANAGEMENT FEES PAYABLE BY THE
FUND AND TO PAY CERTAIN EXPENSES OF THE FUND TO THE EXTENT NECESSARY TO ENSURE
THAT THE TOTAL ANNUAL FUND OPERATING EXPENSES DO NOT EXCEED 1.50%. YOU SHOULD
ALSO KNOW THAT IN ANY FISCAL YEAR IN WHICH THE FUND'S ASSETS ARE GREATER THAN
$75 MILLION AND ITS TOTAL ANNUAL FUND OPERATING EXPENSES ARE LESS THAN 1.50%,
THE FUND'S BOARD OF DIRECTORS MAY ELECT TO REIMBURSE PILGRIM BAXTER FOR ANY
FEES IT WAIVED OR EXPENSES IT REIMBURSED ON THE FUND'S BEHALF DURING THE
PREVIOUS TWO FISCAL YEARS. THE BOARD MADE NO REIMBURSEMENT ELECTION DURING THE
FISCAL YEAR ENDED MARCH 31, 2000.

PBHG LARGE CAP VALUE FUND 29
<PAGE>
PBHG Mid-Cap Value Fund

[GRAPHIC OMITTED] GOAL
The Fund seeks to provide investors with above-average total return over a 3 to
5 year market cycle, consistent with reasonable risk.

[GRAPHIC OMITTED] MAIN INVESTMENT STRATEGIES
Under normal market conditions, the Fund invests at least 65% of its total
assets in value securities, such as common stocks, issued by companies with
market capitalizations within the range of the S&P Midcap 400 Index. Currently,
the companies in the S&P Midcap 400 Index have market capitalizations between
$200 million and $5 billion. The value securities in the Fund are primarily
common stocks that Pilgrim Baxter and Value Investors believe are currently
underpriced using certain financial measurements, such as their
price-to-earnings ratios, dividend income potential and earnings power. Pilgrim
Baxter and Value Investors use their own fundamental research, computer models
and proprietary measures of value in managing this Fund. The Fund may sell a
security for a variety of reasons, such as when it becomes overvalued or shows
deteriorating fundamentals. The Fund's sector weightings are generally within
10% of the S&P Midcap 400's sector weightings. In addition, the Fund generally
has a lower price-to-earnings ratio than the S&P Midcap 400 Index.

[GRAPHIC OMITTED] Main Investment Risks
The value of your investment in the Fund will go up and down, which means you
could lose money.
The price of the securities in the Fund will fluctuate. These price movements
may occur because of changes in the financial markets, the company's individual
situation, or industry changes. These risks are greater for companies with
smaller market capitalizations because they tend to have more limited product
lines, markets and financial resources and may be dependent on a smaller
management group than larger, more established companies. The Fund emphasizes
value securities of medium sized companies, so it is likely to be more volatile
than the stock market in general, as measured by the S&P 500(R) Index. In
addition, the value securities in the Fund may never reach what Pilgrim Baxter
and Value Investors believe are their full worth and may go down in price.

Although the Fund strives to achieve its goal, it cannot guarantee that the goal
will be achieved.
Your investment in the Fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency.

[GRAPHIC OMITTED]
For more information on this Fund's investment strategies and the associated
risks, risks, please refer to the More About the Funds section beginning on page
54.

30 PBHG MID-CAP VALUE FUND
<PAGE>

[GRAPHIC OMITTED] PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. The performance table compares the
Fund's performance over time to that of its benchmark, the S&P Midcap 400 Index,
a widely recognized, unmanaged index that tracks the performance of 400 mid-cap
stocks, and the S&P BARRA MidCap Value Index, a widely recognized, unmanaged
index that tracks the performance of those S&P MidCap 400 companies with lower
price-to-book ratios and forecasted growth rates. Both the chart and the table
assume reinvestment of dividends and distributions. Of course, the Fund's past
performance does not indicate how it will perform in the future.

CALENDAR YEAR TOTAL RETURNS
[BAR CHART OMITTED]
1998 27.84%
1999 21.72%

The Fund's year-to-date return as of 6/30/00 was 16.72%.
BEST QUARTER: Q4 1998 30.07%
WORST QUARTER: Q3 1998 -12.52%

--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
Since Inception
Past 1 Year (4/30/97)
--------------------------------------------------------------------------------
Mid-Cap Value Fund 21.72% 34.37%
S&P Midcap 400 Index 14.72% 24.34%
S&P Midcap 400/BARRA Value Index 2.32% 13.69%

PBHG MID-CAP VALUE FUND 31
<PAGE>
[GRAPHIC OMITTED] FEES AND EXPENSES
This table summarizes the shareholder fees and annual operating expenses you
would pay as an investor in the Fund. Shareholder fees are paid directly from
your account. Annual operating expenses are paid out of the Fund's assets. The
expenses listed below are based on the Fund's last fiscal year, ended March 31,
2000.

--------------------------------------------------------------------------------
FEES AND EXPENSES TABLE
SHAREHOLDER FEES None
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
Management Fees 0.85%
Distribution and/or Service (12b-1) Fees None
Other Expenses 0.59%
--------------------------------------------------------------------------------
Total Annual Operating Expenses 1.44%*
--------------------------------------------------------------------------------
* THESE ARE THE EXPENSES YOU SHOULD EXPECT TO PAY AS AN INVESTOR IN THIS FUND
FOR THE FISCAL YEAR ENDING MARCH 31, 2001. HOWEVER, YOU SHOULD KNOW THAT FOR
THE FISCAL YEAR ENDING MARCH 31, 2001, PILGRIM BAXTER HAS CONTRACTUALLY AGREED
TO WAIVE THAT PORTION, IF ANY, OF THE ANNUAL MANAGEMENT FEES PAYABLE BY THE
FUND AND TO PAY CERTAIN EXPENSES OF THE FUND TO THE EXTENT NECESSARY TO ENSURE
THAT THE TOTAL ANNUAL FUND OPERATING EXPENSES DO NOT EXCEED 1.50%. YOU SHOULD
ALSO KNOW THAT IN ANY FISCAL YEAR IN WHICH THE FUND'S ASSETS ARE GREATER THAN
$75 MILLION AND ITS TOTAL ANNUAL FUND OPERATING EXPENSES ARE LESS THAN 1.50%,
THE FUND'S BOARD OF DIRECTORS MAY ELECT TO REIMBURSE PILGRIM BAXTER FOR ANY
FEES IT WAIVED OR EXPENSES IT REIMBURSED ON THE FUND'S BEHALF DURING THE
PREVIOUS TWO FISCAL YEARS. THE BOARD MADE NO REIMBURSEMENT ELECTION DURING THE
FISCAL YEAR ENDED MARCH 31, 2000.

32 PBHG MID-CAP VALUE FUND

<PAGE>
PBHG Small Cap Value Fund

[GRAPHIC OMITTED] GOAL
The Fund seeks to provide investors with above-average total return over a 3 to
5 year market cycle, consistent with reasonable risk.

[GRAPHIC OMITTED] MAIN INVESTMENT STRATEGIES
Under normal market conditions, the Fund invests at least 65% of its total
assets in value securities, such as common stocks, issued by companies with
market capitalizations within the range of the Russell 2000 Index. Currently,
the companies in the Russell 2000 have market capitalizations between $100
million and $1.5 billion. The value securities in the Fund are primarily common
stocks that Pilgrim Baxter and Value Investors believe are currently underpriced
using certain financial measurements, such as their price-to-earnings ratios,
dividend income potential and earnings power. Pilgrim Baxter and Value Investors
use their own fundamental research, computer models and proprietary measures of
value in managing this Fund. The Fund may sell a security for a variety of
reasons, such as when it becomes overvalued or shows deteriorating fundamentals.
The Fund's sector weightings are generally within 10% of the Russell 2000's
sector weightings. In addition, the Fund generally has lower price-to-earnings
and price-to-book value ratios than the Russell 2000 Index.

[GRAPHIC OMITTED] MAIN INVESTMENT RISKS
The value of your investment in the Fund will go up and down, which means you
could lose money.
The price of the securities in the Fund will fluctuate. These price movements
may occur because of changes in the financial markets, a company's individual
situation, or industry changes. These risks are greater for companies with
smaller market capitalizations because they tend to have more limited product
lines, markets and financial resources and may be dependent on a smaller
management group than larger, more established companies. The Fund emphasizes
value securities of smaller sized companies, so it is likely to be more volatile
than the stock market in general, as measured by the S&P 500(R) Index. In
addition, the value securities in the Fund may never reach what Pilgrim Baxter
and Value Investors believe are their full worth and may go down in price.
Although the Fund strives to achieve its goal, it cannot guarantee that the goal
will be achieved. Your investment in the Fund is not a bank deposit. It is not
insured or guaranteed by the FDIC or any other government agency.

[GRAPHIC OMITTED] For more information on this Fund's investment strategies and
the associated risks, please refer to the More About the Funds section beginning
on page 54.

PBHG SMALL CAP VALUE FUND 33
<PAGE>
[GRAPHIC OMITTED] PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. The performance table compares the
Fund's performance over time to that of its benchmark, the Russell 2000 Index, a
widely recognized, unmanaged index that tracks the performance of 2,000 small
cap stocks, and the Russell 2000 Value Index, a widely-recognized, unmanaged
index that tracks the performance of those Russell 2000 companies with lower
price-to-book ratios and forecasted growth rates. Both the chart and the table
assume reinvestment of dividends and distributions. Of course, the Fund's past
performance does not indicate how it will perform in the future.

CALENDAR YEAR TOTAL RETURNS
[BAR CHART OMITTED]
1998 1.13%
1999 18.63%

The Fund's year-to-date return as of 6/30/00 was 28.12%.

BEST QUARTER: Q4 1998 24.20%
WORST QUARTER: Q3 1998 -21.59%

--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
Since Inception
Past 1 Year (4/30/97)
--------------------------------------------------------------------------------
Small Cap Value Fund 18.63% 23.15%
Russell 2000 Index 21.26% 17.02%
Russell 2000 Value Index -1.49% 7.07%

34 PBHG SMALL CAP VALUE FUND
<PAGE>

--------------------------------------------------------------------------------
FEES AND EXPENSES TABLE
SHAREHOLDER FEES None
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
Management Fees 1.00%
Distribution and/or Service (12b-1) Fees None
Other Expenses 0.58%
--------------------------------------------------------------------------------
Total Annual Operating Expenses 1.58%
--------------------------------------------------------------------------------
Fee Waiver (and/or Expense Reimbursement) 0.08%
Net Expenses 1.50%*
--------------------------------------------------------------------------------
* THIS IS THE ACTUAL TOTAL FUND OPERATING EXPENSE YOU WOULD HAVE PAID AS AN
INVESTOR IN THIS FUND FOR THE FISCAL YEAR ENDING MARCH 31, 2001. THAT'S BECAUSE
FOR THE FISCAL YEAR ENDING MARCH 31, 2001, PILGRIM BAXTER HAS CONTRACTUALLY
AGREED TO WAIVE THAT PORTION, IF ANY, OF THE ANNUAL MANAGEMENT FEES PAYABLE BY
THE FUND AND TO PAY CERTAIN EXPENSES OF THE FUND TO THE EXTENT NECESSARY TO
ENSURE THAT THE TOTAL ANNUAL FUND OPERATING EXPENSES DO NOT EXCEED 1.50%. YOU
SHOULD KNOW THAT IN ANY FISCAL YEAR IN WHICH THE FUND'S ASSETS ARE GREATER THAN
$75 MILLION AND ITS TOTAL ANNUAL FUND OPERATING EXPENSES ARE LESS THAN 1.50%,
THE FUND'S BOARD OF DIRECTORS MAY ELECT TO REIMBURSE PILGRIM BAXTER FOR ANY FEES
IT WAIVED OR EXPENSES IT REIMBURSED ON THE FUND'S BEHALF DURING THE PREVIOUS TWO
FISCAL YEARS. THE BOARD MADE NO REIMBURSEMENT ELECTION DURING FISCAL YEAR ENDED
MARCH 31, 2000.

PBHG SMALL CAP VALUE FUND 35
<PAGE>
PBHG Focused Value Fund

[GRAPHIC OMITTED] GOAL
The Fund seeks to provide investors with above-average total returns over a 3
to 5 year market cycle.

[GRAPHIC OMITTED] MAIN INVESTMENT STRATEGIES
Under normal market conditions, the Fund, a non-diversified fund, invests at
least 65% of its total assets in value securities, such as common stocks of
small, medium or large capitalization companies. The value securities in the
Fund are primarily common stocks that Pilgrim Baxter and Value Investors believe
are currently underpriced using certain financial measurements, such as their
price-to-earnings ratios, dividend income potential and earnings power. Pilgrim
Baxter and Value Investors use their own fundamental research, computer models
and proprietary measures of value in managing this Fund. The Fund may sell a
security for a variety of reasons, such as when it becomes overvalued or shows
deteriorating fundamentals.

[GRAPHIC OMITTED] MAIN INVESTMENT RISKS
The Fund is non-diversified which means, as compared to a diversified fund, it
invests a higher percentage of its assets in a limited number of stocks in order
to achieve a potentially greater investment return than a more diversified fund.
As a result, the price change of a single security, positive or negative, has a
greater impact on the Fund's net asset value and will cause its shares to
fluctuate in value more than it would in a diversified fund. The value of your
investment in the Fund will go up and down, which means you could lose money.
The price of the securities in the Fund will fluctuate. These price movements
may occur because of changes in the financial markets, a company's individual
situation, or industry changes. These risks are greater for companies with
smaller market capitalizations because they tend to have more limited product
lines, markets and financial resources and may be dependent on a smaller
management group than larger, more established companies. The value securities
in the Fund may never reach what Pilgrim Baxter and Value Investors believe are
their full worth and may go down in price. In addition, the Fund may emphasize
small, medium or large sized value companies. An investment in smaller and
medium sized companies is likely to make the Fund more volatile than the stock
market in general, as measured by the S&P 500(R) Index. However, the Fund may
also emphasize large company securities which may limit some of the risks
associated with value investing because large company securities tend to be less
volatile than smaller company securities. Although the Fund strives to achieve
its goal, it cannot guarantee that the goal will be achieved. Your investment in
the Fund is not a bank deposit. It is not insured or guaranteed by the FDIC or
any other government agency.

[GRAPHIC OMITTED]
For more information on this Fund's investment strategies and the associated
risks, please refer to the More About the Funds section beginning on page 54.

36 PBHG FOCUSED VALUE FUND

<PAGE>
[GRAPHIC OMITTED] PERFORMANCE INFORMATION
Performance information for the Fund will be presented once the Fund has
completed investment operations for a full calendar year.

--------------------------------------------------------------------------------
FEES AND EXPENSES TABLE
SHAREHOLDER FEES None
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
Management Fees 0.85%
Distribution and/or Service (12b-1) Fees None
Other Expenses 0.70%
--------------------------------------------------------------------------------
Total Annual Operating Expenses 1.55%
--------------------------------------------------------------------------------
Fee Waiver (and/or Expense Reimbursement) 0.05%
Net Expenses 1.50%*
--------------------------------------------------------------------------------
* THIS IS THE ACTUAL TOTAL FUND OPERATING EXPENSE YOU WILL PAY AS AN INVESTOR
IN THIS FUND FOR THE CURRENT FISCAL YEAR ENDING MARCH 31, 2001. THAT'S BECAUSE
FOR THE FISCAL YEAR ENDING MARCH 31, 2001, PILGRIM BAXTER HAS CONTRACTUALLY
AGREED TO WAIVE THAT PORTION, IF ANY, OF THE ANNUAL MANAGEMENT FEES PAYABLE BY
THE FUND AND TO PAY CERTAIN EXPENSES OF THE FUND TO THE EXTENT NECESSARY TO
ENSURE THAT THE TOTAL ANNUAL FUND OPERATING EXPENSES DO NOT EXCEED 1.50%. YOU
SHOULD KNOW THAT IN ANY FISCAL YEAR IN WHICH THE FUND'S ASSETS ARE GREATER
THAN $75 MILLION AND ITS TOTAL ANNUAL FUND OPERATING EXPENSES ARE LESS THAN
1.50%, THE FUND'S BOARD OF DIRECTORS MAY ELECT TO REIMBURSE PILGRIM BAXTER FOR
ANY FEES IT WAIVED OR EXPENSES IT REIMBURSED ON THE FUND'S BEHALF DURING THE
PREVIOUS TWO FISCAL YEARS. THE BOARD MADE NO REIMBURSEMENT ELECTION DURING
FISCAL YEAR MARCH 31, 2000.

PBHG FOCUSED VALUE FUND 37
<PAGE>
PBHG International Fund

[GRAPHIC OMITTED] GOAL
The Fund seeks to provide investors with long-term capital appreciation.

[GRAPHIC OMITTED] MAIN INVESTMENT STRATEGIES
Under normal market conditions, the Fund invests at least 65% of its total
assets in foreign equity securities of companies in at least three countries
other than the United States. Currently, the Fund principally focuses its
investments in those countries represented in the Morgan Stanley Capital
International Europe Australia and Far East Index. Nonetheless, more than 25% of
the Fund's total assets may be invested in companies whose principal activities
are in specific countries or geographic regions, including countries generally
considered to be an emerging or developing country by the international finance
community. The Fund may sell a security for a variety of reasons, such as to
invest in another company or country offering superior investment opportunities.

[GRAPHIC OMITTED] MAIN INVESTMENT RISKS
The value of your investment in the Fund will go up and down, which means you
could lose money.

The price of the securities in the Fund will fluctuate. These price movements
may occur because of changes in the financial markets, the company's individual
situation, or industry changes. These risks are greater for foreign equity
securities and companies with smaller market capitalizations. Investments in
foreign securities involve risks relating to political, social and economic
developments abroad, as well as risks resulting from the differences between the
regulations to which U.S. and foreign issuers and markets are subject. Companies
with smaller market capitalizations tend to have more limited product lines,
markets and financial resources and may be dependent on a smaller management
group than larger, more established companies.

The foreign equity securities in the Fund may never reach what Murray Johnstone
believes are their full capital appreciation potential and may go down in price.

Investments in emerging or developing countries may be subject to extreme
volatility because, in general, these countries economies are less well
developed, their political structures are less stable and their financial
markets are less liquid than more developed nations.

Although the Fund strives to achieve its goal, it cannot guarantee that the goal
will be achieved.

Your investment in the Fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency.

[GRAPHIC OMITTED] For more information on this Fund's investment strategies and
the associated risks, please refer to the More About the Funds section beginning
on page 54.

38 PBHG INTERNATIONAL FUND
<PAGE>

[GRAPHIC OMITTED] PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. The bar chart shows you how the Fund's
performance has varied from year to year. The performance table compares the
Fund's performance over time to that of the Morgan Stanley Capital International
Europe Australia and Far East Index (MSCIEAFE). The MSCI EAFE is a widely
recognized, unmanaged index that tracks the performance of 60% of the publicly
traded companies in Europe, Australia and the Far East. Both the chart and the
table assume reinvestment of dividends and distributions. Of course, the Fund's
past performance does not indicate how it will perform in the future.

CALENDAR YEAR TOTAL RETURNS
[BAR CHART OMITTED]
1995 2.05%
1996 12.66%
1997 3.48%
1998 12.74%
1999 26.51%

The Fund's year-to-date return as of 6/30/00 was -10.54%.

BEST QUARTER: Q4 1999 20.13%
WORST QUARTER: Q3 1998 -12.24%

--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
Since Inception
Past 1 Year Past 5 Years (6/15/94)
--------------------------------------------------------------------------------
International Fund 26.51% 11.15% 9.58%
MSCI EAFE Index 26.96% 12.83% 11.42%*

*The since inception return for the MSCI EAFE Index was calculated from June
30, 1994.

PBHG INTERNATIONAL FUND 39
<PAGE>
[GRAPHIC OMITTED] FEES AND EXPENSES
This table summarizes the shareholder fees and annual operating expenses you
would pay as an investor in the Fund. Shareholder fees are paid directly from
your account. Annual operating expenses are paid out of the Fund's assets. The
expenses listed below are based on the Fund's last fiscal year, ended March 31,
2000.

--------------------------------------------------------------------------------
FEES AND EXPENSES TABLE
SHAREHOLDER FEES None
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
Management Fees 1.00%
Distribution and/or Service (12b-1) Fees None
Other Expenses 1.00%
--------------------------------------------------------------------------------
Total Annual Operating Expenses 2.00%*
--------------------------------------------------------------------------------
* THESE ARE THE EXPENSES YOU SHOULD EXPECT TO PAY AS AN INVESTOR IN THIS FUND
FOR THE FISCAL YEAR ENDING MARCH 31, 2001. HOWEVER, YOU SHOULD KNOW THAT FOR
THE FISCAL YEAR ENDING MARCH 31, 2001, PILGRIM BAXTER HAS CONTRACTUALLY AGREED
TO WAIVE THAT PORTION, IF ANY, OF THE ANNUAL MANAGEMENT FEES PAYABLE BY THE
FUND AND TO PAY CERTAIN EXPENSES OF THE FUND TO THE EXTENT NECESSARY TO ENSURE
THAT THE TOTAL ANNUAL FUND OPERATING EXPENSES DO NOT EXCEED 2.25%. YOU SHOULD
ALSO KNOW THAT IN ANY FISCAL YEAR IN WHICH THE FUND'S ASSETS ARE GREATER THAN
$75 MILLION AND ITS TOTAL ANNUAL FUND OPERATING EXPENSES ARE LESS THAN 2.25%,
THE FUND'S BOARD OF DIRECTORS MAY ELECT TO REIMBURSE PILGRIM BAXTER FOR ANY
FEES IT WAIVED OR EXPENSES IT REIMBURSED ON THE FUND'S BEHALF DURING THE
PREVIOUS TWO FISCAL YEARS. THE BOARD MADE NO REIMBURSEMENT ELECTION DURING THE
FISCAL YEAR ENDED MARCH 31, 2000.

[GRAPHIC OMITTED] EXAMPLE
This example is intended to help you compare the cost of inve sting in the Fund
to the cost of investing in other mutual funds. This example makes four
assumptions: 1) you invest $10,000 in the Fund for the time periods shown; 2)
you redeem all your shares at the end of those time periods; 3) you earn a 5%
return on your investment each year; and 4) the Fund's operating expenses remain
the same for the time periods shown. The example is hypothetical. Your actual
costs may be higher or lower.

40 PBHG INTERNATIONAL FUND
<PAGE>
PBHG Cash Reserves Fund

[GRAPHIC OMITTED] GOAL
The Fund seeks to provide investors with current income while preserving
principal and maintaining liquidity.

[GRAPHIC OMITTED] MAIN INVESTMENT STRATEGIES
Under normal market conditions, the Fund invests exclusively in short-term U.S.
dollar-denominated debt obligations of U.S. or foreign issuers. These
obligations must be rated in one of the two highest rating categories by any two
nationally recognized rating organizations or unrated securities that Pilgrim
Baxter or Wellington Management determines are of comparable quality. The Fund's
holdings are primarily U.S. money market instruments, such as CDs, commercial
paper and corporate obligations, that Pilgrim Baxter and Wellington Management
believe offer the most attractive income potential without undue risk. The Fund
may sell a security for a variety of reasons, such as to respond to a change in
an issuer's financial condition.

[GRAPHIC OMITTED] MAIN INVESTMENT RISKS
Although the Fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund.

Your investment in the Fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency.

The price of the money market instruments in the Fund will fluctuate. These
price movements may occur because of, among other things, changes in the
financial markets or the issuer's individual financial situation. These risks
are greater for foreign money market instruments. Investments in foreign money
market instruments involve risks relating to political, social and economic
developments abroad, as well as risks resulting from the differences between the
regulations to which U.S. and foreign issuers and markets are subject.

Although the Fund strives to maintain a consistent share price and to achieve
its goal, it cannot guarantee that the constant share price or goal will be
achieved.

[GRAPHIC OMITTED] For more information on this Fund's investment strategies and
the associated risks, please refer to the More About the Funds section beginning
on page 54.

PBHG CASH RESERVES FUND 41
<PAGE>

[GRAPHIC OMITTED] PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. The bar chart shows you how the Fund's
performance has varied from year to year. The performance table compares the
Fund's performance over time to that of the Lipper Money Market Funds Average, a
widely recognized, composite of money market funds that invest in the highest
credit quality short-term money market instruments. Both the chart and the table
assume reinvestment of dividends and distributions. Of course, the Fund's past
performance does not indicate how it will perform in the future.

--------------------------------------------------------------------------------
CALENDAR YEAR TOTAL RETURNS
[BAR CHART OMITTED]
1996 4.91%
1997 5.08%
1998 5.00%
1999 4.60%

The Fund's year-to-date return as of 6/30/00 was 2.75%.

--------------------------------------------------------------------------------
BEST QUARTER: Q4 1997 1.28%
WORST QUARTER: Q2 1999 1.06%

--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99

Since Inception
Past 1 Year (4/4/95)
--------------------------------------------------------------------------------
Cash Reserves Fund 4.60% 4.98%
Lipper Money Market Funds Average 4.49% 4.91%*

* The since inception return for the Lipper Money Market Funds Average was
calculated from March 31, 1995.

TO OBTAIN INFORMATION ABOUT THE FUND'S YIELD, CALL 1-800-433-0051.

42 PBHG CASH RESERVES FUND
<PAGE>

--------------------------------------------------------------------------------
FEES AND EXPENSES TABLE

SHAREHOLDER FEES None
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
Management Fees 0.30%
Distribution and/or Service (12b-1) Fees None
Other Expenses 0.39%
--------------------------------------------------------------------------------
Total Annual Operating Expenses 0.69%
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
YOUR COST OVER

1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------
$70 $221 $384 $859

PBHG CASH RESERVES FUND 43
<PAGE>

PBHG Technology & Communications Fund

[GRAPHIC OMITTED] GOAL
The Fund seeks to provide investors with long-term growth of capital. Current
income is incidental to the Fund's goal.

[GRAPHIC OMITTED] MAIN INVESTMENT STRATEGIES
Under normal market conditions, the Fund, a non-diversified fund, will invest at
least 65% of its total assets in common stocks of companies doing business in
the technology and communications sectors of the market. In addition, the Fund
is concentrated which means it will invest 25% or more of its total assets in
one or more of the industries within these sectors. These industries may include
computer software and hardware, network and cable broadcasting, semiconductors,
defense and data storage and retrieval, and biotechnology. The Fund invests in
companies that may be responsible for breakthrough products or technologies or
may be positioned to take advantage of cutting-edge developments. The Fund's
holdings may range from smaller companies developing new technologies or
pursuing scientific breakthroughs to large, blue chip firms with established
track records in developing, using or marketing scientific advances. The Fund
may sell a security for a variety of reasons, such as to invest in a company
with more attractive growth prospects.

Pilgrim Baxter uses its own fundamental research, computer models and
proprietary measures of growth and business momentum in managing this Fund. The
Fund may sell a security for a variety of reasons, such as a deterioration in
fundamentals or to invest in a company with more attractive growth prospects.

The Fund is concentrated which means, compared to a non-concentrated fund, it
invests a higher percentage of its assets in specific industries within the
technology and communications sectors of the market in order to achieve a
potentially greater investment return. As a result, the economic, political and
regulatory developments in a particular industry, positive or negative, have a
greater impact on the Fund's net asset value and will cause its shares to
fluctuate more that if the Fund did not concentrate its investments.

44 PBHG TECHNOLOGY & COMMUNICATIONS FUND

<PAGE>

The value of your investment in the Fund will go up and down, which means you
could lose money.

The price of the securities in the Fund will fluctuate. These price movements
may occur because of changes in the financial markets, the company's individual
situation, or industry changes. These risks are greater for companies with
smaller market capitalizations because they tend to have more limited product
lines, markets and financial resources and may be dependent on a smaller
management group than larger, more established companies.

Securities of technology and communications companies are strongly affected by
worldwide scientific and technological developments and governmental laws,
regulations and policies and, therefore, are generally more volatile than
securities of companies not dependent upon or associated with technology and
communications issues.

Although the Fund strives to achieve its goal, it cannot guarantee that the goal
will be achieved.

Your investment in the Fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency.

[GRAPHIC OMITTED] For more information on this Fund's investment strategies and
the associated risks, please refer to the More About the Funds section beginning
on page 54.

PBHG TECHNOLOGY & COMMUNICATIONS FUND 45
<PAGE>
[GRAPHIC OMITTED] PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. The bar chart shows you how the Fund's
performance has varied from year to year. The performance table compares the
Fund's performance over time to that of the Soundview Technology Index, a widely
recognized, unmanaged index that measures the performance of 100 major
technology stocks, as chosen by Soundview Financial Group. Both the chart and
the table assume reinvestment of dividends and distributions. Of course, the
Fund's past performance does not indicate how it will perform in the future.

--------------------------------------------------------------------------------
CALENDAR YEAR TOTAL RETURNS
[BAR CHART OMITTED]
1996 54.42%
1997 3.32%
1998 26.00%
1999 243.89%

The Fund's year-to-date return as of 6/30/00 was 16.53%.

--------------------------------------------------------------------------------
BEST QUARTER: Q4 1999 111.54%
WORST QUARTER: Q4 1997 -17.42%

--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
Since Inception
Past 1 Year (9/29/95)
--------------------------------------------------------------------------------
Technology & Communications Fund 243.89% 63.29%
Soundview Technology Index 129.79% 45.68%*

* The since inception return for the Soundview Technology Index was September
30, 1995.

Prior to November 2, 1999, the Fund was diversified and did not concentrate its
investments. Therefore, the Fund's performance prior to November 2, 1999 may not
be indicative of how it will perform in the future.

46 PBHG TECHNOLOGY & COMMUNICATIONS FUND
<PAGE>
[GRAPHIC OMITTED] FEES AND EXPENSES
This table summarizes the shareholder fees and annual operating expenses you
would pay as an investor in the Fund. Shareholder fees are paid directly from
your account. Annual operating expenses are paid out of the Fund's assets. The
expenses listed below are based on the Fund's last fiscal year, ended March 31,
2000.

PBHG TECHNOLOGY& COMMUNICATIONS FUND 47
<PAGE>
PBHG Strategic Small Company Fund

[GRAPHIC OMITTED] GOAL
The Fund seeks to provide investors with growth of capital.

[GRAPHIC OMITTED] MAIN INVESTMENT STRATEGIES
Under normal market conditions, the Fund invests at least 65% of its total
assets in growth and value securities, such as common stocks, of small sized
companies. These companies generally have market capitalizations or annual
revenues of up to $750 million. The growth securities in the Fund are primarily
common stocks that Pilgrim Baxter believes have strong business momentum,
earnings growth and capital appreciation potential. The value securities in the
Fund are primarily common stocks that Pilgrim Baxter and Value Investors believe
are currently underpriced using certain financial measurements, such as their
price-to-earnings ratios. Pilgrim Baxter and Value Investors strategically
adjust the mix of growth and value securities in the Fund, depending upon
economic and market conditions. As a result, at times the Fund may be more
heavily invested in growth securities and at other times the Fund may be more
heavily invested in value securities. Pilgrim Baxter and Value Investors use
their own fundamental research, computer models and proprietary measures of
growth and value in managing this Fund.

[GRAPHIC OMITTED] MAIN INVESTMENT RISKS
The value of your investment in the Fund will go up and down, which means you
could lose money.

The price of the securities in the Fund will fluctuate. These price movements
may occur because of changes in the financial markets, a company's individual
situation, or industry changes. These risks are greater for companies with
smaller market capitalizations because they tend to have more limited product
lines, markets and financial resources and may be dependent on a smaller
management group than larger, more established companies.

The Fund emphasizes growth and value securities of smaller sized companies, so
it is likely to be more volatile than the stock market in general, as measured
by the S&P 500(R) Index. In addition, the growth and value securities in the
Fund may never reach what Pilgrim Baxter and Value Investors believe are their
full potential worth and may go down in price.

Although the Fund strives to achieve its goal, it cannot guarantee that the goal
will be achieved.

Your investment in the Fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency.

[GRAPHIC OMITTED] For more information on this Fund's investment strategies and
the associated risks, please refer to the More About the Funds section beginning
on page 54.

48 PBHG STRATEGIC SMALL COMPANY FUND

<PAGE>

[GRAPHIC OMITTED] PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. The bar chart shows you how the Fund's
performance has varied from year to year. The performance table compares the
Fund's performance over time to that of the Russell 2000 Index, widely
recognized, unmanaged index that tracks the performance of 2000 small cap
stocks. Both the chart and the table assume reinvestment of dividends and
distributions. Of course, the Fund's past performance does not indicate how it
will perform in the future.

--------------------------------------------------------------------------------
CALENDAR YEAR TOTAL RETURNS
[BAR CHART OMITTED]
1997 25.67%
1998 2.13%
1999 51.79%

The Fund's year-to-date return as of 6/30/00 was 26.40%.

--------------------------------------------------------------------------------
BEST QUARTER: Q4 1999 36.16%
WORST QUARTER: Q3 1998 -23.48%

--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
Since Inception
Past 1 Year (12/31/96)
--------------------------------------------------------------------------------
Strategic Small Company Fund 51.79% 24.89%
Russell 2000 Index 21.26% 13.08%

PBHG STRATEGIC SMALL COMPANY FUND 49
<PAGE>

--------------------------------------------------------------------------------
FEES AND EXPENSES TABLE
SHAREHOLDER FEES None
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
Management Fees 1.00%
Distribution and/or Service (12b-1) Fees None
Other Expenses 0.55%
--------------------------------------------------------------------------------
Total Annual Operating Expenses 1.55%
--------------------------------------------------------------------------------
Fee Waiver (and/or Expense Reimbursement) 0.05%
Net Expenses 1.50%*
--------------------------------------------------------------------------------
* THIS IS THE ACTUAL TOTAL FUND OPERATING EXPENSE YOU WILL PAY AS AN INVESTOR
IN THIS FUND FOR THE CURRENT FISCAL YEAR ENDING MARCH 31, 2001. THAT'S BECAUSE
FOR THE FISCAL YEAR ENDING MARCH 31, 2001, PILGRIM BAXTER HAS CONTRACTUALLY
AGREED TO WAIVE THAT PORTION, IF ANY, OF THE ANNUAL MANAGEMENT FEES PAYABLE BY
THE FUND AND TO PAY CERTAIN EXPENSES OF THE FUND TO THE EXTENT NECESSARY TO
ENSURE THAT THE TOTAL ANNUAL FUND OPERATING EXPENSES DO NOT EXCEED 1.50%. YOU
SHOULD KNOW THAT IN ANY FISCAL YEAR IN WHICH THE FUND'S ASSETS ARE GREATER
THAN $75 MILLION AND ITS TOTAL ANNUAL FUND OPERATING EXPENSES ARE LESS THAN
1.50%, THE FUND'S BOARD OF DIRECTORS MAY ELECT TO REIMBURSE PILGRIM BAXTER FOR
ANY FEES IT WAIVED OR EXPENSES IT REIMBURSED ON THE FUND'S BEHALF DURING THE
PREVIOUS TWO FISCAL YEARS. THE BOARD MADE NO REIMBURSEMENT ELECTION DURING
FISCAL YEAR ENDED MARCH 31, 2000.

50 PBHG STRATEGIC SMALL COMPANY FUND

<PAGE>

PBHG Global Technology & Communications Fund

[GRAPHIC OMITTED] GOAL
The Fund seeks to provide investors with long-term growth of capital.

[GRAPHIC OMITTED] MAIN INVESTMENT STRATEGIES
Under normal market conditions, the Fund, a non-diversified fund, will invest at
least 65% of its total assets in common stocks of U.S. and non-U.S. companies
and American Depository Receipts ("ADRs") of non-U.S. companies doing business
in the technology and communications sectors of the market. In addition, the
Fund is concentrated which means it will invest 25% or more of its total assets
in one or more of the industries within these sectors. These industries may
include computer software and hardware, network and cable broadcasting,
semiconductors, defense and data storage and retrieval, and biotechnology.

The Fund invests in companies that may be responsible for breakthrough products
or technologies or may be positioned to take advantage of cutting-edge
developments. These companies will be in at least three different countries, one
of which may include the U.S. Some of these countries may be considered emerging
or developing by the international finance community. The Fund's holdings may
range from smaller companies developing new technologies or pursuing scientific
breakthroughs to large, blue chip firms with established track records in
developing, using or marketing scientific advances.

PBHG GLOBAL TECHNOLOGY & COMMUNICATIONS FUND 51
<PAGE>

The value of your investment in the Fund will go up and down, which means you
could lose money.

The price of the securities in the Fund will fluctuate. These price movements
may occur because of changes in the financial markets, the company's individual
situation, or industry changes. These risks are greater for foreign equity
securities and companies with smaller market capitalizations. Investments in
foreign equity securities involve risks relating to political, social and
economic developments abroad, as well as risks resulting from the differences
between the regulations to which U.S. and foreign issuers and markets are
subject. Companies with smaller market capitalizations tend to have more limited
product lines, markets and financial resources and may be dependent on a smaller
management group than larger, more established companies.

Investments in emerging or developing countries may be subject to extreme
volatility because, in general, these countries' economies are more
under-developed, their political structures are less stable and their financial
markets are less liquid than more developed nations.

Although the Fund strives to achieve its goal, it cannot guarantee that the goal
will be achieved.

Your investment in the Fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency.

[GRAPHIC OMITTED] For more information on the Fund's investment strategies and
the associated risks, please refer to the More About the Funds section beginning
on page 54.

52 PBHG GLOBAL TECHNOLOGY & COMMUNICATIONS FUND

<PAGE>
[GRAPHIC OMITTED] PERFORMANCE INFORMATION
Performance information for the Fund will be presented once the Fund has
completed investment operations for a full calendar year.

[GRAPHIC OMITTED] FEES AND EXPENSES
This table summarizes the shareholder fees and annual operating expenses you
would pay as an investor in the Fund. Shareholder fees are paid directly from
your account. Annual operating expenses are paid out of the Fund's assets. Since
the Fund commenced operations on June 1, 2000, "Other Expenses" is based on
estimated amounts the Fund expects to pay during the current fiscal year.

--------------------------------------------------------------------------------
FEES AND EXPENSES TABLE
SHAREHOLDER FEES None
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
Management Fees 1.50%
Distribution and/or Service (12b-1) Fees None
Other Expenses 0.50%
--------------------------------------------------------------------------------
Total Annual Operating Expenses 2.00%*
--------------------------------------------------------------------------------
* THESE ARE THE EXPENSES YOU SHOULD EXPECT TO PAY AS AN INVESTOR IN THIS FUND
FOR THE FISCAL YEAR ENDING MARCH 31, 2001. HOWEVER, YOU SHOULD KNOW THAT FOR
THE FISCAL YEAR ENDING MARCH 31, 2001, PILGRIM BAXTER HAS CONTRACTUALLY AGREED
TO WAIVE THAT PORTION, IF ANY, OF THE ANNUAL MANAGEMENT FEES PAYABLE BY THE
FUND AND TO PAY CERTAIN EXPENSES OF THE FUND TO THE EXTENT NECESSARY TO ENSURE
THAT THE TOTAL ANNUAL FUND OPERATING EXPENSES DO NOT EXCEED 2.15%. YOU SHOULD
ALSO KNOW THAT IN ANY FISCAL YEAR IN WHICH THE FUND'S ASSETS ARE GREATER THAN
$75 MILLION AND ITS TOTAL ANNUAL FUND OPERATING EXPENSES ARE LESS THAN 2.15%,
THE FUND'S BOARD OF DIRECTORS MAY ELECT TO REIMBURSE PILGRIM BAXTER FOR ANY
FEES IT WAIVED OR EXPENSES IT REIMBURSED ON THE FUND'S BEHALF DURING THE
PREVIOUS TWO FISCAL YEARS. THE BOARD MADE NO REIMBURSEMENT ELECTION DURING THE
FISCAL YEAR ENDED MARCH 31, 2000.

--------------------------------------------------------------------------------
YOUR COST OVER
1 YEAR 3 YEARS
--------------------------------------------------------------------------------
$203 $627

PBHG GLOBAL TECHNOLOGY & COMMUNICATIONS FUND 53
<PAGE>

MORE ABOUT THE FUNDS

[LOGO OMITTED] RISKS AND RETURNS
This section takes a closer look at the investment strategies that make up each
Fund's risk and return characteristics.

In addition to the main investment strategies described in the Fund Summaries
section of this Prospectus, each Fund may make other types of investments that
have different risk/return characteristics. These investments, the Funds' main
investment strategies and their risk/return characteristics are described in the
table set forth on the following pages. From time to time, a Fund may make
investments and pursue strategies different from those described in this
Prospectus. Those non-principal investments and strategies are described in the
Statement of Additional Information. The back cover of this Prospectus explains
how you can get a copy of the Statement of Additional Information.

Each Fund may invest 100% of its total assets in cash or U.S. dollar-denominated
high quality short-term debt instruments for temporary defensive purposes, to
maintain liquidity or when economic or market conditions are unfavorable for
profitable investing. These types of investments typically have a lower yield
than other longer-term investments and lack the capital appreciation potential
of equity securities, like stocks. In addition, while these investments are
generally designed to limit a Fund's losses, they can prevent a Fund from
achieving its investment goal.

Each Fund is actively managed, which means a Fund's manager may frequently buy
and sell securities. Frequent trading increases a Fund's turnover rate and may
increase transaction costs, such as brokerage commissions. Increased transaction
costs could detract from a Fund's performance. In addition, the sale of Fund
securities may generate capital gains which, when distributed, may be taxable to
you.

54
<PAGE>

--------------------------------------------------------------------------------
SECURITIES
Shares representing ownership or the right to ownership in a corporation. Each
Fund (except the Cash Reserves Fund) may invest in the following types of
securities: common and preferred stocks, convertible securities, warrants and
rights.

POTENTIAL RISKS
--------------------------------------------------------------------------------
Security prices fluctuate over time. Security prices may fall as a result of
factors that relate to the company, such as management decisions or lower demand
for the company's products or services.

Security prices may fall because of factors affecting companies in a number of
industries, such as increased production costs.

Security prices may fall because of changes in the financial markets, such as
interest rates or currency exchange rate changes.

POLICIES TO BALANCE RISK AND RETURN
--------------------------------------------------------------------------------
Pilgrim Baxter, Value Investors and Murray Johnstone maintain a long-term
investment approach and focus on securities they believe can appreciate over an
extended time frame, regardless of interim fluctuations.

Under normal circumstances, each Fund (except the Cash Reserves Fund) intends to
remain fully invested, with at least 65% of its total assets in securities.

Pilgrim Baxter, Value Investors and Murray Johnstone focus their active
management on securities selection, the area they believe their commitment to
fundamental research can most enhance a Fund's performance.

POTENTIAL RETURNS
--------------------------------------------------------------------------------
Securities have generally outperformed more stable investments (such as bonds
and cash equivalents) over the long term.

--------------------------------------------------------------------------------
GROWTH SECURITIES
Securities that Pilgrim Baxter believes have or are expected to have strong
sales and earnings growth and capital appreciation potential and will grow
faster than the economy as a whole.

POTENTIAL RISKS
--------------------------------------------------------------------------------
See Securities.

Growth securities may be more sensitive to changes in business momentum and
earnings than other securities because they typically trade at higher earnings
multiples.

The growth securities in the Fund may never reach what Pilgrim Baxter believes
are their full value and may even go down in price.

POTENTIAL RETURNS
--------------------------------------------------------------------------------
See Securities.

Growth securities may appreciate faster than non-growth securities.

POLICIES TO BALANCE RISK AND RETURN
--------------------------------------------------------------------------------
See Securities.

In managing a Fund, Pilgrim Baxter uses its own software and research models
which incorporate important attributes of successful growth. A key attribute of
successful growth is positive business momentum as demonstrated by earnings or
revenue and sales growth, among other factors. Pilgrim Baxter's investment
process is extremely focused on companies which exhibit positive business
momentum.

Pilgrim Baxter considers selling a security when its anticipated appreciation is
no longer probable, alternative investments offer superior appreciation
prospects or the risk of a decline in its market price is too great or a
deterioration in business fundamentals occurs or is expected to occur.

55
<PAGE>

--------------------------------------------------------------------------------
VALUE SECURITIES
Securities that Value Investors believes are currently underpriced using certain
financial measurements, such as their price-to-earnings ratio, earnings power,
dividend income potential, and competitive advantages.

POTENTIAL RISKS
--------------------------------------------------------------------------------
See Securities.

Value companies may have experienced adverse business developments or may be
subject to special risks that have caused their securities to be out of favor.

The value securities in the Fund may never reach what Value Investors believes
are their full value and may even go down in price.

POLICIES TO BALANCE RISK AND RETURN
--------------------------------------------------------------------------------
See Securities.

In managing a Fund, Value Investors uses its own research, computer models and
measures of value.

Value Investors considers selling a security when it becomes overvalued relative
to the market, shows deteriorating fundamentals or falls short of Value
Investors' expectations.

POTENTIAL RETURNS
--------------------------------------------------------------------------------
See Securities.

Value securities may produce significant capital appreciation as the market
recognizes their full value.

--------------------------------------------------------------------------------
FOREIGN EQUITY SECURITIES
Securities of foreign issuers, including ADRs, EDRs and GDRs. ADRs are
certificates issued by a U.S. bank that represent a stated number of shares of a
foreign corporation that the bank holds in its vault. An ADR is bought and sold
in the same manner as U.S. securities. EDRs and GDRs are also receipts that
represent a stated number of shares of a foreign corporation, only that they are
issued by a non-U.S. bank or a foreign branch of U.S. bank. An ADR is bought and
sold in the same manner as U.S. securities and is priced in U.S. dollars. EDRs
and GDRs are generally designed for use on foreign exchanges and are typically
not priced in U.S. dollars. ADRs, EDRs and GDRs each carry most of the risks of
investing directly in foreign equity securities.

POTENTIAL RISKS
--------------------------------------------------------------------------------
Foreign security prices may fall due to political instability, changes in
currency exchange rates, foreign economic conditions or inadequate regulatory
and accounting standards.

These risks tend to be greater in emerging markets. As a result, the
International Fund's investments in emerging markets may be considered
speculative.

The adoption of the euro as the common currency of the European Economic an
Monetary Union (the "EMU") presents some uncertainties and possible risks, such
as changes in relative strength and value of major world currencies, adverse tax
consequences, and increased price competition among and between EMU and non-EMU
countries. These uncertainties and possible risks could adversely affect the
Funds.

56
<PAGE>
FOREIGN EQUITY SECURITIES CONTINUED.

POTENTIAL RETURNS
--------------------------------------------------------------------------------
Favorable exchange rate movements could generate gains or reduce losses. Foreign
investments, which represent a major portion of the world's securities, offer
attractive potential performance and opportunities for diversification.

POLICIES TO BALANCE RISK AND RETURN
--------------------------------------------------------------------------------
Murray Johnstone, in managing the International Fund, and Pilgrim Baxter, in
managing the Global Technology &Communications Fund, each seek to invest in
companies with strong growth potential in those countries with the best
investment opportunities.

Every other Fund does not invest in emerging markets and limits the amount of
total assets it invests in securities of foreign issuers not traded in the U.S.
as follows: Growth, Emerging Growth, Large Cap Growth, Select Equity, Limited,
Large Cap 20, New Opportunities, Technology & Communications: 10% and Core
Growth, Large Cap Value, Mid-Cap Value, Small Cap Value, Focused Value,
Strategic Small Company: 15%. ADRs are not included in these limits.

--------------------------------------------------------------------------------
MONEY MARKET INSTRUMENTS
High quality, short-term U.S. and foreign debt instruments denominated in U.S.
dollars, including bank obligations (such as CDs, time deposits, bankers'
acceptances, and banknotes) commercial paper, corporate obligations (including
asset backed securities) government obligations (such as U.S. Treasury, agency
or foreign government securities) short-term obligations issued by state and
local governments and repurchase agreements.

POTENTIAL RISKS
--------------------------------------------------------------------------------
Money market instrument prices fluctuate over time.

Money market instrument prices may fall as a result of factors that relate to
the issuer, such as a rating downgrade.

Money market instrument prices may fall because of changes in the financial
markets, such as interest rate changes.

The money market instruments in the Cash Reserve Fund may never reach what
Pilgrim Baxter and Wellington Management believe are their full income
potential.

POLICIES TO BALANCE RISK AND RETURN
--------------------------------------------------------------------------------
The Cash Reserves Fund follows strict SEC rules about credit risk, maturity and
diversification of its investments.

POTENTIAL RETURNS
--------------------------------------------------------------------------------
Money market instruments have greater short-term liquidity, capital preservation
and income potential than longer-term investments such as stocks.

57
<PAGE>

--------------------------------------------------------------------------------
SMALL AND MEDIUM SIZED COMPANY SECURITIES

POTENTIAL RISKS
--------------------------------------------------------------------------------
Small and medium sized company securities involve greater risk and price
volatility than larger, more established companies because they tend to have
more limited product lines, markets and financial resources and may be dependent
on a smaller management group.

POLICIES TO BALANCE RISK AND RETURN
--------------------------------------------------------------------------------
See Securities/Growth Securities/Value Securities.

Pilgrim Baxter and Value Investors focus on small and medium sized companies
with strong balance sheets that they expect to exceed consensus earnings
expectations.

POTENTIAL RETURNS
--------------------------------------------------------------------------------
Small and medium sized company securities may appreciate faster than those of
larger, more established companies for many reasons. For example, small and
medium sized companies tend to have younger product lines whose distribution and
revenues are still maturing.

--------------------------------------------------------------------------------
TECHNOLOGY ORCOMMUNICATIONS COMPANY SECURITIES
Securities of companies that rely extensively on technology or communications in
their product development or operations or are expected to benefit from
technological advances and improvements.

POTENTIAL RISKS
--------------------------------------------------------------------------------
Technology or communications company securities are strongly affected by
worldwide scientific and technological developments and governmental laws,
regulations and policies, and, therefore, are generally more volatile than
companies not dependent upon or associated with technology or communications
issues.

POLICIES TO BALANCE RISK AND RETURN
--------------------------------------------------------------------------------
Except for the Technology & Communications Fund and Global Technology
&Communications Fund, each Fund seeks to strike a balance among the industries
in which it invests so that no one industry dominates the Fund's investments.

POTENTIAL RETURNS
--------------------------------------------------------------------------------
Technology or communications company securities offer investors significant
growth potential because they may be responsible for breakthrough products or
technologies or may be positioned to take advantage of cutting-edge,
technology-related developments.

58
<PAGE>

--------------------------------------------------------------------------------
OTC SECURITIES
Securities not listed and traded on an organized exchange, but bought and sold
through a computer network.

POTENTIAL RISKS
--------------------------------------------------------------------------------
OTC securities are not traded as often as securities listed on an exchange. So,
if the Fund were to sell an OTC security, it might have to offer the security at
a discount or sell it in smaller share lots over an extended period of time.

POLICIES TO BALANCE RISK AND RETURN
--------------------------------------------------------------------------------
Pilgrim Baxter, Value Investors and Murray Johnstone use a highly disciplined
investment process that seeks to, among other things, identify quality
investments that will enhance a Fund's performance.

POTENTIAL RETURNS
--------------------------------------------------------------------------------
Increases the number of potential investments for a Fund.

OTC securities may appreciate faster than exchange-traded securities because
they are typically securities of younger, growing companies.

--------------------------------------------------------------------------------
ILLIQUID SECURITIES
Securities that do not have a ready market and cannot be easily sold, if at all,
at approximately the price that the Fund has valued them.

POTENTIAL RISKS
--------------------------------------------------------------------------------
A Fund may have difficulty valuing these securities precisely.

A Fund may be unable to sell these securities at the time or price it desires.

POLICIES TO BALANCE RISK AND RETURN
--------------------------------------------------------------------------------
The Cash Reserves Fund may not invest more than 10% of its net assets in
illiquid securities.

Every other Fund may not invest more than 15% of its net assets in illiquid
securities.

POTENTIAL RETURNS
--------------------------------------------------------------------------------
Illiquid securities may offer more attractive yields or potential growth than
comparable widely traded securities.

59
<PAGE>
THE INVESTMENT ADVISER & SUBADVISERS

[LOGO OMITTED] THE INVESTMENT ADVISER

Pilgrim Baxter & Associates, Ltd., 825 Duportail Road, Wayne, PA 19087, is the
investment advisor for each Fund. Founded in 1982, Pilgrim Baxter currently
manages approximately $23 billion in assets for pension and profit-sharing
plans, charitable institutions, corporations, trusts, estates and other
investment companies.

Pilgrim Baxter believes that discipline and consistency are important to
long-term investment success. This belief is reflected in its investment
process. Pilgrim Baxter uses a quantitative and fundamental investment process
that is extremely focused on business momentum, as demonstrated by such things
as earnings or revenue and sales growth.

Pilgrim Baxter's decision to sell a security depends on many factors. Generally
speaking, however, Pilgrim Baxter considers selling a security when its
anticipated appreciation is no longer probable, alternative investments offer
more superior appreciation prospects, the risk of a decline in its market price
is too great or a deterioration in business fundamentals occurs or is expected
to occur.

As investment adviser, Pilgrim Baxter makes investment decisions for the Growth,
Emerging Growth, Large Cap Growth, Select Equity, Core Growth, Limited, Large
Cap 20, New Opportunities, Technology & Communications and Global Technology &
Communications Funds, and for the growth portion of the Strategic Small Company
Fund. Pilgrim Baxter oversees the investment decisions made by Value Investors
as sub-adviser for the Large Cap Value, Mid-Cap Value, Small Cap Value and
Focused Value Funds, and for the value portion of the Strategic Small Company
Fund, Murray Johnstone as sub-adviser for the International Fund and Wellington
Management as sub-adviser for the Cash Reserves Funds. The Funds' Board of
Directors supervises Pilgrim Baxter and the sub-advisers and establishes
policies that Pilgrim Baxter and the sub-advisers must follow in their
day-to-day investment management activities.

--------------------------------------------------------------------------------
INVESTMENT PROCESS

Pilgrim Baxter begins its investment process by creating a universe of rapidly
growing companies that possess certain growth characteristics. That universe is
continually updated. Pilgrim Baxter then ranks each company in its universe
using proprietary software and research models that incorporate attributes of
successful growth like positive earnings surprises, upward earnings estimate
revisions, and accelerating sales and earnings growth. Finally, using its own
fundamental research and a bottom-up approach to investing, Pilgrim Baxter
evaluates each company's business momentum, earnings quality and whether the
company can sustain its current growth trend. Pilgrim Baxter believes that
through this highly disciplined investment process, it is able to construct a
portfolio of investments with strong growth characteristics.

<PAGE>

[LOGO OMITTED]
THE SUB-ADVISERS

Pilgrim Baxter Value Investors, Inc., 825 Duportail Road, Wayne, PA 19087, is a
wholly-owned subsidiary of Pilgrim Baxter. Founded in 1940, Value Investors
currently manages $680 million for pension and profit sharing plans, charitable
institutions, trusts, estates and other investment companies.

Value Investors' investment process, like that of Pilgrim Baxter, is both
quantitative and fundamental. In seeking to identify attractive investment
opportunities for the Small Cap Value, Mid-Cap Value, Large Cap Value and
Focused Value Funds and the value portion of the Strategic Small Company Fund,
Value Investors first creates a universe of more than 8,000 companies whose
current share price seems lower than the current or future worth. Then, using
its own computer models and measures of value, Value Investors creates a
sub-universe of statistically attractive value companies. Value Investors
considers factors like a company's earnings power vs. its current stock price,
its dividend income potential, its price-to-earnings ratio vs. similar
companies, its competitive advantages, like brand or trade name or market niche,
its management team and its current and future business prospects. Lastly, using
its own fundamental research and a bottom-up approach to investing, Value
Investors identifies those companies which are currently out of market favor but
have the potential to achieve significant appreciation as the marketplace
recognizes their fundamental value.

Value Investors' decision to sell a security depends on many factors. Generally
speaking, however, Value Investors considers selling a security when it becomes
overvalued relative to the market, shows deteriorating fundamentals or falls
short of Value Investors' expectations.

Murray Johnstone International Limited, 11 West Nile Street, Glasgow, Scotland
is a U.S. registered investment adviser. Founded in 1989, Murray Johnstone
currently manages more than $6 billion for institutional clients worldwide.

The investment process of Murray Johnstone, like that of Pilgrim Baxter, is both
quantitative and fundamental. In seeking to identify attractive investment
opportunities for the International Fund, Murray Johnstone uses twenty factors,
like currency considerations, to score and rank a universe of countries and
geographic regions according to investment potential. Then, using its own
fundamental research, Murray Johnstone identifies individual companies with
superior growth records and expectations, sound balance sheets and high cash
flow generation. Each company's investment value is evaluated based on factors
like relative price performance, upward earnings estimate revisions, improving
balance sheets and strength of management. Murray Johnstone's decision to sell a
security depends on many factors. Generally speaking, however, Murray Johnstone
considers selling a security when another company or country offers superior
investment opportunities, the risk associated with a particular currency becomes
too great, or the security falls short of Murray Johnstone's expectations.

<PAGE>

Wellington Management Company, LLP, 75 State Street, Boston, MA is the
sub-adviser for the PBHG Cash Reserves Fund. Wellington Management and its
predecessor organizations have provided investment advisory services to
investment companies since 1928 and to investment counseling clients since 1960.
As of June 30, 2000, Wellington Management held discretionary management
authority with respect to more than $253 billion of assets.

In managing the PBHG Cash Reserves Fund, Wellington Management uses a top-down
strategy and bottom-up security selection, to seek securities with an acceptable
maturity, that are marketable and liquid, offer competitive yields and are
issued by issuers that are on a sound financial footing. Wellington Management
also considers factors such as the anticipated level of interest rates and the
maturity of individual securities relative to the maturity of the Fund as a
whole. The purchase of single rated or unrated securities by Pilgrim Baxter or
Wellington Management is subject to the approval or ratification by the Fund's
Board of Directors.

For the fiscal year ended March 31, 2000, Pilgrim Baxter waived a portion of its
fee for the Small Cap Value, Focused Value and Strategic Small Company Funds, so
that the effective management fee paid by each Fund was as follows:

Growth Fund 0.85% Large Cap Value Fund 0.65%
Emerging Growth Fund 0.85% Mid-Cap Value Fund 0.85%
Large Cap Growth Fund 0.75% Small Cap Value Fund 0.92%
Select Equity Fund 0.85% Focused Value Fund 0.80%
Core Growth Fund 0.85% International Fund 1.00%
Limited Fund 1.00% Cash Reserves Fund 0.30%
Large Cap 20 Fund 0.85% Technology &
New Opportunities Fund 1.00% Communications Fund 0.85%
Strategic Small Company Fund 0.95%

The Global Technology & Communications Fund did not begin investment operations
until June 1, 2000. As investment adviser to this Fund, Pilgrim Baxter is
entitled to receive a fee, calculated daily and payable monthly, at the annual
rate of 1.5% of the Fund's average daily net assets.

Each sub-adviser is entitled to receive a fee from Pilgrim Baxter equal to a
percentage of the daily net assets of each sub-advised Fund.

<PAGE>

GROWTH FUND/NEW OPPORTUNITIES FUND
Gary L. Pilgrim, CFA has managed the Growth Fund since its inception in 1985. He
has managed the New Opportunities Fund since April 21, 2000. Mr. Pilgrim is the
Chief Investment Officer and President of Pilgrim Baxter and has been a growth
stock manager for over 30 years.

LARGE CAP GROWTH FUND/LARGE CAP 20 FUND/SELECT EQUITY FUND
Michael S. Sutton, CFA, has managed the Large Cap Growth and Large Cap 20 Funds
since November, 1999. He has managed the Select Equity Fund since April 24,
2000. Mr. Sutton joined Pilgrim Baxter in October 1999 from Loomis, Sayles &
Co., where he worked for seven years as a portfolio manager of several large cap
growth portfolios. Prior to that, Mr. Sutton was a large cap growth portfolio
manager with Stein, Roe & Farnham.

LIMITED FUND/EMERGING GROWTH FUND
Erin A. Piner has managed the Limited Fund since October, 1998. She has managed
the Emerging Growth Fund since January 2000. Ms. Piner joined Pilgrim Baxter in
1995 as an equity analyst. Prior to joining Pilgrim Baxter, Ms. Piner worked for
four years in the client service group of PaineWebber, Inc.

SMALL CAP VALUE FUND/MID-CAP VALUE FUND/FOCUSED VALUE FUND
Jerome J. Heppelmann, CFA, has managed the Small Cap Value, Mid-Cap Value, and
Focused Value Funds since June, 1999. He joined Pilgrim Baxter in 1994 as a Vice
President of Marketing/ Client Service and since 1997 has been a member of Value
Investors Equity team. Prior to joining Pilgrim Baxter, Mr. Heppelmann worked in
the Investment Advisory Group for SEI Investments.

LARGE CAP VALUE FUND
Raymond J. McCaffrey, CFA, has managed the Large Cap Value Fund since June,
1999. He joined Value Investors as a portfolio manager and analyst in 1997.
Prior to joining Value Investors, Mr. McCaffrey worked for 2 years as a
portfolio manager and analyst at Pitcairn Trust Company. His 11 years of
investment experience also include positions at Cypress Capital Management,
Independence Capital Management and Fidelity Bank.

63
<PAGE>

INTERNATIONAL FUND
Andrew V. Preston has managed this Fund since April, 1999. He co-managed this
Fund from July, 1995 through April, 1999. Mr. Preston joined Murray Johnstone
International Limited in 1985 and has served as a portfolio manager and director
since 1993.

TECHNOLOGY & COMMUNICATIONS FUND/CORE GROWTH FUND
Jeffrey A. Wrona, CFA has managed the Technology & Communications Fund since
May, 1999. He co-managed this Fund from May, 1998 through May, 1999. Mr. Wrona
has managed the Core Growth Fund since May, 1999. Mr. Wrona joined Pilgrim
Baxter in 1997 after seven years as a senior portfolio manager with Munder
Capital Management and today manages several other funds at Pilgrim Baxter.

STRATEGIC SMALL COMPANY FUND
James M. Smith, CFA has co-managed this Fund since its inception in 1996. He
manages the growth portion of this Fund. Mr. Smith joined Pilgrim Baxter in 1993
as a portfolio manager and has over 20 years of equity portfolio management
experience. Mr. Heppelmann manages the value portion of this Fund. His
experience is discussed under the Small Cap Value, Mid-Cap Value and Focused
Value Funds. Mr. Heppelmann has co-managed this fund since June, 1999.

CASH RESERVES FUND
John C. Keogh has managed this Fund since its inception in 1995. Mr. Keogh
joined Wellington Management in 1983 as an assistant portfolio manager and has
served as a portfolio manager since 1990.

GLOBAL TECHNOLOGY & COMMUNICATIONS FUND
Michael K. Ma has managed the Fund since its inception on May 31, 2000. Mr. Ma
joined Pilgrim Baxter in October 1999 as a senior technology analyst. Prior to
joining Pilgrim Baxter, Mr. Ma worked for two and one-half years as an Equity
Research Analyst in the Telecommunications Services Group of Deutsche Bank
Securities, Inc. Prior to that, he worked for four years as a Portfolio Manger
and Research Assistant with United States Trust Company of New York, first as a
research assistant and then after 1994 as a portfolio manager.

64
<PAGE>

YOUR INVESTMENT

[LOGO OMITTED]
PRICING FUND SHARES

Cash Reserves Fund shares are priced at 2:00 p.m. Eastern time on each day the
New York Stock Exchange is open. Cash Reserves Fund shares are not priced on
days that the New York Stock Exchange is closed. The Cash Reserves Fund prices
its investments at amortized cost, which approximates market value.

Each other Fund prices its investments for which market quotations are readily
available at market value. Short-term investments are priced at amortized cost,
which approximates market value. All other investments are priced at fair value
as determined in good faith by the Fund's Board of Directors. If a Fund holds
securities quoted in foreign currencies, it translates that price into U.S.
dollars at current exchange rates. Because foreign markets may be open at
different times than the New York Stock Exchange, the price of a Fund's shares
may change on days when its shares are not available for purchase or sale.

--------------------------------------------------------------------------------
NET ASSET VALUE (NAV)
The price of a Fund's shares is based on that Fund's net asset value (NAV). A
Fund's NAV equals the value of its assets, less its liabilities, divided by the
number of its outstanding shares. Fund shares are priced every day at the close
of regular trading on the New York Stock Exchange. Fund shares are not priced on
days that the New York Stock Exchange is closed.

65
<PAGE>
[LOGO OMITTED] BUYING SHARES
You may purchase shares of each fund directly through the Fund's transfer agent.
Except for the Cash Reserve Fund, the price per share you will pay to invest in
a Fund is its net asset value per share (NAV) next calculated after the transfer
agent or other authorized representative accepts your order. If you purchase
shares of the Cash Reserve Fund by wire transfer in the form of Federal Funds,
the price per share you will pay is that Fund's next calculated net asset value.
If you purchase shares of the Cash Reserve Fund by check or other negotiable
bank draft, the price per share you will pay is that Fund's net asset value as
calculated on the next business day after receipt of the check or bank draft.
Except for the Cash Reserves Fund, each Fund's NAV is calculated at the close of
trading on the New York Stock Exchange, normally 4:00 p.m. Eastern time, each
day the exchange is open for business. Each Fund's assets are generally valued
at their market price. However, if a market price is unavailable or if the
assets have been affected by events occurring after the close of trading, the
Fund's board of directors may use another method that it believes reflects fair
value. The Cash Reserves Fund uses the amortized cost method to value its
securities and generally calculates its NAV at 2:00 p.m. Eastern time each day
the New York Stock Exchange is open.

You may also purchase shares of each Fund through certain broker-dealers or
other financial institutions that are authorized to sell you shares of the
Funds. Such financial institutions may charge you a fee for this service in
addition to the Fund's NAV.

--------------------------------------------------------------------------------
MINIMUM INVESTMENTS
Initial Additional
--------------------------------------------------------------------------------
REGULAR ACCOUNTS
New Opportunities Fund 1 $10,000 no minimum
Limited Fund1 $ 5,000 no minimum
Strategic Small
Company Fund $ 5,000 no minimum
Each Other Fund $ 2,500 no minimum
Uniform Gifts/Transfer
to Minor Accounts $ 500 no minimum
TRADITIONAL IRAS $ 2,000 no minimum
ROTH IRAS $ 2,000 no minimum
EDUCATIONAL IRAS $ 500 no minimum
SYSTEMATIC INVESTMENT $ 500 $25
PLANS 2 (SIP)

1 THE LIMITED AND NEW OPPORTUNITIES FUNDS ARE CURRENTLY CLOSED
TO NEW INVESTORS.
2 PROVIDED A SIP IS ESTABLISHED, THE MINIMUM INITIAL INVESTMENT FOR EACH FUND
IS $500 ALONG WITH A MONTHLY SYSTEMATIC INVESTMENT OF $25 OR MORE.

CONCEPTS TO UNDERSTAND
--------------------------------------------------------------------------------
Traditional IRA: an individual retirement account. Your contributions may or may
not be deductible depending on your circumstances. Assets grow tax-deferred;
withdrawals and distributions are taxable in the year made.

Spousal IRA: an IRA funded by a working spouse in the name of a nonworking
spouse.

Roth IRA: an IRA with non-deductible contributions, and tax-free growth of
assets and distributions to pay retirement expenses, provided certain conditions
are met.

Education IRA: an IRA with nondeductible contributions, and tax-free growth of
assets and distributions, if used to pay certain educational expenses.

FOR MORE COMPLETE IRA INFORMATION, CONSULT A PBHG SHAREHOLDER SERVICES
REPRESENTATIVE OR A TAX ADVISOR.

<PAGE>

[LOGO OMITTED] SELLING SHARES
You may sell your shares at NAV any day the New York Stock Exchange is open for
business. Sale orders received by the Fund's transfer agent or other authorized
representatives by 4:00 p.m. Eastern time (2:00 p.m. Eastern time for the Cash
Reserves Fund) will be priced at the Fund's next calculated NAV. The Fund
generally sends payment for your shares the business day after your order is
accepted. Under unusual circumstances, the Fund may suspend redemptions or
postpone payment for up to seven days. Also, if the Fund has not yet collected
payment for the shares you are selling, it may delay paying out the proceeds on
your sale until payment has been collected up to 15 days from the date of
purchase. You may also sell shares of each Fund through certain broker-dealers
or other financial institutions at which you maintain an account. Such financial
institutions may charge you a fee for this service.

--------------------------------------------------------------------------------
LIMITATIONS ON SELLING SHARES BY PHONE

Proceeds
sent by Minimum Maximum
--------------------------------------------------------------------------------
Check no minimum $50,000
per day

Wire* no minimum no maximum

ACH no minimum no maximum

Please note that the banking instructions to be used for wire and ACH
redemptions must be established on your account in advance of placing your sell
order.

* WIRE FEE IS $10 PER FEDERAL RESERVE WIRE

WRITTEN REDEMPTION ORDERS
--------------------------------------------------------------------------------
Some circumstances require written sell orders along with signature guarantees.
These include:
o Redemptions in excess of $50,000
o Requests to send proceeds to a different address or payee
o Requests to send proceeds to an address that has been changed within the last
30 days
o Requests to wire proceeds to a different bank account

A SIGNATURE GUARANTEE
helps to protect you against fraud. You can obtain one from most banks or
securities dealers, but not from a notary public. For joint accounts, each
signature must be guaranteed. Please call us to ensure that your signature
guarantee is authentic.

67
<PAGE>
[LOGO OMITTED] GENERAL POLICIES

o Each Fund may reject or suspend acceptance of purchase orders.

o Each Fund reserves the right to make redemptions in securities rather than in
cash if the redemption amount exceeds $250,000 or 1% of the NAV of the Fund.

o Payment for telephone purchases must be received by the Fund's transfer agent
within seven days or you may be liable for any losses the Fund incurs as a
result of the cancellation of your purchase order.

o When placing a purchase, sale or exchange order through an authorized
representative, it is the representative's responsibility to promptly transmit
your order to the Fund's transfer agent so that you may receive that same
day's NAV.

o SEI Trust Company, the custodian for PBHG Traditional, Roth and Education IRA
accounts, currently charges a $10 annual custodial fee to Traditional and Roth
IRA accounts and a $7 annual custodial fee to Educational IRA accounts. This
fee will be automatically charged to your account if not received by the
announced due date, usually in mid-August.

o Because of the relatively high cost of maintaining smaller accounts, the Fund
charges an annual fee of $12 if your account balance drops below the minimum
investment amount because of redemptions. Minimum investment amounts are
identified in the table on page 66. For non-retirement accounts, the Fund, may
upon prior notice, close your account and send you the proceeds if your
account balance remains below the minimum investment amount for over 60 days.
Due to you redeeming or exchanging out of the Fund.

Statements and Reports that PBHG sends to you include the following:
o Confirmation Statements, Quarterly Account Statements, Prospectuses and
Financial Reports.

To reduce expenses, only one copy of most financial reports and
prospectuses may be mailed to households, even if more than one person in the
household holds shares of a fund. Call PBHG at 1-800-433-0051 if you need
additional copies of financial reports or prospectuses. If you do not want the
mailing of these documents to be combined with those for other members of your
household, contact PBHG at 1-800-433-0051 or write to P.O. Box 219534, Kansas
City, MO 64121. Electronic copies of most financial reports and prospectuses are
available at PBHG's website (www.pbhgfunds.com).

EXCHANGES BETWEEN FUNDS

You may exchange some or all of your shares in a fund with any other fund
identified in this prospectus. However, exchanges into the Limited Fund may be
made only by investors who are current shareholders of that Fund, as it is
currently closed to new investors. Exchanges into the New Opportunities Fund may
be made only by persons who were shareholders on or before November 12, 1999,
the day this fund closed to new investors. Simply mail, telephone or use the
Fund's internet website to provide your exchange instructions to the transfer
agent. There is currently no fee for exchanges, however, the Fund may change or
terminate this privilege on 60 days notice. Please note that exchanges into the
PBHG Cash Reserves Fund from another PBHG fund may be made only four (4) times a
year.

<PAGE>

TO OPEN AN ACCOUNT

-----IN WRITING-----------------------------------------------------------------
Complete the application.

Mail your completed application and a check to:
The PBHG Funds, Inc.
P.O. Box 219534
Kansas City, Missouri 64121-9534

-----BY TELEPHONE---------------------------------------------------------------
Call us at 1-800-433-0051 to receive an account application and receive an
account number.

WIRE Have your bank send your investment to:
o United Missouri Bank of Kansas City, N.A.
o ABA# 10-10-00695
o Account # 98705-23469
o Fund Name
o Your name
o Your Social Security or tax ID number
o Your account number

Return the account application.

-----BY AUTOMATED CLEARING------------------------------------------------------
HOUSE (ACH)*

-----VIA THE INTERNET-----------------------------------------------------------
o Visit the PBHG Funds website at http://www.pbhgfunds.com.
o Enter the "open account" screen and follow the instructions for completing an
account application.

TO ADD TO AN ACCOUNT
--------------------------------------------------------------------------------
Fill out an investment slip:

Mail the slip and the check to:
The PBHG Funds, Inc.
P.O. Box 219534
Kansas City, Missouri 64121-9534

--------------------------------------------------------------------------------
o Complete the bank information section on the account application.
o Attach a voided check or deposit slip to the account application.
o The maximum purchase allowed through ACH is $100,000 and this option must be
established on your account 15 days prior to initiating a transaction.

--------------------------------------------------------------------------------
o Complete the bank information section on the account application.
o Enter the "Your Account" section of the website and follow the instructions
for purchasing shares.

69
<PAGE>

TO SELL SHARES

-----BY MAIL--------------------------------------------------------------------

Write a letter of instruction that includes:
o your name(s) and signature(s)
o your account number
o the fund name
o the dollar amount your wish to sell
o how and where to send the proceeds

If required, obtain a signature guarantee (see "Selling Shares")

Mail your request to:
The PBHG Funds, Inc.
P.O. Box 219534
Kansas City, Missouri 64121-9534

-----SYSTEMATIC WITHDRAW PLAN---------------------------------------------------

Permits you to have payments of $50 or more mailed or automatically transferred
from your Fund accounts to your designated checking or savings account

o Complete the applicable section on the account application

Note: Must maintain a minimum account balance of $5,000 or more.

-----CHECK WRITING--------------------------------------------------------------

Check Writing is offered to shareholders of the Cash Reserves Fund. If you have
an account balance of $5,000 or more, you may establish this option on your
account. You may redeem shares by writing checks on your account for $250 or
more. To establish Check Writing on your account, call 1-800-433-0051 and
request a Signature Card.

-----BY TELEPHONE---------------------------------------------------------------

Sales orders may be placed by telephone provided this option was selected on
your account application. Please call 1-800-433-0051.

Note: sales from IRA accounts may not be made by telephone and must be made
in writing.

-----ACH------------------------------------------------------------------------

o Complete the bank information section on the account application.
o Attach a voided check or deposit slip to the account application.

Note: sale proceeds sent via ACH will not be posted to your bank account until
the second business day following the transaction.

-----WIRE-----------------------------------------------------------------------

Sale proceeds may be wired at your request. Be sure the Fund has your wire
instructions on file.

There is a $10 charge for each wire sent by the Fund.

<PAGE>

[LOGO OMITTED] DISTRIBUTION AND TAXES
Each Fund pays shareholders dividends from its net investment income and
distributions from its net realized capital gains at least once a year, if
available. These dividends and distributions will be reinvested in the Fund
unless you instruct the Fund otherwise. There are no fees on reinvestments.
Alternatively, you may elect to receive your dividends and distributions in cash
in the form of a check, wire or ACH.

Unless your investment is in an IRA or other tax-exempt account, your dividends
and distributions will be taxable whether you receive them in cash or reinvest
them. Dividends (including short-term capital gains distributions) are taxed at
the ordinary income rate. Distributions of long-term capital gains are taxable
at the long-term capital gains rate, regardless of how long you have been in the
Fund. Long-term capital gains tax rates are described in the table below.

A sale or exchange of a Fund may also generate a tax liability unless your
account is tax-exempt. There are two types of tax liabilities you may incur from
a sale or exchange. (1) Short-term capital gains will apply if you sell or
exchange a Fund up to 12 months after buying it. (2) Long-term capital gains
will apply to Funds sold or exchanged after 12 months. The table below describes
the tax rates for each.

TAXES ON TRANSACTIONS
--------------------------------------------------------------------------------
The tax status of your distributions for each calendar year will be detailed in
your annual tax statement from the Fund. Because everyone's tax situation is
unique, always consult your tax professional about federal, state and local tax
consequences.

--------------------------------------------------------------------------------
TAXABILITY OF DISTRIBUTIONS

Type of Tax rate for Tax rate for
Distribution 15% bracket 28% bracket
--------------------------------------------------------------------------------

Dividends Ordinary income rate Ordinary income rate

Short-term
Capital Gains Ordinary income rate Ordinary income rate

Long-term
Capital Gains 10% 20%

71
<PAGE>
[LOGO OMITTED] FINANCIAL HIGHLIGHTS
A Fund's financial highlights help you understand its recent financial
performance. The total returns represent the rate that you would have earned or
lost on an investment in the Fund, assuming you reinvested all Fund
distributions. PricewaterhouseCoopers LLP has audited the information contained
in these financial highlights. Its report and the Fund's financial statements
are included in the Fund's Annual Report to Shareholders, which is available,
free of charge, upon request.

FOR A SHARE OUTSTANDING THROUGHOUT EACH FISCAL YEAR OR PERIOD ENDED MARCH 31:
<TABLE>
<CAPTION>

Net Realized and Net
Asset Net Unrealized Distributions Distributions Asset
Value Investment Gains or from Net from Value
Beginning Income (Losses) Investment Capital End
of Period (Loss) on Securities Income Gains of Period
-----------------------------------------------------------------------------------------

----------------
PBHG GROWTH FUND
----------------
<S> <C> <C> <C> <C> <C> <C>
PBHG CLASS
2000 2 $24.51 $(0.33) $36.14 -- $(1.59) $58.73
1999 2 28.23 (0.24) (3.48) -- -- 24.51
1998 21.06 (0.26) 7.43 -- -- 28.23
1997 25.30 (0.10) (4.14) -- -- 21.06
1996 16.70 (0.06) 8.66 -- -- 25.30

PBHG ADVISOR CLASS
2000 2 $24.35 $(0.42) $35.85 -- $(1.59) $58.19
1999 2 28.12 (0.30) (3.47) -- -- 24.35
1998 21.03 (0.15) 7.24 -- -- 28.12
1997 1 25.42 (0.06) (4.33) -- -- 21.03
-------------------------
PBHG EMERGING GROWTH FUND
-------------------------
PBHG CLASS
2000 2 $20.61 $(0.21) $20.76 -- $(1.16) $40.00
1999 2 25.83 (0.18) (4.96) -- (0.08) 20.61
1998 19.26 (0.24) 6.81 -- -- 25.83
1997 23.07 (0.11) (2.87) -- (0.83) 19.26
1996 16.10 (0.07) 8.03 -- (0.99) 23.07

--------------------------
PBHG LARGE CAP GROWTH FUND
--------------------------
PBHG CLASS
2000 2 $24.57 $(0.23) $21.32 -- $(7.29) $38.37
1999 2 22.69 (0.16) 3.53 -- (1.49) 24.57
1998 14.26 (0.19) 8.82 -- (0.20) 22.69
1997 14.53 (0.05) (0.21) -- (0.01) 14.26
1996 4 10.00 (0.03) 4.97 -- (0.41) 14.53

-----------------------
PBHG SELECT EQUITY FUND
-----------------------
PBHG CLASS
2000 2 $25.93 $(0.34) $58.71 -- $(6.49) $77.81
1999 2 24.15 (0.21) 1.99 -- -- 25.93
1998 15.91 (0.44) 8.68 -- -- 24.15
1997 17.27 (0.13) (1.03) -- (0.20) 15.91
1996 4 10.00 (0.05) 7.68 -- (0.36) 17.27
</TABLE>

72
<PAGE>

----------------
PBHG GROWTH FUND
----------------
<S> <C> <C> <C> <C> <C> <C> <C>
PBHG CLASS
2000 2 148.57% $6,465,234 1.23% (0.90)% 1.23% (0.90)% 107.73%
1999 2 (13.18)% 3,228,740 1.32% (0.99)% 1.32% (0.99)% 80.51%
1998 34.05 % 5,338,380 1.26% (0.74)% 1.26% (0.74)% 94.21%
1997 (16.76)% 4,634,138 1.25% (0.69)% 1.25% (0.69)% 64.89%
1996 51.50 % 3,298,666 1.48% (0.79)% 1.48% (0.79)% 44.64%

PBHG ADVISOR CLASS
2000 2 147.98% $143,937 1.48% (1.15)% 1.48% (1.15)% 107.73%
1999 2 (13.41)% 66,235 1.57% (1.24)% 1.57% (1.24)% 80.51%
1998 33.71 % 89,227 1.51% (1.02)% 1.51% (1.02)% 94.21%
1997 1 (17.27)%+ 12,991 1.53%* (1.11)%* 1.53%* (1.11)%* 64.89%
-------------------------
PBHG EMERGING GROWTH FUND
-------------------------
PBHG CLASS
2000 2 101.33% $1,336,938 1.24% (0.76)% 1.24% (0.76)% 141.81%
1999 2 (19.91)% 736,008 1.34% (0.80)% 1.34% (0.80)% 101.53%
1998 34.11 % 1,404,157 1.27% (0.80)% 1.27% (0.80)% 95.21%
1997 (13.71)% 1,195,620 1.28% (0.36)% 1.28% (0.36)% 47.75%
1996 50.16 % 689,705 1.47% (0.42)% 1.47% (0.42)% 97.05%

--------------------------
PBHG LARGE CAP GROWTH FUND
--------------------------
PBHG CLASS
2000 2 98.60% $256,965 1.17% (0.79)% 1.17% (0.79)% 184.36%
1999 2 15.90% 144,089 1.25% (0.71)% 1.25% (0.71)% 46.16%
1998 60.80 % 145,662 1.22% (0.79)% 1.22% (0.79)% 46.56%
1997 (1.77)% 119,971 1.23% (0.47)% 1.23% (0.47)% 51.70%
1996 4 50.47 %* 53,759 1.50%* (0.66)%* 2.07%* (1.23)%* 116.75%

-----------------------
PBHG SELECT EQUITY FUND
-----------------------
PBHG CLASS
2000 2 240.82% $1,691,298 1.18% (0.68)% 1.18% (0.68)% 200.56%
1999 2 7.37% 235,904 1.34% (0.90)% 1.34% (0.90)% 56.59%
1998 51.79 % 336,076 1.35% (1.15)% 1.35% (1.15)% 72.16%
1997 (6.94)% 372,486 1.26% (0.76)% 1.26% (0.76)% 71.70%
1996 4 77.75 %* 202,796 1.50%* (0.74)%* 1.73%* (0.97)%* 206.22%
</TABLE>

--------------------------------------------------------------------------------
73
<PAGE>

FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

---------------------
PBHG CORE GROWTH FUND
---------------------
<S> <C> <C> <C> <C> <C> <C>
PBHG Class
2000 2 $14.06 $(0.20) $16.39 -- -- $30.25
1999 2 13.53 (0.14) 0.67 -- -- 14.06
1998 10.34 (0.33) 3.52 -- -- 13.53
1997 11.82 (0.09) (1.39) -- -- 10.34
1996 3 10.00 -- 1.82 -- -- 11.82

-----------------
PBHG LIMITED FUND
-----------------
PBHG CLASS
2000 2 $11.95 $(0.12) $15.20 -- $(3.92) $23.11
1999 2 14.08 (0.10) (1.45) -- (0.58) 11.95
1998 9.05 (0.10) 5.53 -- (0.40) 14.08
1997 6 10.00 0.02 (0.93) $(0.03) (0.01) 9.05

----------------------
PBHG LARGE CAP 20 FUND
----------------------
PBHG CLASS
2000 2 $24.10 $(0.25) $26.26 -- $(5.77) $44.34
1999 2 15.98 (0.12) 8.46 -- (0.22) 24.10
1998 9.25 (0.07) 6.80 -- -- 15.98
1997 7 10.00 (0.01) (0.73) $(0.01) -- 9.25

---------------------------
PBHG NEW OPPORTUNITIES FUND
---------------------------
PBHG CLASS
2000 2 $16.47 $(0.71) $85.60 -- $(3.17) $98.19
1999 10 13.52 (0.01) 2.96 -- -- 16.47

-------------------------
PBHG LARGE CAP VALUE FUND
-------------------------
PBHG CLASS
2000 $13.85 $0.12 $1.78 $(0.08) $(3.70) $11.97
1999 13.01 0.08 2.45 (0.10) (1.59) 13.85
1998 10.11 0.02 3.84 (0.06) (0.90) 13.01
1997 8 10.00 0.02 0.09 -- -- 10.11
-----------------------
PBHG MID-CAP VALUE FUND
-----------------------
PBHG CLASS
2000 2 $15.09 $(0.02) $5.03 -- $(6.28) $13.82
1999 15.30 -- 0.92 -- (1.13) 15.09
1998 9 10.00 (0.01) 6.00 -- (0.69) 15.30

-------------------------
PBHG SMALL CAP VALUE FUND
-------------------------
PBHG CLASS
2000 2 $11.38 $(0.08) $7.45 -- -- $18.75
1999 2 15.38 (0.09) (3.06) -- $(0.85) 11.38
1998 9 10.00 (0.03) 6.15 -- (0.74) 15.38
</TABLE>

74
<PAGE>

---------------------
PBHG CORE GROWTH FUND
---------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PBHG Class
2000 2 115.15% $166,099 1.33% (1.02)% 1.33% (1.02)% 312.32%
1999 2 3.92% 86,485 1.45% (1.16)% 1.45% (1.16)% 120.93%
1998 30.85 % 165,510 1.35% (1.07)% 1.35% (1.07)% 72.78%
1997 (12.52)% 283,995 1.36% (0.77)% 1.36% (0.77)% 46.75%
1996 3 18.20 %+ 31,092 1.50%* (0.18)%* 2.92%* (1.60)%* 17.00%

-----------------
PBHG LIMITED FUND
-----------------
PBHG CLASS
2000 2 137.27% $155,130 1.32% (0.76)% 1.32% (0.76)% 107.78%
1999 2 (11.01)% 108,011 1.40% (0.81)% 1.40% (0.81)% 111.07%
1998 60.78 % 178,168 1.40% (0.72)% 1.40% (0.72)% 81.36%
1997 6 (9.15)%+ 137,520 1.42%* 0.33%* 1.42%* 0.33%* 75.46%

----------------------
PBHG LARGE CAP 20 FUND
----------------------
PBHG CLASS
2000 2 117.88% $1,083,460 1.23% (0.82)% 1.23% (0.82)% 147.35%
1999 2 52.52% 603,077 1.27% (0.64)% 1.27% (0.64)% 76.41%
1998 72.76% 192,631 1.41% (0.79)% 1.41% (0.79)% 98.27%
1997 7 (7.40)%+ 69,819 1.50%* 0.17 %* 1.50%* 0.17 %* 43.98%

---------------------------
PBHG NEW OPPORTUNITIES FUND
---------------------------
PBHG CLASS
2000 2 529.94% $355,600 1.34% (1.15)% 1.34% (1.15)% 668.31%
1999 10 21.82%+ 16,742 1.50%* (0.80)%* 1.59%* (0.89)%* 109.43%

-------------------------
PBHG LARGE CAP VALUE FUND
-------------------------
PBHG CLASS
2000 14.25% $32,922 1.11% 0.71% 1.11% 0.71% 1018.03%
1999 20.29% 44,922 1.01% 0.59% 1.01% 0.59% 568.20%
1998 39.47% 76,476 1.17% 0.98% 1.17% 0.98% 403.59%
1997 8 1.10%+ 26,262 1.50%* 1.61%* 1.74%* 1.37%* 0.00%
-----------------------
PBHG MID-CAP VALUE FUND
-----------------------
PBHG CLASS
2000 2 42.21% $60,690 1.44% (0.15)% 1.44% (0.15)% 742.57%
1999 8.35% 56,981 1.33% 0.01% 1.33% 0.01% 732.73%
1998 9 61.06%+ 54,173 1.47%* (0.17)%* 1.47%* (0.17)%* 399.96%

-------------------------
PBHG SMALL CAP VALUE FUND
-------------------------
PBHG CLASS
2000 2 64.76% $92,634 1.50% (0.56)% 1.58% (0.64)% 352.85%
1999 2 (20.93)% 69,787 1.48% (0.71)% 1.48% (0.71)% 273.87%
1998 9 62.27%+ 125,834 1.49%* (0.52)%* 1.49%* (0.52)%* 263.04%
</TABLE>

75
<PAGE>

FINANCIAL HIGHLIGHTS (CONCLUDED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

-----------------------
PBHG FOCUSED VALUE FUND
-----------------------
<S> <C> <C> <C> <C> <C> <C>
PBHG CLASS
2000 2 $10.46 $(0.01) $8.93 -- $(0.87) $18.51
1999 10 10.32 -- 0.14 -- -- 10.46

-----------------------
PBHG INTERNATIONAL FUND
-----------------------
2000 2 $11.60 $(0.08) $2.30 -- $(0.88) $12.94
1999 11 12.04 (0.14) 0.29 $(0.17) (0.42) 11.60
1998 11.26 (0.03) 1.83 -- (1.02) 12.04
1997 10.55 -- 0.71 -- -- 11.26
1996 9.13 (0.04) 1.46 -- -- 10.55

-----------------------
PBHG CASH RESERVES FUND
-----------------------
PBHG CLASS
2000 $1.00 $0.05 -- $(0.05) -- $1.00
1999 1.00 0.05 -- (0.05) -- 1.00
1998 1.00 0.05 -- (0.05) -- 1.00
1997 1.00 0.05 -- (0.05) -- 1.00
1996 4 1.00 0.05 -- (0.05) -- 1.00

-------------------------------------
PBHG TECHNOLOGY & COMMUNICATIONS FUND
-------------------------------------
PBHG CLASS
2000 2 $27.59 $(0.54) $62.84 -- $(4.87) $85.02
1999 2 19.27 (0.19) 8.80 -- (0.29) 27.59
1998 14.63 (0.23) 5.72 -- (0.85) 19.27
1997 12.48 (0.05) 2.55 -- (0.35) 14.63
1996 5 10.00 (0.02) 2.50 -- -- 12.48

---------------------------------
PBHG STRATEGIC SMALL COMPANY FUND
---------------------------------
PBHG CLASS

2000 2 $10.54 $(0.13) $10.18 -- $(1.25) $19.34
1999 2 12.89 (0.11) (1.78) -- $(0.46) 10.54
1998 8.86 (0.11) 5.01 -- (0.87) 12.89
1997 8 10.00 -- (1.14) -- -- 8.86
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Ratio
Ratio of Net
of Net Ratio Investment
Net Investment of Expenses Income (Loss)
Assets Ratio Income to Average to Average
End of Expenses (Loss) Net Assets Net Assets Portfolio
Total of Period to Average to Average (Excluding (Excluding Turnover
Return (000) Net Assets Net Assets Waivers) Waivers) Rate
--------------------------------------------------------------------------------------------
-----------------------
PBHG FOCUSED VALUE FUND
-----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PBHG CLASS
2000 2 89.17% $22,556 1.50% (0.10)% 1.55% (0.15)% 853.36%
1999 10 1.36%+ 3,658 1.50%* 0.09%* 2.67%* (1.08)%* 173.09%

-----------------------
PBHG INTERNATIONAL FUND
-----------------------
2000 2 19.29% $11,382 2.00% (0.62)% 2.00% (0.62)% 90.17%
1999 11 1.42% 12,220 1.97% (0.35)% 1.97% (0.35)% 59.74%
1998 17.46% 20,905 2.00% (0.13)% 2.00% (0.13)% 85.94%
1997 6.73% 21,265 2.22% (0.32)% 2.22% (0.32)% 74.82%
1996 15.55% 11,243 2.25% (0.22)% 3.03% (1.00)% 140.26%

-----------------------
PBHG CASH RESERVES FUND
-----------------------
PBHG CLASS
2000 4.81% $579,458 0.69% 4.78% 0.69% 4.78% n/a
1999 4.84% 144,239 0.70% 4.72% 0.70% 4.72% n/a
1998 5.13% 117,574 0.68% 5.00% 0.68% 5.00% n/a
1997 4.89% 341,576 0.68% 4.79% 0.68% 4.79% n/a
1996 4 5.24%* 99,001 0.70%* 5.05%* 0.88%* 4.87%* n/a

-------------------------------------
PBHG TECHNOLOGY & COMMUNICATIONS FUND
-------------------------------------
PBHG CLASS
2000 2 233.99% $3,843,946 1.19% (0.96)% 1.19% (0.96)% 362.38%
1999 2 45.33% 536,405 1.34% (0.96)% 1.34% (0.96)% 276.07%
1998 38.29% 495,697 1.30% (0.91)% 1.30% (0.91)% 259.89%
1997 19.59% 493,156 1.33% (0.59)% 1.33% (0.59)% 289.91%
1996 5 24.82%+ 61,772 1.50%* (0.50)%* 2.00%* (1.00)%* 125.99%

---------------------------------
PBHG STRATEGIC SMALL COMPANY FUND
---------------------------------
PBHG CLASS

2000 2 99.74% $75,225 1.50% (0.93)% 1.55% (0.98)% 240.55%
1999 2 (14.52)% 48,029 1.50% (0.97)% 1.54% (1.01)% 140.89%
1998 56.54 % 111,983 1.45% (0.92)% 1.45% (0.92)% 215.46%
1997 8 (11.40)%+ 61,382 1.50%* 0.18%* 1.50%* 0.18%* 88.88%

<FN>
* Annualized
+ Total returns and portfolio turnover have not been annualized.
1 The PBHG Growth Fund Advisor Class commenced operations on August 16, 1996.
2 Per share calculations were performed using average shares for the period.
3 The PBHG Core Growth Fund commenced operations on December 29, 1995.
4 The PBHG Large Cap Growth Fund, the PBHG Select Equity Fund, and the PBHG
Cash Reserves Fund commenced operations on April 5, 1995.
5 The PBHG Technology & Communications Fund commenced operations on September
29, 1995.
6 The PBHG Limited Fund commenced operations on June 28, 1996.
7 The PBHG Large Cap 20 Fund commenced operations on November 29, 1996.
8 The PBHG Large Cap Value Fund and the PBHG Strategic Small Company Fund
commenced operations on December 31, 1996.
9 The PBHG Mid-Cap Value and the PBHG Small Cap Value Funds commenced
operations April 30, 1997.
10 The PBHG New Opportunities Fund and the PBHG Focused Value Fund commenced
operations on February 12, 1999.
11 Distributions from net investment income include $0.1659 of distribution in
excess of net investment income.
</FN>
</TABLE>

Amounts designated as "--" are either $0 or have been rounded to $0.

<PAGE>
FOR MORE INFORMATION
--------------------------------------------------------------------------------
[LOGO OMITTED]
THE PBHG FUNDS, INC.
--------------------------------------------------------------------------------
SEC FILE NUMBER 811-04391

For investors who want more information about the funds, the following documents
are available free upon request:

STATEMENT OF ADDITIONAL INFORMATION (SAI)
Provides more information about the funds and is incorporated into this
Prospectus by reference.

ANNUAL/SEMI-ANNUAL REPORTS
Provides financial and performance information about the Funds and their
investments and a discussion of the market conditions and investment strategies
that significantly affected each Fund's performance during the last fiscal year
or half-year.

TO OBTAIN INFORMATION
--------------------------------------------------------------------------------
BY TELEPHONE
Call 1-800-433-0051

BY MAIL
The PBHG Funds, Inc.
P.O. Box 219534
Kansas City, MO 64121-9534

VIA THE INTERNET
www.pbhgfunds.com

Text-only versions and other information about The PBHG Funds, Inc. are
available on the EDGAR database on the SEC's Internet site at
http://www.sec.gov, or by visiting the SEC's Public Reference Room in
Washington, D.C. (1-202-942-8090). Copies of this information may be obtained,
for a duplicating fee, by sending your written request to the SEC's Public
Reference Section, Washington, D.C. 20549-0102, or by electronic request at
[email protected].

INVESTMENT ADVISER
Pilgrim Baxter & Associates, Ltd.

DISTRIBUTOR
SEI Investments Distribution Co.

PBHG Prospectus -- 7/00