THE PBHG FUNDS, INC.
--------------------
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[LOGO OMITTED] ANNUAL REPORT
MARCH 31, 2000
<PAGE>
THE PBHG FUNDS, INC.
PBHG GROWTH FUNDS
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 VALUE FUNDS
PBHG Large Cap Value Fund
PBHG Mid-Cap Value Fund
PBHG Small Cap Value Fund
PBHG Focused Value Fund
PBHG SPECIALTY FUNDS
PBHG International Fund
PBHG Cash Reserves Fund
PBHG Technology & Communications Fund
PBHG Strategic Small Company Fund
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THE PBHG FUNDS, INC.
TABLE OF CONTENTS
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Message to Shareholders 3
PBHG Portfolio Managers 4
Management Discussion and Analysis 7
PBHG GROWTH FUNDS
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PBHG Growth Fund 8
PBHG Emerging Growth Fund 10
PBHG Large Cap Growth Fund 12
PBHG Select Equity Fund 14
PBHG Core Growth Fund 16
PBHG Limited Fund 18
PBHG Large Cap 20 Fund 20
PBHG New Opportunities Fund 22
PBHG VALUE FUNDS
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PBHG Large Cap Value Fund 24
PBHG Mid-Cap Value Fund 26
PBHG Small Cap Value Fund 28
PBHG Focused Value Fund 30
PBHG SPECIALTY FUNDS
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PBHG International Fund 32
PBHG Cash Reserves Fund 34
PBHG Technology & Communications Fund 36
PBHG Strategic Small Company Fund 38
Report of Independent Accountants 40
Statements of Net Assets/Schedules
of Investments 41
Statements of Asset and Liabilities 82
Statements of Operations 84
Statements of Changes in Net Assets 86
Financial Highlights 91
Notes to Financial Statements 94
Notice to Shareholders 98
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THE PBHG FUNDS, INC.
MESSAGE TO SHAREHOLDERS
DEAR FELLOW SHAREHOLDERS:
We are pleased to send you The PBHG Funds, Inc. Annual Report for the fiscal
year ended March 31, 2000. This year was one of great challenge and success for
everyone at PBHG -- from our portfolio managers to our shareholder services
representatives.
PERFORMANCE RESULTS
In a rapidly changing economic and market environment, we believe our
portfolio managers were very successful in identifying and investing in
companies with strong growth potential. For the fiscal year ended March 31,
2000, eleven of our fourteen domestic equity funds outperformed their respective
benchmark and their mutual fund peers as defined and measured by Lipper, Inc. We
encourage you to read the performance information for each of the PBHG Funds
contained in this report. However, it is important to understand that these
outstanding results were generated in an unusually strong market environment for
the type of securities in which we seek to invest and that they are unlikely to
be sustained. We believe that it is equally important for shareholders to be
sure of their personal investment and savings goals and make sure they have
chosen investments that will help them to meet those goals over the long term.
SHAREHOLDER SERVICES
Our extraordinary investment performance results created an extremely
challenging environment for our shareholder service center as the volume of
shareholder calls from both longtime shareholders and those new to PBHG
increased dramatically. While we were successful in anticipating the upward
trends in volumes and increasing staff to meet those trends, our increase was
not sufficient to maintain the standards that you and we expect from PBHG. While
there is no excuse for our service levels being diminished, it was impossible
for us to predict the more than 400% increase in call, transaction and e-mail
volumes that we experienced in the first quarter of 2000. We apologize for any
inconvenience that this situation may have caused you over the last few weeks,
but we are confident that we will once again be meeting your service level
expectations by the time you read this letter.
In addition to increasing our staff, we are in the process of adding
additional features and functionality to PBHG FundLink (our automated telephonic
shareholder service system) and our web site, www.pbhgfunds.com. These features
will make it easier than ever for you to obtain information about your account.
Enclosed with this report is a brochure describing the new functionality of PBHG
FundLink.
The newest version of PBHG FundLink, which is scheduled for release in early
June, will feature voice recognition technology. This means that you will be
able to verbally instruct the system to provide information or perform
transactions rather than pushing the buttons on your phone to navigate through
menu options. The "Your Account" section of our web site will include new
transaction capabilities and be upgraded to make navigation simpler. We are
extremely pleased to provide these services so that you can conduct many of your
routine transactions at a time most convenient for you.
NEW PBHG GLOBAL TECHNOLOGY & COMMUNICATIONS FUND
To expand and enhance the investment choices available to our investors, PBHG
has filed a registration statement with the Securities and Exchange Commission
for a new fund, the PBHG Global Technology & Communications Fund. This fund will
seek to provide investors with long-term growth of capital and invest in common
stocks and American Depositary Receipts of U.S. and non-U.S. companies doing
business in the technology and communications sectors of the world's markets.
This fund is an expansion of the technology sector expertise of Pilgrim Baxter &
Associates, Ltd. into the global equity markets. For more information on this
fund, please call 1-800-433-0051 and speak with a Shareholder Services
Representative.
As always, we thank you for your continued confidence in the PBHG Funds, and
we look forward to serving your investment needs for many years to come.
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Sincerely,
[SIGNATURE OMITTED]
Harold J. Baxter
CHAIRMAN
THE PBHG FUNDS, INC.
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THE PBHG FUNDS, INC.
PBHG PORTFOLIO MANAGERS
Gary L. Pilgrim, CFA
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MANAGER
PBHG Growth Fund
PBHG New Opportunities Fund
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Gary L. Pilgrim is co-founder, Director, President and Chief Investment Officer
of Pilgrim Baxter & Associates, Ltd. He is also the President of The PBHG Funds,
Inc. Gary has managed the PBHG Growth Fund since its inception in 1985. In
addition, he is responsible for overseeing the investment management of Pilgrim
Baxter's institutional client portfolios, as well as the PBHG mutual funds
advised by Pilgrim Baxter. He is also responsible for overseeing the firm's
day-to-day securities trading and account control operations.
Throughout his 30-year career, Gary has specialized in growth stock
investing. He began his career at Philadelphia National Bank in the late 1960's,
starting as an equity analyst, later becoming Director of Research and then the
Chief Investment Officer of that bank's Trust Department. Gary holds a B.S.B.A
from the University of Tulsa and an M.B.A. from Drexel University. He is a
Chartered Financial Analyst and a member of the Financial Analysts of
Philadelphia, Inc.
Effective April 24, 2000, Gary Pilgrim also manages the PBHG New
Opportunities Fund.
Jeffrey A. Wrona, CFA
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MANAGER
BHG Technology & Communications Fund
PBHG Core Growth Fund
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Jeffrey A. Wrona is the manager of the PBHG Technology & Communications Fund and
PBHG Core Growth Fund. In addition, he manages small- and mid-cap growth
portfolios for clients of Pilgrim Baxter & Associates, Ltd. Prior to joining the
firm, Jeff was with Munder Capital Management, where he was a Senior Portfolio
Manager, as well as co-founder of Munder's mid-cap growth product and the Munder
NetNet Fund. His prior industry experience includes securities analysis at
Drexel Burnham Lambert. Jeff began his business career as a product design
engineer with Ford Motor Company. He holds a bachelor's degree in engineering
from the University of Michigan and an M.B.A. from the University of Michigan.
Jeff is a Chartered Financial Analyst.
Jerome J. Heppelmann, CF
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MANAGER
PBHG Strategic Small Company Fund
PBHG Small Cap Value Fund
PBHG Mid-Cap Value Fund
PBHG Focused Value Fund
CO-MANAGER
PBHG Strategic Small Company Fund
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Jerome J. Heppelmann concentrates on our small cap and mid-cap value funds. His
involvement in the management of these equity strategies began in 1997. He
continues to follow the disciplined value-oriented investment process that has
guided the PBHG Strategic Small Company, PBHG Small Cap Value, PBHG Mid-Cap
Value and PBHG Focused Value funds since their inception. Jerome has been with
Pilgrim Baxter & Associates since 1994 and has held a number of roles within the
firm prior to joining the value investment team. Prior to joining Pilgrim Baxter
& Associates, Jerome was a member of the Investment Advisory Group within SEI
Investments servicing investment management clients. Jerome holds a Chartered
Financial Analyst designation and is a member of the Financial Analysts of
Philadelphia, Inc. He holds a Bachelor of Business Administration with a
concentration in Finance from The University of Notre Dame.
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THE PBHG FUNDS, INC.
PBHG PORTFOLIO MANAGERS
Michael S. Sutton, CFA
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MANAGER
PBHG Large Cap 20 Fund
PBHG Large Cap Growth Fund
PBHG Select Equity Fund
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Michael S. Sutton is responsible for managing the PBHG Large Cap 20 and PBHG
Large Cap Growth Funds . In addition, Michael manages large cap growth
portfolios and researches large cap growth stocks. Michael joined Pilgrim Baxter
& Associates from Loomis, Sayles & Co., where he worked as a portfolio manager
for seven years. There, he managed institutional mid and large cap growth
portfolios. His prior industry experience includes portfolio management at
Stein, Roe & Farnham. While there, he managed portfolios in a large cap growth
style. Michael received his BS in Finance, MBA and JD from Florida State
University and is a Chartered Financial Analyst and a Chartered Investment
Counselor.
Effective April 24, 2000, Michael Sutton also manages the PBHG Select
Equity Fund.
Erin A. Piner
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MANAGER
PBHG Limited Fund
PBHG Emerging Growth Fund
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Erin A. Piner manages the PBHG Limited Fund and the PBHG Emerging Growth Fund
and focuses her research on the smallest companies in the Pilgrim Baxter
universe. In addition, she manages micro-cap growth portfolios for clients of
Pilgrim Baxter & Associates, Ltd. Prior to joining the firm in 1995, Erin worked
in the private client groups of Kidder, Peabody & Co., Inc. and Paine Webber,
Inc. (subsequent to its merger with Kidder, Peabody). Erin holds a B.A. from the
College of the Holy Cross. She is currently a candidate in the Chartered
Financial Analyst program.
Raymond J. McCaffrey, CFA
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MANAGER
PBHG Large Cap Value Fund
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Raymond J. McCaffrey is a portfolio manager concentrating on our large cap value
discipline. Ray joined Pilgrim Baxter Value Investors in 1997 from Pitcairn
Trust Company, where he was Vice President, Technology Analyst & Portfolio
Manager responsible for the management of a concentrated equity portfolio and
for security analysis and research of the technology sector. His ten years of
investment experience also include investment analyst positions with Cypress
Capital Management, Independence Capital Management and Fidelity Bank. Ray is an
honors graduate of Villanova University with a BS in Economics and received his
MBA from Carnegie Mellon University with a concentration in Finance and
Investments. He is a Chartered Financial Analyst.
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THE PBHG FUNDS, INC.
PBHG PORTFOLIO MANAGERS
James M. Smith, CFA
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CO-MANAGER
PBHG Strategic Small Company Fund
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James M. Smith is the manager of the Growth portion of the PBHG Strategic Small
Company Fund. In addition, he manages small-cap growth portfolios for clients of
Pilgrim Baxter & Associates, Ltd. Jim possesses over twenty-five years of
investment experience in equity portfolio management and research. Prior to
joining Pilgrim Baxter, he managed a small-cap growth equity mutual fund for
Selected Financial Services. His prior service also includes employment with
Sears Investment Management Company as a Vice President responsible for emerging
growth and venture capital portfolios. Jim is a graduate of Washington & Lee
University, where he was inducted into Phi Beta Kappa. He also holds an M.B.A.
from Northwestern University. Jim is a Chartered Financial Analyst.
Andrew Preston, MSI
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MANAGER
PBHG International Fund
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Andrew Preston is the manager of the PBHG International Fund. He served as the
Fund's co-manager from 1995 through 1998. In 1985, he joined Murray Johnstone
International Limited, a registered investment adviser located in Glasgow,
Scotland and the investment sub-advisor for the PBHG International Fund. Murray
Johnstone is a wholly-owned subsidiary of Murray Johnstone Holdings Limited,
which together have over $7 billion in assets under management for institutional
clients worldwide. Murray Johnstone Holdings Limited, with its predecessors, has
been in business since 1907.
Andrew currently serves as Portfolio Manager and Director (since 1993) of
Murray Johnstone International Limited. He has managed investments in the United
Kingdom, the United States, Japan and Southeast Asia. Andrew holds a B.A. from
the University of Melbourne, where he majored in Economics and Far Eastern
Languages (Chinese and Japanese) and Culture.
John C. Keogh
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MANAGER
PBHG Cash Reserves Fund
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John Keogh is a Senior Vice President and Partner at Wellington Management
Company, LLP, the investment sub-adviser for the PBHG Cash Reserves Fund.
Wellington is an investment management firm servicing public mutual funds,
employee benefit plans, endowments, foundations, and other institutions and
individuals. As of March 31, 2000, it had discretionary management authority
over $248 billion of assets. Wellington and its predecessor organizations have
provided investment advisory services to investment companies since 1933.
John is responsible for money market and other short duration portfolios at
Wellington, managing approximately $23 billion in this asset class. He is a
member of Wellington's Fixed Income Review Group and he chairs the firm's Short
Duration Bond Strategy Group, which develops guidelines for their portfolio
managers. John has the distinction of managing the first dollar-denominated
money market fund ever offered by a Japanese entity. Prior to joining Wellington
in 1983, he worked in the investment division of Connecticut National Bank. John
holds a B.A. in Economics from Tufts University.
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THE PBHG FUNDS, INC.
MANAGEMENT DISCUSSION AND ANALYSIS
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DEAR FELLOW SHAREHOLDERS:
Despite significant events that had the potential to cause the markets to
perform poorly, the fiscal year ended March 31, 2000 proved to be more rewarding
to our shareholders than any other in the almost 15 year history of The PBHG
Funds, Inc. Among these "market torpedo" was investor and media preoccupation
with the potential computer problems associated with the change over to the year
2000 or "Y2K Problem." Although this issue was a serious global concern, it was
addressed appropriately by all industries and had no major impact on the ability
of the world's computer systems to function properly. The Federal Reserve's
determination to raise interest rates to maintain steady growth without high
levels of inflation was certainly another significant market event. However, the
United States economy's robust growth, combined with low inflation, low
unemployment and rising corporate earnings, provided an ideal environment for
market advances.
While the market's advance during the fiscal year was led in large part by
technology, smaller capitalization stocks outperformed those of their larger
counterparts after two years of being almost completely ignored by investors.
The Russell 2000, a commonly used measure of the performance of small cap
stocks, returned 37.29% for the year ended March 31, 2000 while the S&P 500
returned 17.94% for the same period. Growth stocks outperformed value stocks
even more significantly with the Russell 2000 Growth Index returning 59.06% in
comparison to the Russell 2000 Value Index return of 13.24% for the year ended
March 31, 2000. No summary of market results for the year ended March 31, 2000
would be complete without mentioning the 86.08% return of the Nasdaq Composite
Index or the returns of more concentrated technology indexes like the Pacific
Stock Exchange High Technology Index-133.68% or the Soundview Technology
Index-170.09%.
The performance of the PBHG Funds for the fiscal year moved in step with these
major market averages. Although nearly all of our 14 domestic equity funds
significantly outperformed their respective benchmarks, our growth funds, which
are naturally drawn to the higher growth companies found in the technology
sector, outperformed our value funds. Our best performing growth funds were
those with the greatest exposure to the technology sector. The PBHG New
Opportunities Fund surged an unprecedented 529.94%, the PBHG Select Equity Fund
returned 240.82% and the PBHG Growth Fund advanced 148.57%. The technology
concentrated PBHG Technology & Communications Fund returned 233.99%. The returns
of the PBHG value funds were in direct correlation to their market
capitalization with the PBHG Small Cap Value Fund leading the group with a
64.76% return followed by the PBHG Mid-Cap Value Fund at 42.21% and the PBHG
Large Cap Value Fund at 14.25%. The more flexible and concentrated PBHG Focused
Value Fund returned 89.17%. While we are extremely proud of all the investment
results mentioned above, we would like to remind you that they were generated in
an unusually strong market environment and will likely not be sustainable.
The market returns of the past year should serve as another reminder that
investors should stay focused on building portfolios and investment programs
that provide diversification and are geared towards meeting their long-term
investment objectives. There were many reports of investors that positioned
their portfolios in cash because of the uncertainty regarding Y2K only to miss
the significant market appreciation that occurred in fourth quarter of 1999.
While a long-term outlook can be difficult to maintain in periods of short-term
market volatility, it has generally been rewarded. We truly believe that "time
in the market" is more important than "timing the market."
Sincerely,
[SIGNATURE OMITTED]
Gary L. Pilgrim
PRESIDENT AND CHIEF INVESTMENT OFFICER
PILGRIM BAXTER & ASSOCIATES, LTD.
7
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<PAGE>
THE PBHG FUNDS, INC.
PBHG GROWTH FUND
PORTFOLIO PROFILE
OBJECTIVE: Long-term capital appreciation.
INVESTS IN: Small to medium-sized growth companies.
STRATEGY: The PBHG Growth Fund seeks capital appreciation by investing primarily
in common stocks of small- and medium-sized U.S. growth companies. These
companies, in the opinion of Pilgrim Baxter, have an outlook for strong growth
in earnings and the potential for significant capital appreciation. The Fund is
aggressive and should be considered a long-term investment. The Fund is
currently making the majority of purchase selections in companies with market
capitalizations in the $1 billion to $10 billion range.
PERFORMANCE
For the year ended March 31, 2000, the Fund's total return was 148.6% versus
the Russell 2000 Growth Index return of 59.1%, the 97.8% average return of all
funds classified as midcap growth by Lipper, Inc. and the Russell Mid-Cap Growth
Index return of 77.2%. In contrast to last year's returns, which were negative
in three of the four quarters, this fiscal year had positive returns in each
quarter, topped by the December quarter. This quarter's return of 64.6% was, by
a wide margin, the largest in the Fund's fifty-seven quarter history. The
environment for most of the year was one of leadership by technology companies
and smaller growth companies. For example, both the PSE Technology Index and the
Soundview Technology Index were up in excess of 130%. By comparison, value
driven and large cap indexes were much less productive as shown by the S&P's
return of 17.9% and the fact that the various Russell value indexes were
contained within a return range of 4% to 13%.
Using the Russell 2000 Growth Index as a reference, the highest returns
during the year came from the areas of business equipment & services and
technology, capital goods and healthcare while consumer durables, non-durables
and services, raw materials and financial services were relatively weak. The
Fund's major overweightings in technology and business equipment and services
delivered the majority of the outperformance. These two sectors together
accounted for about 80% of the portfolio holdings on average during the year. We
had little or no exposure to the weakest performing sectors. For example, we
were very underweighted in financial services which struggled with a less then
accommodating interest rate environment during much of the year. As is the norm
for us, the weightings outcomes were arrived at by anticipating and staying with
those companies showing exceptional earnings results. The year was marked by
relatively few fundamental disappointments and a long list of companies that
exceeded earnings expectations while growing their businesses at very high
rates. While results aren't complete for the last quarter of the fiscal year,
the first three quarters showed portfolio companies growing at rates in the
55-80% range in both sales and earnings. The portfolio companies also
experienced a sharply declining number of negative earnings surprises as the
year progressed. In the final analyses, we believe these great earnings outcomes
more than explain our relatively good investment returns.
PORTFOLIO HIGHLIGHTS
With a portfolio return of 148.6%, there were obviously many great
performing stocks in the portfolio during the year. Stocks the Fund held for the
full fiscal year that produced above average returns included Check Point
Software, Applied Micro Circuits, Micromuse and SDL Inc. New positions that
performed particularly well included Redback Networks, E.Piphany, Ditech
Communications and Copper Mountain Networks. Each of these companies not only
delivered solid fundamental results during the year, but were involved in
technology and/or the internet in some way. A sample of investment bloopers
would include US Liquids, Consolidated Graphics, Navigant Consulting, Lason and
Engineering Animation. The common theme, as always, was earnings targets were
missed, dramatically lowering expectations going forward. As shareholders are
aware, we seldom continue to hold companies that miss their numbers and all of
the above were sold.
As we are writing this review, the market and the technology sector are
coming under intense selling pressure. With the huge outperformance of the
Nasdaq over the last year, driven very much by technology, one could certainly
argue that a setback was overdue. As much as we hate to give back performance,
the only real defensive option for an investor like ourselves is a heavy cash
position. Our strategy, however, is to always own a portfolio of the most
rapidly growing, quality companies and to accept the volatility that comes with
these types of companies and stay fully invested. We have never claimed any
market timing expertise and we don't believe that it is possible to consistently
add value by jumping in and out of the market. Our focus will continue to be on
individual stock selection as we attempt to add value by owning great growth
companies. As we work our way through this period, remember that many investors
sell stocks simply because they are going down. It is our experience that this
type of environment produces great opportunity to acquire high growth rate,
smaller companies much more easily than under normal circumstances. That will be
our strategy in the weeks ahead.
We thank you for your investment in the Fund.
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THE PBHG FUNDS, INC.
INVESTMENT FOCUS STYLE / MARKET CAPITALIZATION
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AVERAGE ANNUAL TOTAL RETURN1
AS OF MARCH 31, 2000
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
One Annualized Annualized Annualized Annualized
Year 3 Year 5 Year 10 Year Inception
Return Return Return Return to Date
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PBHG Growth Fund
-PBHG Class 2 148.57% 42.49% 29.54% 26.11% 23.23%
- ----------------------------------------------------------------------------------------
PBHG Growth Fund -
Advisor Class 3 147.98% 42.13% 29.31% 26.04% 23.15%
- ----------------------------------------------------------------------------------------
</TABLE>
COMPARISON OF CHANGE IN THE VALUE OF A
$10,000 INVESTMENT IN THE PBHG
GROWTH FUND, PBHG CLASS, VERSUS
THE RUSSELL 2000 GROWTH INDEX AND
THE LIPPER MID-CAP GROWTH FUNDS
AVERAGE
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PBHG Growth Fund, Russell 2000 Lipper Mid-Cap Growth
PBHG Class Growth Index(4) Funds Average(5)
12/31/85 $10000 $10000 $10000
1/31/86 10250 10228 10239
2/28/86 11080 10983 11002
3/31/86 11510 11482 11619
4/30/86 11640 11763 11819
5/31/86 12580 12194 12503
6/30/86 12680 12233 12698
7/31/86 11700 10918 11508
8/31/86 12380 11153 11989
9/30/86 11240 10245 10930
10/31/86 12193 10766 11593
11/30/86 12676 10718 11714
12/31/86 12394 10358 11411
1/31/87 14728 11691 12966
2/28/87 16509 12823 14219
3/31/87 16871 13175 14406
4/30/87 16911 12767 14215
5/31/87 17046 12677 14385
6/30/87 16508 12991 14441
7/31/87 16604 13302 14910
8/31/87 17548 13687 15591
9/30/87 17524 13413 15323
10/31/87 12898 8994 11048
11/30/87 11840 8399 10298
12/31/87 13832 9273 11677
1/31/88 13566 9454 11703
2/29/88 14814 10334 12599
3/31/88 14660 10888 12816
4/30/88 15011 11151 13050
5/31/88 14576 10783 12792
6/30/88 15684 11579 13731
7/31/88 14969 11363 13282
8/31/88 14099 10950 12745
9/30/88 14744 11260 13242
10/31/88 14449 11073 13040
11/30/88 14119 10642 12723
12/31/88 14780 11162 13310
1/31/89 15792 11638 14124
2/28/89 15553 11667 14047
3/31/89 15244 11991 14441
4/30/89 16467 12588 15394
5/31/89 18020 13191 16285
6/30/89 17004 12767 15748
7/31/89 18401 13365 16874
8/31/89 19177 13749 17464
9/30/89 19896 13907 17662
10/31/89 18852 13146 16863
11/30/89 18698 13263 17121
12/31/89 19109 13413 17284
1/31/90 17501 12029 15761
2/28/90 18537 12485 16278
3/31/90 19377 13057 17006
4/30/90 18948 12669 16637
5/31/90 21627 13799 18439
6/30/90 21823 13881 18557
7/31/90 20716 13250 17900
8/31/90 17984 11332 15641
9/30/90 15483 10259 14308
10/31/90 14787 9683 13879
11/30/90 16614 10574 15129
12/31/90 17266 11078 15897
1/31/91 19518 12118 17389
2/28/91 20782 13510 18834
3/31/91 22659 14462 20053
4/30/91 22284 14290 19754
5/31/91 23271 14980 20846
6/30/91 20664 13961 19506
7/31/91 22323 14593 20879
8/31/91 23449 15238 21848
9/30/91 23074 15467 21887
10/31/91 23745 16126 22728
11/30/91 22724 15285 21880
12/31/91 26179 16748 24871
1/31/92 27174 18064 25543
2/29/92 27447 18257 25893
3/31/92 25782 17207 24487
4/30/92 24862 16208 23341
5/31/92 24688 16171 23415
6/30/92 23544 15140 22357
7/31/92 23420 15615 23191
8/31/92 22649 15014 22623
9/30/92 23644 15433 23200
10/31/92 25061 16068 24199
11/30/92 28298 17568 26089
12/31/92 33612 18050 26971
1/31/93 33003 18274 27465
2/28/93 30891 17281 26147
3/31/93 34668 17726 27208
4/30/93 33868 17164 26501
5/31/93 37613 18193 28221
6/30/93 39822 18236 28593
7/31/93 40302 18418 28793
8/31/93 43375 19300 30437
9/30/93 47344 19938 31679
10/31/93 48145 20514 32009
11/30/93 46320 19684 30869
12/31/93 49312 20461 32212
1/31/94 51258 21006 33049
2/28/94 51777 20913 32977
3/31/94 47592 19629 31011
4/30/94 47884 19659 30931
5/31/94 45192 19218 30328
6/30/94 41591 18397 28841
7/31/94 42888 18659 29502
8/31/94 47657 20028 31620
9/30/94 49052 20112 31804
10/31/94 50577 20326 32621
11/30/94 49571 19504 31417
12/31/94 51654 19964 32055
1/31/95 49122 19557 31699
2/28/95 51849 20461 33100
3/31/95 54219 21058 34305
4/30/95 53667 21375 34442
5/31/95 54089 21655 35080
6/30/95 59998 23147 37900
7/31/95 67238 24951 41326
8/31/95 67141 25258 41917
9/30/95 70712 25779 43263
10/31/95 72660 24510 42103
11/30/95 75550 25591 43737
12/31/95 77660 26158 43964
1/31/96 74186 25942 43815
2/29/96 79673 27125 45830
3/31/96 82140 27662 46761
4/30/96 89056 29786 50529
5/31/96 93114 31314 52621
6/30/96 89348 29278 50353
7/31/96 80128 25704 44971
8/31/96 84218 27606 47831
9/30/96 91621 29027 51265
10/31/96 85192 27776 49450
11/30/96 87465 28548 50593
12/31/96 85290 29105 50390
1/31/97 85225 29832 52038
2/28/97 76102 28031 48713
3/31/97 68375 26052 45293
4/30/97 68667 25751 45257
5/31/97 77141 29621 50810
6/30/97 80420 30626 53167
7/31/97 85972 32195 57330
8/31/97 84153 33161 57485
9/30/97 90192 35808 61866
10/31/97 85160 33656 58222
11/30/97 82465 32855 57226
12/31/97 82433 32874 57472
1/31/98 80290 32436 56604
2/28/98 87757 35299 61602
3/31/98 91653 36780 64701
4/30/98 92010 37006 65251
5/31/98 83569 34317 61467
6/30/98 88212 34668 64232
7/31/98 80095 31773 60526
8/31/98 60388 24439 47798
9/30/98 65063 26917 51311
10/31/98 66524 28320 53512
11/30/98 72530 30517 57996
12/31/98 82920 33279 65402
1/31/99 84705 34776 68228
2/28/99 76167 31595 63165
3/31/99 79576 32720 68067
4/30/99 76069 35610 70987
5/31/99 78764 35666 70795
6/30/99 88764 37545 76742
7/31/99 87530 36384 75913
8/31/99 89803 35023 75906
9/30/99 96978 35699 77598
10/31/99 105776 36614 84241
11/30/99 122561 40485 94459
12/31/99 159576 47621 112208
1/31/2000 159543 47177 110671
2/29/2000 216428 58154 137453
3/31/2000 197803 52041 131419
1 Performance is historical and not indicative of future results. The
investment return and principal value of an investment will fluctuate, so
that an investor's shares, when redeemed, may be worth more or less than
their original cost.
2 The PBHG Growth Fund-PBHG Class commenced operations on December 19, 1985.
3 The performance shown for the Advisor Class (formerly known as the Trust
Class) prior to its inception on August 16, 1996, is based on the
performance and expenses of the PBHG Class. Subsequent to August 16, 1996,
the performance is that of the Advisor Class and reflects the expenses
specific to the Advisor Class, which will cause its returns to be less than
those of the PBHG Class. The average annual total return of the Advisor
Class from its inception date to March 31, 2000 was 26.96%.
4 The Russell 2000 Growth Index is an unmanaged index comprised of those
securities in the Russell 2000 Index with a greater-than-average growth
orientation. The Index reflects the reinvestment of income dividends and
capital gains distributions, if any, but does not reflect fees, brokerage
commissions, or other expenses of investing. The Index is not intended to
imply the Fund's past or future performance.
5 The Lipper Mid-Cap Growth Funds Average represents the average performance
of all mutual funds classified by Lipper, Inc. in the Mid-Cap Growth
category. These performance figures are based on the changes in net asset
value of the funds in the category with all capital gains distributions and
income dividends reinvested. The average is not intended to imply the
Fund's past or future performance.
SECTOR WEIGHTINGS -- AT MARCH 31, 2000
[PIE CHART OMITTED]
Consumer Cyclical 12%
Health Care 7%
Industrial 12%
Services 3%
Technology 55%
Cash 11%
% OF TOTAL PORTFOLIO INVESTMENTS
TOP TEN HOLDINGS - MARCH 31, 2000
InfoSpace 3.9%
SDL 3.7%
Gemstar International 3.4%
Flextronics International 2.9%
Peregrine Systems 2.9%
Micromuse 2.8%
Network Solutions 2.8%
Check Point Software 2.6%
Macrovision 2.3%
Research in Motion 2.2%
- -------------------------------------------------------
% of Total Portfolio Investments 29.4%
9
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<PAGE>
THE PBHG FUNDS, INC.
PBHG EMERGING GROWTH FUND
PORTFOLIO PROFILE
OBJECTIVE: Long-term growth of capital.
INVESTS IN: Domestic emerging growth companies.
STRATEGY: The Fund's strategy is to invest in young, rapidly growing companies
with prospects for continued growth. The Fund will typically target the
following sectors: technology, healthcare, consumer, and service. The Fund will
remain diversified over a large number of securities.
PERFORMANCE
For the year ending March 31, 2000, the PBHG Emerging Growth Fund generated
a return of 101.33%, significantly outperforming its small-cap benchmark, the
Russell 2000 Growth Index, which finished the same period up 59.06%. After
underperforming the Russell 2000 Growth by 990 basis points in fiscal year 1999,
this past year's extraordinary relative outperformance clearly illustrates a
dramatic reversal of fortune for our rapidly growing, high-quality small company
holdings. This divergence in returns demonstrates that while market sentiment
can be erratic, our mission to stay consistently invested in the emerging growth
companies with strong earnings and revenue growth prospects regardless of
short-term swings in market valuation will reward our long-term investors over
time.
Addressing the Emerging Growth Fund's rather lackluster performance in the
last annual report, we wrote the following: "The last year has been another
difficult year for small-cap stocks. With the Dow hitting 10,000 and the
Internet craze creating billions of valuation each week, some may ask why we
remain so staunchly committed to small, rapidly growing companies. We remain
unfazed...we believe that the small-cap sector in general and the PBHG Emerging
Growth Fund in particular will provide the investor with the potential for
explosive returns." This assertion that our fundamentally strong, fast growing
small-cap holdings were perfectly positioned to benefit from a renewed focus on
earnings growth proved correct over the year that has followed. However, recent
and historical market volatility along with the extreme difficulty of accurately
forecasting changes in market sentiment have clearly reinforced our contention
that this aggressive growth Fund provides the best returns to disciplined
investors who maintain a long-term time horizon.
PORTFOLIO HIGHLIGHTS
With relative valuations hovering near all time lows against the backdrop of
strong growth and the wind of a more benevolent environment toward small-cap
stocks at their back, technology stocks provided the performance leadership for
the strong returns of the Emerging Growth Fund over the period ending March 31,
2000. Many of our long-term small-cap holdings that suffered through the abysmal
performance of fiscal year 1999 were well rewarded over the twelve months that
followed.
Among those positions held throughout the fiscal year that were significant
contributors to the Fund's performance were the following: Business Objects, a
provider of business intelligence software was up 570% in the period. Having
been inappropriately stigmatized as an old economy software company that would
die a painful Y2K related death, Business Objects responded with strong
fundamental performance that was rewarded over the last twelve months as
investors began to embrace the small Paris based company as an important
e-commerce enabling technology vendor. Having consistently outpaced the market's
expectations for earnings and revenue growth, Polycom, a manufacturer of
traditional audio and video conferencing products as well as integrated access
devices for new technology based service providers, posted a 322% return in the
period. Peregrine Systems, an enterprise software and service vendor that
enables the management of corporate infrastructure resources from procurement
throughout the entire lifecycle was up 299% in the period. Peregrine provides
another example of an old economy software company whose valuation improved
significantly as investors came to recognize it as a new economy infrastructure
necessity in the business to business Internet commerce arena. Forrester
Research, a provider of market data and insight to technology professionals
continued to benefit from the growth of our transforming digital economy,
posting a 257% return for the period. Advent Software, a maker of software for
the asset management industry was up 175% in the period. It is without accident
that each of these companies is profitable and has maintained a solid, scalable
business model. These profitable high growth companies continue to be the
mainstay of the investment process for the Emerging Growth Fund.
In addition to our long-term holdings, the Fund also had a number of new
positions contribute handsomely to the period's positive returns. Ditech
Communications, a provider of telecommunications equipment, which was originally
purchased in June 1999 as the company was approaching quarterly profitability;
Informatica, a provider of software for data analysis, initially purchased in
April 1999; and Micromuse, a provider of software for telecommunications
management, also purchased in April 1999 each delivered stellar returns to the
Fund. Similar to our aforementioned long-term holdings, we believe each of these
companies is profitable and growing rapidly.
While it is easy to find winners in a year such as the one that has just
passed, we had our fair share of losers in the Fund as well. The healthcare
sector experienced earnings disappointments followed by significant wealth
destruction as the nuclear winter of Y2K significantly affected many companies
in this sector. Healthcare was the only sector that delivered negative returns
in the portfolio, but certain individual companies across all industries such as
Laser Vision Centers, Dave & Busters, Axent Technologies and Consolidated
Graphics also detracted from the Fund's performance.
Looking forward, while many of us expect volatility to continue to be a
defining characteristic of the year ahead, we believe the strong revenue and
earnings growth offered by our portfolio of high-quality, small emerging growth
companies should continue to yield healthy returns over time. Although periods
of extreme market volatility have historically proven to be particularly
difficult for the small-cap asset class, we are optimistic that a renewed focus
on quality will be a key performance driver for the rapidly growing,
fundamentally robust small companies that have always been the hallmark of our
portfolio.
10
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<PAGE>
THE PBHG FUNDS, INC.
INVESTMENT FOCUS STYLE / MARKET CAPITALIZATION
[CHART OMITTED]
AVERAGE ANNUAL TOTAL RETURN1
AS OF MARCH 31, 2000
- -------------------------------------------------------------------------------
One Annualized Annualized Annualized
Year 3 Year 5 Year Inception
Return Return Return to Date2
- -------------------------------------------------------------------------------
PBHG Emerging Growth Fund 101.33% 29.32% 22.88% 26.34%
- -------------------------------------------------------------------------------
COMPARISON OF CHANGE IN THE VALUE OF A
$10,000 INVESTMENT IN THE PBHG
GROWTH FUND, PBHG CLASS, VERSUS
THE RUSSELL 2000 GROWTH INDEX AND
THE LIPPER MID-CAP GROWTH FUNDS
AVERAGE
[LINE GRAPH OMITTED]
PBHG Emerging Russell 2000 Lipper Small Cap
Growth Fund Growth Index(3) Growth Funds Average(4)
6/30/93 $10000 $10000 $10000
7/31/93 10198 10100 10048
8/31/93 11304 10583 10595
9/30/93 12500 10933 11076
10/31/93 13063 11249 11225
11/30/93 12332 10794 10794
12/31/93 13100 11220 11309
1/31/94 13636 11519 11619
2/28/94 14075 11468 11621
3/31/94 13100 10764 10918
4/30/94 13261 10780 10916
5/31/94 12854 10539 10623
6/30/94 12008 10088 10084
7/31/94 12372 10232 10280
8/31/94 13689 10983 11022
9/30/94 14621 11029 11168
10/31/94 15628 11146 11426
11/30/94 15435 10695 11067
12/31/94 16216 10947 11350
1/31/95 15518 10724 11149
2/28/95 16130 11220 11627
3/31/95 17290 11548 12041
4/30/95 17666 11721 12164
5/31/95 17762 11875 12296
6/30/95 19384 12693 13231
7/31/95 21328 13682 14347
8/31/95 21575 13851 14543
9/30/95 22359 14136 15002
10/31/95 21682 13441 14579
11/30/95 22982 14033 15180
12/31/95 24072 14344 15435
1/31/96 23498 14226 15310
2/29/96 24838 14874 16149
3/31/96 25963 15169 16659
4/30/96 29722 16334 18365
5/31/96 31084 17171 19334
6/30/96 29159 16055 18368
7/31/96 25142 14095 16456
8/31/96 27122 15138 17622
9/30/96 29643 15918 18761
10/31/96 28068 15231 18093
11/30/96 28011 15655 18424
12/31/96 28184 15960 18597
1/31/97 28475 16359 19047
2/28/97 24311 15371 17758
3/31/97 22403 14286 16516
4/30/97 21345 14121 16265
5/31/97 25567 16243 18603
6/30/97 27033 16794 19680
7/31/97 27882 17655 20989
8/31/97 28184 18184 21341
9/30/97 30918 19636 23089
10/31/97 28347 18455 21918
11/30/97 27289 18016 21452
12/31/97 27149 18027 21559
1/31/98 26823 17787 21238
2/28/98 28766 19357 23028
3/31/98 30045 20169 24159
4/30/98 30255 20293 24410
5/31/98 27568 18818 22767
6/30/98 28417 19011 23364
7/31/98 26009 17423 21712
8/31/98 21147 13401 17016
9/30/98 23020 14760 18368
10/31/98 22740 15530 19217
11/30/98 24532 16735 20889
12/31/98 27964 18249 23166
1/31/99 28058 19070 23740
2/28/99 24800 17326 21615
3/31/99 24064 17943 22582
4/30/99 23481 19527 23519
5/31/99 24496 19558 23723
6/30/99 27252 20588 25885
7/31/99 26610 19952 25864
8/31/99 26353 19206 25584
9/30/99 28443 19576 26326
10/31/99 30335 20078 27843
11/30/99 33604 22201 31565
12/31/99 41484 26114 37534
1/31/2000 39861 25870 37122
2/29/2000 53014 31889 46773
3/31/2000 48448 28537 43742
1 Performance is historical and not indicative of future results. The
investment return and principal value of an investment will fluctuate, so
that an investor's shares, when redeemed, may be worth more or less than
their original cost.
2 The PBHG Emerging Growth Fund commenced operations on June 14, 1993.
3 The Russell 2000 Growth Index is an unmanaged index comprised of those
securities in the Russell 2000 Index with a greater-than-average growth
orientation. The Index reflects the reinvestment of income dividends and
capital gains distributions, if any, but does not reflect fees, brokerage
commissions, or other expenses of investing. The Index is not intended to
imply the Fund's past or future performance.
4 The Lipper Small-Cap Growth Funds Average represents the average
performance of all mutual funds classified by Lipper, Inc. in the Small-Cap
Growth category. These performance figures are based on the changes in net
asset value of the funds in the category with all capital gains
distributions and income dividends reinvested. The average is not intended
to imply the Fund's past or future performance.
SECTOR WEIGHTINGS - AT MARCH 31, 2000
[PIE CHART OMITTED]
Consumer Cyclical 7%
Health Care 10%
Industrial 9%
Services 8%
Technology 58%
Cash 8%
% OF TOTAL PORTFOLIO INVESTMENTS
TOP TEN HOLDINGS - MARCH 31, 2000
Peregrine Systems 3.6%
Micromuse 2.7%
Business Objects ADR 2.7%
Advent Software 2.5%
TranSwitch 2.2%
Polycom 2.2%
Micrel 2.1%
Allscripts 2.1%
Ditech Communications 2.0%
Varian Semiconductor Equipment 2.0%
- -------------------------------------------------------
% of Total Portfolio Investments 24.2%
11
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
PBHG LARGE CAP GROWTH
PORTFOLIO PROFILE
OBJECTIVE: Long-term growth of capital.
INVESTS IN: Companies, with above $1 billion of market capitalization that, in
Pilgrim Baxter's opinion, have an outlook for strong growth in earnings and
potential for capital appreciation.
STRATEGY: The Fund consists of larger companies with historical and estimated
future growth rates of over 20%. The Fund strives to layer additional strong
investment ideas on top of the 20 "best Large Cap ideas" found in the PBHG Large
Cap 20 Fund to provide a more diversified investment opportunity for
shareholders interested in the large company arena.
In the current environment -- where very large, multinational, economically
sensitive corporations are experiencing slowing growth rates -- this Fund
attempts to isolate and harness the power of consistent, high-growth, large
companies that are less affected by economic cycles.
PERFORMANCE
The PBHG Large Cap Growth Fund returned 98.6% for the fiscal year ended
March 31, 2000, compared to the 17.9% return of its benchmark, the S&P 500
Index. The out performance relative to the benchmark occurred in the last three
fiscal quarters. During this time, investors gravitated toward technology issues
whose revenue and earnings growth rates were accelerating. The underlying
strength of these companies' fundamentals increasingly began to overwhelm the
doomsayer's predictions for a Year 2000 catastrophe. In fact, the fourth quarter
of 1999 proved to be one of the best quarters for technology stocks ever.
An interesting phenomenon over the past year was the intensity of the
Initial Public Offering (IPO) market. Here, investors were especially eager to
snap up new issues as quickly as the investment bankers could get them ready for
institutional investor roadshows. An equally interesting phenomenon was that
investors became increasingly willing to pay up for Internet companies that had
no current earnings but were growing their revenues exponentially. These "New
Economy" companies received extraordinary valuations. As their valuations grew,
it increased the scrutiny of all technology companies' price appreciation. In
the meantime, "Old Economy" companies were being devalued by the stock market.
The divergence in these two segments reached a crescendo on March 10, 2000.
Since then, there has been a revision in New and Old Economy valuations. Many
New Economy issues indiscriminately lost 30% of their value by the close of the
first quarter of 2000.
Over the past year, the Fund nicely outperformed the market and our peer
group as our preference for high-growth companies was rewarded. The last two
quarters of the fiscal year provided most of our substantial relative
outperformance. For the fiscal year, we were fortunate enough to outperform 83%
of our peers, as the average return generated by the universe of multi-cap
growth mutual funds (as categorized by Lipper, Inc.) was 65.1% over the same
twelve-month period.
Like last year, investors continued to favor technology stocks above all
others. Determining factors seemed to be sustainable, above-average earnings and
revenue growth rates in an environment characterized by increased trading
liquidity. There is no question that our investment style was in favor over the
last twelve months. We continue to believe that high quality, well-managed,
non-cyclical growth companies with sustainable competitive advantages
consistently represent the most compelling investment opportunities.
We also experienced some disappointments during this fiscal year.
Deteriorating fundamentals prompted the sale of a number of holdings, most
before their share price deterioration and, unfortunately, a few after. While
negative surprises are a fact of life for investors, we believe minimizing them
creates superior returns over time. We plan to continue to work hard to
anticipate changes in our companies' business fundamentals.
PORTFOLIO HIGHLIGHTS
Relatively large positions in several of the market's top performers easily
compensated for the negative effects of our disappointing stocks. Fortunately,
several Fund holdings appreciated by more than 200% for the year.
Technology comprised the largest sector of the portfolio and led this year's
performance. One of our best performers was Qualcomm which benefited from its
proprietary CDMA technology in the explosively growing cellular phone market,
rising 365% from our purchase in June 1999. An important theme was our
investment in Internet Infrastructure companies, which included EMC Corp.,
Broadcom, SunMicrosystems and Cisco Systems. A particularly important segment of
the Internet infrastructure subsector was optical networking. Our company of
choice here was JDS Uniphase, which was also one of last year's best performing
issues appreciating 567% from our initial purchase in June of 1999. JDS Uniphase
is a provider of advanced fiberoptic components and modules. The Company's
components and modules are basic building blocks for fiberoptic networks and
perform both optical-only (passive) and optoelectronic (active) functions within
these networks. We continue to remain steadfast in our view that technology is
likely to remain the fastest growing sector of our economy with the best
business momentum.
Non-technology companies also contributed to our strong performance during
the year. In the consumer cyclical sector, better-than-expected earnings reports
drove the share prices of Home Depot, Kohl's, Walmart and Tiffany's. In the
healthcare sector, Genentech and MedImmune benefited from continued recognition
as two of the best-positioned biotechnology companies. In the services sector,
Gemstar International Group shares rose due to better-than-expected earnings and
the expanded recognition of the company's rapidly growing service. Gemstar
develops markets and licenses proprietary technologies designed to simplify and
enhance consumers' interaction with electronics products and other platforms
that deliver video, programming information and other data.
As we enter the new fiscal year, the equity markets are in a period of
transition. The euphoria of the prior two quarters has abated and the new mode
is one of caution. Clearly the Federal Reserve is no longer accommodating with
respect to interest rates. With valuations at historically high levels, we would
expect periods of extreme short-term volatility. But in our opinion odds are low
for a major sustained downdraft in equity markets in the presence of a vibrant
U.S. economy and exceptional fundamental business dynamics. At present, some of
the market's "arrogance" that it could continue climbing unabated has waned. In
one sense, we are relieved that the ominous correction everyone has been
anticipating for New Economy stocks has finally occurred. While we experienced
some discomfort as some of "our babies" were thrown out with the "bath-water,"
we are confident that over the intermediate term the market will separate our
"contenders" from the "pretenders". The pullback has also presented us with the
opportunity to commit new capital to our investments at lower prices, which we
believe will strengthen the Fund for the long-term.
12
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<PAGE>
THE PBHG FUNDS, INC.
INVESTMENT FOCUS STYLE / MARKET CAPITALIZATION
[CHART OMITTED]
AVERAGE ANNUAL TOTAL RETURN
AS OF MARCH 31, 2000
- --------------------------------------------------------------------------------
One Annualized Annualized
Year 3 Year Inception
Return Return to Date2
- --------------------------------------------------------------------------------
PBHG Large Cap Growth Fund 98.60% 54.69% 40.59%
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN THE VALUE OF A
$10,000 INVESTMENT IN THE PBHG
GROWTH FUND, PBHG CLASS, VERSUS
THE RUSSELL 2000 GROWTH INDEX AND
THE LIPPER MID-CAP GROWTH FUNDS
AVERAGE
[LINE GRAPH OMITTED]
PBHG Large Cap Lipper Multi-Cap Growth
Growth Fund S&P 500 Index(3) Funds Average(4)
4/30/95 $10000 $10000 $10000
5/31/95 10070 10399 10228
6/30/95 10920 10640 10858
7/31/95 11740 10993 11588
8/31/95 12310 11020 11692
9/30/95 13160 11485 12028
10/31/95 13510 11444 11847
11/30/95 13720 11946 12280
12/31/95 13383 12176 12319
1/31/96 14146 12590 12481
2/29/96 14827 12707 12893
3/31/96 14992 12830 13040
4/30/96 15880 13019 13737
5/31/96 16509 13354 14206
6/30/96 16158 13405 13829
7/31/96 15023 12813 12755
8/31/96 15601 13083 13381
9/30/96 16870 13819 14320
10/31/96 16365 14200 14174
11/30/96 16994 15273 14885
12/31/96 16514 14970 14662
1/31/97 17247 15905 15400
2/28/97 16504 16030 14817
3/31/97 14727 15372 13954
4/30/97 15626 16289 14295
5/31/97 17330 17280 15582
6/30/97 18197 18054 16152
7/31/97 19860 19490 17621
8/31/97 18941 18399 17235
9/30/97 20139 19406 18334
10/31/97 19282 18759 17509
11/30/97 19365 19626 17583
12/31/97 20206 19963 17773
1/31/98 19893 20184 17764
2/28/98 22450 21639 19261
3/31/98 23681 22746 20192
4/30/98 23817 22974 20416
5/31/98 23160 22580 19585
6/30/98 24861 23496 20607
7/31/98 24621 23247 19987
8/31/98 19945 19890 16465
9/30/98 21458 21164 17751
10/31/98 21573 22886 18701
11/30/98 22993 24273 20094
12/31/98 26353 25672 22395
1/31/99 27213 26745 23629
2/28/99 25671 25914 22346
3/31/99 27447 26951 23735
4/30/99 27157 27995 24355
5/31/99 26029 27334 23939
6/30/99 27950 28851 25660
7/31/99 26933 27951 25144
8/31/99 27135 27811 25167
9/30/99 27593 27048 25149
10/31/99 30363 28760 26977
11/30/99 34284 29345 29362
12/31/99 44025 31073 34092
1/31/2000 44792 29512 33274
2/29/2000 56129 28953 38515
3/31/2000 54509 31786 38700
1 Performance is historical and not indicative of future results. The
investment return and principal value of an investment will fluctuate, so
that an investor's shares, when redeemed, may be worth more or less than
their original cost.
2 The PBHG Large Cap Growth Fund commenced operations on April 5, 1995.
3 The S&P 500 Index is a capitalization-weighted index of 500 stocks. The
index is designed to measure performance of the broad domestic economy
through changes in the aggregate market value of 500 stocks representing
all major industries. The Index is not intended to imply the Fund's past or
future performance.
4 The Lipper Multi-Cap Growth Funds Average represents the average
performance of all mutual funds classified by Lipper, Inc. in the Multi-Cap
Growth category. These performance figures are based on the changes in net
asset value of the funds in the category with all capital gains
distributions and income dividends reinvested. The average is not intended
to imply the Fund's past or future performance.
SECTOR WEIGHTINGS - AT MARCH 31, 2000
[PIE CHART OMITTED]
Consumer Cyclical 8%
Financial 3%
Health Care 8%
Industrial 10%
Services 3%
Technology 60%
Utilities 2%
Cash 6%
% OF TOTAL PORTFOLIO INVESTMENTS
TOP TEN HOLDINGS - MARCH 31, 2000
Broadcom 3.2%
Nortel Networks 2.9%
Cisco Systems 2.8%
InfoSpace 2.7%
Juniper Networks 2.4%
JDS Uniphase 2.3%
Gemstar International 2.2%
General Electric 2.1%
Siebel Systems 2.1%
Texas Instruments 2.1%
- -------------------------------------------------------
% of Total Portfolio Investments 24.9%
13
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
PBHG SELECT EQUITY FUND
PORTFOLIO PROFILE
OBJECTIVE: Long-term growth of capital.
INVESTS IN: Normally no more than 30 common stocks of companies that, in Pilgrim
Baxter's opinion, have a strong earnings growth outlook and potential for
capital appreciation.
STRATEGY: This portfolio is designed to concentrate our investments in
approximately 30 companies that we believe represent the best growth companies
in the market at a given time, regardless of company size. We purchase only
those high growth, high quality companies where we have the greatest confidence
in the company's specific fundamental business characteristics.
PERFORMANCE
The PBHG Select Equity Fund returned 240.82% for the fiscal year ended March
31, 2000. This compares quite favorably to the 17.94% return of the S&P 500 and
the 65.13% return of the average mutual fund in Lipper's Multi-Cap Growth Fund
classification. The Fund's heavy weighting in the technology sector was a
contributing factor to outperforming the benchmark but stock selection within
that sector was the primary driver. Technology companies in general, and those
with high earnings and sales growth rates in particular, were in high demand by
investors for a large part of the year.
The Fund underperformed to the S&P 500 in the quarter ended June 30, 1999,
its first fiscal quarter. During that quarter, investors rotated out of
technology stocks and into industrial and consumer cyclical issues. This was
prompted by worries over the high valuations of Internet companies, which
broadened to the entire technology sector. During the first fiscal quarter, the
Fund returned 0.42% while the S&P 500 returned 7.05%.
The trend of favoring the low growth stocks of the industrial and consumer
cyclical sectors quickly faded in the Fund's second fiscal quarter. That quarter
was marked by a return of the market's attention to the technology sector. The
Fund was well positioned to benefit from that shift. During the second fiscal
quarter, the Fund returned 8.22% versus a decline in the S&P 500 of 6.25%.
Exposure to quality companies in the semiconductor, enterprise storage device
and software, and Internet sectors boosted performance over the benchmark
significantly.
The market leadership of the technology sector continued and picked up
strength in the Fund's third fiscal quarter. For the three months ended December
31, 1999, the Fund returned 130.62%, significantly outpacing the 14.88% return
of the S&P 500. This was caused by a seemingly insatiable demand for the
Internet and Internet-related companies that were top holdings of the Fund.
Twenty-one of the companies held by the Fund increased by over 100% during its
third fiscal quarter.
During the final fiscal quarter, the Fund also produced strong returns. For
the three months ended March 31, 2000, the Fund returned 35.98%, which compares
favorably to the 2.30% return of the S&P 500 over the same time period. The
companies in which the Fund invested continued to produce strong operating
results and business momentum, a combination that was rewarded. Despite the
strong performance of the quarter, the world's equity markets became
increasingly volatile and continued to be so after the Fund's fiscal year end in
response to the perception of rising inflation.
PORTFOLIO HIGHLIGHTS The majority of the Fund's holdings performed extremely
well during the fiscal year. In fact, the Fund had positions in over 31 stocks
that increased by more than 100%. Of these, 14 returned in excess of 250%.
Examples of our winners include: [Bullet] InfoSpace, an Internet content
provider, was up 596% from its purchase in June 1999 to fiscal year end
[Bullet] Broadvision, an Internet software company, gained 578% from March 31,
1999 through its sale in January 2000.
[Bullet] Audiocodes, which designs, develops and markets telecommunications
products, returned 488% from its purchase in May 1999 through fiscal year end.
[Bullet] Emulex, which designs, develops and supplies network products, was up
443% from its purchase in June 1999 through its sale in January 2000.
[Bullet] Broadcom, a provider of integrated silicon solutions that enable
broadband digital data transmissions of voice, data and video content, gained
413% from its purchase in June 1999 to fiscal year end.
Although the majority of the Fund's investments provided positive
contributions to performance during the fiscal year, we did experience some
disappointments. Examples include: New Era of Networks, Network Associates,
Advantage Learning Systems, Softnet Systems and Earthlink. Each of these
companies lost between 71% and 38% of their value during the fiscal year and was
eliminated from the portfolio. As is usually the case with our underperformers,
these companies posted operating results that disappointed investors.
Overall, we believe the PBHG Select Equity Fund provided extraordinary
investment performance results during the fiscal year ended March 31, 2000.
These results were generated in an environment that was extremely favorable to
technology stocks. We urge investors to maintain realistic expectations of
future performance and understand that these types of results are unlikely to be
sustained. In the last few months, the global equity markets have become
increasingly volatile given the large advances in equity valuations, the Federal
Reserve's dedication to increasing interest rates in order to control economic
growth and the nervous investment sentiment that these market conditions create.
We remain positive in our long-term outlook for the high quality, rapidly
growing companies in which the Fund invests and believe our strategy will
continue to be successful over the long haul. We thank your for your continued
confidence and investment in the Fund.
14
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<PAGE>
THE PBHG FUNDS, INC.
INVESTMENT FOCUS STYLE / MARKET CAPITALIZATION
[CHART OMITTED]
AVERAGE ANNUAL TOTAL RETURN1
AS OF MARCH 31, 2000
- ----------------------------------------------------------------------------
One Annualized Annualized
Year 3 Year Inception
Return Return to Date2
- ----------------------------------------------------------------------------
PBHG Select Equity Fund 240.82% 77.10% 55.98%
- ----------------------------------------------------------------------------
COMPARISON OF CHANGE IN THE VALUE OF A
$10,000 INVESTMENT IN THE
PBHG SELECT EQUITY FUND,
VERSUS THE S&P 500 INDEX AND
THE LIPPER MULTI-CAP GROWTH
FUNDS AVERAGE
[LINE CHART OMITTED]
PBHG Select Lipper Multi-Cap Growth
Equity Fund S&P 500 Index(3) Funds Average(4)
4/30/95 $10000 $10000 $10000
5/31/95 10402 10399 10228
6/30/95 11685 10640 10858
7/31/95 13399 10993 11588
8/31/95 13947 11020 11692
9/30/95 14545 11485 12028
10/31/95 14985 11444 11847
11/30/95 15367 11946 12280
12/31/95 15510 12176 12319
1/31/96 15851 12590 12481
2/29/96 17025 12707 12893
3/31/96 17326 12830 13040
4/30/96 18811 13019 13737
5/31/96 20376 13354 14206
6/30/96 19603 13405 13829
7/31/96 17687 12813 12755
8/31/96 18861 13083 13381
9/30/96 21118 13819 14320
10/31/96 19904 14200 14174
11/30/96 20366 15273 14885
12/31/96 19852 14970 14662
1/31/97 20338 15905 15400
2/28/97 17947 16030 14817
3/31/97 16123 15372 13954
4/30/97 16579 16289 14295
5/31/97 18808 17280 15582
6/30/97 19568 18054 16152
7/31/97 21402 19490 17621
8/31/97 20338 18399 17235
9/30/97 22335 19406 18334
10/31/97 20794 18759 17509
11/30/97 20176 19626 17583
12/31/97 21210 19963 17773
1/31/98 20784 20184 17764
2/28/98 22902 21639 19261
3/31/98 24473 22746 20192
4/30/98 24422 22974 20416
5/31/98 22993 22580 19585
6/30/98 25922 23496 20607
7/31/98 23824 23247 19987
8/31/98 19193 19890 16465
9/30/98 21048 21164 17751
10/31/98 19781 22886 18701
11/30/98 21261 24273 20094
12/31/98 25243 25672 22395
1/31/99 25577 26745 23629
2/28/99 23257 25914 22346
3/31/99 26277 26951 23735
4/30/99 25365 27995 24355
5/31/99 24280 27334 23939
6/30/99 26388 28851 25660
7/31/99 25821 27951 25144
8/31/99 27736 27811 25167
9/30/99 28557 27048 25149
10/31/99 34303 28760 26977
11/30/99 43575 29345 29362
12/31/99 65858 31073 34092
1/31/2000 69092 29512 33274
2/29/2000 99040 28953 38515
3/31/2000 89556 31786 38700
1 Performance is historical and not indicative of future results. The
investment return and principal value of an investment will fluctuate, so
that an investor's shares, when redeemed, may be worth more or less than
their original cost.
2 The PBHG Select Equity Fund commenced operations on April 5, 1995.
3 The S&P 500 Index is a capitalization-weighted index of 500 stocks. The
index is designed to measure performance of the broad domestic economy
through changes in the aggregate market value of 500 stocks representing
all major industries. The Index is not intended to imply the Fund's past or
future performance.
4 The Lipper Multi-Cap Growth Funds Average represents the average
performance of all mutual funds classified by Lipper, Inc. in the Multi-Cap
Growth category These performance figures are based on the changes in net
asset value of the funds in the category with all capital gains
distributions and income dividends reinvested. The average is not intended
to imply the Fund's past or future performance.
SECTOR WEIGHTINGS - AT MARCH 31, 2000
[PIE CHART OMITTED]
Consumer Cyclical 6%
Technology 94%
% OF TOTAL PORTFOLIO INVESTMENTS
TOP TEN HOLDINGS - MARCH 31, 2000
Gemstar International 5.9%
Broadcom 5.8%
Juniper Networks 5.0%
InfoSpace 4.9%
SDL 4.8%
Exodus Communications 4.7%
Brocade Communications Systems 4.7%
America Online 4.5%
Cisco Systems 4.5%
Microsoft 4.4%
- -------------------------------------------------------
% of Total Portfolio Investments 49.2%
15
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<PAGE>
THE PBHG FUNDS, INC.
PBHG CORE GROWTH FUND
PORTFOLIO PROFILE
OBJECTIVE: Long-term capital appreciation.
INVESTS IN: A diversified portfolio of equity securities that are believed to
have superior long-term growth prospects and the potential for long-term capital
appreciation. The Fund may invest in companies of any size.
STRATEGY: The Fund's strategy is to invest in companies of any size that are
exhibiting business momentum. As of the year ended March 31, 2000, the Fund's 83
holdings ranged from $901 million to $65 billion in market capitalization. The
average holding in the Fund had a market capitalization of $10 billion as of
year end. By comparison, the average holding at year-end last year had an
average market capitalization of $36 billion. Many of the large capitalization
stocks were sold throughout the year and replaced with, on average, more rapidly
growing companies in the small and medium capitalization area.
PERFORMANCE
The Core Growth Fund returned 115.2% compared with the 77.2% return of the
Russell Mid-Cap Growth Index for the year ended March 31, 2000. In addition, the
Fund significantly outpaced broader indices, such as the S&P 500, which was up
17.9% over the same period.
PORTFOLIO HIGHLIGHTS
Growth stocks significantly outperformed value stocks across all
capitalizations during the trailing 12 months. This is evidenced by the 77.2%
return of the Russell Mid Cap Growth Index vs. 4.2% for the Russell Mid Cap
Value Index. Technology stocks were, by far, the biggest contributor to overall
performance. Energy and Industrial stocks also participated in the rally.
The Fund's technology weighting at year-end was 59.0%, well above what it
has been historically. The benchmark's weighting was also historically high at
54.9%. We continue to intentionally overweight this sector because we believe
the fundamental outlook for these companies is as good as it's ever been. The
Fund's technology holdings performed substantially better than those in the
benchmark, also contributing to the Fund's results. Other than technology, no
other sector matched the Fund's performance for the last 12 months. Your
Healthcare and Services holdings performed well relative to the benchmark, while
the Fund's holdings in the Consumer Cyclical and Financial sectors performed
poorly relative to those in the benchmark.
In our bottom-up approach to investing, we look for companies that appear to
have the potential for many quarters and, hopefully, years of exceptional
growth. The things we care most about in stock selection are high growth rates
in sales and incremental earnings, positive income statement surprises and
estimate revisions. We prefer companies that are in the early stages of
acceleration with an open-ended growth opportunity. We are relatively
indifferent to attempts at valuation analysis, believing that these high-growth
rate companies are typically cheap if they accomplish their high growth rates
for several years and expensive if they do not. We are very sensitive to changes
in business momentum. When we spot a positive inflection point, we attempt to
determine if there are high probabilities of sustained growth.
Our discipline never changes. Our portfolios will contain high quality
companies experiencing the best business momentum. At times the market will
place a premium on these characteristics and at other times, like the end of
1998 when investors craved stability and/or liquidity, the market will ignore
these characteristics. We do not attempt to time the market and do very little
sector strategizing. We attempt to manage risk by following our companies very
closely and by building or reducing positions when we believe that company
fundamentals are changing.
As of the time of this writing, rapidly growing companies and especially
technology stocks have experienced a significant correction both over the last
two weeks of the first quarter as well as the first few weeks of the second
quarter. We have no way of calling the bottom, but we strongly believe what we
have experienced to date is a "valuation correction" and in no way is reflective
of the business fundamentals for the companies in the portfolio. The March
quarter earning reports, now substantially through, have been terrific. We
remain positive on the technology sector long-term and now with stock prices
much lower, our conviction has risen commensurately.
16
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<PAGE>
THE PBHG FUNDS, INC.
INVESTMENT FOCUS STYLE / MARKET CAPITALIZATION
[CHART OMITTED]
AVERAGE ANNUAL TOTAL RETURN1
AS OF MARCH 31, 2000
- ---------------------------------------------------------------------------
One Annualized Annualized
Year 3 Year Inception
Return Return to Date2
- ---------------------------------------------------------------------------
PBHG Core Growth Fund 115.15% 43.02% 29.78%
- ---------------------------------------------------------------------------
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
IN THE PBHG CORE GROWTH FUND, VERSUS THE
RUSSELL MID CAP GROWTH INDEX AND THE LIPPER MULTI-CAP GROWTH FUNDS AVERAGE
[LINE CHART OMITTED]
PBHG Core Russell Mid-Cap Lipper Multi-Cap Growth
Growth Fund Growth Index(3) Funds Average(4)
12/31/95 $10000 $10000 $10000
1/31/96 10590 10177 10132
2/29/96 11450 10562 10466
3/31/96 11820 10645 10586
4/30/96 13310 11159 11151
5/31/96 14230 11387 11532
6/30/96 13800 11043 11226
7/31/96 12040 10186 10354
8/31/96 13000 10736 10862
9/30/96 14200 11418 11624
10/31/96 13410 11284 11506
11/30/96 13740 11949 12083
12/31/96 13280 11748 11902
1/31/97 13300 12268 12501
2/28/97 11690 11997 12028
3/31/97 10340 11319 11327
4/30/97 10200 11597 11604
5/31/97 11680 12636 12649
6/30/97 12230 12986 13112
7/31/97 12990 14228 14304
8/31/97 12480 14090 13990
9/30/97 12890 14803 14883
10/31/97 12280 14061 14213
11/30/97 11910 14209 14273
12/31/97 11990 14395 14427
1/31/98 11470 14136 14420
2/28/98 12830 15465 15636
3/31/98 13530 16113 16391
4/30/98 13620 16332 16573
5/31/98 12540 15660 15898
6/30/98 13560 16103 16728
7/31/98 12540 15413 16225
8/31/98 9680 12471 13366
9/30/98 10790 13415 14410
10/31/98 10520 14402 15181
11/30/98 11260 15374 16312
12/31/98 12880 16966 18179
1/31/99 13420 17475 19181
2/28/99 12670 16620 18139
3/31/99 14060 17546 19268
4/30/99 14160 18346 19770
5/31/99 13890 18110 19432
6/30/99 15530 19374 20830
7/31/99 15560 18757 20411
8/31/99 16300 18562 20429
9/30/99 16450 18404 20415
10/31/99 17990 19827 21899
11/30/99 20130 21881 23835
12/31/99 25450 25669 27675
1/31/2000 25140 25664 27011
2/29/2000 34490 31060 31265
3/31/2000 30250 31092 31415
1 Performance is historical and not indicative of future results. The
investment return and principal value of an investment will fluctuate, so
that an investor's shares, when redeemed, may be worth more or less than
their original cost.
2 The PBHG Core Growth Fund commenced operations on December 29, 1995.
3 The Russell Mid Cap Growth Index is an unmanaged index comprised of those
securities in the Russell 1000 Index with a higher price to book ratio and
higher forecasted growth values. The Index reflects the reinvestment of
income dividends and capital gain distributions, if any, but does not
reflect fees, brokerage commissions, or other expenses of investing. The
Index is not intended to imply the Fund's past or future performance.
4 The Lipper Multi-Cap Growth Funds Average represents the average
performance of all mutual funds classified by Lipper, Inc. in the Multi-Cap
Growth category. These performance figures are based on the changes in net
asset value of the funds in the category with all capital gains
distributions and income dividends reinvested. The average is not intended
to imply the Fund's past or future performance.
SECTOR WEIGHTINGS - AT MARCH 31, 2000
[PIE CHART OMITTED]
Consumer Cyclical 8%
Energy 5%
Financial 2%
Health Care 10%
Industrial 8%
Services 5%
Technology 62%
% OF TOTAL PORTFOLIO INVESTMENTS
TOP TEN HOLDINGS - MARCH 31, 2000
Redback Networks 2.6%
Network Solutions 2.3%
Globespan 2.3%
Art Technology 2.3%
Mettler-Toledo International 2.2%
Cooper Cameron 2.1%
Bank One 2.1%
Allscripts 2.0%
Exodus Communications 2.0%
Ariba 2.0%
- -------------------------------------------------------
% of Total Portfolio Investments 21.8%
17
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<PAGE>
THE PBHG FUNDS, INC.
PBHG LIMITED FUND
PORTFOLIO PROFILE
OBJECTIVE: Long-term capital appreciation.
INVESTS IN: A diversified portfolio of equity securities of companies that are
believed, by Pilgrim Baxter, to have superior long-term growth prospects and
potential for long-term capital appreciation.
STRATEGY: The Fund invests in companies under $250 million in market
capitalization or annual revenues. The Fund is currently closed to investment by
new shareholders in order to help protect achievement of its investment
objective.
PERFORMANCE
For the twelve months ending March 31, 2000, the PBHG Limited Fund returned
137.27% against the 59.06% return posted by the Russell 2000 Growth Index.
Performance over this period marked a significant reversal of fortune from the
negative returns posted by both the Fund and its benchmark Index, the Russell
2000 Growth, in the previous twelve-month period.
In each of the four quarters of this fiscal year, the Fund out-performed the
Russell 2000 Growth significantly. In the most recent quarter ending March 31,
2000, the Fund generated a return of 23.52% relative to 9.29% for the Russell
2000 Growth. In the quarter ending December 31, 1999 the Fund generated a return
of 49.84% relative to the 33.39% produced by the index. In the quarter ending
September 30, 1999 the Fund produced a positive return of 4.22% relative to the
loss of 4.91% delivered by the Russell 2000 Growth. Finally, for the quarter
ending June 30, 1999, the Fund produced a 23.01% return relative to the 14.75%
produced by the Russell 2000 Growth Index. With the wind of a more benevolent
environment toward small-cap stocks at its back, the PBHG Limited Fund was
redeemed from the bear market most small company investors experienced over the
year that ended in March 1999. Further supported by the markets renewed focus on
growth over liquidity, the high-quality, rapidly growing small company holdings
in our Fund succeeded in delivering the healthy returns that we had
long-awaited.
PORTFOLIO HIGHLIGHTS
Despite the widely held belief that small company investing was a dying fad,
the twelve-month period ending March 31, 2000 turned out to be a spectacular
year for small-cap growth stocks. Benefiting directly from the shift to an
Internet-enabled, digital economy, the rapidly growing small companies that are
delivering the products and services necessary to architect this change,
predominantly technology companies, fueled the asset class' outsized returns.
Our long-term holdings, many of which produced lackluster returns in the
previous period regardless of the continued strength of their revenue and
earnings growth, contributed greatly to the Fund's impressive fiscal year 2000
performance. Among these notable contributors were the following: Business
Objects, a provider of business intelligence software, up 570% in the period.
Micromuse, a provider of software solutions for the effective monitoring and
management of multiple elements underlying an enterprise's information
technology infrastructure, was up 504%. Clarify, which was acquired by Nortel
during the period for its front-office customer resource management software,
delivered a 380% return. Transwitch, a fabless semiconductor manufacturer
enabling broadband telecommunications applications, was up 378% for the period.
Polycom, a manufacturer of traditional audio and video conferencing products as
well as integrated access devices for new technology based service providers,
posted a 322% return for the period. Hall Kinion & Associates, an information
technology staffing company, was up 285%. It is worth noting that each of these
companies is profitable and has maintained a solid, scalable business model.
High-quality, rapidly growing, small companies such as these will continue to be
the mainstay of our Fund.
In addition to our long-term holdings, the Fund also had a
number of newly established positions contribute handsomely to the period's
positive returns, including its two best performing stocks. The first, Ditech
Communications, a provider of telecommunications equipment, purchased in July
1999 just as the company was approaching quarterly profitability, delivered an
892% return over the period. Since our initial purchase, the company has
generated greater than 100% revenue growth, handily exceeding expectations. The
second strong addition to the portfolio during the past year was Natural
Microsystems. This manufacturer of enabling technology for networking and
telecommunications equipment providers was purchased when the company exhibited
definitive signs of exiting a turnaround stage led by a new management team, a
strong new product cycle, and a highly profitable customer base. For the period
ending March 31, 2000, Natural Microsystems posted a 579% return.
While it is easy to find winners during a period where each sector in the
Fund posted a positive return, the portfolio still had its fair share of duds
over the last twelve months. J. Jill Group, New Era of Networks, Laser Vision
Centers, Engineering Animation and QuadraMed each delivered a somewhat violent
reminder that small growth companies can deliver negative earnings surprises and
volatile returns. Thankfully, our disciplined attention to the warning signs of
such trouble continues to help us avoid many of these potential disappointments.
Looking forward, while many of us expect volatility to continue to be a
defining characteristic of the year ahead, the strong revenue and earnings
growth offered by our portfolio of high-quality, small emerging growth companies
should continue to yield healthy returns over time. Although periods of extreme
market volatility have historically proven to be particularly difficult for the
small cap asset class, we are optimistic that a renewed focus on quality will be
a key performance driver for the rapidly growing, fundamentally robust small
companies that have always been the hallmark of our portfolio.
18
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<PAGE>
THE PBHG FUNDS, INC.
INVESTMENT FOCUS STYLE / MARKET CAPITALIZATION
[CHART OMITTED]
AVERAGE ANNUAL TOTAL RETURN1
AS OF MARCH 31, 2000
- ----------------------------------------------------------------------------
One Annualized Annualized
Year 3 Year Inception
Return Return to Date2
- ----------------------------------------------------------------------------
PBHG Limited Fund 137.27% 50.29% 34.93%
- ----------------------------------------------------------------------------
COMPARISON OF CHANGE IN THE VALUE OF A
$10,000 INVESTMENT IN THE PBHG
LIMITED FUND, VERSUS THE
RUSSELL 2000 GROWTH INDEX AND
THE LIPPER SMALL-CAP GROWTH
FUNDS AVERAGE
[LINE CHART OMITTED]
PBHG Limited Russell 2000 Lipper Small-Cap Growth
Fund Growth Index(3) Funds Average(4)
6/30/96 $10000 $10000 $10000
7/31/96 9950 8779 8959
8/31/96 10320 9429 9594
9/30/96 11010 9914 10214
10/31/96 10570 9487 9850
11/30/96 10560 9751 10031
12/31/96 11082 9941 10125
1/31/97 11273 10189 10370
2/28/97 10048 9574 9668
3/31/97 9085 8898 8992
4/30/97 8984 8795 8855
5/31/97 10741 10117 10128
6/30/97 11454 10460 10714
7/31/97 12016 10996 11427
8/31/97 12257 11326 11619
9/30/97 13622 12230 12570
10/31/97 13070 11495 11933
11/30/97 12809 11221 11679
12/31/97 12864 11228 11737
1/31/98 12708 11078 11562
2/28/98 13756 12056 12537
3/31/98 14606 12562 13153
4/30/98 14720 12639 13290
5/31/98 13621 11721 12395
6/30/98 14057 11841 12720
7/31/98 13154 10852 11821
8/31/98 10509 8347 9264
9/30/98 11691 9193 10000
10/31/98 11681 9673 10462
11/30/98 12770 10423 11372
12/31/98 14542 11366 12612
1/31/99 15053 11878 12925
2/28/99 13422 10791 11768
3/31/99 12998 11176 12294
4/30/99 12965 12163 12804
5/31/99 13966 12182 12916
6/30/99 15989 12823 14092
7/31/99 15380 12427 14081
8/31/99 15358 11962 13929
9/30/99 16663 12193 14333
10/31/99 18077 12505 15159
11/30/99 20524 13828 17185
12/31/99 24968 16265 20435
1/31/2000 24821 16113 20210
2/29/2000 32988 19862 25465
3/31/2000 30840 17774 23815
1 Performance is historical and not indicative of future results. The
investment return and principal value of an investment will fluctuate, so
that an investor's shares, when redeemed, may be worth more or less than
their original cost.
2 The PBHG Limited Fund commenced operations on June 28, 1996.
3 The Russell 2000 Growth Index is an unmanaged index comprised of those
securities in the Russell 2000 Index with a greater-than-average growth
orientation. The Index reflects the reinvestment of income dividends and
capital gains distributions, if any, but does not reflect fees, brokerage
commissions, or other expenses of investing. The Index is not intended to
imply the Fund's past or future performance.
4 The Lipper Small-Cap Growth Funds Average represents the average
performance of all mutual funds classified by Lipper, Inc. in the Small-Cap
Growth category. These performance figures are based on the changes in net
asset value of the funds in the category with all capital gains
distributions and income dividends reinvested. The average is not intended
to imply the Fund's past or future performance.
SECTOR WEIGHTINGS - AT MARCH 31, 2000
[PIE CHART OMITTED]
Consumer Cyclical 8%
Consumer Non-Cyclical 1%
Health Care 13%
Industrial 7%
Services 13%
Technology 44%
Cash 13%
% OF TOTAL PORTFOLIO INVESTMENTS
TOP TEN HOLDINGS - MARCH 31, 2000
Natural Microsystems 3.6%
Micromuse 3.5%
Varian Semiconductor Equipment 3.3%
Forrester Research 3.1%
Business Objects 3.0%
Advent Software 2.9%
Polycom 2.8%
TranSwitch 2.8%
Allscripts 2.8%
Actuate 2.8%
- -------------------------------------------------------
% of Total Portfolio Investments 30.6%
19
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<PAGE>
THE PBHG FUNDS, INC.
PBHG LARGE CAP 20 FUND
PORTFOLIO PROFILE
OBJECTIVE: Long-term growth of capital.
INVESTS IN: A limited number of larger capitalization companies (no more than
20) that have above-average potential for capital appreciation.
STRATEGY: The Fund is different from other PBHG Funds in two key ways: it
invests only in large capitalization companies (over $1 billion) and it
concentrates investments in just 20 stocks. This non-diversified Fund seeks
large capitalization stocks that present the best opportunities for meaningful
capital appreciation in the foreseeable future. Our strategy involves looking
beyond the financial data and analysts' reports to find some dynamic within a
company that may not be fully appreciated and that, when exploited, can lead to
positive earnings surprises and upward revisions of future growth expectations.
PERFORMANCE
The PBHG Large Cap 20 Fund returned 117.9% for the fiscal year ended March
31, 2000. This compares favorably to the return provided by our benchmark, the
S&P 500 Index at 17.9%. The out-performance relative to the benchmark occurred
in the last three fiscal quarters. During this time, investors gravitated toward
technology issues whose revenue and earnings growth rates were accelerating. The
underlying strength of these companies' fundamentals increasingly began to
overwhelm the doomsayer's predictions for a Year 2000 catastrophe. In fact, the
fourth quarter of 1999 proved to be one of the best quarters for technology
stocks ever.
An interesting phenomenon over the past year was the intensity of the
Initial Public Offering (IPO) market. Here, investors were especially eager to
snap up new issues as quickly as the investment bankers could get them ready for
institutional investor roadshows. An equally interesting phenomenon was that
investors became increasingly willing to pay up for Internet companies that had
no current earnings but were growing their revenues exponentially. These "New
Economy" companies received extraordinary valuations. As their valuations grew,
it increased the scrutiny of all technology companies' price appreciation. In
the meantime, "Old Economy" companies were being devalued by the stock market.
The divergence in these two segments reached a crescendo on March 10, 2000.
Since then, there has been a revision in New and Old Economy valuations. Many
New Economy issues indiscriminately lost 30% of their value into by close of the
first quarter of 2000.
Over the past year, the Fund nicely outperformed the market and our peer
group as our preference for high-growth companies was rewarded. The last two
quarters of the fiscal year provided most of our substantial relative
outperformance. For the fiscal year, we were fortunate enough to outperform 99%
of our peers, as the average return generated by the universe of large cap
growth mutual funds (as categorized by Lipper Analytical Services) was 38.1%
over the same twelve-month period.
Like last year, investors continued to favor technology stocks above all
others. Determining factors seemed to be sustainable, above-average earnings and
revenue growth rates in an environment characterized by increased trading
liquidity. There is no question that our investment style was in favor over the
last twelve months. We continue to believe that high quality, well-managed,
non-cyclical growth companies with sustainable competitive advantages
consistently represent the most compelling investment opportunities.
We also experienced some disappointments during this fiscal year.
Deteriorating fundamentals prompted the sale of a number of holdings, most
before their share price deterioration and, unfortunately, a few after. While
negative surprises are a fact of life for investors, we believe minimizing them
creates superior returns over time. We plan to continue to work hard to
anticipate changes in our companies' business fundamentals.
PORTFOLIO HIGHLIGHTS
The advantages of concentrated investing -- focusing on a limited number of
stocks possessing the greatest fundamental business momentum -- were borne out
in the results of the Large Cap 20 Fund during the last fiscal year. Despite a
few disappointments, we believe having several of the market's top performers
easily compensated for the negative effects of our less effective stocks.
Fortunately, several holdings appreciated by more than 200% for the year.
Technology comprised the largest sector of the portfolio and led this year's
performance. One of our best performers was Qualcomm which benefited from its
proprietary CDMA technology in the explosively growing cellular phone market,
rising 365% from our purchase in June 1999. An important theme was our
investment in Internet Infrastructure companies, which included EMC Corp.,
Broadcom, SunMicrosystems and Cisco Systems. A particularly important segment of
the Internet infrastructure subsector was optical networking. Our company of
choice here was JDS Uniphase, which was also one of last year's best performing
issues appreciating 567% from our initial purchase in June of 1999. JDS Uniphase
is a provider of advanced fiberoptic components and modules. The Company's
components and modules are basic building blocks for fiberoptic networks and
perform both optical-only (passive) and optoelectronic (active) functions within
these networks. We continue to remain steadfast in our view that technology is
likely to remain the fastest growing sector of our economy with the best
business momentum.
Non-technology companies also contributed to our strong performance during
the year. In the consumer cyclical sector, better-than-expected earnings reports
drove the share prices of Home Depot, Kohls, Walmart and Tiffany. In the
healthcare sector, Genentech benefited from continued recognition as one of the
premier biotechnology companies. In the services sector, Gemstar International
Group shares rose due to better-than-expected earnings and the expanded
recognition of the company's rapidly growing service. Gemstar develops markets
and licenses proprietary technologies designed to simplify and enhance
consumers' interaction with electronics products and other platforms that
deliver video, programming information and other data.
As we enter the new fiscal year, the equity markets are in a period of
transition. The euphoria of the prior two quarters has abated and the new mode
is one of caution. Clearly the Federal Reserve is no longer accommodating with
respect to interest rates. With valuations at historically high levels, we would
expect periods of extreme short-term volatility. But in our opinion, the odds
are low for a major sustained downdraft in equity markets in the presence of a
vibrant U.S. economy and exceptional fundamental business dynamics. At present,
some of the market's "arrogance" that it could continue climbing unabated has
waned. In one sense we are relieved that the ominous correction everyone has
been anticipating for New Economy stocks has finally occurred. While we
experienced some discomfort as some of "our babies" were thrown out with the
"bath-water," we are confident that over the intermediate term the market will
separate our "contenders" from the "pretenders". The pullback has also presented
us with the opportunity to commit new capital to our investments at lower
prices, which we believe will strengthen the Fund for the long-term.
20
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<PAGE>
THE PBHG FUNDS, INC.
INVESTMENT FOCUS STYLE / MARKET CAPITALIZATION
[CHART OMITTED]
AVERAGE ANNUAL TOTAL RETURN1
AS OF MARCH 31, 2000
- ---------------------------------------------------------------------------
One Annualized Annualized
Year 3 Year Inception
Return Return to Date2
- ---------------------------------------------------------------------------
PBHG Large Cap 20 Fund 117.88% 79.06% 64.99%
- ---------------------------------------------------------------------------
COMPARISON OF CHANGE IN THE VALUE OF A
$10,000 INVESTMENT IN THE
PBHG LARGE CAP 20 FUND,
VERSUS THE S&P 500 INDEX AND
THE LIPPER LARGE-CAP GROWTH
FUNDS AVERAGE
[LINE CHART OMITTED]
PBHG Large Cap Lipper Large-Cap
20 Fund S&P 500 Index(3) Growth Funds Average(4)
11/30/96 $10,000 $10,000 $10,000
12/31/96 $9,841 $9,802 $9,747
1/31/97 $10,462 $10,414 $10,362
2/28/97 $10,001 $10,496 $10,163
3/31/97 $9,260 $10,065 $9,637
4/30/97 $9,881 $10,666 $10,148
5/31/97 $10,912 $11,315 $10,848
6/30/97 $11,523 $11,821 $11,298
7/31/97 $12,854 $12,761 $12,373
8/31/97 $12,234 $12,047 $11,793
9/30/97 $12,914 $12,706 $12,422
10/31/97 $12,424 $12,283 $11,977
11/30/97 $12,494 $12,851 $12,225
12/31/97 $13,084 $13,071 $12,336
1/31/98 $13,355 $13,216 $12,517
2/28/98 $15,097 $14,168 $13,522
3/31/98 $15,998 $14,893 $14,168
4/30/98 $16,278 $15,043 $14,391
5/31/98 $15,848 $14,785 $14,022
6/30/98 $17,589 $15,385 $14,892
7/31/98 $17,609 $15,221 $14,781
8/31/98 $14,516 $13,023 $12,327
9/30/98 $16,708 $13,858 $13,233
10/31/98 $17,069 $14,985 $14,084
11/30/98 $18,320 $15,893 $15,073
12/31/98 $21,960 $16,809 $16,719
1/31/99 $23,995 $17,512 $17,855
2/28/99 $22,294 $16,968 $17,105
3/31/99 $24,400 $17,647 $18,142
4/30/99 $23,337 $18,330 $18,186
5/31/99 $22,527 $17,897 $17,593
6/30/99 $24,178 $18,891 $18,873
7/31/99 $23,540 $18,301 $18,279
8/31/99 $24,512 $18,210 $18,582
9/30/99 $25,372 $17,711 $18,436
10/31/99 $28,136 $18,831 $19,757
11/30/99 $33,614 $19,214 $20,893
12/31/99 $44,567 $20,346 $23,432
1/31/00 $43,320 $19,324 $22,483
2/29/00 $51,964 $18,958 $24,181
3/31/00 $53,163 $20,813 $25,496
1 Performance is historical and not indicative of future results. The
investment return and principal value of an investment will fluctuate, so
that an investor's shares, when redeemed, may be worth more or less than
their original cost.
2 The PBHG Large Cap 20 Fund commenced operations on November 29, 1996.
3 The S&P 500 Index is a capitalization-weighted index of 500 stocks. The
index is designed to measure performance of the broad domestic economy
through changes in the aggregate market value of 500 stocks representing
all major industries. The Index is not intended to imply the Fund's past or
future performance.
4 The Lipper Large-Cap Growth Funds Average represents the average
performance of all mutual funds classified by Lipper, Inc. in the Large-Cap
Growth category. These performance figures are based on the changes in net
asset value of the funds in the category with all capital gains
distributions and income dividends reinvested. The average is not intended
to imply the Fund's past or future performance.
SECTOR WEIGHTINGS - AT MARCH 31, 2000
[PIE CHART OMITTED]
Consumer Cyclical 5%
Financial 4%
Health Care 7%
Industrial 8%
Technology 70%
Cash 6%
% OF TOTAL PORTFOLIO INVESTMENTS
TOP TEN HOLDINGS - MARCH 31, 2000
JDS Uniphase 8.4%
Broadcom 7.7%
Nortel Networks 7.4%
Cisco Systems 6.6%
Gemstar International 5.3%
Texas Instruments 5.0%
Flextronics International 4.6%
Applied Materials 4.5%
Nokia ADR, Cl A 4.5%
EMC 4.4%
- -------------------------------------------------------
% of Total Portfolio Investments 58.2%
21
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<PAGE>
THE PBHG FUNDS, INC.
PBHG NEW OPPORTUNITIES FUND
PORTFOLIO PROFILE
OBJECTIVE: Long-term capital appreciation.
INVESTS IN: Equity securities of small and medium sized growth companies. The
Fund does not have a delineated predisposition to set sector or sub-sector
allocations.
STRATEGY: The PBHG New Opportunities Fund is a diversified portfolio intended to
deliver capital appreciation by identifying and investing in the fastest growing
stocks of small- and medium-sized growth companies. With generally similar
weightings among the holdings and no predetermined sector or sub-sector
allocation, the Fund is intended to own the highest quality, rapidly growing,
emerging small companies. When identifying and reviewing the names that make-up
the portfolio, the Fund incorporates Pilgrim Baxter's proprietary quantitative
model coupled with an extensive top-down and bottom-up growth-oriented
fundamental review. A majority of the Fund's purchases are in companies with
market capitalizations below $1 billion.
PERFORMANCE
The PBHG New Opportunities Fund returned 529.94% for the fiscal year ended
March 31, 2000. We are proud to tell you that this was the best performance of
any mutual fund for that one-year period according to Lipper. Inc. This
performance also compares very favorably to the 59.06% return of the Russell
2000 Growth Index and the 97.82% return of the average mutual fund in Lipper's
Mid-Cap Growth Fund Classification. The Fund was heavily weighted in the
technology sector for the majority of the year, which contributed to its
outstanding performance in comparison to its benchmark. Our stock selection
criteria, focusing on companies that are growing rapidly and sustainably, was
the primary driver of performance. In addition, the Fund was able to add
relative performance by trading advantageously in volatile markets with a
portion of its assets while maintaining its core long-term positions.
The Fund outperformed its benchmark considerably in each quarter of the
fiscal year. During the first fiscal quarter, the Fund performed well despite a
rotation by investors out of many technology stocks and into industrial and
consumer cyclical issues. This rotation was prompted by worries about the high
valuations of Internet companies, which broadened to much of the technology
sector. During the first fiscal quarter, the fund returned 47.30% while the
Russell 2000 Growth Index returned 14.75%.
During the second fiscal quarter, the Fund returned 13.44% versus a decline
in the Russell 2000 Growth Index of 4.91%. Unlike the prior quarter, when
investor's appetites for growth companies was strong, the second fiscal quarter
was a period of gains in a narrow segment of the technology sector. The Fund's
exposure to direct, infrastructure and bandwidth related Internet companies was
largely responsible for outperformance in the quarter.
The market leadership of the technology sector continued and picked up
strength in the Fund's third fiscal quarter. For the three months ended December
31, 1999, the Fund returned 164.80%, significantly outperforming the 33.39%
return of the Russell 2000 Growth Index. This was caused by a seemingly
insatiable demand for the Internet and Internet-related companies that were top
holdings of the Fund. In particular, the Fund was concentrated in the
business-to-business Internet stocks that were most sought after. Amazingly,
twenty-two of the companies held by the Fund increased by over 100% during the
fiscal quarter.
During the final fiscal quarter, the Fund also produced strong returns. For
the three months ended March 31, 2000, the Fund returned 42.37%, which compares
very favorably to the 9.29% return of the Russell 2000 Growth Index. The
companies in which the Fund invested continued to produce strong operating
results and to exhibit good business momentum, a combination that was rewarded.
Despite the strong performance of the quarter, the world's equity markets became
increasingly volatile and continued to be so after fiscal year end in response
to the perception of rising inflation.
PORTFOLIO HIGHLIGHTS
The majority of the Fund's holdings performed extremely well during the
fiscal year. In fact, the Fund had positions in over 60 stocks that increased by
more than 100%. Of these, 17 returned in excess of 500% and 3 returned greater
than 1,000%.
The Funds three best performing positions were companies that were purchased
at or shortly after their initial public offering and were held through the end
of the fiscal year. Ditech Communications, which designs, develops and markets
equipment used in building and expanding telecommunications and cable
communications networks returned 1,580% during the period. Brocade
Communications Systems advanced 1,137%. Brocade provides switching solutions for
storage area networks and allow companies to manage the growth of their data
storage and improve data transfer performance. The final greater-than-1,000%
percent performer during the period was Art Technology Group which provides an
integrated suite of Internet customer relationship management and electronic
commerce software applications.
Rounding out the Fund's top five performers were SDL, Inc. and I2
Technologies which were held during the entire fiscal year and returned 838% and
818%, respectively. SDL designs, manufactures and markets semiconductor lasers
and fiber optic related products. I2 Technologies is a business-to-business
supplier of e-commerce solutions.
Although the majority of the Fund's investments provided positive
contributions to performance during the fiscal year, we did experience some
disappointments. Examples include: New Era of Networks, FVC.com. Engineering
Animation, Biomatrix and Carematrix. Each of these companies lost between 71%
and 39% of their value during the fiscal year and was eliminated from the
portfolio. As is usually the case with our underperformers, these companies
posted operating results that disappointed investors.
Overall, we believe the PBHG New Opportunities Fund provided extraordinary
investment performance results during the fiscal year ended March 31, 2000.
These results were generated in an environment that was extremely favorable to
the technology stocks in which the fund was concentrated. We urge investors to
maintain realistic expectations of future performance and understand that these
types of results are unlikely to be sustained. In the last few months, global
equity markets have become increasingly volatile given the large advances in
equity valuations, the Federal Reserve's dedication to increasing interest rates
in order to preserve slow economic growth and the nervous investment sentiment
that these market conditions create. We remain positive in our long-term outlook
for the high quality rapidly growing companies in which the Fund invests and
believe our strategy will continue to be successful over the long haul. We thank
your for your continued confidence and investment in the Fund.
22
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<PAGE>
THE PBHG FUNDS, INC.
INVESTMENT FOCUS STYLE / MARKET CAPITALIZATION
[CHART OMITTED]
AVERAGE ANNUAL TOTAL RETURN1
AS OF MARCH 31, 2000
- -------------------------------------------------------------------------
One Annualized
Year Inception
Return to Date2
- -------------------------------------------------------------------------
PBHG New Opportunities Fund 529.94% 505.56%
- -------------------------------------------------------------------------
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE PBHG NEW
OPPORTUNITIES FUND, VERSUS THE RUSSELL 2000 GROWTH INDEX
AND THE LIPPER MID CAP GROWTH FUNDS AVERAGE
[LINE CHART OMITTED]
PBHG NEW RUSSELL 2000 LIPPER MID-CAP GROWTH
OPPORTUNITIES GROWTH INDEX(3) FUNDS AVERAGE(4)
2/28/99 $10000 $10000 $10000
3/31/99 11714 10356 10763
4/30/99 12134 11271 11213
5/31/99 12795 11289 11131
6/30/99 17255 11883 12149
7/31/99 18770 11516 12021
8/31/99 19047 11085 12057
9/30/99 19573 11299 12358
10/31/99 24780 11588 13465
11/30/99 33314 12814 15191
12/31/99 51830 15072 18164
1/31/2000 54784 14932 18004
2/29/2000 82487 18406 22697
3/31/2000 73791 16471 21316
1 Performance is historical and not indicative of future results. The
investment return and principal value of an investment will fluctuate, so
that an investor's shares, when redeemed, may be worth more or less than
their original cost.
2 The PBHG New Opportunities Fund commenced operations on February 12, 1999.
3 The Russell 2000 Growth Index is an unmanaged index comprised of those
securities in the Russell 2000 Index with a greater-than-average growth
orientation. The Index reflects the reinvestment of income dividends and
capital gains distributions, if any, but does not reflect fees, brokerage
commissions, or other expenses of investing. The Index is not intended to
imply the Fund's past or future performance.
4 The Lipper Mid Cap Growth Funds Average represents the average performance
of all mutual funds classified by Lipper, Inc. in the Mid-Cap Growth
category. These performance figures are based on the changes in net asset
value of the funds in the category with all capital gains distributions and
income dividends reinvested. The average is not intended to imply the
Fund's past or future performance.
SECTOR WEIGHTINGS - AT MARCH 31, 2000
[PIE CHART OMITTED]
Consumer Cyclical 5%
Industrial 1%
Health Care 2%
Services 3%
Technology 89%
% OF TOTAL PORTFOLIO INVESTMENTS
TOP TEN HOLDINGS - MARCH 31, 2000
Broadcom 6.4%
Gemstar International 6.1%
Brocade Communications Systems 5.9%
SDL 5.4%
Juniper Networks 5.2%
Opitika Imaging Systems 5.0%
Exodus Communications 4.9%
InfoSpace 4.5%
Siebel Systems 4.4%
JDS Uniphase 4.3%
- -------------------------------------------------------
% of Total Portfolio Investments 52.3%
23
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<PAGE>
THE PBHG FUNDS, INC.
PBHG LARGE CAP VALUE FUND
PORTFOLIO PROFILE
OBJECTIVE: Long-term growth of capital and income.
INVESTS IN: A diversified portfolio of equity securities of large capitalization
companies.
STRATEGY: The Fund invests in companies with market capitalizations in excess of
$1 billion which in Value Investors' opinion, are undervalued or overlooked by
the market. In selecting investments for the Fund, Value Investors emphasizes
fundamental investment value and considers factors such as: the relationship of
a company's potential earning power to the current market price of its stock;
continuing dividend income and the potential for increased dividend growth; low
price/earnings ratio relative to either that company's historical results or the
current ratios for other similar companies; and potential for favorable business
developments.
PERFORMANCE
For the fiscal year ended March 31, 2000, the PBHG Large Cap Value Fund's
total return was 14.25% versus 17.94% for the S&P 500 Index, the Fund's
benchmark, and 6.33% for the Russell 1000 Value Index. We are disappointed that
we trailed the S&P 500 and are working hard to try beat this benchmark in 2000.
The years 1998 and 1999 were two of the worst years for value investing
since the early 1970's. In 1998, growth outperformed value by 20% and in 1999,
growth bested value again, this time by 15%.
January and February of this year were a repeat of 1998 and 1999, with the
Russell 1000 Growth Index outperforming the Russell 1000 Value Index by 10%. On
a three-month trailing basis (Dec-Feb), the Russell Growth bettered the Russell
Value by 20% basis points.
But value came roaring back in March, with the Russell Value Index gaining
12.2%, bettering the returns of the S&P 500 Index, the Russell 1000 Growth Index
and the Nasdaq Composite. We may look back on March 2000 as the month when value
investing emerged from its bear market. Bear markets typically end with one
final intense sell-off, in which all but the "true believers" capitulate and
sell their stocks. We believe this happened in the first two months of this
year, climaxing in early March, when investors sold their value stocks to buy
high-flying technology shares.
PORTFOLIO HIGHLIGHTS
The Federal Reserve is determined to keep inflation at bay, even if it means
causing the economy to slow. Recent consumer price index reports indicate that
inflation is beginning to accelerate in many areas of the economy. We expect the
Fed will continue to raise rates this year, which could put earnings at risk for
economically sensitive companies.
As "true believers" in value investing, there have been no major changes to
our investment strategy. We remain fully invested and are concentrating our
attention on identifying stocks that offer an attractive trade-off between
valuation, growth prospects and the business fundamentals of the enterprise. At
present, we believe telecommunications services, healthcare, and energy,
including natural gas and electric utilities are particularly attractive. We
believe these groups should be able to deliver earnings growth despite a hostile
Federal Reserve. Even with the recent correction, technology stocks sell at
valuations well in excess of their growth rates and only selected companies
offer good value at current levels.
24
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<PAGE>
THE PBHG FUNDS, INC.
INVESTMENT FOCUS STYLE / MARKET CAPITALIZATION
[CHART OMITTED]
AVERAGE ANNUAL TOTAL RETURN1
AS OF MARCH 31, 2000
- ----------------------------------------------------------------------------
One Annualized Annualized
Year 3 Year Inception
Return Return to Date2
- ----------------------------------------------------------------------------
PBHG Large Cap Value Fund 14.25% 24.22% 22.58%
- ----------------------------------------------------------------------------
COMPARISON OF CHANGE IN THE VALUE OF A
$10,000 INVESTMENT IN THE
PBHG LARGE CAP VALUE FUND,
VERSUS THE S&P 500 INDEX
AND THE LIPPER MULTI-CAP
VALUE FUNDS AVERAGE
[LINE GRAPH OMITTED]
PBHG Large Cap S&P 500 Lipper Multi-Cap Value
Value Fund Index(3) Funds Average(4)
12/31/96 $10,000 $10,000 $10,000
1/31/97 $10,240 $10,624 $10,385
2/28/97 $10,430 $10,708 $10,468
3/31/97 $10,110 $10,269 $10,134
4/30/97 $10,380 $10,881 $10,418
5/31/97 $11,080 $11,543 $11,076
6/30/97 $11,560 $12,060 $11,478
7/31/97 $12,400 $13,019 $12,314
8/31/97 $12,000 $12,291 $12,014
9/30/97 $12,450 $12,963 $12,620
10/31/97 $12,110 $12,531 $12,143
11/30/97 $12,390 $13,110 $12,402
12/31/97 $12,562 $13,335 $12,592
1/31/98 $12,540 $13,483 $12,531
2/28/98 $13,407 $14,455 $13,383
3/31/98 $14,101 $15,194 $13,959
4/30/98 $14,198 $15,347 $14,013
5/31/98 $14,101 $15,084 $13,716
6/30/98 $14,339 $15,696 $13,742
7/31/98 $14,318 $15,529 $13,265
8/31/98 $12,312 $13,287 $11,311
9/30/98 $13,201 $14,138 $11,828
10/31/98 $14,578 $15,288 $12,746
11/30/98 $15,553 $16,214 $13,304
12/31/98 $16,925 $17,149 $13,701
1/31/99 $17,244 $17,866 $13,721
2/28/99 $16,509 $17,311 $13,310
3/31/99 $16,962 $18,003 $13,649
4/30/99 $17,415 $18,701 $14,717
5/31/99 $17,550 $18,259 $14,656
6/30/99 $18,701 $19,272 $15,128
7/31/99 $18,297 $18,671 $14,724
8/31/99 $17,991 $18,578 $14,241
9/30/99 $17,844 $18,069 $13,645
10/31/99 $18,787 $19,212 $14,087
11/30/99 $19,142 $19,602 $14,135
12/31/99 $18,796 $20,757 $14,532
1/31/00 $18,634 $19,714 $13,885
2/29/00 $17,372 $19,341 $13,303
3/31/00 $19,379 $21,233 $14,692
1 Performance is historical and not indicative of future results. The
investment return and principal value of an investment will fluctuate, so
that an investor's shares, when redeemed, may be worth more or less than
their original cost.
2 The PBHG Large Cap Value Fund commenced operations on December 31, 1996.
3 The S&P 500 Index is a capitalization weighted index of 500 stocks. The
index is designed to measure performance of the broad domestic economy
through changes in the aggregate market value of 500 stocks representing
all major industries. The Index is not intended to imply the Fund's past or
future performance.
4 The Lipper Multi-Cap Value Funds Average represents the average performance
of all mutual funds classified by Lipper, Inc. in the Multi-Cap Value
category. These performance figures are based on the changes in net asset
value of the funds in the category with all capital gains distributions and
income dividends reinvested. The average is not intended to imply the
Fund's past or future performance.
SECTOR WEIGHTINGS - AT MARCH 31, 2000
[PIE CHART OMITTED]
Basic Materials 3%
Consumer Cyclical 4%
Consumer Non-Cyclical 13%
Energy 9%
Financial 16%
Health Care 14%
Industrial 10%
Services 13%
Technology 13%
Cash 5%
% OF TOTAL PORTFOLIO INVESTMENTS
TOP TEN HOLDINGS - MARCH 31, 2000
Warner Lambert 4.0%
Citigroup 3.4%
GTE 3.0%
IBM 2.9%
Procter & Gamble 2.8%
Electronic Data Systems 2.5%
Computer Associates International 2.3%
First Data 2.3%
Comcast, Cl A 2.2%
Heinz (HJ) 2.1%
- -------------------------------------------------------
% of Total Portfolio Investments 27.5%
25
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<PAGE>
THE PBHG FUNDS, INC.
PBHG MID-CAP VALUE FUND
PORTFOLIO PROFILE
OBJECTIVE: Above-average total return over a market cycle of three to five
years, consistent with reasonable risk.
INVESTS IN: Common stocks and other equity securities of companies with market
capitalizations in the range of companies represented by the Standard & Poor's
Mid Cap 400 Index ("S&P 400"), which are considered to be undervalued based on
certain proprietary measures of value.
STRATEGY: The Fund typically invests in equity securities of companies with
between $200 million and $5 billion in market capitalization. In selecting
investments for the Fund, Value Investors emphasizes fundamental investment
value and considers the following factors, among others, in identifying and
analyzing a security's fundamental value and capital appreciation potential: the
relationship of a company's potential earning power to the current price of its
stock; current dividend income and the potential for dividend growth; low
price/earnings ratio relative to either that company's historical results or the
current ratios for other similar companies; strong competitive advantages; and
potential for favorable business developments.
PERFORMANCE
For the quarter ended March 31, 2000, the PBHG Mid-Cap Value Fund's total
return was 12.72% versus 12.69% for the S&P 400 and 6.27% for the S&P Midcap
Barra Value Index ("S&P Barra Mid Value"). For the fiscal year, the Fund's total
return was 42.21% versus 38.08% for the S&P 400 and 18.28% for the S&P Barra Mid
Value. In a quarter and a year that was dominated by growth stocks, we were very
pleased with the Fund's returns. We hope we filled an important role in your
diversified portfolio and look forward to serving you again in fiscal year 2001.
As our process dictates, we continue to focus on companies whose
appreciation potential is commensurate with their near-term business dynamics
and long-term growth potential. In select cases, we feel that the market
provided us with the opportunity to own exceptional companies with great
management teams, strong operating histories and improving near-term and
long-term prospects. It was these companies that contributed to the bulk of your
out-performance vs. the S&P 400 and S&P Barra Mid Value benchmarks during the
past 12 months.
The Fund's most gratifying performance contribution came from its energy
companies. These companies possess the attributes that we seek in potential
portfolio additions: great near-term results, solid long-term growth prospects
and attractive valuations. Although the energy stocks in your Fund have done
well recently, we remain bullish as a result of the continually improving
near-term dynamics. Oil prices remain over $22/ barrel. Natural gas continues to
trade around the $2.75/ mcf level. Day rates are rising for the service
companies and rig counts are increasing commensurate with higher drilling
budgets.
PORTFOLIO HIGHLIGHTS
Technology was the best performing sector in most major indices over the
past 12 months. Regardless of your personal exposure to these stocks, it was
impossible not to notice the effect technology was having on popular culture.
Long a bellwether for technology, the Nasdaq joined the S&P 500 and the Dow
Jones Industrial Average as a core benchmark of performance seemingly overnight,
inasmuch as it became a gold standard of investing and drove the performance of
most major indices. It was also a major contributor to the Fund's performance
over the past 12 months. The Fund benefited from holdings in semiconductors and
semiconductor capital equipment, as these companies offered the best trade-off
between valuation, near-term business dynamics and long-term growth.
Energy also contributed positively to the Fund's positive performance during
the past 12 months. As oil rebounded off its low of $11/barrel in 1998, many of
the energy companies returned to profitability and started showing huge free
cash flow. Although we are bullish on energy, we prefer companies with natural
gas exposure versus oil, which we believe removes some of the commodity price
risk associated with OPEC. The supply and demand characteristics continue to
bode well for future stock price appreciation within this group.
Poor performing sectors over the past year included financials and consumer
staples. As investors attempted to raise cash for technology purchases, they
managed to sell many of the stocks in these groups down to levels they had not
seen in years.
LOOKING FORWARD
We expect continued volatility in the markets. Feeding the skeptics, we
expect continued rate hikes by the Federal Reserve, emerging signs of
inflationary prospects (consumer spending, low unemployment and higher energy
costs) and an increasingly leveraged and skittish individual investor.
Conversely, bulls will counter these issues by pointing to their expectations
for companies' strong earnings results over the next few weeks and the continued
strength of the U.S. economy. Regardless of future market action, we continue to
believe our process will deliver incremental returns and risk diversification
for our investors.
26
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<PAGE>
THE PBHG FUNDS, INC.
INVESTMENT FOCUS STYLE / MARKET CAPITALIZATION
[CHART OMITTED]
AVERAGE ANNUAL TOTAL RETURN1
AS OF MARCH 31, 2000
- -----------------------------------------------------------------------
One Annualized
Year Inception
Return to Date2
- -----------------------------------------------------------------------
PBHG Mid-Cap Value Fund 42.21% 36.51%
- -----------------------------------------------------------------------
COMPARISON OF CHANGE IN THE VALUE OF A $10,000
INVESTMENT IN THE PBHG MID-CAP VALUE FUND,
VERSUS THE S&P MID CAP 400 INDEX, S&P BARRA
MID-CAP VALUE INDEX AND THE LIPPER MID-CAP
VALUE FUNDS AVERAGE
[LINE CHART OMITTED]
<TABLE>
<CAPTION>
PBHG Mid-Cap S&P 400 Lipper Mid-Cap Value S&P Barra MidCap
Value Fund Mid-Cap Index(3) Funds Average(5) Value Index(4)
<S> <C> <C> <C> <C>
4/30/97 $10000 $10000 $10000 $10000
5/31/97 10740 10874 10834 10638
6/30/97 11410 11180 11257 10926
7/31/97 12890 12285 12024 11733
8/31/97 13240 12271 12066 11811
9/30/97 14300 12976 12784 12472
10/31/97 13760 12411 12367 12100
11/30/97 13870 12595 12432 12402
12/31/97 14148 13083 12677 13147
1/31/98 14138 12834 12532 12845
2/28/98 15443 13896 13448 13795
3/31/98 16106 14523 14070 14440
4/30/98 16422 14787 14210 14533
5/31/98 15717 14123 13643 13946
6/30/98 15896 14211 13560 13842
7/31/98 15580 13660 12760 13240
8/31/98 12769 11119 10526 11072
9/30/98 13906 12157 11043 11933
10/31/98 15358 13243 11766 12874
11/30/98 16538 13904 12209 13174
12/31/98 18087 15584 12765 13761
1/31/99 18122 14977 12521 13042
2/28/99 17023 14193 11928 12419
3/31/99 17451 14589 12223 12653
4/30/99 17764 15740 13253 13878
5/31/99 18666 15808 13459 14104
6/30/99 20042 16656 13926 14542
7/31/99 20215 16301 13638 14349
8/31/99 19487 15742 13061 13805
9/30/99 19174 15256 12697 13125
10/31/99 19313 16033 12859 13388
11/30/99 20007 16875 13178 13658
12/31/99 22017 17878 13939 14080
1/31/2000 20903 17374 13339 13472
2/29/2000 21622 18590 13609 12978
3/31/2000 24818 20146 14789 14964
</TABLE>
1 Performance is historical and not indicative of future results. The
investment return and principal value of an investment will fluctuate, so
that an investor's shares, when redeemed, may be worth more or less than
their original cost.
2 The PBHG Large Cap Value Fund commenced operations on December 31, 1996.
3 The S&P 500 Index is a capitalization weighted index of 500 stocks. The
index is designed to measure performance of the broad domestic economy
through changes in the aggregate market value of 500 stocks representing
all major industries. The Index is not intended to imply the Fund's past or
future performance.
4 The Lipper Multi-Cap Value Funds Average represents the average performance
of all mutual funds classified by Lipper, Inc. in the Multi-Cap Value
category. These performance figures are based on the changes in net asset
value of the funds in the category with all capital gains distributions and
income dividends reinvested. The average is not intended to imply the
Fund's past or future performance.
SECTOR WEIGHTINGS - AT MARCH 31, 2000
[PIE CHART OMITTED]
Basic Materials 2%
Consumer Cyclical 10%
Consumer Non-Cyclical 5%
Energy 22%
Financial 15%
Health Care 6%
Industrial 8%
Services 6%
Technology 7%
Utilities 8%
Cash 11%
% OF TOTAL PORTFOLIO INVESTMENTS
TOP TEN HOLDINGS - MARCH 31, 2000
Unitedglobalcom, Cl A 2.8%
Baker Hughes 2.3%
Fortune Brands 2.3%
Providian Financial 2.0%
Networks Associates 2.0%
Scripps (E.W.), Cl A 2.0%
Protective Life 2.0%
EOG Resources 1.9%
Weatherford International 1.9%
Constellation Energy Group 1.9%
- -------------------------------------------------------
% of Total Portfolio Investments 21.2%
27
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
PBHG SMALL CAP VALUE FUND
PORTFOLIO PROFILE
OBJECTIVE: Above-average total return over a market cycle of three to five
years, consistent with reasonable risk.
INVESTS IN: A diversified portfolio of common stocks of small companies with
market capitalizations similar to companies represented by the Russell 2000
Index, that are considered to be relatively undervalued based on certain
proprietary measures of value.
STRATEGY: In selecting investments for the Fund, Value Investors emphasizes
fundamental investment value and considers the following factors, among others,
in identifying and analyzing a security's fundamental value and capital
appreciation potential: the relationship of a company's potential earning power
to the current price of its stock; current dividend income and the potential for
dividend growth; low price/earnings ratio relative to either that company's
historical results or the current ratios for other similar companies; strong
competitive advantages; and potential for favorable business developments.
PERFORMANCE
For the quarter ended March 31, 2000, the PBHG Small Cap Value Fund's total
return was 21.20% versus 7.08% and 3.82% for the Russell 2000 and Russell 2000
Value respectively. For the fiscal year, the Fund's total return was 64.76%
versus 37.29% for the Russell 2000 and 13.24% for the Russell 2000 Value. In a
quarter and a year that was dominated by growth stocks, we were very pleased
with the Fund's returns. We hope we filled an important role in your diversified
portfolio and look forward to serving you again in fiscal year 2001.
As our process dictates, we continue to focus on companies whose prices are
commensurate with their near-term business dynamics and long-term growth
potential. In select cases we feel that the market provided us with the
opportunity to own exceptional companies with great management teams, strong
operating histories and improving near-term and long-term prospects. It was
these companies that contributed to the bulk of your out-performance vs. the
Russell 2000 and Russell 2000 Value benchmarks during the past 12 months.
The most gratifying performance came from the Fund's energy companies. These
companies possess the attributes that we seek in potential portfolio additions:
great near-term results, solid long-term growth prospects and attractive
valuations. Although the energy stocks in your Fund have done well recently, we
remain bullish as a result of the continually improving near-term dynamics. Oil
prices remain over $22/ barrel. Natural gas continues to trade around the $2.75/
mcf level. Day rates are rising for the service companies and rig counts are
increasing commensurate with higher drilling budgets.
PORTFOLIO HIGHLIGHTS
As has been well reported, technology was the best performing sector in most
major indices over the past 12 months. Regardless of your personal exposure to
these stocks, it was impossible not to notice the effect technology was having
on popular culture. Almost overnight, technology bellwether the Nasdaq joined
the S&P 500 and the Dow Jones Industrial Average as a core benchmark of
performance. Concurrently, it became a gold standard of investing and drove the
performance of most major indices. It was also a major contributor to the Fund's
performance over the past 12 months. The Fund primarily benefited from holdings
in semiconductors and semiconductor capital equipment, as these companies
offered the best trade-off between valuation, near-term business dynamics and
long-term growth.
Energy also contributed to the Fund's positive performance during the past
12 months. As oil rebounded off its low of $11/barrel in 1998, many of the
energy companies returned to profitability and began exhibiting substantial free
cash flow. Although we are bullish on energy, we prefer companies with natural
gas exposure versus oil exposure, which we believe removes some of the commodity
price risk associated with OPEC. The supply and demand characteristics continue
to bode well for future stock price appreciation within this group in our
opinion.
Poor performing sectors over the past year included financials and consumer
staples. As investors attempted to raise cash for technology purchases, they
managed to sell many of the stocks in these groups down to levels they had not
seen in years.
LOOKING FORWARD
We expect continued volatility in the markets. Feeding the skeptics, we
expect continued rate hikes by the Federal Reserve, emerging signs of
inflationary prospects (consumer spending, low unemployment and higher energy
costs) and an increasingly leveraged and skittish individual investor.
Conversely, bulls will counter these issues by pointing to their expectations
for strong earnings results over the next few weeks and the continued strength
of the U.S. economy. Regardless of future market action, we continue to believe
our process will deliver incremental returns and risk diversification for our
investors.
28
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
INVESTMENT FOCUS STYLE / MARKET CAPITALIZATION
[CHART OMITTED]
AVERAGE ANNUAL TOTAL RETURN1
AS OF MARCH 31, 2000
- ---------------------------------------------------------------------------
One Annualized
Year Inception
Return to Date2
- ---------------------------------------------------------------------------
PBHG Small Cap Value Fund 64.76% 29.22%
- ---------------------------------------------------------------------------
COMPARISON OF CHANGE IN THE VALUE OF A $10,000
INVESTMENT IN THE PBHG SMALL CAP VALUE
FUND, VERSUS THE RUSSELL 2000 INDEX,
RUSSELL 2000 VALUE INDEX AND THE LIPPER
SMALL-CAP VALUE FUNDS AVERAGE
[LINE CHART OMITTED]
PBHG Small Cap Russell 2000 Lipper Small-Cap Russell 2000
Value Fund Index(3) Value Funds Average(5) Value Index(4)
4/30/97 $10000 $10000 $10000 $10000
5/31/97 10880 11113 10913 10796
6/30/97 11800 11589 11503 11342
7/31/97 13070 12128 12145 11819
8/31/97 13370 12405 12440 12006
9/30/97 14550 13313 13278 12805
10/31/97 14210 12729 12902 12456
11/30/97 14200 12646 12818 12593
12/31/97 14539 12868 12959 13020
1/31/98 14518 12665 12745 12785
2/28/98 15615 13601 13593 13558
3/31/98 16227 14162 14199 14107
4/30/98 16438 14240 14359 14177
5/31/98 15520 13473 13801 13675
6/30/98 15098 13501 13548 13598
7/31/98 14402 12409 12604 12533
8/31/98 11490 9999 10415 10570
9/30/98 11838 10782 10765 11167
10/31/98 12872 11221 11215 11499
11/30/98 13811 11809 11720 11810
12/31/98 14703 12540 12129 12180
1/31/99 14410 12707 11929 11904
2/28/99 13237 11678 11116 11091
3/31/99 12831 11860 10948 11000
4/30/99 13429 12923 11933 12004
5/31/99 14004 13111 12348 12373
6/30/99 14962 13704 12940 12821
7/31/99 15255 13328 12816 12516
8/31/99 15131 12835 12320 12059
9/30/99 15131 12838 12072 11818
10/31/99 14771 12890 11856 11581
11/30/99 15605 13659 12277 11641
12/31/99 17443 15205 12869 11999
1/31/2000 17217 14961 12468 11685
2/29/2000 19845 17432 12970 12399
3/31/2000 21141 16283 13584 12458
1 Performance is historical and not indicative of future results. The
investment return and principal value of an investment will fluctuate, so
that an investor's shares, when redeemed, may be worth more or less than
their original cost.
2 The PBHG Mid-Cap Value Fund commenced operations on April 30, 1997.
3 The S&P Mid Cap 400 Index is an unmanaged capitalization-weighted index
that measures the performance of the mid-range sector of the U.S. stock
market. The Index reflects the reinvestment of income dividends and capital
gains distributions, if any, but does not reflect fees, brokerage
commissions, or other expenses of investing. The Index is not intended to
imply the Fund's past or future performance.
4 The S&P Barra Mid Cap Value Index is an unmanaged capitalization weighted
index that consists of those securities in the S&P Mid Cap 400 Index with
lower price to book ratios. The index reflects the reinvestments of income
dividends and capital gains distributions, if any, but does not reflect
fees, brokerage commissions or other expenses of investing. The index is
not intended to imply the Fund's past or future performance.
5 The Lipper Mid-Cap Value Funds Average represents the average performance
of all mutual funds classified by Lipper, Inc. in the Mid-Cap Value
category. These performance figures are based on the changes in net asset
value of the funds in the category with all capital gains distributions and
income dividends reinvested. The average is not intended to imply the
Fund's past or future performance.
SECTOR WEIGHTINGS - AT MARCH 31, 2000
[PIE CHART OMITTED]
Basic Materials 4%
Consumer Cyclical 11%
Energy 17%
Financial 18%
Health Care 7%
Industrial 10%
Services 1%
Technology 22%
Transportation 2%
Utilities 1%
Cash 7%
% OF TOTAL PORTFOLIO INVESTMENTS
TOP TEN HOLDINGS - MARCH 31, 2000
Santa Fe Synder 2.8%
EOG Resources 2.5%
Glenayre Technologies 2.1%
Affiliated Managers Group 1.9%
Sonic Foundry 1.9%
Harman International 1.8%
Alpharma, Cl A 1.8%
Kinder Morgan 1.7%
BancWest 1.7%
Aeroflex 1.7%
- -------------------------------------------------------
% of Total Portfolio Investments 20.0%
29
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
PBHG FOCUSED VALUE FUND
PORTFOLIO PROFILE
OBJECTIVE: Above-average total return over a market cycle of three to five
years, consistent with reasonable risk, by investing in common stocks and other
equity securities of large, medium and small companies which are considered to
be relatively undervalued based on certain proprietary measures of value.
INVESTS IN: The Fund, a non-diversified portfolio, intends to invest a majority
of its assets in equity securities deemed to be undervalued. Use of our
disciplined approach may result in investment selections that are considerably
out of favor or contrary to the conventional investment consensus. The Fund may
invest in securities of companies that are considered financially sound based on
their operating history, but which may be experiencing temporary earnings
pressure due to adverse business conditions that may be company or industry
specific or due to unfavorable publicity.
STRATEGY: The Fund takes a unique approach to value investing. When screening
the universe of stocks, we discard the 25% of the universe which are the most
expensive stocks (as most value investors would), but we also disregard the 25%
of the universe that have the poorest business fundamentals, regardless of
valuation. Thus, while most value investors love the cheapest stocks, we will
only buy cheap stocks that have good profit prospects. Using this unique
approach, we always balance a potential investment's valuation against its
growth prospects.
Our goal is to produce market-beating returns by concentrating assets in the
most promising investment candidates we can identify. This concentrated approach
will likely produce investment returns that vary considerably from the S&P 500
Index. The impact of a change in value, positive or negative, of a single
holding may be magnified.
PERFORMANCE
For the quarter ended March 31, 2000, the PBHG Focused Value Fund's total
return was 29.53% versus 2.30% for the S&P 500 Index. For the fiscal year, the
Fund's total return was 89.17% versus 17.94% for the S&P 500. In a quarter and a
year that was dominated by growth stocks, we were very pleased with the Fund's
returns. We hope we filled an important role in your diversified portfolio and
look forward to serving you again in fiscal year 2001.
As our process dictates, we continue to focus on companies whose price
potential reflects their near-term business dynamics and long-term growth
potential. In select cases, we feel that the market provided us with the
opportunity to own exceptional companies with great management teams, strong
operating histories and improving near-term and long-term prospects. It was
these companies that contributed to the bulk of your out-performance versus the
S&P 500 benchmarks during the past 12 months.
The most gratifying performance contribution came from the Fund's energy
companies. These companies possess the attributes that we seek in potential
portfolio additions: great near-term results, solid long-term growth prospects
and attractive valuations. Although the energy stocks in your Fund have done
well recently, we remain bullish as a result of the continually improving
near-term business dynamics. Oil prices remain over $22/barrel. Natural gas
continues to trade around the $2.75/mcf level. Day rates are rising for the
service companies and rig counts are increasing commensurate with higher
drilling budgets.
PORTFOLIO HIGHLIGHTS
Technology was the best performing sector in most major indices over the
past 12 months. Regardless of your personal exposure to these stocks, it is
impossible not to notice the effect this area will have on popular culture.
Seemingly overnight, technology bellwether, the Nasdaq, joined the S&P 500 and
the Dow Jones Industrial Average as a core benchmark of broad market
performance. In the process, it became a gold standard of investing and drove
the performance of most major indices. All of this notwithstanding, technology
was a major contributor to the Fund's performance over the past 12 months. The
Fund primarily benefited from holdings in semiconductors and semiconductor
capital equipment, as these companies offered the best trade-off between
valuation, near-term business dynamics and long-term growth.
Energy also contributed to the Fund's positive performance during the past
12 months. As oil rebounded off its low of $11/barrel in 1998, many of the
energy companies returned to profitability and began exhibiting substantial free
cash flow. Although we are bullish on energy, we prefer companies with natural
gas exposure versus oil exposure. We believe that this removes some of the
commodity price risk associated with OPEC. In our opinion, the supply and demand
characteristics continue to bode well for future stock price appreciation within
this group.
Poor performing sectors over the past year included financials and consumer
staples. As investors attempted to raise cash for technology purchases, they
managed to sell many of the stocks in these groups down to price levels that had
not been seen in years.
LOOKING FORWARD
We expect continued volatility in the markets. Feeding the skeptics, we
expect further rate hikes by the Federal Reserve, emerging signs of inflationary
prospects (consumer spending, low unemployment and higher energy costs) and an
increasingly leveraged and skittish individual investor. Conversely, bulls will
counter the skeptics by pointing out their expectations for strong earnings
results over the next few weeks and the continued strength of the U.S. economy.
Regardless of future market action, we continue to believe our process will
deliver incremental returns and risk diversification for our investors.
30
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
INVESTMENT FOCUS STYLE / MARKET CAPITALIZATION
[CHART OMITTED]
AVERAGE ANNUAL TOTAL RETURN1
AS OF MARCH 31, 2000
- ------------------------------------------------------------------------
One Annualized
Year Inception
Return to Date2
- ------------------------------------------------------------------------
PBHG Focused Value Fund 89.17% 77.76%
- ------------------------------------------------------------------------
COMPARISON OF CHANGE IN THE VALUE OF A
$10,000 INVESTMENT IN THE
PBHG FOCUSED VALUE FUND,
VERSUS THE S&P 500 INDEX
AND THE LIPPER MULTI-CAP
CORE FUNDS AVERAGE
[LINE CHART OMITTED]
PBHG Focused S&P 500 Lipper Multi-Cap Core
Value Fund Index(3) Funds Average(4)
2/28/99 $10000 $10000 $10000
3/99 10205 10400 10339
4/99 10127 10803 10801
5/99 10517 10548 10675
6/99 11395 11133 11231
7/99 11620 10786 10966
8/99 11639 10732 10761
9/99 11717 10438 10511
10/99 12068 11098 11003
11/99 12976 11324 11397
12/99 14903 11991 12277
1/00 16176 11388 11826
2/00 16854 11173 12176
3/00 19304 12266 12993
1 Performance is historical and not indicative of future results. The
investment return and principal value of an investment will fluctuate, so
that an investor's shares, when redeemed, may be worth more or less than
their original cost.
2 The PBHG Small Cap Value Fund commenced operations on April 30, 1997.
3 The Russell 2000 Index is an unmanaged index comprised of the 2,000
smallest securities in the Russell 3000 Index. The Index reflects the
reinvestment of income dividends and capital gains distributions, if any,
but does not reflect fees, brokerage commissions, or other expenses of
investing.
4 The Russell 2000 Value Index is an unmanaged index that measures the
performance of those securities in the Russell 2000 Index with lower price
to book ratios and lower forecasted growth values. The Index reflects the
reinvestment of income dividends and capital gain distributions, if any,
but does not reflect fees, brokerage commissions or other expenses of
investing. The Index is not intended to imply the Fund's past or future
performance.
5 The Lipper Small-Cap Value Funds Average represents the average performance
of all mutual funds classified by Lipper, Inc. in the Small-Cap Value
category. These performance figures are based on the changes in net asset
value of the funds in the category with all capital gains distributions and
income dividends reinvested. The average is not intended to imply the
Fund's past or future performance.
SECTOR WEIGHTINGS - AT MARCH 31, 2000
[PIE CHART OMITTED]
Consumer Cyclical 12%
Consumer Non-Cyclical 2%
Energy 8%
Financial 25%
Health Care 7%
Industrial 6%
Services 8%
Technology 10%
Utilities 4%
Cash 18%
% OF TOTAL PORTFOLIO INVESTMENTS
TOP TEN HOLDINGS - MARCH 31, 2000
Fleet Boston Financial 5.5%
Minnesota Mining & Manufacturing 5.5%
Federal Home Loan Mortgage 5.4%
Comcast, Cl A 5.1%
Baker Hughes 4.7%
Sonic Foundry 4.2%
Pharmacia & Upjohn 4.2%
General Motors 4.2%
Providian Financial 4.1%
Bank One 4.0%
- -------------------------------------------------------
% of Total Portfolio Investments 46.8%
31
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
PBHG INTERNATIONAL FUND
PORTFOLIO PROFILE
OBJECTIVE: Long-term capital appreciation.
INVESTS IN: Equity securities of non-U.S. companies.
STRATEGY: The Fund invests primarily in a diversified portfolio of equity
securities of non-U.S. issuers. Country selection is a significant part of the
investment process employed by Murray Johnstone International Limited, the
Fund's sub-adviser. Under normal market conditions, at least 65% of the Fund's
total assets will be invested in securities of issuers in at least three
countries other than the United States. The Fund may invest more than 25% of its
total assets in the securities of issuers whose principal activities are in
specific countries or geographic regions, including emerging markets. The term
"emerging markets" applies to any country which is generally considered to be an
emerging or developing country by the international financial community.
PERFORMANCE
The year to 31 March, 2000 divided starkly into two parts: markets surged in
the latter part of 1999 on a combination of enthusiasm for the "TMT" stocks -
technology, media and telecommunications, and the abundant liquidity provided by
central banks to ensure that Y2K did not lead to a shortfall in cash and panic
in financial markets. This euphoria spread from the US to Europe and the Far
East and led to dynamic returns for investors. In January 2000, we saw the first
signs that there was another side to the market and that valuations attached to
some "new economy" stocks might be over-optimistic. During the next three months
sentiment swung between support for new economy and "old economy" stocks, to the
extent that for the first quarter of 2000, the EAFE Index was almost unchanged.
Over the year, the MSCI EAFE Index returned 25.1% while the Fund returned 19.3%.
MARKET REVIEW
The European markets saw a solid year but returns were volatile through the
period. The portfolio return lagged the index due to the underperformance of the
financials and "value" stocks for much of the period. The portfolio was
beginning to close the performance gap in Europe towards the end of the year
when sentiment turned away from "TMT" stocks. During 1999 the Euro itself was
one of the key themes. Our view was that the weak Euro was a reflection of
weaker economic growth but that in time the cheaper currency would bring
benefits to the region in terms of more competitive exports and a more vibrant
manufacturing sector. These conditions are now in evidence; manufacturing is
leading the recovery and consumer confidence is improving. The European Central
Bank adjusted rates up modestly during the period but this was only a reflection
of the return to growth. At the same time, the single currency continued to
encourage a high level of merger activity leading to exceptional performances in
the case of certain stocks. The portfolio was invested in the mobile phone
group, Mannesmann, which was subject to a hostile bid from VodafoneAirtouch. The
market perception was that the two companies were a good fit and both stocks
appreciated strongly.
The solid performance of the Japanese market slowed late in the year but
stock selection continued to add value to returns. The economy showed pockets of
strength: profits were revised up and overtime was increasing. Consumer
confidence was improving and consumption was expected to pick up through 2000,
in spite of two weak quarters to end 1999. As in other markets, investor
optimism focused on technology stocks. The portfolio benefited from a full
exposure to the market and, in particular, to telecom stocks and other "net"
beneficiaries. The portfolio returned 80.7% for the period versus 45.5% for the
index.
Investments in the Singapore market fared relatively poorly during the
period. With Malaysia being readmitted to the major indices, investors increased
their exposure, diverting assets from Singapore to achieve their target
weighting. Hong Kong saw a strong market, returning 50.2%. The portfolio
outperformed with a return of 84.8%, as investors increased their investment in
Cheung Kong, the bell-weather stock for the market. The emerging markets
performed strongly in both the latter half of 1999 and the first quarter of
2000. In Latin America lower inflation allowed the governments to continue to
bring down interest rates, attracting buyers to equities. With the region up
52.7%, the portfolio underpeformed this figure but still returned a healthy
38.6%.
During the year our investment policy was to trim the UK, take some profits
from Japan and reinvest the proceeds in Europe. Our belief was that all the
elements were in place in Europe for a pick up in profits and equity markets
either late in 1999 or early in 2000. As it happened, this process commenced in
1999 but we believe it still has further to run. We have been focusing
investments on Germany but the sale of Mannesmann temporarily reduced exposure
to the market. This will be rebuilt. The reduction in the UK proved timely since
this was the worst performing market in Europe in the first three months of
2000.
MARKET OUTLOOK
The dynamic growth in the US economy was a fundamental driver of global
recovery in the late 1990s. However, it is clear that the US has been growing at
a rate in excess of the long-term sustainable rate of 4% (e.g., over 7.0% in the
4th quarter of 1999). We believe the Federal Reserve Board will move to slow
this pace by continuing to raise rates. The impact of this policy on other
economies and markets will vary from region to region. With the combination of
strong retail demand and house price inflation in the UK, the government will
continue to have a bias towards tightening. In Europe, growth appears to be much
more soundly based in 2000 than it was in 1999. Accordingly, there will be
pressures to follow the Fed lead but the pace of growth is much slower so there
will not be the need for substantial rises. The first green shoots of growth in
Japan are only now coming through. Although rates cannot fall in Japan, there
will be no pressure to hike rates for some time. The situation is similar in
China, which is only now recovering from a period of deflation. So, with the
exception of the US and UK there the year should be relatively free of new
interest rate "shocks", a situation which should allow markets to stabilize.
With global growth continuing to gather momentum and higher interest rates
largely confined to the US and UK, markets should recover their composure after
the recent correction. Growth in Europe is clearly on an upward trend while in
China which has been subdued in the current cycle, there are signs of a modest
pick up. These areas will see a continuation of low interest rates and easy
monetary policy, conditions which should favour growth, corporate profits and
equity market returns. It is also apparent that while many companies have seen
their stock price soar during 1999, many others have seen it plumb new lows so
opportunities for cheap investments do exist. That being said, we believe
technology will continue to be an important theme through 2000 but we will have
to be selective in making investments in companies which will be "winners" since
many of the new dot.coms may not be with us by the end of the year. Our focus
will therefore be on those companies which have real businesses with earnings
power. The key issue will be the valuation of stocks and investors will become
increasingly critical of new economy companies which cannot convince the markets
that their idea really will "fly".
32
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
INVESTMENT FOCUS STYLE / MARKET CAPITALIZATION
[CHART OMITTED]
AVERAGE ANNUAL TOTAL RETURN1
AS OF MARCH 31, 2000
- -----------------------------------------------------------------------------
One Annualized Annualized Annualized
Year 3 Year 5 Year Inception
Return Return Return to Date2
- -----------------------------------------------------------------------------
PBHG International Fund 19.29% 12.42% 11.87% 8.52%
- -----------------------------------------------------------------------------
COMPARISON OF CHANGE IN THE VALUE OF
A $10,000 INVESTMENT IN
THE PBHG INTERNATIONAL
FUND, VERSUS THE MSCI EAFE
INDEX AND THE LIPPER
INTERNATIONAL FUNDS
AVERAGE
[LINE GRAPH OMITTED]
PBHG International MSCI EAFE Lipper International
Fund Index(3) Funds Average(4)
6/30/94 $10000 $10000 $10000
7/31/94 10060 10097 10274
8/31/94 10241 10336 10572
9/30/94 10040 10011 10314
10/31/94 10070 10344 10515
11/30/94 9679 9847 10003
12/31/94 9829 9909 9911
1/31/95 9163 9528 9427
2/28/95 8992 9501 9444
3/31/95 9204 10094 9762
4/30/95 9486 10474 10077
5/31/95 9355 10349 10168
6/30/95 9506 10167 10172
7/31/95 9748 10800 10718
8/31/95 9536 10388 10514
9/30/95 9698 10591 10673
10/31/95 9436 10306 10466
11/30/95 9657 10593 10582
12/31/95 10030 11020 10895
1/31/96 10383 11065 11142
2/29/96 10424 11103 11192
3/31/96 10635 11338 11385
4/30/96 10958 11668 11745
5/31/96 10887 11453 11723
6/30/96 10928 11517 11801
7/31/96 10464 11181 11368
8/31/96 10605 11206 11501
9/30/96 10837 11504 11752
10/31/96 10807 11386 11682
11/30/96 11270 11840 12190
12/31/96 11301 11687 12237
1/31/97 11291 11278 12207
2/28/97 11341 11463 12376
3/31/97 11351 11504 12408
4/30/97 11401 11565 12442
5/31/97 12107 12318 13179
6/30/97 12762 12997 13794
7/31/97 13045 13208 14188
8/31/97 11936 12221 13164
9/30/97 12752 12906 13984
10/31/97 11694 11914 12920
11/30/97 11583 11792 12810
12/31/97 11694 11895 12916
1/31/98 12192 12439 13220
2/28/98 12901 13238 14094
3/31/98 13333 13645 14817
4/30/98 13355 13753 15017
5/31/98 13189 13686 15038
6/30/98 13023 13790 14922
7/31/98 13565 13930 15140
8/31/98 11749 12204 12987
9/30/98 11428 11830 12523
10/31/98 12347 13063 13454
11/30/98 13067 13732 14147
12/31/98 13183 14274 14584
1/31/99 13242 14232 14709
2/28/99 13020 13893 14323
3/31/99 13522 14472 14825
4/30/99 14023 15059 15512
5/31/99 13114 14283 14880
6/30/99 13638 14840 15659
7/31/99 13650 15281 16144
8/31/99 13778 15337 16267
9/30/99 13883 15491 16332
10/31/99 14151 16072 16959
11/30/99 15188 16630 18270
12/31/99 16678 18123 20466
1/31/2000 15332 16971 19318
2/29/2000 15594 17428 20492
3/31/2000 16129 18104 20650
1 Performance is historical and not indicative of future results. The
investment return and principal value of an investment will fluctuate, so
that an investor's shares, when redeemed, may be worth more or less than
their original cost.
2 The PBHG Focused Value Fund commenced operations on February 12, 1999.
3 The S&P 500 Index is a capitalization-weighted index of 500 stocks. The
index is designed to measure performance of the broad domestic economy
through changes in the aggregate market value of 500 stocks representing
all major industries. The Index is not intended to imply the Fund's past or
future performance.
4 The Multi-Cap Core Funds Average represents the average performance of all
mutual funds classified by Lipper, Inc. in the Multi-Cap Core category.
These performance figures are based on the changes in net asset value of
the funds in the category with all capital gains distributions and income
dividends reinvested. The average is not intended to imply the Fund's past
or future performance.
COUNTRY WEIGHTINGS - AT MARCH 31, 2000
[PIE CHART OMITTED]
Argentina 2%
Belgium 1%
Australia 1%
Brazil 4%
Denmark 1%
Finland 3%
France 6%
Germany 11%
Hong Kong 1%
Hungary 1%
Ireland 1%
Italy 5%
Japan 27%
Mexico 5%
Netherlands 6%
New Zealand 1%
Singapore 2%
Spain 3%
Sweden 3%
Switzerland 3%
United Kingdom 13%
% OF TOTAL PORTFOLIO INVESTMENTS
TOP TEN HOLDINGS - MARCH 31, 2000
Bayer 5.0%
Union Electrica Fenosa 2.6%
TDK 2.4%
Fomento Economico ADR 2.4%
Telenorte Lest Part ADR 2.4%
Nokia Oyj/Nok1v.He 2.3%
Telecom Italia 2.3%
Marschollek Lauten 2.2%
NTT 2.2%
SKF 2.1%
- -------------------------------------------------------
% of Total Portfolio Investments 25.8%
33
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<PAGE>
THE PBHG FUNDS, INC.
PBHG CASH RESERVES FUND
PORTFOLIO PROFILE
OBJECTIVE: Preserve principal value & maintain a high degree of liquidity while
providing current income.
INVESTS IN: Money market securities.
STRATEGY: The Fund's strategy is to be fully invested in a diversified
portfolio of short-term, high-quality money market securities.
PERFORMANCE
For the twelve months ended March 31, 2000, the PBHG Cash Reserves Fund
returned 4.81% compared to 4.72% for the Lipper Money Market Funds Average.
MARKET HIGHLIGHTS
Buoyed by the strong employment environment, solid wage gains and growing
net worth created by positive equity returns, consumer spending remains the
strongest driver of the domestic economy. Historically, an advance in wage
pressures would have been expected with such a low level of unemployment, but
gains in productivity have continued to thwart this threat. However, with little
evidence of a slowdown coming in the US, and an improving global prognosis
following the dire straits of 1998, the Federal Reserve (the "Fed") raised the
Fed Funds rate five times over the last year, by a total of 125 basis points, in
a preemptive effort to slow the economy.
A unique concern for money market investors in the past year was the anxiety
in the short-term markets leading up to December 31, and the much anticipated
transition across year-end. By the early fall, many typical corporate borrowers
in the US short-term market began to extend the maturities of their borrowing in
preparation for higher short-term interest rates and to assure access to
financing across this critical year end date. At this time forward interest
rates implied a high level of uncertainty and offered high yield premiums to
attract lenders and investors, and fears rose in the market concerning the
potential for a liquidity crisis. The Fed took an active role in calming these
Y2K related fears as it implemented innovative financing programs for banks and
dealers. These added liquidity measures, when combined with larger than normal
cash balances held by investors, eventually provided so much liquidity that
overnight financing rates were as low as 1% by the end of December. This is a
good example of the system working to put safety before yield. In fact, yields
recovered to normal levels as soon as we entered 2000.
Spurred upward by the Fed's 125 basis point total rate rise, short-term
rates on March 31, 2000 were much higher than a year ago. The yield on the
three-month and one year Treasuries had risen by 142 and 163 basis points to
5.90% and 6.25%, respectively. The full yield curve inverted in the final
quarter of this reporting period as yields on longer-term issues actually
declined, supported by the Treasury's announced cutback in issuance, planned
buyback of outstanding debt and equity market volatility.
The strong economic growth evident at the end of 1999 and into the first
quarter of 2000 will keep the Federal Reserve in a tightening mode as we move
forward. As "old-economy versus new economy" debates continue on the appropriate
level for non-inflationary GDP growth, the Fed thinks the current rate of growth
is too fast. In our opinion, absent a significant jump in inflation, the Fed
will stick to a gradual approach of raising rates to slow this pace of growth.
PORTFOLIO HIGHLIGHTS
During 1999, we shortened the average maturity of the Fund in order to be
able to respond quickly in the rising rate environment. As Y2K fears heightened
during the fourth quarter of 1999, we felt it prudent to increase the level of
liquidity in the Fund. This higher level of liquidity did result in less yield
over the last couple of days of 1999, but in our opinion it ensured that
shareholders of the Fund were protected. With the threats of a Y2K meltdown now
behind us, we are now fully focused on the continuing willingness of the Fed to
raise rates. In this environment we feel the best strategy is to concentrate
investments in shorter maturity securities. We believe this stance will allow
the portfolio to "turn-over" quicker, hopefully replacing lower yielding
securities with higher yielding securities in the process. Additionally, we will
opportunistically invest in longer issues when the market fully prices in
additional rate hikes.
34
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<PAGE>
THE PBHG FUNDS, INC.
COMPARISON OF TOTAL RETURN, AS OF MARCH 31, 2000 FOR THE PBHG CASH RESERVES
FUND, VERSUS THE LIPPER MONEY MARKET FUNDS AVERAGE1
[BAR CHART OMITTED]
PBHG CASH RESERVES FUND
ONE YEAR 4.81%
LIPPER MONEY MARKET FUNDS AVERAGE(2)
ONE YEAR 4.72%
1 Performance is historical and not indicative of future results.
2 The Lipper Money Market Funds Average represents the average performance of
all mutual funds classified by Lipper, Inc. in the Money Market category.
These performance figures are based on the changes in net asset value of
the funds in the category with all capital gains distributions and income
dividends reinvested. The index is not intended to imply the Funds past or
future performance.
SECTOR WEIGHTINGS - AT MARCH 31, 2000
[PIE CHART OMITTED]
Certificates of Deposit 2%
Government Bonds 1%
Commercial Paper 10%
Corporate Obligations 1%
Cash 86%
% OF TOTAL PORTFOLIO INVESTMENTS
35
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
PBHG TECHNOLOGY & COMMUNICATIONS FUND
PORTFOLIO PROFILE
OBJECTIVE: Long-term capital appreciation.
INVESTS IN: Companies whose products or services are based on or delivered with
technology. Also invests in companies that link businesses, consumers and other
entities through communications technology.
STRATEGY: The Fund's strategy is to invest in technology and related companies
that are exhibiting business momentum. As of the year ending March 31, 2000, the
Fund's 86 holdings ranged from $548 million to $84 billion in market
capitalization. At year end, the average holding in the Fund had a market
capitalization of $13 billion. In addition to the bottoms-up approach to
selecting individual companies, the Fund also focuses on specific sub-sector
weightings within the technology and telecommunications industries.
PERFORMANCE
The PBHG Technology and Communications Fund returned 234.0% compared with
the 133.7% return of the Pacific Stock Exchange (PSE) High Technology Index and
170.1% of the Soundview Technology Index for the year ended March 31, 2000. In
addition, the Fund significantly outpaced broader indices such as the S&P 500,
which was up 17.9% over the same time period.
PORTFOLIO HIGHLIGHTS
In our opinion, the 12 month period ending March 31, 2000 can only be
described as one of the most exhilarating and volatile periods for the
technology and telecommunications sector. Needless to say, technology investors
reaped the rewards of the accelerating growth and valuations in the sector. This
bifurcation between the "old economy" and "new economy" was never more apparent
than in the equity markets this past year. Our emphasis on the "new economy"
companies contributed to the strong results. In addition, we believe the Fund
was well positioned in the right sub-sectors of the technology and
communications universe throughout most of the past twelve months.
The Fund had significant weightings in the semiconductor, semiconductor
capital equipment, and Internet sub-sectors (particularly the portals and
business-to-consumer companies) at the start of the fiscal year. As we
approached the end of calendar year 2000, we shifted the focus of the Fund more
towards the telecommunications systems and component suppliers (both wireline
and wireless) as well as the business-to-business (B2B) applications and
software companies. This was at the expense of semiconductors and related
equipment. The year 2000 date changeover (Y2K) was one of the dominant issues
throughout the year, not only for the technology sector but nearly every aspect
of the global economy. The potential disruptions were well documented by the
press and by Wall Street prognosticators. The reality was that Y2K had minimal
negative impacts. There were companies that stockpiled inventory and others that
delayed purchases until after the New Year. However, the companies in the Fund
saw minimal, if any, impact to their operations. In fact, the majority of the
portfolio companies experienced improving business conditions or "business
momentum" through year-end.
One of our main themes throughout the past 12 months has been the evolution
of the global telecommunications network infrastructure. With the massive
build-outs of new age fiber networks, both on a domestic as well as global
scale, we believe the main beneficiaries of these network buildouts continue to
be the telecommunications systems and component vendors. In fact, business
momentum for these vendors improved throughout the year. This became evident as
the service providers began to "light up" the networks and expand the capacity
of the fiber to meet accelerating bandwidth demands. In addition, the need to
route greater amounts of data around the globe efficiently and thereby replace
the antiquated, voice centric circuit switch network drove the demand for next
generation products. We continue to believe the growth of the Internet and data
intensive applications continue to fuel demand for bandwidth both by businesses
and consumers. No matter how this bandwidth is delivered, (either via a wireline
connection through copper, fiber, or coaxial or wireless connection) the demand
for telecommunications equipment and components will further accelerate in our
opinion. Another area of focus for the Fund throughout the year was the broadly
defined Internet infrastructure group. These companies range from those that
provide data center space that house web sites to those that enable dynamic
wireless Internet capabilities to those that more efficiently deliver content to
the end user.
Early in 2000, we significantly reduced the Fund's exposure in the Internet
portal and business to consumer (B2C) companies. While we continue to be
long-term believers that the Internet will have a significant impact on the way
B2C commerce is conducted, many companies in this area have broken business
models and with the Christmas selling season behind us, their inherent
seasonality is now a negative. The entrance by the traditional bricks and mortar
retailing giants onto the e-commerce battlefield only heightens the concerns
regarding sustainable business models and eventual profitability. We believe
those companies that establish Internet brand recognition and create a business
model characterized by expanding margins will ultimately thrive.
As of the time of this writing, technology stocks have experienced a
significant correction both over the last two weeks of the first quarter as well
as the first few weeks of the second quarter. We have no way of calling the
bottom, but we strongly believe what we have experienced to date is a "valuation
correction" and in no way is reflective of the business fundamentals for the
companies in the portfolio. The March quarter earnings reports, although still
early in the reporting season, have been terrific and would expect that to
continue the next few weeks. We remain positive on the technology sector
long-term and now with stock prices much lower, our conviction has risen
commensurately.
36
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<PAGE>
THE PBHG FUNDS, INC.
INVESTMENT FOCUS STYLE / MARKET CAPITALIZATION
[CHART OMITTED]
AVERAGE ANNUAL TOTAL RETURN1
AS OF MARCH 31, 2000
- -------------------------------------------------------------------------------
One Annualized Annualized
Year 3 Year Inception
Return Return to Date2
- -------------------------------------------------------------------------------
PBHG Technology & Communications Fund 233.99% 88.64% 66.99%
- -------------------------------------------------------------------------------
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
IN THE PBHG TECHNOLOGY & COMMUNICATIONS FUND,
VERSUS THE SOUNDVIEW TECHNOLOGY INDEX AND THE
LIPPER SCIENCE & TECHNOLOGY FUNDS AVERAGE
[LINE CHART OMITTED]
PBHG Technology & Soundview Technology Lipper Science & Technology
Communication Fund Index(3) Funds Average(4)
9/30/95 $10000 $10000 $10000
10/31/95 10800 10368 9841
11/30/95 11720 11079 9965
12/31/95 11602 10533 9591
1/31/96 11462 10446 9574
2/29/96 12562 11128 10039
3/31/96 12482 10831 9767
4/30/96 14132 12557 10831
5/31/96 15303 13442 11248
6/30/96 14973 12235 10511
7/31/96 13712 11006 9512
8/31/96 14963 12002 10133
9/30/96 16643 13468 11270
10/31/96 16793 13286 11112
11/30/96 17663 14813 12042
12/31/96 17916 13842 11777
1/31/97 18539 15118 12522
2/28/97 16580 13942 11477
3/31/97 14927 12988 10636
4/30/97 15437 13353 10947
5/31/97 18100 15145 12435
6/30/97 18641 15181 12589
7/31/97 20865 17578 14207
8/31/97 20773 18116 14207
9/30/97 22416 18555 14924
10/31/97 19732 16406 13635
11/30/97 19151 16227 13517
12/31/97 18511 15133 13184
1/31/98 17697 15504 13520
2/28/98 19850 17507 15071
3/31/98 20643 17427 15508
4/30/98 21061 18623 16114
5/31/98 19047 16872 14962
6/30/98 20332 17789 16123
7/31/98 19186 17415 15865
8/31/98 16004 13427 12690
9/30/98 17997 15450 14377
10/31/98 18072 16976 15400
11/30/98 20322 18826 17480
12/31/98 23324 21537 20327
1/31/99 28435 24899 23553
2/28/99 25325 21781 21523
3/31/99 30000 23314 23965
4/30/99 31653 23997 24725
5/31/99 30120 24762 24376
6/30/99 34622 27911 27306
7/31/99 34067 27977 27006
8/31/99 36916 29675 28454
9/30/99 37916 30310 29464
10/31/99 45517 33603 32675
11/30/99 54107 39615 38449
12/31/99 80210 49489 48346
1/31/2000 82496 48149 47161
2/29/2000 117027 62909 59956
3/31/2000 100197 63040 57072
1 Performance is historical and not indicative of future results. The
investment return and principal value of an investment will fluctuate, so
that an investor's shares, when redeemed, may be worth more or less than
their original cost.
2 The PBHG Technology & Communications Fund commenced operations on September
29, 1995.
3 The Soundview Technology Index is an equal dollar weighted index designed
to measure the performance of the technology industry. It is comprised of
100 major technology companies chosen by Soundview Financial Group. The
Index reflects the reinvestment of income dividends and capital gain
distributions, if any, but does not reflect fees, brokerage commissions, or
other expenses of investing. The Index is not intended to imply the Fund's
past or future performance.
4 The Lipper Science & Technology Funds Average represents the average
performance of all mutual funds classified by Lipper, Inc. in the Science &
Technology category. These performance figures are based on the changes in
net asset value of the funds in the category with all capital gains
distributions and income dividends reinvested. The average is not intended
to imply the Fund's past or future performance.
SECTOR WEIGHTINGS - AT MARCH 31, 2000
[PIE CHART OMITTED]
Consumer Cyclical 2%
Industrial 2%
Services 1%
Technology 95%
% OF TOTAL PORTFOLIO INVESTMENTS
TOP TEN HOLDINGS - MARCH 31, 2000
InfoSpace 6.2%
JDS Uniphase 4.0%
SDL 2.8%
Sycamore Networks 2.6%
Brocade Communications Systems 2.6%
Rare Medium Group 2.5%
Veritas Software 2.4%
Broadcom 2.4%
Juniper Networks 2.4%
Network Solutions 2.3%
- -------------------------------------------------------
% of Total Portfolio Investments 30.3%
37
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<PAGE>
THE PBHG FUNDS, INC.
PBHG STRATEGIC SMALL COMPANY FUND
PORTFOLIO PROFILE
OBJECTIVE: Growth of capital.
INVESTS IN: Equity securities of small companies having a market capitalization
or annual revenues of up to $750 million.
STRATEGY: The Fund invests in companies poised for rapid and dynamic growth
("growth companies") and companies that are undervalued or overlooked by the
market ("value securities") in a proportion that depends on the Advisers' view
of current economic or market conditions and their long-term investment outlook.
PERFORMANCE
The PBHG Strategic Small Company Fund returned 99.74% for the fiscal year
ended March 31, 2000. The performance breakdown showed the growth portion of the
portfolio returning 149.48% and the value portion contributing 70.95%. This
performance compares favorably to the 37.29% and 59.06% returns of the Russell
2000 and the Russell 2000 Growth Indexes, respectively and the 96.44% and 17.32%
return of the average mutual fund in Lipper's Small Cap Growth and Small Cap
Value categories, respectively. As has historically been the case, the Fund was
heavily weighted in the technology sector for the majority of the year, which
contributed to its performance in comparison to its benchmarks.
The mandate of the Fund is to provide strong growth potential in an up
market cycle via the growth style employed by Pilgrim Baxter & Associates, while
moderating the risk of a down market with the value style utilized by Pilgrim
Baxter Value Investors, Inc. Since inception, the Fund has maintained a neutral
allocation (approximately 50/50) between the two styles, with adjustments for
market movements made with the flow of funds into and out of the Fund. At March
31, 2000 the split of assets was 56% growth and 44% value.
PORTFOLIO HIGHLIGHTS -- VALUE
As our process dictates, we continue to focus on companies whose prices are
commensurate with their near-term business dynamics and long-term growth
potential. In select cases we feel that the market provided us with the
opportunity to own exceptional companies with great management teams, strong
operating histories and improving near-term and long-term prospects. It was
these companies that contributed to the bulk of your out-performance vs. the
Russell 2000 and Russell 2000 Value benchmarks during the past 12 months.
The most gratifying performance came from the Fund's energy companies. These
companies possess the attributes that we seek in potential portfolio additions:
great near-term results, solid long-term growth prospects and attractive
valuations. Although the energy stocks in your Fund have done well recently, we
remain bullish as a result of the continually improving near-term dynamics. Oil
prices remain over $22/ barrel. Natural gas continues to trade around the $2.75/
mcf level. Day rates are rising for the service companies and rig counts are
increasing commensurate with higher drilling budgets.
As has been well reported, Technology was the best performing sector in most
major indices over the past 12 months. Regardless of your personal exposure to
these stocks, it was impossible not to notice the effect technology was having
on popular culture. Almost overnight, technology bellwether the NASDAQ joined
the S&P 500 and the Dow Jones Industrial Average as a core benchmark of
performance. Concurrently, it became a gold standard of investing and drove the
performance of most major indices. It was also a major contributor to the Fund's
performance over the past 12 months. The Fund primarily benefited from holdings
in semiconductors and semiconductor capital equipment, as these companies
offered the best trade-off between valuation, near-term business dynamics and
long-term growth.
Energy also contributed to the Fund's positive performance during the past
12 months. As oil rebounded off its low of $11/barrel in 1998, many of the
energy companies returned to profitability and began exhibiting substantial free
cash flow. Although we are bullish on energy, we prefer companies with natural
gas exposure versus oil exposure, which removes some of the commodity price risk
associated with OPEC. The supply and demand characteristics continue to bode
well for future stock price appreciation within this group.
Poor performing sectors over the past year include financials and consumer
staples. As investors attempted to raise cash for technology purchases, they
managed to sell many of the stocks in these groups down to levels they had not
seen in years.
PORTFOLIO HIGHLIGHTS -- GROWTH
The overwhelming majority of the growth portion if the Fund's holdings
performed extremely well during the fiscal year. In fact, the Fund had positions
in over 50 stocks that increased by more than 100%.
The Fund's five best performing positions were: Applied Micro Circuits Corp
(AMCC), JDS Uniphase (JDSU) QLogic (QLGC), Sandisk Corporation (SNDK) and
Broadvision Inc. (BVSN) which returned 1,304%, 737%, 707%, 595% and 577%,
respectively.
Although the majority of the Fund's investments provided positive
contributions to performance during the fiscal year, we did experience some
disappointments. Examples of these include: Bluestone Software Inc. (BLSW),
Biosite Diagnostics Inc. (BSTE), Carrier Access Group (CACS), Concentric Network
Corp. (CNCX), and Telebanc Financial Corp. (TBFC). Each of these companies lost
between 60% and 45% of their value during the fiscal year and was, with the
exception of Bluestone Software Inc., eliminated from the portfolio.
As is usually the case with our underperformers, these companies failed to
maintain earnings growth or posted operating results that disappointed
investors.
As is typical of our growth style of investing, we were overweighted in the
technology sector and exposure for the fiscal year averaged over 59%. While the
technology sector clearly dominated the returns of the portfolio, contributing
over 92% to the return of the growth portion of the Fund, other sectors also had
a positive impact. The industrial sector, with an average weight of 6.8%,
contributed over 7% to the total return. The healthcare and consumer cyclical
sectors each contributed over 5% to the return. The financial and energy
sectors, small though their weightings may have been, both had a negative impact
on the Fund, contributing -0.29% and -0.06%, respectively.
The PBHG Strategic Small Company Fund provided extraordinary investment
performance results during the fiscal year ended March 31, 2000. These results
were generated in an environment that was extremely favorable to the technology
stocks in which the fund was concentrated. We urge investors to maintain
realistic expectations of future performance and understand that these types of
results are unlikely to be sustained. In the last few months, global equity
markets have become increasingly volatile given the large advances in equity
valuations, the Federal Reserve's dedication to increasing interest rates in
order to preserve slow economic growth and the nervous investment sentiment that
these market conditions create. We remain positive in our long-term outlook for
the high quality rapidly growing companies in which the Fund invests and believe
our strategy will continue to be successful over the long haul.
38
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<PAGE>
THE PBHG FUNDS, INC.
INVESTMENT FOCUS STYLE / MARKET CAPITALIZATION
[CHART OMITTED]
AVERAGE ANNUAL TOTAL RETURN1
AS OF MARCH 31, 2000
- ------------------------------------------------------------------------------
One Annualized Annualized
Year 3 Year Inception
Return Return to Date2
- ------------------------------------------------------------------------------
PBHG Strategic Small Company Fund 99.74% 38.78% 30.39%
- ------------------------------------------------------------------------------
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE PBHG
STRATEGIC SMALL COMPANY FUND, VERSUS THE RUSSELL 2000 INDEX AND THE
LIPPER SMALL-CAP GROWTH FUNDS AVERAGE
[LINE CHART OMITTED]
PBHG Strategic Small Russell 2000 Lipper Small-Cap Growth
Company Fund Index(3) Funds Average(4)
12/31/96 $10,000 $10,000 $10,000
1/31/97 $10,120 $10,200 $10,242
2/28/97 $9,350 $9,952 $9,549
3/31/97 $8,860 $9,483 $8,881
4/30/97 $8,750 $9,509 $8,746
5/31/97 $10,270 $10,567 $10,003
6/30/97 $11,130 $11,020 $10,582
7/31/97 $12,170 $11,533 $11,286
8/31/97 $12,410 $11,797 $11,475
9/30/97 $13,440 $12,660 $12,415
10/31/97 $12,820 $12,104 $11,786
11/30/97 $12,520 $12,026 $11,535
12/31/97 $12,567 $12,236 $11,593
1/31/98 $12,502 $12,043 $11,420
2/28/98 $13,439 $12,933 $12,382
3/31/98 $13,870 $13,467 $12,990
4/30/98 $13,999 $13,541 $13,126
5/31/98 $12,922 $12,812 $12,242
6/30/98 $13,073 $12,839 $12,563
7/31/98 $12,244 $11,800 $11,675
8/31/98 $9,466 $9,508 $9,149
9/30/98 $10,004 $10,252 $9,877
10/31/98 $10,381 $10,671 $10,333
11/30/98 $11,501 $11,230 $11,232
12/31/98 $12,835 $11,924 $12,456
1/31/99 $13,105 $12,083 $12,765
2/28/99 $11,957 $11,104 $11,623
3/31/99 $11,856 $11,278 $12,142
4/30/99 $12,092 $12,288 $12,646
5/31/99 $12,576 $12,468 $12,756
6/30/99 $13,937 $13,032 $13,918
7/31/99 $13,960 $12,674 $13,907
8/31/99 $14,083 $12,205 $13,757
9/30/99 $14,308 $12,208 $14,156
10/31/99 $14,815 $12,257 $14,972
11/30/99 $16,209 $12,989 $16,973
12/31/99 $19,482 $14,459 $20,183
1/31/00 $19,188 $14,227 $19,961
2/29/00 $24,796 $16,576 $25,151
3/31/00 $23,682 $15,484 $23,521
1 Performance is historical and not indicative of future results. The
investment return and principal value of an investment will fluctuate, so
that an investor's shares, when redeemed, may be worth more or less than
their original cost.
2 The PBHG Strategic Small Company Fund commenced operations on December 31,
1996.
3 The Russell 2000 Index is an unmanaged index comprised of the 2,000
smallest securities in the Russell 3000 Index. The Index reflects the
reinvestment of income dividends and capital gains distributions, if any,
but does not reflect fees, brokerage commissions, or other expenses of
investing. The Index is not intended to imply the Fund's past or future
performance.
4 The Lipper Small-Cap Growth Funds Average represents the average
performance of all mutual funds classified by Lipper, Inc. in the Small-Cap
Growth category. These performance figures are based on the changes in net
asset value of the funds in the category with all capital gains
distributions and income dividends reinvested. The average is not intended
to imply the Fund's past or future performance.
SECTOR WEIGHTINGS - AT MARCH 31, 2000
[PIE CHART OMITTED]
Basic Materials 2%
Consumer Cyclical 10%
Energy 7%
Financial 9%
Health Care 6%
Industrial 10%
Services 5%
Technology 46%
Transportation 1%
Cash 4%
TOP TEN HOLDINGS - MARCH 31, 2000
Sandisk 1.7%
Applied Micro Circuits 1.5%
TranSwitch 1.2%
Advanced Digital Information 1.1%
EOG Resources 1.1%
Exchange Applications 1.1%
Polycom 1.1%
Business Objects ADR 1.0%
Tweeter Home Entertainment Group 1.0%
Manhattan Associates 11.7%
- -------------------------------------------------------
% of Total Portfolio Investments 10.8%
39
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF THE PBHG FUNDS, INC.:
In our opinion, the accompanying statements of net assets for the PBHG Growth
Fund, PBHG Emerging Growth Fund, PBHG Large Cap Growth Fund, PBHG Select Equity
Fund, PBHG Limited Fund, PBHG Large Cap 20 Fund, PBHG New Opportunities Fund and
PBHG Cash Reserves Fund, and the statements of assets and liabilities, including
the schedules of investments, for the PBHG Core Growth Fund, PBHG Large Cap
Value Fund, PBHG Mid-Cap Value Fund, PBHG Small Cap Value Fund, PBHG Focused
Value Fund, PBHG International Fund, PBHG Technology & Communications Fund and
PBHG Strategic Small Company Fund (constituting The PBHG Funds, Inc. hereafter
referred to as the "Fund"), and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of each of the funds, constituting the
"Fund", at March 31, 2000, the results of each of their operations for the year
then ended, the changes in each of their net assets for each of the two years
(or periods) in the period then ended, and the financial highlights for each of
the periods presented commencing April 1, 1996, in conformity with accounting
principles generally accepted in the United States. These financial statements
and financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of securities at March 31,
2000 by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above. The financial highlights for the Fund for
the fiscal periods presented prior to the year ended March 31, 1997 were audited
by other independent accountants, whose report dated April 29, 1996 expressed an
unqualified opinion on those financial highlights.
PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, Pennsylvania
May 12, 2000
40
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG GROWTH FUND
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
COMMON STOCK -- 89.6%
CONSUMER CYCLICAL -- 12.4%
AUDIO/VIDEO PRODUCTS -- 5.0%
Gemstar International* 2,518,100 $ 216,557
Polycom* 1,437,200 113,808
-----------
330,365
- --------------------------------------------------------------------------------
MOTION PICTURES & SERVICES -- 3.2%
Macrovision* 1,721,500 148,264
Zomax*+ 1,076,500 64,859
-----------
213,123
- --------------------------------------------------------------------------------
RADIO -- 1.1%
Hispanic Broadcasting* 652,700 73,918
-----------
73,918
- --------------------------------------------------------------------------------
RETAIL-COMPUTER EQUIPMENT -- 0.9%
CDW Computer Centers* 720,900 60,871
-----------
60,871
- --------------------------------------------------------------------------------
RETAIL-DISCOUNT -- 0.6%
Dollar Tree Stores* 804,300 41,924
-----------
41,924
- --------------------------------------------------------------------------------
RETAIL-JEWELRY -- 0.6%
Tiffany & Company 442,900 37,038
-----------
37,038
- --------------------------------------------------------------------------------
RETAIL-RESTAURANTS -- 1.0%
Starbucks* 1,454,600 65,184
-----------
65,184
-----------
TOTAL CONSUMER CYCLICAL (COST $403,052) 822,423
-----------
- --------------------------------------------------------------------------------
HEALTH CARE -- 6.8%
MEDICAL INFORMATION SYSTEMS -- 0.7%
Allscripts* 807,800 48,569
-----------
48,569
- --------------------------------------------------------------------------------
MEDICAL INSTRUMENTS -- 0.6%
Techne* 546,800 37,729
-----------
37,729
- --------------------------------------------------------------------------------
MEDICAL PRODUCTS -- 1.4%
Minimed* 716,500 92,787
-----------
92,787
- --------------------------------------------------------------------------------
MEDICAL-BIOMEDICAL/GENETIC -- 0.8%
Incyte Pharmaceuticals* 285,900 24,998
Invitrogen* 510,000 29,612
-----------
54,610
- --------------------------------------------------------------------------------
MEDICAL-DRUGS -- 2.0%
Celgene* 510,200 50,797
Jones Pharmaceuticals 866,950 26,334
King Pharmaceuticals* 1,060,550 33,407
Pharmacopeia* 405,800 19,884
-----------
130,422
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
PHARMACY SERVICES -- 0.7%
Express Scripts, Cl A* 1,147,000 $ 48,174
-----------
48,174
- --------------------------------------------------------------------------------
RESPIRATORY PRODUCTS -- 0.6%
Resmed* 549,600 39,228
-----------
39,228
-----------
TOTAL HEALTH CARE (COST $331,144) 451,519
-----------
- --------------------------------------------------------------------------------
INDUSTRIAL -- 12.0%
BUILDING & CONSTRUCTION-MISCELLANEOUS -- 0.8%
Dycom Industries* 1,028,200 50,125
-----------
50,125
- --------------------------------------------------------------------------------
CAPACITORS -- 0.9%
Kemet* 903,300 57,134
-----------
57,134
- --------------------------------------------------------------------------------
CIRCUIT BOARDS -- 0.6%
Jabil Circuit* 952,000 41,174
-----------
41,174
- --------------------------------------------------------------------------------
ELECTRONIC COMPONENTS-MISCELLANEOUS -- 3.9%
Flextronics International* 2,669,800 188,054
Gentex* 1,946,900 72,157
-----------
260,211
- --------------------------------------------------------------------------------
ELECTRONIC MEASURING INSTRUMENTS -- 0.8%
Credence Systems* 443,300 55,468
-----------
55,468
- --------------------------------------------------------------------------------
INDUSTRIAL AUTOMATION/ROBOTICS -- 1.2%
Cognex* 769,800 44,408
PRI Automation* 520,800 31,834
-----------
76,242
- --------------------------------------------------------------------------------
INSTRUMENTS-CONTROLS -- 2.0%
Microchip Technology* 1,986,450 130,609
-----------
130,609
- --------------------------------------------------------------------------------
LASERS-SYSTEMS/COMPONENTS -- 0.6%
Cymer* 760,800 38,040
-----------
38,040
- --------------------------------------------------------------------------------
MACHINERY-GENERAL INDUSTRIAL -- 0.8%
Asyst Technologies* 855,200 50,029
-----------
50,029
- --------------------------------------------------------------------------------
MACHINERY-PUMPS -- 0.4%
Helix Technology 422,200 25,358
-----------
25,358
-----------
TOTAL INDUSTRIAL (COST $432,109) 784,390
-----------
- --------------------------------------------------------------------------------
41
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG GROWTH FUND
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
SERVICES -- 2.9%
ADVERTISING SALES -- 0.9%
Lamar Advertising* 1,291,400 $ 58,759
-----------
58,759
- --------------------------------------------------------------------------------
ADVERTISING SERVICES -- 0.6%
Getty Images* 1,136,500 40,843
-----------
40,843
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES -- 0.8%
Wireless Facilities* 506,600 53,320
-----------
53,320
- --------------------------------------------------------------------------------
COMPUTER SERVICES -- 0.6%
QRS* 512,400 38,558
-----------
38,558
-----------
TOTAL SERVICES (COST $151,066) 191,480
-----------
- --------------------------------------------------------------------------------
TECHNOLOGY -- 55.5%
APPLICATIONS SOFTWARE -- 5.4%
Citrix Systems* 1,248,200 82,693
Intertrust Technologies* 95,500 4,059
Peregrine Systems* 2,739,400 183,711
Pinnacle Systems* 1,130,000 37,572
Quest Software* 448,200 50,535
-----------
358,570
- --------------------------------------------------------------------------------
CELLULAR TELECOMMUNICATION -- 0.5%
Triton PCS Holdings* 619,400 37,009
-----------
37,009
- --------------------------------------------------------------------------------
CIRCUITS -- 1.6%
Micrel* 1,118,600 107,386
-----------
107,386
- --------------------------------------------------------------------------------
COMMUNICATIONS SOFTWARE -- 2.1%
Research In Motion* 1,329,100 141,549
-----------
141,549
- --------------------------------------------------------------------------------
COMPUTER DATA SECURITY -- 2.8%
Checkpoint Software* 980,000 167,641
RSA Security* 360,200 18,663
-----------
186,304
- --------------------------------------------------------------------------------
COMPUTER GRAPHICS -- 0.6%
Nvidia* 464,800 39,268
-----------
39,268
- --------------------------------------------------------------------------------
COMPUTERS-INTEGRATED SYSTEMS -- 1.1%
Redback Networks* 247,500 74,235
-----------
74,235
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
DECISION SUPPORT SOFTWARE -- 0.2%
Advent Software* 316,300 $ 14,510
-----------
14,510
- --------------------------------------------------------------------------------
EDUCATIONAL SOFTWARE -- 1.5%
Smartforce ADR* 2,108,200 96,714
-----------
96,714
- --------------------------------------------------------------------------------
ELECTRONIC COMPONENTS-SEMICONDUCTORS-- 10.3%
Applied Micro Circuits* 683,600 102,583
Cree* 322,800 36,436
Lattice Semiconductor* 662,200 44,823
Qlogic* 999,200 135,391
SDL* 1,113,000 236,930
Semtech* 757,200 48,508
TranSwitch* 756,950 72,762
-----------
677,433
- --------------------------------------------------------------------------------
ENTERPRISE SOFTWARE/SERVICES -- 5.5%
Aspect Development* 676,400 43,543
BEA Systems* 829,000 60,828
Informatica* 831,600 63,877
Microstrategy+ 1,624,100 141,398
TSI International Software Limited* 671,500 55,776
-----------
365,422
- --------------------------------------------------------------------------------
FIBER OPTICS -- 1.3%
Harmonic* 718,700 59,832
MRV Communications* 297,900 27,295
-----------
87,127
- --------------------------------------------------------------------------------
INTERNET CONTENT -- 8.0%
Backweb Technologies* 666,700 22,918
Critical Path* 427,000 36,295
Go2Net* 524,900 42,287
Infospace* 1,718,160 249,885
Network Solutions* 1,157,400 177,896
-----------
529,281
- --------------------------------------------------------------------------------
INTERNET SOFTWARE -- 3.6%
Allaire* 458,200 34,651
Art Technology* 1,077,600 70,785
E.Piphany* 300,100 40,082
Software.com* 362,800 46,756
Vignette* 295,900 47,418
-----------
239,692
- --------------------------------------------------------------------------------
NETWORK SOFTWARE -- 2.7%
Micromuse* 1,293,000 179,485
-----------
179,485
- --------------------------------------------------------------------------------
NETWORKING PRODUCTS -- 0.6%
Extreme Networks* 454,400 35,898
-----------
35,898
- --------------------------------------------------------------------------------
42
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG GROWTH FUND
Shares/Face Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
SATELLITE TELECOMMUNICATIONS -- 2.1%
Gilat Satellite*+ 1,149,900 $ 134,826
-----------
134,826
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT -- 4.2%
Advanced Fibre* 910,700 57,090
Audiocodes Limited* 756,000 75,883
Ditech Communications* 930,600 98,702
Terayon Communication* 206,300 42,291
-----------
273,966
-----------
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS SERVICES -- 1.4%
Copper Mountain Networks* 600,400 49,195
Inet Technologies* 799,000 42,297
-----------
91,492
TOTAL TECHNOLOGY (COST $1,535,756) 3,670,167
-----------
TOTAL COMMON STOCK (COST $2,853,127) 5,919,979
-----------
- --------------------------------------------------------------------------------
WARRANTS -- 0.0%
HEALTH CARE -- 0.0%
MEDICAL INFORMATION SYSTEMS
PER-SE Technologies 2,579 0
-----------
TOTAL HEALTH CARE (COST $0) 0
-----------
TOTAL WARRANTS (COST $0) 0
-----------
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS -- 10.8%
Barclays
6.08%, dated 03/31/00, matures 04/03/00,
repurchase price $86,873,057 (collateralized by
U.S. Government Agency Instruments:
total market value $88,568,127) (A) $86,829 86,829
Greenwich Capital
6.08%, dated 03/31/00, matures 04/03/00,
repurchase price $60,342,313 (collateralized by
U.S. Government Agency Instruments:
total market value $61,520,106) (A) 60,312 60,312
J.P. Morgan
6.08%, dated 03/31/00, matures 04/03/00,
repurchase price $53,835,718 (collateralized by
U.S. Government Agency Instruments:
total market value $54,888,976) (A) 53,812 53,812
Prudential
6.08%, dated 03/31/00, matures 04/03/00,
repurchase price $133,253,908 (collateralized by
U.S. Government Agency Instruments:
total market value $135,850,704) (A) 133,187 133,187
Morgan Stanley
6.08%, dated 03/31/00, matures 04/03/00,
repurchase price $241,246,358 (collateralized by
U.S. Government Agency Instruments:
total market value $245,952,356) (A) 241,124 241,124
Face Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS -- CONTINUED
J.P. Morgan
6.08%, dated 03/31/00, matures 04/03/00,
repurchase price $140,046,032 (collateralized by
U.S. Government Agency Instruments:
total market value $142,774,613) (A) $139,975 $ 139,975
-----------
TOTAL REPURCHASE AGREEMENTS (COST $715,239) 715,239
-----------
TOTAL INVESTMENTS-- 100.4% (COST $3,568,366) 6,635,218
-----------
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- (0.4)%
TOTAL OTHER ASSETS AND LIABILITIES, NET (26,047)
-----------
- --------------------------------------------------------------------------------
NET ASSETS:
Fund Shares of PBHG Class (authorized 400 million
shares -- $0.001 par value) based on 110,081,226
outstanding shares of common stock 3,135,109
Fund Shares of Advisor Class (authorized 200 million
shares -- $0.001 par value) based on 2,473,523
outstanding shares of common stock 73,080
Accumulated net realized gain on investments 334,130
Net unrealized appreciation on investments 3,066,852
-----------
TOTAL NET ASSETS-- 100.0% $6,609,171
-----------
-----------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-- PBHG CLASS $58.73
-----------
-----------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-- ADVISOR CLASS $58.19
-----------
-----------
* Non-income producing security
(A) -- Tri-party repurchase agreement
ADR -- American Depository Receipt
Cl -- Class
+ Considered an affiliated company as the Fund owns more than 5% of the
outstanding voting securities of such company. The total market of investments
in affiliated companies as of March 31, 2000 was $341,083,106.
The accompanying notes are an integral part of the financial statements.
43
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG EMERGING GROWTH FUND
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
COMMON STOCK -- 89.7%
CONSUMER CYCLICAL -- 7.0%
AUDIO/VIDEO PRODUCTS -- 2.1%
Polycom* 360,200 $ 28,523
-----------
28,523
- --------------------------------------------------------------------------------
RADIO -- 0.6%
Citadel Communications* 190,900 8,054
-----------
8,054
- --------------------------------------------------------------------------------
RETAIL-APPAREL/SHOE -- 2.0%
Charlotte Russe Holding* 308,000 5,275
Hot Topic* 337,800 11,823
Pacific Sunwear of California* 244,000 9,394
-----------
26,492
- --------------------------------------------------------------------------------
RETAIL-COMPUTER EQUIPMENT -- 0.8%
Insight Enterprises* 300,000 10,931
-----------
10,931
- --------------------------------------------------------------------------------
RETAIL-CONSUMER ELECTRONICS -- 0.8%
Tweeter Home Entertainment Group* 234,600 10,381
-----------
10,381
- --------------------------------------------------------------------------------
RETAIL-VARIETY STORE -- 0.7%
99 Cents Only Stores* 242,200 9,506
-----------
9,506
-----------
TOTAL CONSUMER CYCLICAL (COST $49,917) 93,887
-----------
- --------------------------------------------------------------------------------
HEALTH CARE -- 10.1%
HEALTH CARE COST CONTAINMENT -- 0.5%
Hooper Holmes 185,600 6,368
-----------
6,368
- --------------------------------------------------------------------------------
MEDICAL INFORMATION SYSTEMS -- 2.7%
Allscripts* 454,800 27,345
Dendrite International* 401,900 8,415
-----------
35,760
- --------------------------------------------------------------------------------
MEDICAL INSTRUMENTS -- 0.2%
Techne* 37,700 2,601
-----------
2,601
- --------------------------------------------------------------------------------
MEDICAL PRODUCTS -- 2.2%
Minimed* 182,300 23,608
Zoll Medical Group* 110,800 5,679
-----------
29,287
- --------------------------------------------------------------------------------
MEDICAL-DRUGS -- 2.7%
Medicis Pharmaceutical, Cl A* 313,450 12,538
Pharmacopeia* 468,600 22,961
-----------
35,499
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
RESPIRATORY PRODUCTS -- 1.8%
Resmed* 347,900 $ 24,831
-----------
24,831
-----------
TOTAL HEALTH CARE (COST $105,678) 134,346
-----------
- --------------------------------------------------------------------------------
INDUSTRIAL -- 8.9%
BUILDING & CONSTRUCTION-MISCELLANEOUS -- 0.5%
Dycom Industries* 150,000 7,313
-----------
7,313
- --------------------------------------------------------------------------------
DIVERSIFIED MANUFACTURING OPERATIONS -- 0.3%
GSI Lumonics* 249,600 4,274
-----------
4,274
- --------------------------------------------------------------------------------
ELECTRONIC MEASURING INSTRUMENTS -- 2.8%
Credence Systems* 168,300 21,059
Molecular Devices* 131,100 10,062
Zygo* 119,300 5,756
-----------
36,877
- --------------------------------------------------------------------------------
INDUSTRIAL AUTOMATION/ROBOTICS -- 1.1%
PRI Automation* 250,100 15,287
-----------
15,287
- --------------------------------------------------------------------------------
INSTRUMENTS-SCIENTIFIC -- 0.6%
Varian* 207,100 7,948
-----------
7,948
- --------------------------------------------------------------------------------
LASERS-SYSTEMS/COMPONENTS -- 2.3%
Cymer* 233,500 11,675
Electro Scientific Industries* 334,600 19,407
-----------
31,082
- --------------------------------------------------------------------------------
MACHINERY-GENERAL INDUSTRIAL -- 1.3%
Advanced Energy Industries* 330,300 16,845
-----------
16,845
-----------
TOTAL INDUSTRIAL (COST $91,424) 119,626
-----------
- --------------------------------------------------------------------------------
SERVICES -- 7.3%
ADVERTISING SERVICES -- 1.5%
Getty Images* 556,100 19,985
-----------
19,985
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES -- 0.5%
Jupiter Communications* 294,500 6,773
-----------
6,773
- --------------------------------------------------------------------------------
COMPUTER SERVICES -- 2.1%
Answerthink Consulting Group* 300,600 7,346
Factset Research Systems 429,100 11,613
QRS* 127,800 9,617
-----------
28,576
- --------------------------------------------------------------------------------
44
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG EMERGING GROWTH FUND
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
CONSULTING SERVICES -- 2.7%
Diamond Technology Partners, Cl A* 360,550 $ 23,706
Forrester Research* 237,900 12,906
-----------
36,612
- --------------------------------------------------------------------------------
RESEARCH & DEVELOPMENT -- 0.5%
Albany Molecular Research* 104,000 6,071
-----------
6,071
-----------
TOTAL SERVICES (COST $70,272) 98,017
-----------
- --------------------------------------------------------------------------------
TECHNOLOGY -- 56.4%
APPLICATIONS SOFTWARE -- 6.8%
Actuate* 399,000 21,471
Peregrine Systems* 691,200 46,354
Pinnacle Systems* 200,000 6,650
Quest Software* 80,200 9,042
Rational Software* 96,900 7,413
-----------
90,930
- --------------------------------------------------------------------------------
CIRCUITS -- 2.6%
Micrel* 289,600 27,802
Sipex* 197,800 6,985
-----------
34,787
- --------------------------------------------------------------------------------
COMMUNICATIONS SOFTWARE -- 0.1%
Apropos Technology* 44,000 1,628
-----------
1,628
- --------------------------------------------------------------------------------
COMPUTER DATA SECURITY -- 0.9%
ISS Group* 102,200 11,906
-----------
11,906
- --------------------------------------------------------------------------------
COMPUTER GRAPHICS -- 1.5%
Nvidia* 231,200 19,533
-----------
19,533
- --------------------------------------------------------------------------------
COMPUTERS-INTEGRATED SYSTEMS -- 1.0%
Mercury Computer Systems* 85,000 4,154
Radiant Systems* 53,900 3,389
Systems & Computer Technology* 230,100 5,379
-----------
12,922
- --------------------------------------------------------------------------------
COMPUTERS-MEMORY DEVICES -- 0.5%
M-Systems Flash Disk Pioneers* 121,600 6,445
-----------
6,445
- --------------------------------------------------------------------------------
COMPUTERS-PERIPHERAL EQUIPMENT -- 1.4%
In Focus Systems* 515,800 18,472
-----------
18,472
- --------------------------------------------------------------------------------
DATA PROCESSING/MANAGEMENT -- 1.4%
Documentum* 241,900 18,868
-----------
18,868
- --------------------------------------------------------------------------------
DECISION SUPPORT SOFTWARE -- 2.6%
Advent Software* 716,500 32,869
Blaze Software* 38,000 1,083
-----------
33,952
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
ELECTRONIC COMPONENTS-SEMICONDUCTORS-- 10.5%
ATMI* 317,600 $ 15,165
Cree* 176,700 19,945
Electroglas* 417,100 14,286
Qlogic* 80,000 10,840
Quantum Effect Devices* 141,300 11,251
TranSwitch* 301,275 28,960
Triquint Semiconductor* 193,100 14,193
Varian Semiconductor Equipment* 410,000 26,086
-----------
140,726
- --------------------------------------------------------------------------------
ENTERPRISE SOFTWARE SERVICE -- 5.0%
Business Objects ADR* 345,600 34,387
Informatica* 235,800 18,112
TSI International Software Limited* 170,600 14,170
-----------
66,669
- --------------------------------------------------------------------------------
FIBER OPTICS -- 1.9%
Harmonic* 179,400 14,935
MRV Communications* 120,100 11,004
-----------
25,939
- --------------------------------------------------------------------------------
INTERNET CONTENT -- 1.0%
Digital Think* 47,500 1,871
Rare Medium Group* 255,200 11,261
-----------
13,132
- --------------------------------------------------------------------------------
INTERNET SOFTWARE -- 4.4%
Allaire* 111,600 8,440
Appnet* 268,200 12,605
Art Technology* 259,800 17,066
Eprise* 76,500 1,205
Integrated Information Systems* 285,000 6,212
Intraware* 168,300 6,953
Macromedia* 71,400 6,448
-----------
58,929
- --------------------------------------------------------------------------------
NETWORK SOFTWARE -- 2.6%
Micromuse* 252,800 35,092
-----------
35,092
- --------------------------------------------------------------------------------
NETWORKING PRODUCTS -- 0.6%
Emulex* 70,700 7,715
-----------
7,715
- --------------------------------------------------------------------------------
SATELLITE TELECOMMUNICATIONS -- 0.8%
Celeritek* 170,000 10,753
-----------
10,753
- --------------------------------------------------------------------------------
SOFTWARE TOOLS -- 0.7%
Cysive* 146,100 10,008
-----------
10,008
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT -- 6.9%
Anaren Microwave* 40,700 3,902
Audiocodes Limited* 250,400 25,134
Ditech Communications* 249,800 26,494
Natural Microsystems* 277,500 23,796
Tut Systems* 222,700 13,265
-----------
92,591
- --------------------------------------------------------------------------------
45
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG EMERGING GROWTH FUND
Shares/Face Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS SERVICES -- 0.8%
Inet Technologies* 23,000 $ 1,218
Latitude Communications* 346,600 9,098
-----------
10,316
- --------------------------------------------------------------------------------
WIRELESS EQUIPMENT -- 2.4%
Netro* 129,000 8,387
Powerwave Technologies* 191,000 23,875
-----------
32,262
-----------
TOTAL TECHNOLOGY (COST $370,711) 753,575
-----------
TOTAL COMMON STOCK (COST $688,002) 1,199,451
-----------
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS -- 7.6%
J.P. Morgan
6.08%, dated 03/31/00, matures 04/03/00,
repurchase price $44,915,323 (collateralized
by U.S. Government Agency Instruments:
total market value $45,790,429) (A $44,893 44,893
J.P. Morgan
6.08%, dated 03/31/00, matures 04/03/00,
repurchase price $13,566,061 (collateralized
by U.S. Government Agency Instruments:
total market value $13,830,751) (A) 13,559 13,559
Morgan Stanley
6.08%, dated 03/31/00, matures 04/03/00,
repurchase price $42,572,463 (collateralized
by U.S. Government Agency Instruments:
total market value $43,839,635) (A) 42,551 42,551
-----------
TOTAL REPURCHASE AGREEMENTS (COST $101,003) 101,003
-----------
TOTAL INVESTMENTS-- 97.3% (COST $789,005) 1,300,454
-----------
- --------------------------------------------------------------------------------
Market
Description Value (000)
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- 2.7%
TOTAL OTHER ASSETS AND LIABILITIES, NET $ 36,484
-----------
- --------------------------------------------------------------------------------
NET ASSETS:
Fund Shares of Pbhg Class (authorized 400 million
shares -- $0.001 par value) based on
33,422,042 outstanding shares of common stock 796,743
Accumulated net realized gain on investments 28,746
Net unrealized appreciation on investments 511,449
-----------
TOTAL NET ASSETS-- 100.0% $1,336,938
-----------
-----------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE $40.00
-----------
-----------
* Non-income producing security
(A) -- Tri-party repurchase agreement
ADR -- American Depository Receipt
Cl -- Class
The accompanying notes are an integral part of the financial statements.
[LOGO OMITTED]
46
<PAGE>
THE PBHG FUNDS, INC.
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG LARGE CAP GROWTH FUND
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
COMMON STOCK -- 92.4%
CONSUMER CYCLICAL -- 8.1%
AUDIO/VIDEO PRODUCTS -- 3.2%
Gemstar International* 65,600 $ 5,642
Polycom* 31,500 2,494
-----------
8,136
- --------------------------------------------------------------------------------
E-COMMERCE -- 0.4%
Homegrocer.com* 100,200 1,040
-----------
1,040
- --------------------------------------------------------------------------------
RADIO -- 0.6%
Hispanic Broadcasting* 14,300 1,619
-----------
1,619
- --------------------------------------------------------------------------------
RETAIL-BEDDING -- 0.6%
Bed Bath & Beyond* 41,400 1,630
-----------
1,630
- --------------------------------------------------------------------------------
RETAIL-BUILDING PRODUCTS -- 1.3%
Home Depot 50,150 3,235
-----------
3,235
- --------------------------------------------------------------------------------
RETAIL-CONSUMER ELECTRONICS -- 0.6%
Best Buy* 17,600 1,514
-----------
1,514
- --------------------------------------------------------------------------------
RETAIL-JEWELRY -- 0.6%
Tiffany & Company 19,700 1,647
-----------
1,647
- --------------------------------------------------------------------------------
RETAIL-REGIONAL DEPARTMENT STORE -- 0.8%
Kohl's* 19,500 1,999
-----------
1,999
-----------
TOTAL CONSUMER CYCLICAL (COST $12,151) 20,820
-----------
- --------------------------------------------------------------------------------
FINANCIAL -- 3.1%
DIVERSIFIED FINANCIAL SERVICES -- 0.6%
Citigroup 27,600 1,637
-----------
1,637
- --------------------------------------------------------------------------------
FINANCE-INVESTMENT BANKER/BROKER -- 2.5%
Goldman Sachs 34,500 3,627
Schwab, Charles 48,200 2,738
-----------
6,365
-----------
TOTAL FINANCIAL (COST $7,108) 8,002
-----------
- --------------------------------------------------------------------------------
HEALTH CARE -- 8.2%
MEDICAL INFORMATION SYSTEMS -- 0.8%
IMS Health 121,300 2,055
-----------
2,055
- --------------------------------------------------------------------------------
MEDICAL INSTRUMENTS -- 1.1%
Guidant* 45,700 2,688
-----------
2,688
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
MEDICAL-BIOMEDICAL/GENENICS -- 3.2%
Amgen* 65,100 $ 3,995
Genentech* 27,000 4,104
-----------
8,099
- --------------------------------------------------------------------------------
MEDICAL-DRUGS -- 2.3%
Medimmune* 17,200 2,995
Shire Pharmaceuticals ADR* 54,097 2,772
-----------
5,767
- --------------------------------------------------------------------------------
THERAPEUTICS -- 0.8%
Gilead Sciences* 30,700 1,946
-----------
1,946
-----------
TOTAL HEALTHCARE (COST $15,659) 20,555
-----------
- --------------------------------------------------------------------------------
INDUSTRIAL -- 10.1%
DIVERSIFIED MANUFACTURING OPERATIONS-- 4.1%
General Electric 34,800 5,400
Tyco International Limited 105,100 5,242
-----------
10,642
- --------------------------------------------------------------------------------
DIVERSIFIED OPERATIONS -- 1.5%
Onex^ 111,500 3,917
-----------
3,917
- --------------------------------------------------------------------------------
ELECTRONIC COMPONENTS-MISCELLANEOUS-- 2.5%
Celestica* 31,000 1,645
DII Group* 11,100 1,255
Flextronics International* 50,000 3,522
-----------
6,422
- --------------------------------------------------------------------------------
ELECTRONIC MEASURING INSTRUMENTS -- 2.0%
Agilent Technologies* 49,900 5,190
-----------
5,190
-----------
TOTAL INDUSTRIAL (COST $17,929) 26,171
-----------
- --------------------------------------------------------------------------------
SERVICES -- 2.9%
ADVERTISING AGENCIES -- 0.7%
Omnicom Group 20,300 1,897
-----------
1,897
- --------------------------------------------------------------------------------
COMPUTER SERVICES -- 0.7%
Digitas* 78,200 1,916
-----------
1,916
- --------------------------------------------------------------------------------
TELEPHONE-INTEGRATED -- 1.5%
AT&T 70,500 3,966
-----------
3,966
-----------
TOTAL SERVICES (COST $7,649) 7,779
-----------
- --------------------------------------------------------------------------------
47
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG LARGE CAP GROWTH FUND
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
TECHNOLOGY -- 58.3%
APPLICATIONS SOFTWARE -- 4.7%
Citrix Systems* 18,400 $ 1,219
Microsoft* 46,800 4,972
Rational Software* 7,700 589
Siebel Systems* 45,300 5,411
-----------
12,191
- --------------------------------------------------------------------------------
CIRCUITS -- 1.0%
Linear Technology 44,600 2,453
-----------
2,453
- --------------------------------------------------------------------------------
COMMUNICATIONS SOFTWARE -- 0.7%
Research in Motion* 16,300 1,736
-----------
1,736
- --------------------------------------------------------------------------------
COMPUTER DATA SECURITY -- 0.5%
Entrust Technologies* 13,900 1,183
-----------
1,183
- --------------------------------------------------------------------------------
COMPUTERS-INTEGRATED SYSTEMS -- 1.0%
Brocade Communications Systems* 14,000 2,510
-----------
2,510
- --------------------------------------------------------------------------------
COMPUTERS-MEMORY DEVICES -- 3.1%
EMC* 31,700 3,963
Veritas Software* 30,400 3,982
-----------
7,945
- --------------------------------------------------------------------------------
COMPUTERS-MICRO -- 1.5%
Sun Microsystems* 40,100 3,757
-----------
3,757
- --------------------------------------------------------------------------------
ELECTRONIC COMPONENTS-SEMICONDUCTOR-- 13.2%
Applied Materials* 50,400 4,750
Broadcom* 33,500 8,136
Fairchild Semiconductor
International, Cl A* 38,400 1,402
Intel 18,100 2,388
Kla-Tencor* 31,800 2,679
Novellus Systems* 32,200 1,807
SDL* 12,600 2,682
Texas Instruments 33,400 5,344
Xilinx* 56,900 4,712
-----------
33,900
- --------------------------------------------------------------------------------
ENTERPRISE SOFTWARE SERVICES -- 1.4%
BEA Systems* 32,400 2,377
Microstrategy* 14,200 1,236
-----------
3,613
- --------------------------------------------------------------------------------
FIBER OPTICS -- 6.0%
Corning 21,400 4,152
E-Tek Dynamics* 7,400 1,741
JDS Uniphase* 47,400 5,715
Sycamore Networks* 30,100 3,883
-----------
15,491
- --------------------------------------------------------------------------------
Shares/Face Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
INTERNET CONTENT -- 3.9%
Infospace* 47,600 $ 6,923
Network Solutions* 20,000 3,074
-----------
9,997
- --------------------------------------------------------------------------------
INTERNET SOFTWARE -- 2.9%
Ariba* 15,600 3,270
Exodus Communications* 22,000 3,091
Tibco Software* 13,900 1,133
-----------
7,494
- --------------------------------------------------------------------------------
NETWORKING PRODUCTS -- 7.8%
Cisco Systems* 92,900 7,182
Foundry Networks* 36,200 5,204
Juniper Networks* 23,100 6,088
Network Appliance* 20,200 1,672
-----------
20,146
- --------------------------------------------------------------------------------
PRINTERS & RELATED PRODUCTS -- 1.5%
Lexmark International Group* 37,300 3,944
-----------
3,944
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT -- 6.9%
Comverse Technology* 14,300 2,703
Nokia ADR, Cl A 19,800 4,301
Nortel Networks^ 57,500 7,245
Qualcomm* 23,800 3,554
-----------
17,803
- --------------------------------------------------------------------------------
WIRELESS EQUIPMENT -- 2.2%
Motorola 22,800 3,246
Nextel Partners, Cl A* 82,300 2,387
-----------
5,633
-----------
TOTAL TECHNOLOGY (COST $77,523) 149,796
-----------
- --------------------------------------------------------------------------------
UTILITIES -- 1.7%
INDEPENDENT POWER PRODUCER -- 1.7%
Calpine* 46,100 4,333
-----------
4,333
-----------
TOTAL UTILITIES (COST $2,748) 4,333
-----------
TOTAL COMMON STOCK (COST $140,767) 237,456
-----------
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 5.8%
J.P. Morgan
6.10%, dated 03/31/00, matures 04/03/00,
repurchase price $14,820,167 (collateralized
by U.S. Government Agency Instruments:
total market value $15,112,437) (A) $14,812 14,812
-----------
TOTAL REPURCHASE AGREEMENT (COST $14,812) 14,812
-----------
TOTAL INVESTMENTS-- 98.2% (COST $155,579) 252,268
-----------
- --------------------------------------------------------------------------------
48
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG LARGE CAP GROWTH FUND
Market
Description Value (000)
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- 1.8%
TOTAL OTHER ASSETS AND LIABILITIES, NET $ 4,697
-----------
- --------------------------------------------------------------------------------
NET ASSETS:
Fund Shares of PBHG Class (authorized 200 million
shares -- $0.001 par value) based on 6,697,027
outstanding shares of common stock 138,533
Accumulated net realized gain on investments 21,743
Net unrealized appreciation on investments 96,689
-----------
TOTAL NET ASSETS-- 100.0% $256,965
-----------
-----------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE $38.37
-----------
-----------
* Non-income producing security
(A) -- Tri-party repurchase agreement
ADR -- American Depository Receipt
Cl -- Class
^ The fund held Canadian securities as of March 31, 2000. The total market value
of investments is $11,161,995 and represented 4.3% of the fund.
The accompanying notes are an integral part of the financial statements.
49
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG SELECT EQUITY FUND
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
COMMON STOCK -- 105.0%
CONSUMER CYCLICAL -- 5.8%
AUDIO/VIDEO PRODUCTS -- 5.8%
Gemstar International* 1,145,300 $ 98,496
-----------
98,496
-----------
TOTAL CONSUMER (COST $77,573) 98,496
-----------
- --------------------------------------------------------------------------------
HEALTH CARE -- 0.1%
MEDICAL PRODUCTS -- 0.1%
Luminex* 34,600 748
-----------
748
-----------
TOTAL HEALTH CARE (COST $599) 748
-----------
- --------------------------------------------------------------------------------
TECHNOLOGY -- 99.1%
APPLICATIONS SOFTWARE -- 12.7%
Intertrust Technologies* 510,900 21,713
Microsoft* 692,600 73,589
Quest Software* 501,200 56,510
Siebel Systems* 531,000 63,421
-----------
215,233
- --------------------------------------------------------------------------------
COMMUNICATIONS SOFTWARE -- 2.8%
Research in Motion* 444,473 47,336
-----------
47,336
- --------------------------------------------------------------------------------
COMPUTER DATA SECURITY -- 1.4%
Verisign* 162,300 24,264
-----------
24,264
- --------------------------------------------------------------------------------
COMPUTERS-INTEGRATED SYSTEMS -- 8.7%
Brocade Communications Systems* 440,000 78,898
Redback Networks* 225,900 67,756
-----------
146,654
- --------------------------------------------------------------------------------
COMPUTERS-MEMORY DEVICES -- 4.0%
Veritas Software* 516,625 67,678
-----------
67,678
- --------------------------------------------------------------------------------
ELECTRONIC COMPONENTS-SEMICONDUCTORS-- 10.5%
Broadcom* 399,500 97,029
SDL* 378,800 80,637
-----------
177,666
- --------------------------------------------------------------------------------
ENTERPRISE SOFTWARE/SERVICE -- 5.3%
I2 Technologies* 339,000 41,400
Microstrategy* 551,900 48,050
-----------
89,450
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
FIBER OPTICS -- 10.0%
E-Tek Dynamics* 142,300 $ 33,476
Harmonic* 299,800 24,958
JDS Uniphase* 556,300 67,069
MRV Communications* 472,000 43,247
-----------
168,750
- --------------------------------------------------------------------------------
INTERNET CONTENT -- 11.9%
Doubleclick* 425,600 39,847
Infospace* 559,400 81,358
Network Solutions* 306,400 47,095
Rare Medium Group* 752,200 33,191
-----------
201,491
- --------------------------------------------------------------------------------
INTERNET SOFTWARE -- 20.1%
America Online* 1,115,000 74,984
Ariba* 269,400 56,473
Art Technology* 840,800 55,230
E.Piphany* 239,500 31,988
Exodus Communications* 563,200 79,130
Valueclick* 46,000 963
Vignette* 257,800 41,312
-----------
340,080
- --------------------------------------------------------------------------------
NETWORKING PRODUCTS -- 9.3%
Cisco Systems* 967,500 74,800
Juniper Networks* 315,600 83,180
-----------
157,980
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT -- 2.4%
Audiocodes Limited* 403,600 40,511
-----------
40,511
-----------
TOTAL TECHNOLOGY (COST $1,345,381) 1,677,093
-----------
TOTAL COMMON STOCK (COST $1,423,553) 1,776,337
-----------
TOTAL INVESTMENTS-- 105.0% (COST $1,423,553) 1,776,337
-----------
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- (5.0)%
Bank Overdraft (54,180)
Line of Credit Borrowing (32,500)
Other Assets and Liabilities, Net 1,641
-----------
TOTAL OTHER ASSETS AND LIABILITIES, NET (85,039)
-----------
- --------------------------------------------------------------------------------
NET ASSETS:
Fund Shares of PBHG Class (authorized 200 million
shares -- $0.001 par value)based on 21,736,955
outstanding shares of common stock 1,298,649
Accumulated net realized gain on investments 9,865
Net unrealized appreciation on investments 352,784
-----------
TOTAL NET ASSETS-- 100.0% $1,691,298
-----------
-----------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE $77.81
-----------
-----------
* Non-income producing security
The accompanying notes are an integral part of the financial statements.
50
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG CORE GROWTH FUND
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
COMMON STOCK -- 104.9%
CONSUMER CYCLICAL -- 8.2%
AUDIO/VIDEO PRODUCTS -- 2.2%
Gemstar International* 24,500 $ 2,107
Polycom* 19,800 1,568
-----------
3,675
- --------------------------------------------------------------------------------
RESORTS/THEME PARKS -- 0.6%
Premier Parks* 45,700 960
-----------
960
- --------------------------------------------------------------------------------
RETAIL-CONSUMER ELECTRONICS -- 1.1%
Tandy 34,400 1,746
-----------
1,746
- --------------------------------------------------------------------------------
RETAIL-JEWELRY -- 3.4%
Tiffany & Company 32,200 2,693
Zale* 64,200 3,029
-----------
5,722
- --------------------------------------------------------------------------------
TELEVISION -- 0.9%
Univision Communication* 12,700 1,435
-----------
1,435
-----------
TOTAL CONSUMER CYCLICAL (COST $12,189) 13,538
-----------
- --------------------------------------------------------------------------------
ENERGY -- 5.3%
OIL FIELD MACHINERY & EQUIPMENT -- 2.1%
Cooper Cameron* 52,700 3,524
-----------
3,524
- --------------------------------------------------------------------------------
OIL & GAS DRILLING -- 3.2%
Ensco International 91,400 3,302
Santa Fe International 53,100 1,965
-----------
5,267
TOTAL ENERGY (COST $6,330) 8,791
-----------
- --------------------------------------------------------------------------------
FINANCIAL -- 2.1%
SUPER-REGIONAL BANKS-US -- 2.1%
Bank One 100,500 3,455
-----------
3,455
-----------
TOTAL FINANCIALS (COST $3,181) 3,455
-----------
- --------------------------------------------------------------------------------
HEALTH CARE -- 10.7%
DIAGNOSTIC EQUIPMENT -- 1.1%
Cytyc* 41,700 2,012
-----------
2,012
- --------------------------------------------------------------------------------
MEDICAL INFORMATION SYSTEMS -- 2.1%
Allscripts* 56,700 3,409
-----------
3,409
- --------------------------------------------------------------------------------
MEDICAL-BIOMEDICAL/GENETIC -- 1.6%
Incyte Pharmaceuticals* 30,300 2,649
-----------
2,649
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
MEDICAL-DRUGS -- 5.9%
Celgene* 20,200 $ 2,011
Medicis Pharmaceutical, Cl A* 43,900 1,756
Medimmune* 16,700 2,908
Teva Pharmaceutical ADR 82,100 3,064
-----------
9,739
-----------
TOTAL HEALTH CARE (COST $15,283) 17,809
-----------
- --------------------------------------------------------------------------------
INDUSTRIAL -- 8.7%
CAPACITORS -- 1.1%
Kemet* 27,700 1,752
-----------
1,752
- --------------------------------------------------------------------------------
CIRCUIT BOARDS -- 0.2%
Viasystems Group* 24,600 381
-----------
381
- --------------------------------------------------------------------------------
ELECTRONIC COMPONENTS-MISCELLANEOUS-- 2.0%
Celestica* 22,800 1,210
Flextronics International* 30,600 2,155
-----------
3,365
- --------------------------------------------------------------------------------
ELECTRONIC MEASURING INSTRUMENTS -- 2.3%
Credence Systems* 17,500 2,190
Veeco Instruments* 21,400 1,583
-----------
3,773
- --------------------------------------------------------------------------------
INSTRUMENTS-CONTROLS -- 3.1%
Mettler-Toledo International* 90,500 3,705
Microchip Technology* 22,400 1,473
-----------
5,178
-----------
TOTAL INDUSTRIAL (COST $12,110) 14,449
-----------
- --------------------------------------------------------------------------------
SERVICES -- 5.5%
ADVERTISING AGENCIES -- 1.1%
Omnicom Group 19,700 1,841
-----------
1,841
- --------------------------------------------------------------------------------
ADVERTISING SERVICES -- 1.4%
Getty Images* 65,700 2,361
-----------
2,361
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES -- 1.9%
Convergys* 83,000 3,206
-----------
3,206
- --------------------------------------------------------------------------------
COMPUTER SERVICES -- 1.1%
Marchfirst* 49,385 1,762
-----------
1,762
-----------
TOTAL SERVICES (COST $8,762) 9,170
-----------
- --------------------------------------------------------------------------------
TECHNOLOGY -- 64.4%
APPLICATIONS SOFTWARE -- 3.3%
Citrix Systems* 22,300 1,477
New Era of Networks* 24,600 966
Peregrine Systems* 24,500 1,643
Quest Software* 11,900 1,342
-----------
5,428
- --------------------------------------------------------------------------------
51
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG CORE GROWTH FUND
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
COMPUTER DATA SECURITY -- 1.5%
Checkpoint Software* 4,400 $ 753
Verisign* 11,200 1,674
-----------
2,427
- --------------------------------------------------------------------------------
COMPUTERS-INTEGRATED SYSTEMS -- 4.5%
Brocade Communications Systems* 16,400 2,941
Redback Networks* 14,900 4,469
-----------
7,410
- --------------------------------------------------------------------------------
COMPUTERS-MEMORY DEVICES -- 2.8%
Sandisk* 22,500 2,756
Veritas Software* 13,925 1,824
-----------
4,580
- --------------------------------------------------------------------------------
EDUCATIONAL SOFTWARE -- 1.1%
Smartforce ADR* 41,200 1,890
-----------
1,890
- --------------------------------------------------------------------------------
ELECTRONIC COMPONENTS-SEMICONDUCTORS-- 12.6%
Amkor Technology* 15,800 838
Atmel* 38,000 1,962
ATMI* 33,800 1,614
Cypress Semiconductor* 47,900 2,362
Globespan* 37,600 3,833
LSI Logic* 43,000 3,123
Qlogic* 14,000 1,897
Triquint Semiconductor* 35,100 2,580
Xilinx* 33,800 2,799
-----------
21,008
- --------------------------------------------------------------------------------
ENTERPRISE SOFTWARE/SERVICE -- 2.2%
BEA Systems* 21,500 1,577
Microstrategy* 24,000 2,089
-----------
3,666
- --------------------------------------------------------------------------------
FIBER OPTICS -- 5.9%
Ciena* 17,500 2,207
JDS Uniphase* 14,000 1,688
MRV Communications* 36,300 3,326
Sycamore Networks* 19,400 2,503
-----------
9,724
- --------------------------------------------------------------------------------
INTERNET CONTENT -- 6.7%
China.com, Cl A* 17,100 1,385
Infospace* 22,800 3,316
Network Solutions* 25,300 3,889
Rare Medium Group* 59,200 2,612
-----------
11,202
- --------------------------------------------------------------------------------
INTERNET SOFTWARE -- 11.9%
Active Software* 11,900 757
Akamai Technologies* 3,900 627
Ariba* 16,100 3,375
Art Technology* 58,000 3,810
Clarent* 27,700 2,498
Commerce One* 9,900 1,478
- --------------------------------------------------------------------------------
Shares/Face Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
INTERNET SOFTWARE -- 11.9% -- CONTINUED
Exodus Communications* 24,100 $ 3,386
Interwoven* 9,200 1,010
U.S. Internetworking* 25,050 971
Valueclick* 4,800 100
Vignette* 11,400 1,827
-----------
19,839
- --------------------------------------------------------------------------------
NETWORK SOFTWARE -- 1.4%
Micromuse* 16,200 2,249
-----------
2,249
- --------------------------------------------------------------------------------
NETWORKING PRODUCTS -- 5.3%
Emulex* 13,700 1,495
Extreme Networks* 28,500 2,252
Foundry Networks* 15,800 2,271
Juniper Networks* 10,500 2,767
-----------
8,785
- --------------------------------------------------------------------------------
SOFTWARE TOOLS -- 0.5%
Broadbase Software* 11,400 909
-----------
909
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT -- 3.0%
Advanced Fibre* 29,000 1,818
Ditech Communications* 21,900 2,323
Natural Microsystems* 10,100 866
-----------
5,007
- --------------------------------------------------------------------------------
WIRELESS EQUIPMENT -- 1.7%
Netro* 27,000 1,755
Powerwave Technologies* 8,800 1,100
-----------
2,855
-----------
TOTAL TECHNOLOGY (COST $75,990) 106,979
-----------
TOTAL COMMON STOCK (COST $133,845) 174,191
-----------
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 0.0%
Morgan Stanley
5.75%, dated 03/31/00, matures 04/03/00,
repurchase price $90,074 (collateralized
by U.S. Government Agency Instruments:
total market value $91,831) (A) $90 90
-----------
TOTAL REPURCHASE AGREEMENT (COST $90) 90
-----------
TOTAL INVESTMENTS-- 104.9% (COST $133,935) 174,281
-----------
Percentages are based on Net Assets of $166,098,930.
* Non-income producing security
(A) -- Tri-party repurchase agreement
ADR -- American Depository Receipt
Cl -- Class
The accompanying notes are an integral part of the financial statements.
52
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG LIMITED FUND
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
COMMON STOCK -- 92.8%
BASIC MATERIALS -- 1.1%
ADVANCED MATERIALS/PRODUCTS -- 1.1%
Surmodics* 64,700 $ 1,779
-----------
1,779
-----------
TOTAL BASIC MATERIALS (COST $1,028) 1,779
-----------
- --------------------------------------------------------------------------------
CONSUMER CYCLICAL -- 8.7%
AUDIO/VIDEO PRODUCTS -- 2.8%
Polycom* 55,500 4,395
-----------
4,395
- --------------------------------------------------------------------------------
RADIO -- 0.4%
Citadel Communications* 13,300 561
-----------
561
- --------------------------------------------------------------------------------
RETAIL-APPAREL/SHOE -- 1.2%
Charlotte Russe Holding* 108,800 1,863
-----------
1,863
- --------------------------------------------------------------------------------
RETAIL-CONSUMER ELECTRONICS -- 1.8%
Tweeter Home Entertainment Group* 62,300 2,757
-----------
2,757
- --------------------------------------------------------------------------------
RETAIL-RESTAURANTS -- 2.5%
Buca* 141,200 1,818
Rare Hospitality International* 107,000 2,080
-----------
3,898
-----------
TOTAL CONSUMER CYCLICAL (COST $8,221) 13,474
-----------
- --------------------------------------------------------------------------------
CONSUMER NON-CYCLICAL -- 0.6%
FOOD-RETAIL -- 0.6%
Wild Oates Markets* 43,750 897
-----------
897
-----------
TOTAL CONSUMER NON-CYCLICAL (COST $765) 897
-----------
- --------------------------------------------------------------------------------
HEALTH CARE -- 13.8%
HEALTH CARE COST CONTAINMENT -- 1.6%
Hooper Holmes 74,200 2,546
-----------
2,546
- --------------------------------------------------------------------------------
MEDICAL INFORMATION SYSTEMS -- 2.8%
Allscripts* 72,000 4,329
-----------
4,329
- --------------------------------------------------------------------------------
MEDICAL PRODUCTS -- 0.5%
Zoll Medical Group* 16,400 840
-----------
840
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
MEDICAL-DRUGS -- 4.7%
Cima Labs* 96,200 $ 1,653
Medicis Pharmaceutical, Cl A* 51,425 2,057
Pharmacopeia* 71,500 3,504
-----------
7,214
- --------------------------------------------------------------------------------
PATIENT MONITORING EQUIPMENT -- 0.3%
Aspect Medical Systems* 11,800 423
-----------
423
- --------------------------------------------------------------------------------
PHARMACY SERVICES -- 1.6%
Accredo Health* 74,250 2,460
-----------
2,460
- --------------------------------------------------------------------------------
RESPIRATORY PRODUCTS -- 2.3%
Resmed* 50,600 3,612
-----------
3,612
-----------
TOTAL HEALTH CARE (COST $9,856) 21,424
-----------
- --------------------------------------------------------------------------------
INDUSTRIAL -- 6.9%
ELECTRONIC MEASUREMENT INSTRUMENTS-- 2.3%
Cohu 52,100 2,171
Molecular Devices* 18,000 1,382
-----------
3,553
- --------------------------------------------------------------------------------
MACHINERY-GENERAL INDUSTRIAL -- 4.6%
Applied Science & Technology* 26,400 799
Asyst Technologies* 56,300 3,293
Gasonics International* 78,000 3,093
-----------
7,185
-----------
TOTAL INDUSTRIAL (COST $5,535) 10,738
-----------
- --------------------------------------------------------------------------------
SERVICES -- 13.6%
COMMERCIAL SERVICES -- 0.5%
Jupiter Communications* 34,900 803
-----------
803
- --------------------------------------------------------------------------------
COMPUTER SERVICES -- 6.1%
Factset Research Systems 68,900 1,865
Netegrity* 26,500 1,815
PSW Technologies* 106,900 4,249
QRS* 21,100 1,588
-----------
9,517
- --------------------------------------------------------------------------------
CONSULTING SERVICES -- 5.4%
Diamond Technology Partners* 52,650 3,462
Forrester Research* 89,100 4,833
-----------
8,295
- --------------------------------------------------------------------------------
53
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<PAGE>
THE PBHG FUNDS, INC.
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG LIMITED FUND
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
HUMAN RESOURCES -- 1.6%
Hall Kinion & Associates* 105,000 $ 2,527
-----------
2,527
-----------
TOTAL SERVICES (COST $10,988) 21,142
-----------
- --------------------------------------------------------------------------------
TECHNOLOGY -- 48.1%
APPLICATIONS SOFTWARE -- 3.7%
Actuate* 80,000 4,305
Symix Systems* 70,600 1,412
-----------
5,717
- --------------------------------------------------------------------------------
CIRCUITS -- 1.7%
Pericom Semiconductors* 71,700 2,559
-----------
2,559
- --------------------------------------------------------------------------------
COMMUNICATIONS SOFTWARE -- 0.1%
Apropos Technology* 5,500 204
-----------
204
- --------------------------------------------------------------------------------
COMPUTERS-INTEGRATED SYSTEMS -- 0.9%
Netsolve* 44,600 1,438
-----------
1,438
- --------------------------------------------------------------------------------
COMPUTERS-MEMORY DEVICES -- 0.6%
M-Systems Flash Disk Pioneers* 16,100 853
-----------
853
- --------------------------------------------------------------------------------
COMPUTERS-PERIPHERAL EQUIPMENT -- 2.3%
In Focus Systems* 100,500 3,599
-----------
3,599
- --------------------------------------------------------------------------------
DECISION SUPPORT SOFTWARE -- 2.9%
Advent Software* 97,300 4,464
-----------
4,464
- --------------------------------------------------------------------------------
ELECTRONIC COMPONENTS-SEMICONDUCTORS-- 8.4%
Electroglas* 61,800 2,117
Parlex* 46,200 1,409
TranSwitch* 45,525 4,376
Varian Semiconductor Equipment* 80,900 5,147
-----------
13,049
- --------------------------------------------------------------------------------
ENTERPRISE SOFTWARE/SERVICE -- 6.3%
Business Objects ADR* 46,000 4,577
Informatica* 39,100 3,003
TSI International Software Limited* 27,300 2,268
-----------
9,848
- --------------------------------------------------------------------------------
FIBER OPTICS -- 1.6%
MRV Communications* 26,700 2,446
-----------
2,446
- --------------------------------------------------------------------------------
INTERNET CONTENT -- 1.7%
Rare Medium Group* 60,300 2,661
-----------
2,661
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
INTERNET SOFTWARE -- 1.1%
Appnet* 35,700 $ 1,678
-----------
1,678
- --------------------------------------------------------------------------------
NETWORK SOFTWARE -- 3.5%
Micromuse* 39,200 5,441
-----------
5,441
- --------------------------------------------------------------------------------
SOFTWARE TOOLS -- 1.6%
Broadbase Software* 12,200 973
Cysive* 22,000 1,507
-----------
2,480
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT -- 9.8%
Anaren Microwave* 31,700 3,039
Davox* 25,900 693
Ditech Communications* 35,100 3,723
Natural Microsystems* 64,500 5,531
Tut Systems* 36,800 2,192
-----------
15,178
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS SERVICES -- 1.9%
Latitude Communication* 95,200 2,499
RMH Teleservices* 45,300 442
-----------
2,941
TOTAL TECHNOLOGY (COST $31,905) 74,556
-----------
TOTAL COMMON STOCK (COST $68,298) 144,010
-----------
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 13.5%
J.P. Morgan
6.10%, dated 03/31/00, matures 04/03/00,
repurchase price $21,000,049 (collateralized
by U.S. Government Agency Instruments:
total market value $21,409,959) (A) $20,989 20,989
-----------
TOTAL REPURCHASE AGREEMENT (COST $20,989) 20,989
-----------
TOTAL INVESTMENTS-- 106.3% (COST $89,287) 164,999
-----------
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- (6.3)%
Payable for Investment Securities Purchased (12,296)
Other Assets and Liabilities, Net 2,427
-----------
TOTAL OTHER ASSETS AND LIABILITIES, NET (9,869)
-----------
- --------------------------------------------------------------------------------
NET ASSETS:
Fund Shares of PBHG Class (authorized 200 million
shares -- $0.001 par value)
based on 6,712,547 outstanding shares
of common stock 57,696
Accumulated net investment loss (3)
Accumulated net realized gain on investments 21,725
Net unrealized appreciation on investments 75,712
-----------
TOTAL NET ASSETS-- 100.0% $155,130
-----------
-----------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE $23.11
-----------
-----------
* Non-income producing security
(A) -- Tri-party repurchase agreement
ADR -- American Depository Receipt
Cl -- Class
The accompanying notes are an integral part of the financial statements.
54
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG LARGE CAP 20 FUND
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
COMMON STOCK -- 92.0%
CONSUMER CYCLICAL -- 5.2%
AUDIO/VIDEO PRODUCTS -- 5.2%
Gemstar International* 654,300 $ 56,270
-----------
56,270
-----------
TOTAL CONSUMER CYCLICAL (COST $19,217) 56,270
-----------
- --------------------------------------------------------------------------------
FINANCIAL -- 3.6%
DIVERSIFIED FINANCIAL SERVICES -- 3.6%
Citigroup 651,600 38,648
-----------
38,648
-----------
TOTAL FINANCIAL (COST $37,386) 38,648
-----------
- --------------------------------------------------------------------------------
HEALTH CARE -- 6.4%
MEDICAL INSTRUMENTS -- 3.0%
Guidant* 554,700 32,623
-----------
32,623
- --------------------------------------------------------------------------------
MEDICAL-BIOMEDICAL/GENETIC -- 3.4%
Genentech* 241,000 36,632
-----------
36,632
-----------
TOTAL HEALTH CARE (COST $54,660) 69,255
-----------
- --------------------------------------------------------------------------------
INDUSTRIAL -- 8.3%
ELECTRONIC COMPONENTS-MISCELLANEOUS-- 4.6%
Flextronics International* 700,300 49,327
-----------
49,327
- --------------------------------------------------------------------------------
ELECTRONIC MEASUREMENT INSTRUMENTS-- 3.7%
Agilent Technologies* 385,200 40,061
-----------
40,061
-----------
TOTAL INDUSTRIAL (COST $56,063) 89,388
-----------
- --------------------------------------------------------------------------------
TECHNOLOGY -- 68.5%
APPLICATIONS SOFTWARE -- 3.4%
Siebel Systems* 306,300 36,584
-----------
36,584
- --------------------------------------------------------------------------------
COMPUTERS-MEMORY DEVICES -- 8.3%
EMC* 370,600 46,325
Veritas Software* 331,800 43,466
-----------
89,791
- --------------------------------------------------------------------------------
COMPUTERS-MICRO -- 4.1%
Sun Microsystems* 479,600 44,940
-----------
44,940
- --------------------------------------------------------------------------------
ELECTRONIC COMPONENTS-SEMICONDUCTORS-- 16.9%
Applied Materials* 509,100 47,983
Broadcom* 336,700 81,776
Texas Instruments 332,000 53,120
-----------
182,879
- --------------------------------------------------------------------------------
Shares/Face Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
FIBER OPTICS -- 8.2%
JDS Uniphase* 740,600 $ 89,289
-----------
89,289
- --------------------------------------------------------------------------------
INTERNET CONTENT -- 2.3%
Network Solutions* 161,800 24,869
-----------
24,869
- --------------------------------------------------------------------------------
NETWORKING PRODUCTS -- 13.7%
Cisco Systems* 910,100 70,362
Foundry Networks* 307,700 44,232
Juniper Networks* 128,900 33,973
-----------
148,567
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT -- 11.6%
Nokia ADR, Cl A 215,100 46,730
Nortel Networks^ 629,190 79,278
-----------
126,008
-----------
TOTAL TECHNOLOGY (COST $389,594) 742,927
-----------
TOTAL COMMON STOCK (COST $556,920) 996,488
-----------
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS -- 5.8%
Morgan Stanley
6.10%, dated 03/31/00, matures 04/03/00,
repurchase price $8,641,889 (collateralized
by U.S. Government Agency Instruments:
total market value $8,822,864) (A) $ 8,637 8,637
J.P. Morgan
6.10%, dated 03/31/00, matures 04/03/00,
repurchase price $54,645,935 (collateralized
by U.S. Government Agency Instruments:
total market value $55,710,949) (A) 54,618 54,618
-----------
TOTAL REPURCHASE AGREEMENTS (COST $63,255) 63,255
-----------
TOTAL INVESTMENTS-- 97.8% (COST $620,175) 1,059,743
-----------
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- 2.2%
TOTAL OTHER ASSETS AND LIABILITIES, NET 23,717
-----------
- --------------------------------------------------------------------------------
NET ASSETS:
Fund Shares of PBHG Class (authorized 200 million
shares -- $0.001 par value)
based on 24,437,315 outstanding shares
of common stock 554,374
Undistributed net investment loss (4)
Accumulated net realized gain on investments 89,522
Net unrealized appreciation on investments 439,568
-----------
TOTAL NET ASSETS-- 100.0% $1,083,460
-----------
-----------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE $44.34
-----------
-----------
* Non-income producing security
(A) -- Tri-party repurchase agreement
ADR -- American Depository Receipt
Cl -- Class
^ The fund held Canadian securities as of March 31, 2000. The total market value
of investments is $79,277,940 and represented 7.3% of the fund.
The accompanying notes are an integral part of the financial statements.
55
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG NEW OPPORTUNITIES FUND
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
COMMON STOCK -- 112.6%
CONSUMER CYCLICAL -- 6.2%
AUDIO/VIDEO PRODUCTS -- 6.2%
Gemstar International* 255,200 $ 21,947
-----------
21,947
-----------
TOTAL CONSUMER CYCLICAL (COST $14,069) 21,947
-----------
- --------------------------------------------------------------------------------
HEALTH CARE -- 2.4%
BLOOD COLLECTION BANKING -- 0.1%
Cryo-Cell International* 39,180 316
-----------
316
- --------------------------------------------------------------------------------
MEDICAL INFORMATION SYSTEMS -- 2.3%
Allscripts* 135,900 8,171
-----------
8,171
-----------
TOTAL HEALTH CARE (COST $8,040) 8,487
-----------
- --------------------------------------------------------------------------------
INDUSTRIAL -- 1.1%
ELECTRONIC COMPONENTS-MISCELLANEOUS-- 1.1%
EPCOS Ag ADR* 30,800 4,035
-----------
4,035
-----------
TOTAL INDUSTRIAL (COST $4,687) 4,035
-----------
- --------------------------------------------------------------------------------
SERVICES -- 3.2%
COMPUTER SERVICES -- 3.2%
Mcafee.com* 221,100 11,428
-----------
11,428
-----------
TOTAL SERVICES (COST $11,671) 11,428
-----------
- --------------------------------------------------------------------------------
TECHNOLOGY -- 99.7%
APPLICATIONS SOFTWARE -- 10.0%
Intertrust Technologies* 220,700 9,380
Quest Software* 91,900 10,362
Siebel Systems* 132,200 15,789
-----------
35,531
- --------------------------------------------------------------------------------
COMMUNICATIONS SOFTWARE -- 2.8%
Research in Motion* 94,100 10,022
-----------
10,022
- --------------------------------------------------------------------------------
COMPUTER DATA SECURITY -- 1.0%
Verisign* 23,200 3,468
-----------
3,468
- --------------------------------------------------------------------------------
COMPUTERS-INTEGRATED SYSTEMS -- 9.6%
Brocade Communications Systems* 118,600 21,267
Redback Networks* 42,900 12,867
-----------
34,134
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
DATA PROCESSING/MANAGEMENT -- 5.1%
Optika Imaging Systems+ 647,000 $ 18,116
-----------
18,116
- --------------------------------------------------------------------------------
ELECTRONIC COMPONENTS-SEMICONDUCTORS-- 15.8%
Broadcom* 95,400 23,170
Globespan* 70,700 7,207
Quantum Effect Devices* 83,000 6,609
SDL* 90,700 19,308
-----------
56,294
- --------------------------------------------------------------------------------
ENTERPRISE SOFTWARE/SERVICES -- 4.8%
I2 Technologies* 61,600 7,523
Microstrategy* 107,700 9,377
-----------
16,900
- --------------------------------------------------------------------------------
FIBER OPTICS -- 10.4%
Avanex* 30,300 4,598
E-Tek Dynamics* 18,000 4,234
JDS Uniphase* 129,600 15,625
MRV Communications* 137,700 12,617
-----------
37,074
- --------------------------------------------------------------------------------
INTERNET CONTENT -- 10.7%
Infospace.com* 111,400 16,202
Network Solutions* 72,800 11,189
Rare Medium Group* 240,700 10,621
-----------
38,012
- --------------------------------------------------------------------------------
INTERNET SOFTWARE -- 16.8%
Ariba* 54,800 11,487
Art Technology* 123,000 8,080
E.Piphany* 52,000 6,945
Exodus Communications* 125,300 17,605
Loudeye Technologies* 106,000 3,697
Valueclick* 10,200 213
Vignette* 72,900 11,682
-----------
59,709
- --------------------------------------------------------------------------------
NETWORK SOFTWARE -- 1.9%
Universal Access* 205,155 6,873
-----------
6,873
- --------------------------------------------------------------------------------
NETWORKING PRODUCTS -- 5.3%
Juniper Networks* 71,400 18,818
-----------
18,818
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT -- 5.0%
Audiocodes Limited* 96,100 9,646
Ditech Communications* 76,800 8,146
-----------
17,792
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS SERVICES -- 0.5%
Telocity* 150,900 1,867
-----------
1,867
TOTAL TECHNOLOGY (COST $232,427) 354,610
-----------
TOTAL COMMON STOCK (COST $270,894) 400,507
-----------
- --------------------------------------------------------------------------------
56
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG NEW OPPORTUNITIES FUND
Face Market
Description Amount (00) Value (000)
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 0.1%
J.P. Morgan
6.10%, dated 03/31/00, matures 04/03/00,
repurchase price $135,880 (collateralized
by U.S. Government Agency Instruments:
total market value $138,528) (A) $136 $ 136
-----------
TOTAL REPURCHASE AGREEMENT (COST $136) 136
-----------
TOTAL INVESTMENTS-- 112.7% (COST $271,030) 400,643
-----------
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- (12.7%)
Bank Overdraft (18,000)
Line of Credit Borrowing (27,400)
Other Assets and Liabilities, Net 357
-----------
TOTAL OTHER ASSETS AND LIABILITIES, NET (45,043)
-----------
- --------------------------------------------------------------------------------
NET ASSETS:
Fund Shares of PBHG Class (authorized 200 million
shares -- $0.001 par value)
based on 3,621,719 outstanding shares
of common stock 185,627
Accumulated net realized gain on investments 40,376
Net unrealized appreciation on investments 129,597
-----------
TOTAL NET ASSETS-- 100.0% $355,600
-----------
-----------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE $98.19
-----------
-----------
* Non-income producing security
(A) -- Tri-party repurchase agreement
ADR -- American Depository Receipt
+ Considered an affiliated company as the fund owns more than 5% of the
outstanding voting securities of such company. The total market value of
investments in affiliated companies as of March 31, 2000 was $18,116,000.
The accompanying notes are an integral part of the financial statements.
57
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG LARGE CAP VALUE FUND
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
COMMON STOCK -- 96.8%
BASIC MATERIALS -- 2.6%
CHEMICALS-DIVERSIFIED -- 0.8%
Dupont E.I. De Nemours 5,400 $ 285
-----------
285
- --------------------------------------------------------------------------------
CHEMICALS-SPECIALTY -- 1.0%
Praxair 7,800 325
-----------
325
- --------------------------------------------------------------------------------
METAL-ALUMINUM -- 0.8%
Alcoa 4,100 288
-----------
288
-----------
TOTAL BASIC MATERIALS (COST $865) 898
-----------
- --------------------------------------------------------------------------------
CONSUMER CYCLICAL -- 4.4%
AUTO-CARS/LIGHT TRUCKS -- 0.9%
Ford Motor Company 6,100 280
-----------
280
- --------------------------------------------------------------------------------
CABLE TV -- 2.1%
Comcast, Cl A* 16,100 698
-----------
698
- --------------------------------------------------------------------------------
MULTIMEDIA -- 0.9%
McGraw Hill 6,700 305
-----------
305
- --------------------------------------------------------------------------------
RETAIL-APPAREL/SHOE -- 0.5%
Intimate Brands 3,800 156
-----------
156
-----------
TOTAL CONSUMER CYCLICAL (COST $1,355) 1,439
-----------
- --------------------------------------------------------------------------------
CONSUMER NON-CYCLICAL -- 13.4%
CONSUMER PRODUCTS-MISCELLANEOUS -- 0.9%
Fortune Brands 12,100 302
-----------
302
- --------------------------------------------------------------------------------
COSMETICS & TOILETRIES -- 3.8%
Avon Products 11,200 325
Procter & Gamble 16,200 911
-----------
1,236
- --------------------------------------------------------------------------------
FOOD-MISCELLANEOUS/DIVERSIFIED -- 6.1%
Conagra 17,800 323
General Mills 9,400 340
Heinz (H J) 19,700 687
Kellogg 13,100 336
Ralston-Purina Group 11,700 320
-----------
2,006
- --------------------------------------------------------------------------------
FOOD-RETAIL -- 0.7%
Kroger* 13,300 234
-----------
234
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
TOBACCO -- 1.9%
UST 39,400 $ 616
-----------
616
-----------
TOTAL CONSUMER NON-CYCLICAL (COST $4,244) 4,394
-----------
- --------------------------------------------------------------------------------
ENERGY -- 9.1%
OIL COMPANIES-EXPLORATION & PRODUCTION-- 3.6%
EOG Resources 6,000 127
Kerr Mcgee 11,200 647
Santa Fe Snyder* 42,300 407
-----------
1,181
- --------------------------------------------------------------------------------
OIL COMPANIES-INTEGRATED -- 4.3%
Conoco, Cl A 13,900 342
Exxon Mobil 8,300 646
Royal Dutch Petroleum 7,600 437
-----------
1,425
- --------------------------------------------------------------------------------
OIL & GAS DRILLING -- 0.7%
Santa Fe International 5,800 215
-----------
215
- --------------------------------------------------------------------------------
OIL-FIELD SERVICES -- 0.5%
Tidewater 5,300 169
-----------
169
-----------
TOTAL ENERGY (COST $2,725) 2,990
-----------
- --------------------------------------------------------------------------------
FINANCIAL -- 15.7%
COMMERCIAL BANKS-SOUTHERN US -- 1.0%
Hibernia, Cl A 31,100 327
-----------
327
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES -- 3.4%
Citigroup 18,600 1,103
-----------
1,103
- --------------------------------------------------------------------------------
FINANCE-CREDIT CARDS -- 0.6%
Providian Financial 2,300 199
-----------
199
- --------------------------------------------------------------------------------
FINANCE-INVESTMENT BANKER/BROKER -- 1.4%
Bear Stearns 7,000 319
Merrill Lynch 1,500 157
-----------
476
- --------------------------------------------------------------------------------
FINANCE-MORTAGE LOAN/BANKER -- 3.2%
Federal National Mortgage 10,400 587
Federal Home Loan Mortgage 10,400 460
-----------
1,047
- --------------------------------------------------------------------------------
FINANCIAL GUARANTEE INSURANCE -- 1.0%
MGIC Investment 7,600 332
-----------
332
- --------------------------------------------------------------------------------
58
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG LARGE CAP VALUE FUND
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT/ADVISORY SERVICES -- 1.0%
John Nuveen, Cl A 8,600 $ 329
-----------
329
- --------------------------------------------------------------------------------
MONEY CENTER BANKS -- 0.9%
J.P. Morgan 2,300 303
-----------
303
- --------------------------------------------------------------------------------
S&L/THRIFTS-WESTERN US -- 0.5%
Washington Mutual 5,700 151
-----------
151
- --------------------------------------------------------------------------------
SUPER-REGIONAL BANKS-US -- 2.7%
Mellon Financial 8,900 263
Wells Fargo 15,200 622
-----------
885
-----------
TOTAL FINANCIAL (COST $4,839) 5,152
-----------
- --------------------------------------------------------------------------------
HEALTH CARE -- 13.8%
DISPOSABLE MEDICAL PRODUCTS -- 0.8%
Bard (C.R.) 7,200 279
-----------
279
- --------------------------------------------------------------------------------
MEDICAL PRODUCTS -- 1.5%
Johnson & Johnson 6,800 476
-----------
476
- --------------------------------------------------------------------------------
MEDICAL-DRUGS -- 6.2%
American Home Products 11,200 601
Merck 2,600 162
Warner Lambert 13,200 1,287
-----------
2,050
- --------------------------------------------------------------------------------
MEDICAL-HMO -- 3.4%
Pacificare Health Systems* 6,800 339
United Healthcare 7,800 465
Wellpoint Health Networks* 4,600 321
-----------
1,125
- --------------------------------------------------------------------------------
MEDICAL-WHOLESALE DRUG DISTRIBUTOR-- 0.9%
Cardinal Health 6,500 298
-----------
298
- --------------------------------------------------------------------------------
OPTICAL SUPPLIES -- 1.0%
Bausch & Lomb 6,000 313
-----------
313
-----------
TOTAL HEALTH CARE (COST $4,261) 4,541
-----------
- --------------------------------------------------------------------------------
INDUSTRIAL -- 10.1%
AEROSPACE/DEFENSE -- 1.4%
Boeing 7,600 288
Northrop 3,000 159
-----------
447
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
AEROSPACE/DEFENSE-EQUIPMENT -- 2.0%
General Dynamics 6,700 $ 333
Goodrich (B.F.) 11,600 333
-----------
666
- --------------------------------------------------------------------------------
DIVERSIFIED MANUFACTURING OPERATIONS-- 2.5%
Cooper Industries 9,500 333
Honeywell International 9,100 479
-----------
812
- --------------------------------------------------------------------------------
ELECTRIC PRODUCTS-MISCELLANEOUS -- 1.1%
Emerson Electric 7,000 370
-----------
370
- --------------------------------------------------------------------------------
INDUSTRIAL AUTOMATION/ROBOTICS -- 1.2%
Rockwell International 9,600 401
-----------
401
- --------------------------------------------------------------------------------
INSTRUMENTS-CONTROLS -- 0.9%
Parker Hannifin 7,600 314
-----------
314
- --------------------------------------------------------------------------------
MACHINERY-GENERAL INDUSTRIAL -- 1.0%
Ingersoll Rand 7,300 323
-----------
323
-----------
TOTAL INDUSTRIAL (COST $3,083) 3,333
-----------
- --------------------------------------------------------------------------------
SERVICES -- 13.6%
COMPUTER SERVICES -- 6.6%
Ceridian* 24,900 478
Computer Sciences* 5,500 435
Electronic Data Systems 12,800 822
Unisys* 16,900 431
-----------
2,166
- --------------------------------------------------------------------------------
TELEPHONE-INTEGRATED -- 6.2%
AT&T 10,600 596
GTE 13,500 959
SBC Communications 11,700 491
-----------
2,046
- --------------------------------------------------------------------------------
TELEPHONE-LOCAL -- 0.8%
BellSouth 5,700 268
-----------
268
-----------
TOTAL SERVICES (COST $4,413) 4,480
-----------
- --------------------------------------------------------------------------------
TECHNOLOGY -- 13.6%
COMPUTERS-MICRO -- 2.8%
IBM 7,900 932
-----------
932
- --------------------------------------------------------------------------------
DATA PROCESSING/MANAGEMENT -- 2.2%
First Data 16,500 730
-----------
730
- --------------------------------------------------------------------------------
59
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG LARGE CAP VALUE FUND
Shares/Face Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
ENTERPRISE SOFTWARE/SERVICES -- 3.7%
Computer Associates International 12,400 $ 734
Compuware* 23,000 485
-----------
1,219
- --------------------------------------------------------------------------------
OFFICE AUTOMATION & EQUIPMENT -- 1.7%
Pitney Bowes 12,700 568
-----------
568
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT -- 3.2%
Lucent Technologies 7,000 425
Tellabs* 9,800 617
-----------
1,042
-----------
TOTAL TECHNOLOGY (COST $4,426) 4,491
-----------
- --------------------------------------------------------------------------------
UTILITIES -- 0.5%
ELECTRIC-INTEGRATED -- 0.5%
PECO Energy 4,300 159
-----------
159
-----------
TOTAL UTILITIES (COST $168) 159
-----------
TOTAL COMMON STOCK (COST $30,379) 31,877
-----------
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 4.9%
JP Morgan
6.10%, dated 03/31/00, matures
04/03/00, repurchase price $1,612,809
(collateralized by U.S. Government
Agency Instruments: total market value
$1,644,230) (A) $1,612 1,612
-----------
TOTAL REPURCHASE AGREEMENT (COST $1,612) 1,612
-----------
TOTAL INVESTMENTS-- 101.7% (COST $31,991) $33,489
-----------
-----------
Percentages are based on Net Assets of $32,922,297.
* Non-income producing security
(A) -- Tri-party repurchase agreement
Cl -- Class
The accompanying notes are an integral part of the financial statements.
60
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG MID-CAP VALUE FUND
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
COMMON STOCK -- 95.7%
BASIC MATERIALS -- 2.6%
CHEMICALS-SPECIALTY -- 2.3%
CK Witco 43,700 $ 445
Cytec Industries* 30,300 928
-----------
1,373
- --------------------------------------------------------------------------------
FERTILIZERS -- 0.3%
IMC Global 14,300 210
-----------
210
-----------
TOTAL BASIC MATERIALS (COST $1,378) 1,583
-----------
- --------------------------------------------------------------------------------
CONSUMER CYCLICAL -- 10.3%
APPAREL MANUFACTURERS -- 0.1%
Tommy Hilfiger* 3,700 54
-----------
54
- --------------------------------------------------------------------------------
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL -- 0.9%
Delphi Automotive Systems 33,100 530
-----------
530
- --------------------------------------------------------------------------------
BROADCAST SERVICE/PROGRAMMING -- 2.7%
Unitedglobalcom, Cl A* 21,800 1,636
-----------
1,636
- --------------------------------------------------------------------------------
CASINO HOTELS -- 0.7%
Harrah's Entertainment* 24,100 447
-----------
447
- --------------------------------------------------------------------------------
DISTRIBUTION/WHOLESALE -- 0.7%
Tech Data* 13,200 434
-----------
434
- --------------------------------------------------------------------------------
HOTELS & MOTELS -- 1.7%
Starwood Hotels & Resorts 40,100 1,053
-----------
1,053
- --------------------------------------------------------------------------------
MULTIMEDIA -- 1.9%
Scripps (E.W.), Cl A 24,000 1,164
-----------
1,164
- --------------------------------------------------------------------------------
PUBLISHING-NEWSPAPERS -- 0.7%
Tribune Company 10,900 399
-----------
399
- --------------------------------------------------------------------------------
RETAIL-RESTAURANTS -- 0.9%
Wendys International 26,900 543
-----------
543
-----------
TOTAL CONSUMER CYCLICAL (COST $6,093) 6,260
-----------
- --------------------------------------------------------------------------------
CONSUMER NON-CYCLICAL -- 5.3%
BEVERAGES-WINE/SPIRITS -- 0.7%
Diageo PLC ADR 14,300 431
-----------
431
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
CONSUMER PRODUCTS-MISCELLANEOUS -- 2.2%
Fortune Brands 54,400 $ 1,360
-----------
1,360
- --------------------------------------------------------------------------------
FOOD-MISCELLANEOUS/DIVERSIFIED -- 2.4%
Aurora Foods* 4,000 12
Conagra 49,300 893
Sara Lee 29,600 533
-----------
1,438
-----------
CONSUMER NON-CYCLICAL (COST $3,243) 3,229
-----------
- --------------------------------------------------------------------------------
ENERGY -- 24.0%
OIL COMPANIES-EXPLORATION & PRODUCTION-- 10.9%
Apache 16,400 816
Burlington Resources 12,800 474
Devon Energy 17,200 835
EOG Resources 53,700 1,138
Forest Oil* 62,600 665
Louis Dreyfus Natural Gas* 21,800 741
Santa Fe Snyder* 109,900 1,058
Union Pacific Resources 30,000 435
Vastar Resources 6,400 476
-----------
6,638
- --------------------------------------------------------------------------------
OIL FIELD MACHINERY & EQUIPMENT -- 3.5%
Cooper Cameron* 14,300 956
Weatherford International* 19,300 1,137
-----------
2,093
- --------------------------------------------------------------------------------
OIL & GAS DRILLING -- 3.0%
Ensco International 11,900 430
Global Marine* 11,100 282
Nabors Industries* 15,400 598
Noble Drilling* 12,800 530
-----------
1,840
- --------------------------------------------------------------------------------
OIL-FIELD SERVICES -- 4.3%
Baker Hughes 45,500 1,376
BJ Services* 5,900 436
Hanover Compressor* 14,400 819
-----------
2,631
- --------------------------------------------------------------------------------
PIPELINES -- 2.3%
Columbia Energy Group 8,200 486
Kinder Morgan 26,300 907
-----------
1,393
-----------
TOTAL ENERGY (COST $12,489) 14,595
-----------
- --------------------------------------------------------------------------------
FINANCIAL -- 16.1%
COMMERCIAL BANKS-EASTERN US -- 0.6%
Mercantile 11,900 364
-----------
364
- --------------------------------------------------------------------------------
61
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<PAGE>
THE PBHG FUNDS, INC.
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG MID-CAP VALUE FUND
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
COMMERCIAL BANKS-SOUTHERN US -- 1.3%
Southtrust 31,500 $ 801
-----------
801
- --------------------------------------------------------------------------------
FINANCE-CREDIT CARD -- 3.5%
Capital One Financial 19,800 949
Providian Financial 13,500 1,170
-----------
2,119
- --------------------------------------------------------------------------------
FINANCE-INVESTMENT BANKER/BROKER -- 3.1%
E*Trade Group* 28,900 871
Paine Webber Group 23,000 1,012
-----------
1,883
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT/ADVISOR SERVICE -- 0.8%
Waddell & Reed Financial, Cl A 11,700 495
-----------
495
- --------------------------------------------------------------------------------
LIFE/HEALTH INSURANCE -- 2.6%
Jefferson Pilot 6,400 426
Protective Life 36,100 1,146
-----------
1,572
- --------------------------------------------------------------------------------
PROPERTY/CASUALTY INSURANCE -- 1.1%
XL Capital Limited, Cl A 11,900 659
-----------
659
- --------------------------------------------------------------------------------
S & L THRIFTS-CENTRAL US -- 1.4%
Charter One Financial 39,400 827
-----------
827
- --------------------------------------------------------------------------------
SUPER-REGIONAL BANKS-US -- 1.7%
Comerica 4,200 176
First Union 22,400 834
-----------
1,010
-----------
TOTAL FINANCIAL (COST $8,789) 9,730
-----------
- --------------------------------------------------------------------------------
HEALTH CARE -- 6.9%
DISPOSABLE MEDICAL PRODUCTS -- 1.0%
Bard (C.R.) 15,700 607
-----------
607
- --------------------------------------------------------------------------------
DRUG DELIVERY SYSTEMS -- 1.4%
Alza* 22,500 845
-----------
845
- --------------------------------------------------------------------------------
MEDICAL-BIOMEDICAL/GENETIC -- 1.3%
Aclara Biosciences* 20,200 797
-----------
797
- --------------------------------------------------------------------------------
MEDICAL-DRUGS -- 1.1%
Forest Labs* 3,400 287
Medimmune* 2,300 400
-----------
687
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
MEDICAL-GENERIC DRUGS -- 2.1%
Mylan Labs 29,000 $ 798
Watson Pharmaceutical* 11,100 441
-----------
1,239
-----------
TOTAL HEALTH CARE (COST $3,352) 4,175
-----------
- --------------------------------------------------------------------------------
INDUSTRIAL -- 8.3%
AEROSPACE/DEFENSE -- 0.9%
Litton Industries* 12,800 566
-----------
566
- --------------------------------------------------------------------------------
AEROSPACE/DEFENSE-EQUIPMENT -- 0.4%
Orbital Sciences* 13,700 206
-----------
206
- --------------------------------------------------------------------------------
DIVERSIFIED MANUFACTURING OPERATIONS-- 4.0%
Eaton 12,800 998
ITT Industries 19,200 596
Textron 13,700 834
-----------
2,428
- --------------------------------------------------------------------------------
ELECTRONIC COMPONENTS-MISCELLANEOUS-- 0.9%
Vishay Intertechnology* 9,500 529
-----------
529
- --------------------------------------------------------------------------------
LIFE/HEALTH INSURANCE -- 0.6%
Torchmark 14,000 324
-----------
324
- --------------------------------------------------------------------------------
METAL PROCESSORS & FABRICATORS -- 0.3%
Worthington Industries 16,500 204
-----------
204
- --------------------------------------------------------------------------------
MISCELLANEOUS MANUFACTURING -- 1.2%
Pentair 19,200 712
-----------
712
-----------
TOTAL INDUSTRIAL (COST $4,627) 4,969
-----------
- --------------------------------------------------------------------------------
SERVICES -- 6.8%
COMMERCIAL SERVICES-FINANCE -- 2.5%
Block (H&R) 25,000 1,119
Concord EFS* 18,100 415
-----------
1,534
- --------------------------------------------------------------------------------
COMPUTER SERVICES -- 2.2%
DST Systems* 5,900 383
Safeguard Scientifics* 13,300 935
-----------
1,318
- --------------------------------------------------------------------------------
RENTAL AUTO/EQUIPMENT -- 1.1%
Hertz, Cl A 19,700 671
-----------
671
- --------------------------------------------------------------------------------
62
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG MID-CAP VALUE FUND
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
TELEPHONE-LOCAL -- 1.0%
Alltel 10,100 $ 637
-----------
637
-----------
TOTAL SERVICES (COST $3,738) 4,160
-----------
- --------------------------------------------------------------------------------
TECHNOLOGY -- 7.3%
CELLULAR TELECOMMUNICATIONS -- 0.2%
Alamosa PCS Holdings* 3,700 139
-----------
139
- --------------------------------------------------------------------------------
DATA PROCESSING/MANAGEMENT -- 0.6%
Acxiom* 10,300 342
-----------
342
- --------------------------------------------------------------------------------
ELECTRONIC COMPONENTS-SEMICONDUCTORS-- 2.0%
Advanced Micro Devices* 13,000 742
Cypress Semiconductor* 7,900 390
Silicon Image* 1,300 93
-----------
1,225
- --------------------------------------------------------------------------------
ENTERPRISE SOFTWARE/SERVICES -- 0.3%
Symantec* 2,600 195
-----------
195
- --------------------------------------------------------------------------------
INTERNET CONTENT -- 0.3%
S1* 2,000 171
-----------
171
- --------------------------------------------------------------------------------
NETWORK SOFTWARE -- 1.9%
Networks Associates* 36,100 1,164
-----------
1,164
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT -- 1.8%
Tellabs* 13,700 863
Westell Technologies* 7,300 233
-----------
1,096
-----------
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS SERVICES -- 0.2%
ICG Communications* 2,900 105
-----------
105
TOTAL TECHNOLOGY (COST $3,665) 4,437
-----------
- --------------------------------------------------------------------------------
Shares/Face Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
UTILITIES -- 8.1%
ELECTRIC-INTEGRATED -- 7.2%
Conectiv 19,200 $ 336
Constellation Energy Group 35,300 1,125
DQE 16,100 733
DTE Energy 37,300 1,082
Duke Energy 7,300 383
Minnesota Power 42,700 710
-----------
4,369
- --------------------------------------------------------------------------------
GAS-DISTRIBUTION -- 0.9%
MCN Energy Group 10,500 262
UGI 14,200 307
-----------
569
-----------
TOTAL UTILITIES (COST $4,838) 4,938
-----------
TOTAL COMMON STOCK (COST $52,212) 58,076
-----------
- --------------------------------------------------------------------------------
RIGHTS
TECHNOLOGY -- 0.0%
INTERNET SOFTWARE -- 0.0%
Opus 360 260 0
-----------
TECHNOLOGY (COST $0) 0
-----------
TOTAL RIGHTS (COST $0) 0
-----------
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 11.5%
Morgan Stanley
6.03% dated 03/31/00, matures
04/03/00, repurchase price $6,998,389
(collateralized by U.S. Government
Agency Instruments: total market
value $7,266,358) (A) $6,995 6,995
-----------
TOTAL REPURCHASE AGREEMENT (COST $6,995) 6,995
-----------
TOTAL INVESTMENTS-- 107.2% (COST $59,207) $ 65,071
-----------
-----------
Percentages are based on Net Assets of $60,690,123.
* Non-Income Producing Security
(A) - Tri-Party Repurchase Agreement
ADR - American Depository Receipt
Cl - Class
The accompanying notes are an integral part of the financial statements.
63
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG SMALL CAP VALUE FUND
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
COMMON STOCK -- 92.1%
BASIC MATERIALS -- 3.7%
CHEMICALS-SPECIALTY -- 2.9%
CK Witco 124,000 $ 1,263
Cytec Industries* 47,000 1,439
-----------
2,702
- --------------------------------------------------------------------------------
FERTILIZERS -- 0.5%
IMC Global 33,500 492
-----------
492
- --------------------------------------------------------------------------------
STEEL-PRODUCERS -- 0.3%
LTV 86,000 306
-----------
306
-----------
TOTAL BASIC MATERIALS (COST $3,234) 3,500
-----------
- --------------------------------------------------------------------------------
CONSUMER CYCLICAL -- 10.8%
AUDIO/VIDEO PRODUCTS -- 1.8%
Harman International 27,100 1,626
-----------
1,626
- --------------------------------------------------------------------------------
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL -- 1.0%
Delco Remy International* 125,600 934
-----------
934
- --------------------------------------------------------------------------------
CASINO HOTELS -- 0.7%
Harrah's Entertainment* 36,200 672
-----------
672
- --------------------------------------------------------------------------------
HOME FURNISHINGS -- 2.2%
Ethan Allen Interiors 25,700 643
Furniture Brands International* 75,600 1,422
-----------
2,065
- --------------------------------------------------------------------------------
PUBLISHING-NEWSPAPERS -- 1.1%
Journal Register* 15,500 229
Pulitzer 19,900 813
-----------
1,042
- --------------------------------------------------------------------------------
RETAIL-CATALOG SHOPPING -- 0.5%
MSC Industrial Direct* 27,800 500
-----------
500
- --------------------------------------------------------------------------------
RETAIL-CONSUMER ELECTRONICS -- 0.8%
Tweeter Home Entertainment Group* 16,500 730
-----------
730
- --------------------------------------------------------------------------------
RETAIL-JEWELRY -- 0.4%
Friedman's, Cl A 55,500 342
-----------
342
- --------------------------------------------------------------------------------
RETAIL-MAIL ORDER -- 0.3%
Wilmar Industries* 14,600 249
-----------
249
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
RETAIL-RESTAURANTS -- 1.0%
Wendys International 45,000 $ 909
-----------
909
- --------------------------------------------------------------------------------
TELEVISION -- 0.9%
Pegasus Communications* 5,600 788
-----------
788
- --------------------------------------------------------------------------------
TRAVEL SERVICES -- 0.1%
Hotel Reservations Network* 6,600 117
-----------
117
-----------
TOTAL CONSUMER CYCLICAL (COST $9,401) 9,974
-----------
- --------------------------------------------------------------------------------
CONSUMER NON-CYCLICAL -- 0.3%
FOOD-MISCELLANEOUS/DIVERSIFIED -- 0.3%
Aurora Foods* 99,900 300
-----------
300
-----------
TOTAL CONSUMER NON-CYCLICAL (COST $768) 300
-----------
- --------------------------------------------------------------------------------
ENERGY -- 16.7%
OIL COMPANIES-EXPLORATION & PRODUCTION-- 11.7%
Barrett Resources* 7,300 218
Devon Energy 16,000 777
EOG Resources 105,300 2,231
Forest Oil* 121,400 1,290
Louis Dreyfus Natural Gas* 32,200 1,095
Newfield Exploration* 8,400 296
Noble Affiliates 32,800 1,076
Santa Fe Snyder* 265,400 2,554
Unit* 8,800 97
Vintage Petroleum 57,900 1,165
-----------
10,799
- --------------------------------------------------------------------------------
OIL REFINING & MARKETING -- 0.7%
Valero Energy 22,000 674
-----------
674
- --------------------------------------------------------------------------------
OIL & GAS DRILLING -- 2.6%
Key Energy Services* 118,900 1,382
Patterson Energy* 21,700 689
Pride International* 15,800 361
-----------
2,432
- --------------------------------------------------------------------------------
PIPELINES -- 1.7%
Kinder Morgan 45,100 1,556
-----------
1,556
-----------
TOTAL ENERGY (COST $12,690) 15,461
-----------
- --------------------------------------------------------------------------------
FINANCIAL -- 18.6%
COMMERCIAL BANKS-CENTRAL US -- 0.5%
Firstmerit 22,700 418
-----------
418
- --------------------------------------------------------------------------------
64
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG SMALL CAP VALUE FUND
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
COMMERICAL BANKS-EASTERN US -- 1.1%
Commercial Bank of New York 19,800 $ 189
Mercantile 26,300 804
-----------
993
- --------------------------------------------------------------------------------
COMMERICAL BANKS-SOUTHERN US -- 1.4%
Southtrust 49,400 1,257
-----------
1,257
- --------------------------------------------------------------------------------
COMMERICAL BANKS-WESTERN US -- 3.4%
BancWest 77,000 1,521
City National 32,400 1,091
Silicon Valley Bancshares* 7,600 546
-----------
3,158
- --------------------------------------------------------------------------------
FINANCE-INVESTMENT BANKER/BROKER -- 2.2%
Morgan Keegan 50,600 886
Raymond James Financial 45,700 948
Wit Capital Group* 10,400 178
-----------
2,012
- --------------------------------------------------------------------------------
FINANCIAL GUARANTEE INSURANCE -- 0.8%
Financial Security Assurance 10,700 786
-----------
786
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT/ADVISORY SERVICES-- 2.8%
Affiliated Managers Group* 36,300 1,724
Federated Investors 9,400 257
Waddell & Reed Financial, ClA 15,000 635
-----------
2,616
- --------------------------------------------------------------------------------
LIFE/HEALTH INSURANCE -- 2.9%
Money Group 38,000 1,228
Protective Life 35,300 1,121
Torchmark 15,800 365
-----------
2,714
- --------------------------------------------------------------------------------
PROPERTY/CASUALTY INSURANCE -- 0.7%
Fidelity National Financial 16,800 232
First American Financial 32,500 461
-----------
693
- --------------------------------------------------------------------------------
REITS-SHOPPING CENTERS -- 0.6%
JP Realty 32,800 584
-----------
584
- --------------------------------------------------------------------------------
S & L/THRIFTS-CENTRAL US -- 1.4%
Charter One Financial Inc 61,100 1,283
-----------
1,283
- --------------------------------------------------------------------------------
S & L/THRIFTS-WESTERN US -- 0.4%
ITLA Capital* 31,200 398
-----------
398
- --------------------------------------------------------------------------------
SUPER-REGIONAL BANKS-US -- 0.4%
Comerica 9,200 385
-----------
385
-----------
TOTAL FINANCIAL (COST $15,695) 17,297
-----------
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
HEALTH CARE -- 7.1%
DIAGNOSTIC KITS -- 0.0%
Biosite Diagnostics* 1,900 $ 46
-----------
46
- --------------------------------------------------------------------------------
DISPOSABLE MEDICAL PRODUCTS -- 0.0%
ICU Medical* 1,400 25
-----------
25
- --------------------------------------------------------------------------------
MEDICAL PRODUCTS -- 0.7%
PSS World Medical* 98,700 669
-----------
669
- --------------------------------------------------------------------------------
MEDICAL-BIOMEDICAL/GENETIC -- 1.4%
Aclara Biosciences* 30,100 1,187
Regeneron Pharmaceuticals* 2,600 77
-----------
1,264
- --------------------------------------------------------------------------------
MEDICAL-DRUGS -- 1.1%
Cima Labs* 6,200 107
Dura Pharmaceuticals* 26,900 331
Intrabiotics Pharmaceuticals* 38,500 577
-----------
1,015
- --------------------------------------------------------------------------------
MEDICAL-GENERIC DRUGS -- 1.7%
Alpharma, Cl A 42,900 1,577
-----------
1,577
- --------------------------------------------------------------------------------
MEDICAL-HOSPITALS -- 0.1%
Triad Hospitals* 3,900 65
-----------
65
- --------------------------------------------------------------------------------
MEDICAL-OUTPATIENT/HOME MEDICAL -- 0.3%
Lincare Holding* 7,400 210
-----------
210
- --------------------------------------------------------------------------------
MEDICAL-WHOLESALE DRUG DISTRIBUTOR-- 0.3%
Syncor* 8,600 284
-----------
284
- --------------------------------------------------------------------------------
THERAPEUTICS -- 1.5%
CV Therapeutics* 8,600 432
Titan Pharmaceuticals* 5,300 165
Tularik* 5,300 164
United Therapeutics* 8,200 637
-----------
1,398
-----------
TOTAL HEALTH CARE (COST $4,757) 6,553
-----------
- --------------------------------------------------------------------------------
INDUSTRIAL -- 9.6%
AEROSPACE/DEFENSE -- 0.4%
Teledyne Technologies* 21,400 372
-----------
372
- --------------------------------------------------------------------------------
AEROSPACE/DEFENSE-EQUIPMENT -- 0.9%
Orbital Sciences* 54,600 819
-----------
819
- --------------------------------------------------------------------------------
65
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG SMALL CAP VALUE FUND
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
BUILDING PRODUCTS-CEMENT/AGGREGATE-- 0.6%
Lafarge 23,800 $ 565
-----------
565
- --------------------------------------------------------------------------------
DIVERSIFIED MANUFACTURING OPERATIONS-- 1.0%
ITT Industries 30,000 932
-----------
932
- --------------------------------------------------------------------------------
ELECTRONIC COMPONENTS-MISCELLANEOUS-- 1.1%
Kent Electronics* 7,600 222
Vishay Intertechnology* 14,000 779
-----------
1,001
- --------------------------------------------------------------------------------
ELECTRONIC CONNECTORS -- 0.4%
Amphenol* 3,500 358
-----------
358
- --------------------------------------------------------------------------------
ELECTRONICS-MILITARY -- 1.6%
Aeroflex* 30,400 1,505
-----------
1,505
- --------------------------------------------------------------------------------
HAZARDOUS WASTE DISPOSAL -- 0.4%
Stericycle* 12,700 317
-----------
317
- --------------------------------------------------------------------------------
MACHINERY-GENERAL INDUSTRIAL -- 1.0%
Speedfam-Ipec* 47,200 938
-----------
938
- --------------------------------------------------------------------------------
METAL PROCESSORS & FABRICATORS -- 0.3%
Wolverine Tube* 18,200 233
-----------
233
- --------------------------------------------------------------------------------
NON-HAZARDOUS WASTE DISPOSAL -- 0.2%
Republic Services* 19,200 210
-----------
210
- --------------------------------------------------------------------------------
STEEL PIPE & TUBE -- 1.0%
NS Group* 55,600 907
-----------
907
- --------------------------------------------------------------------------------
TRUCKING & LEASING -- 0.3%
Ryder System 13,100 297
-----------
297
- --------------------------------------------------------------------------------
WIRE & CABLE PRODUCTS -- 0.4%
Cable Design Technologies* 11,600 394
-----------
394
-----------
TOTAL INDUSTRIAL (COST $6,316) 8,848
-----------
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
SERVICES -- 0.9%
COMPUTER SERVICES -- 0.3%
Manhattan Associates* 8,300 $ 284
-----------
284
- --------------------------------------------------------------------------------
SCHOOLS -- 0.6%
Edison Schools* 28,800 565
-----------
565
-----------
TOTAL SERVICES (COST $603) 849
-----------
- --------------------------------------------------------------------------------
TECHNOLOGY -- 22.0%
APPLICATIONS SOFTWARE -- 1.9%
Sonic Foundry* 17,600 1,716
-----------
1,716
- --------------------------------------------------------------------------------
CELLULAR TELECOMMUNICATIONS -- 0.2%
Alamosa PCS Holdings* 5,400 204
-----------
204
- --------------------------------------------------------------------------------
CIRCUITS -- 1.4%
Integrated Device Technology* 32,900 1,304
-----------
1,304
- --------------------------------------------------------------------------------
COMMUNICATIONS SOFTWARE -- 1.8%
Avid Technology* 83,900 1,500
General Magic* 16,500 147
-----------
1,647
- --------------------------------------------------------------------------------
COMPUTER AIDED DESIGN -- 0.2%
Ansoft* 17,400 216
-----------
216
- --------------------------------------------------------------------------------
COMPUTER DATA SECURITY -- 0.4%
Axent Technologies* 19,200 361
-----------
361
- --------------------------------------------------------------------------------
COMPUTERS-INTEGRATED SYSTEMS -- 0.2%
Systems & Computer Technology* 8,600 201
-----------
201
- --------------------------------------------------------------------------------
COMPUTERS-MEMORY DEVICES -- 1.1%
Overland Data* 62,200 875
Western Digital* 24,900 185
-----------
1,060
- --------------------------------------------------------------------------------
COMPUTERS-PERIPHERAL EQUIPMENT -- 0.6%
S3* 24,100 506
-----------
506
- --------------------------------------------------------------------------------
DATA PROCESSING/MANAGEMENT -- 2.7%
Acxiom* 17,200 572
Excelon* 51,500 579
Informix* 78,200 1,325
-----------
2,476
- --------------------------------------------------------------------------------
66
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG SMALL CAP VALUE FUND
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
ELECTRONIC COMPONENTS-SEMICONDUCTORS-- 4.0%
Cirrus Logic* 18,200 $ 332
Cypress Semiconductor* 6,800 335
Electroglas* 8,600 295
Genus* 77,600 1,077
MEMC Electronic Materials* 40,200 809
Silicon Image* 3,000 215
Zoran* 10,700 602
-----------
3,665
- --------------------------------------------------------------------------------
ENTERPRISE SOFTWARE/SERVICES -- 0.9%
Informatica* 6,300 484
Symantec* 4,400 330
-----------
814
- --------------------------------------------------------------------------------
INTERNET CONTENT -- 0.4%
Launch Media* 5,900 92
S1* 3,698 317
-----------
409
- --------------------------------------------------------------------------------
INTERNET SOFTWARE -- 0.7%
Ravisent Technologies* 45,300 629
-----------
629
- --------------------------------------------------------------------------------
PRINTERS & RELATED PRODUCTS -- 1.0%
Splash Technologies* 74,200 928
-----------
928
- --------------------------------------------------------------------------------
SATELLITE TELECOMMUNICATIONS -- 0.3%
American Mobile Satellite* 3,400 82
Globecomm Systems* 7,400 197
-----------
279
- --------------------------------------------------------------------------------
TELECOMMUNICATION EQUIPMENT -- 0.9%
Pairgain Technologies* 20,100 375
Westell Technologies* 15,400 491
-----------
866
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS SERVICES -- 0.2%
ICG Communications* 5,900 213
-----------
213
- --------------------------------------------------------------------------------
TRANSPORT-TRUCK -- 0.6%
US Xpress Enterprises* 65,600 578
-----------
578
- --------------------------------------------------------------------------------
WIRELESS EQUIPMENT -- 2.5%
Glenayre Technologies* 104,900 1,842
Metro One Telecommunications* 17,800 238
Spectrian* 10,600 239
-----------
2,319
-----------
TOTAL TECHNOLOGY (COST $15,706) 20,391
-----------
- --------------------------------------------------------------------------------
Shares/Face Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
TRANSPORTATION -- 1.5%
AIRLINES -- 0.6%
Midway Airlines* 108,350 $ 542
-----------
542
- --------------------------------------------------------------------------------
TRANSPORTATION-AIR FREIGHT -- 0.5%
Airborne Freight 21,200 509
-----------
509
- --------------------------------------------------------------------------------
TRANSPORTATION-TRUCK -- 0.4%
Hunt (J.B.) Transportation Services 25,400 348
-----------
348
-----------
TOTAL TRANSPORTATION (COST $2,345) 1,399
-----------
- --------------------------------------------------------------------------------
UTILITIES -- 0.9%
ELECTRIC-INTEGRATED -- 0.4%
Idacorp 9,700 337
-----------
337
- --------------------------------------------------------------------------------
GAS-DISTRIBUTION -- 0.5%
UGI 21,400 463
-----------
463
-----------
TOTAL UTILITIES (COST $730) 800
-----------
TOTAL COMMON STOCK (COST $72,245) 85,372
-----------
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 7.2%
Morgan Stanley
6.03% dated 03/31/00, matures
04/03/00, repurchase price $6,644,001
(collateralized by U.S. Government
Agency Instruments: total market
value $6,786,772) (A) $6,641 6,641
-----------
TOTAL REPURCHASE AGREEMENT (COST $6,641) 6,641
-----------
TOTAL INVESTMENTS-- 99.3% (COST $78,886) $ 92,013
-----------
-----------
Percentages are based on Net Assets of $92,634,193.
* Non-Income Producing Security
(A) - Tri-Party Repurchase Agreement
Cl - Class
The accompanying notes are an integral part of the financial statements.
67
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG FOCUSED VALUE FUND
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
COMMON STOCK -- 92.0%
CONSUMER CYCLICAL -- 13.4%
AUTO-CARS/LIGHT TRUCKS -- 4.0%
General Motors 10,900 $ 903
-----------
903
- --------------------------------------------------------------------------------
BROADCAST SERVICE/PROGRAM -- 2.5%
Unitedglobalcom, Cl A* 7,700 578
-----------
578
- --------------------------------------------------------------------------------
CABLE TV -- 4.9%
Comcast, Cl A* 25,400 1,102
-----------
1,102
- --------------------------------------------------------------------------------
RETAIL-MAIL ORDER -- 2.0%
Williams-Sonoma* 14,300 443
-----------
443
-----------
TOTAL CONSUMER CYCLICAL (COST $2,712) 3,026
-----------
- --------------------------------------------------------------------------------
CONSUMER NON-CYCLICAL -- 2.6%
FOOD-RETAIL -- 2.6%
Kroger* 32,800 576
-----------
576
-----------
TOTAL CONSUMER NON-CYCLICAL (COST $567) 576
-----------
- --------------------------------------------------------------------------------
ENERGY -- 8.8%
OIL COMPANY-EXPLORATION & PRODUCTION-- 2.9%
EOG Resources 18,300 388
Santa Fe Snyder* 28,400 273
-----------
661
- --------------------------------------------------------------------------------
OIL FIELD MACHINERY & EQUIPMENT -- 1.4%
Weatherford International* 5,400 318
-----------
318
-----------
- --------------------------------------------------------------------------------
OIL FIELD SERVICES -- 4.5%
Baker Hughes 33,300 1,007
-----------
1,007
-----------
TOTAL ENERGY (COST $1,812) 1,986
-----------
- --------------------------------------------------------------------------------
FINANCIAL -- 28.0%
FINANCE-CREDIT CARD -- 6.8%
Capital One Financial 13,800 662
Providian Financial 10,100 875
-----------
1,537
- --------------------------------------------------------------------------------
FINANCE-INVESTMENT BANKER/BROKER -- 2.2%
E*Trade Group* 16,300 491
-----------
491
- --------------------------------------------------------------------------------
FINANCE MORTGAGE LOAN/BANKER -- 5.2%
Federal Home Loan Mortgage 26,300 1,162
-----------
1,162
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
MONEY CENTER BANKS -- 2.6%
J.P. Morgan 4,400 $ 580
-----------
580
- --------------------------------------------------------------------------------
SUPER-REGIONAL BANKS-US -- 11.2%
Bank One 25,000 859
Fleet Boston Financial 32,700 1,194
Wells Fargo 11,800 483
-----------
2,536
-----------
TOTAL FINANCIAL (COST $5,789) 6,306
-----------
- --------------------------------------------------------------------------------
HEALTH CARE -- 8.3%
MEDICAL-BIOMEDICAL/GENETIC -- 1.3%
Aclara Biosciences* 7,200 284
-----------
284
- --------------------------------------------------------------------------------
MEDICAL-DRUGS -- 6.7%
Forest Labs* 1,800 152
Intrabiotics Pharmaceuticals* 7,800 117
Merck 5,400 335
Pharmacia & Upjohn 15,200 901
-----------
1,505
- --------------------------------------------------------------------------------
THERAPEUTICS -- 0.3%
United Therapeutics* 1,000 78
-----------
78
-----------
TOTAL HEALTH CARE (COST $1,492) 1,867
-----------
- --------------------------------------------------------------------------------
INDUSTRIAL -- 7.0%
BUILDING & CONSTRUCTION-MISCELLANEOUS -- 1.7%
Willbros Group* 54,700 390
-----------
390
- --------------------------------------------------------------------------------
DIVERSIFIED MANUFACTURING OPERATIONS-- 5.3%
Minnesota Mining & Manufacturing 13,400 1,187
-----------
1,187
-----------
TOTAL INDUSTRIAL (COST $1,592) 1,577
-----------
- --------------------------------------------------------------------------------
SERVICES -- 9.0%
COMMERCIAL SERVICE-FINANCE -- 1.4%
Block (H&R) 7,100 318
-----------
318
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES -- 1.2%
Giga Information Group* 25,000 275
-----------
275
- --------------------------------------------------------------------------------
TELEPHONE-INTEGRATED -- 3.5%
AT&T 14,200 799
-----------
799
- --------------------------------------------------------------------------------
68
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG FOCUSED VALUE FUND
Shares/Face Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
TELEPHONE-LOCAL -- 2.9%
Alltel 10,200 $ 643
-----------
643
-----------
TOTAL SERVICES (COST $2,022) 2,035
-----------
- --------------------------------------------------------------------------------
TECHNOLOGY -- 10.8%
APPLICATIONS SOFTWARE -- 4.1%
Sonic Foundry* 9,400 916
-----------
916
- --------------------------------------------------------------------------------
COMPUTERS-MICROPROCESSING -- 3.8%
Dell Computer* 15,900 857
-----------
857
- --------------------------------------------------------------------------------
ELECTRONIC COMPONENTS-SEMICONDUCTORS-- 2.2%
Silicon Image* 5,400 387
Zoran* 1,900 107
-----------
494
- --------------------------------------------------------------------------------
INTERNET SOFTWARE -- 0.5%
Ravisent Technologies* 8,600 119
-----------
119
- --------------------------------------------------------------------------------
WIRELESS EQUIPMENT -- 0.2%
Metro One Telecommunications* 3,800 51
-----------
51
-----------
TOTAL TECHNOLOGY (COST $1,426) 2,437
-----------
- --------------------------------------------------------------------------------
UTILITIES -- 4.1%
ELECTRIC-INTEGRATED -- 4.1%
Duke Energy 15,100 793
Minnesota Power 8,600 143
-----------
936
TOTAL UTILITIES (COST $913) 936
-----------
TOTAL COMMON STOCK (COST $18,325) 20,746
-----------
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 20.2%
Morgan Stanley
5.80% dated 03/31/00, matures
04/03/00, repurchase price $4,558,980
(collateralized by U.S. Government
Agency Instruments: total market
value $4,647,932) (A) $4,557 4,557
-----------
TOTAL REPURCHASE AGREEMENT (COST $4,557) 4,557
-----------
TOTAL INVESTMENTS-- 112.2% (COST $22,882) $ 25,303
-----------
-----------
Percentages are based on Net Assets of $22,556,416.
* Non-Income Producing Security
(A) - Tri-Party Repurchase Agreement
Cl - Class
The accompanying notes are an integral part of the financial statements.
69
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG INTERNATIONAL FUND
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
COMMON STOCK -- 92.1%
ARGENTINA -- 1.9%
Banco Frances Rio* 9,000 $ 213
-----------
213
- --------------------------------------------------------------------------------
AUSTRALIA -- 0.8%
National Australia Bank* 7,000 90
-----------
90
- --------------------------------------------------------------------------------
BELGIUM -- 0.8%
Fortis* 3,521 90
-----------
90
- --------------------------------------------------------------------------------
BRAZIL -- 3.9%
Companhia Paranaese* 21,000 179
Telenorte Leste Part ADR* 10,000 266
-----------
445
- --------------------------------------------------------------------------------
DENMARK -- 0.7%
Novo-Nordisk* 632 85
-----------
85
- --------------------------------------------------------------------------------
FINLAND -- 2.3%
Nokia Oyj/Nok1v.He 1,248 264
-----------
264
- --------------------------------------------------------------------------------
FRANCE -- 5.8%
Banque National Paris* 2,209 174
France Telecom* 959 165
Total Fina Elf* 920 138
Vivendi* 1,571 181
-----------
658
- --------------------------------------------------------------------------------
GERMANY -- 8.3%
Bayer* 12,585 564
Dresdner Bank* 3,927 159
Epcos Ag* 901 119
Siemens* 720 104
-----------
946
- --------------------------------------------------------------------------------
HONG KONG -- 1.1%
Hutchison Whampoa 7,000 126
-----------
126
- --------------------------------------------------------------------------------
HUNGARY -- 1.2%
Magyar Tavk ADR* 3,000 132
-----------
132
- --------------------------------------------------------------------------------
IRELAND -- 0.7%
Allied Irish Bank* 7,909 76
-----------
76
- --------------------------------------------------------------------------------
ITALY -- 4.3%
Eni* 46,811 234
Telecom Italia* 17,303 258
-----------
492
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
JAPAN -- 25.9%
Fuji Machine* 3,000 $ 223
Fuji Photo Film* 4,000 176
Kurita Water* 9,000 174
Matsushita Communications* 1,000 184
Mitsui* 27,000 218
Nippon Comsys* 8,000 149
NTT* 6 246
Olympus Optical* 9,000 139
Omron* 5,000 142
Rohm Company Limited* 600 208
Secom* 2,000 171
Sharp* 8,000 171
Sumitomo Bank* 12,000 179
TDK* 2,000 272
Uni Charm* 2,000 131
Yamanouchi Pharmaceutical* 3,000 164
-----------
2,947
- --------------------------------------------------------------------------------
MEXICO -- 4.9%
Formento Economico ADR* 6,000 270
Panamerican Beverages* 10,000 176
Tubos Acero Mexico ADR* 7,000 115
-----------
561
- --------------------------------------------------------------------------------
NETHERLANDS -- 5.7%
Aegon* 1,890 151
Elsevier* 12,937 131
Equant ADR* 1,369 117
Philips Electronics 495 83
Unilever Cert* 3,397 167
-----------
649
- --------------------------------------------------------------------------------
NEW ZEALAND -- 0.9%
Carter Holt Harvey 48,000 41
Telecom Corp Of N.Z.* 12,500 57
-----------
98
- --------------------------------------------------------------------------------
SINGAPORE -- 2.0%
City Developments* 30,000 136
Singapore Press Holdings* 5,500 88
-----------
224
- --------------------------------------------------------------------------------
SPAIN - 2.6%
Union Electrica Fenosa* 14,490 297
-----------
297
- --------------------------------------------------------------------------------
SWEDEN -- 3.0%
Ericsson* 1,186 104
SKF* 10,701 237
-----------
341
- --------------------------------------------------------------------------------
SWITZERLAND -- 3.2%
Roche Holdings - Genus* 14 152
Zurich Allied 423 213
-----------
365
- --------------------------------------------------------------------------------
70
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG INTERNATIONAL FUND
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
UNITED KINGDOM -- 12.1%
Abbey National* 4,100 $ 54
Autonomy* 300 51
Bank Of Scotland* 8,100 92
Barclays 3,300 87
BP Amoco* 14,100 129
British Aerospace* 15,400 87
British Telecom 7,400 138
Energis* 1,000 47
Freeserve Wi* 3,700 29
Laporte - Redeemable `B'* 110,400 2
Laporte* 6,900 53
Logica* 1,500 50
Man (Ed&F) Group* 7,600 64
Norwich Union* 11,700 78
Peninsular & Oriental* 5,200 54
Rio Tinto* 4,300 72
Sage Group* 3,700 41
Smithkline Beecham* 8,000 105
Vodafone Airtouch* 26,700 148
-----------
1,381
-----------
TOTAL COMMON STOCK (COST $8,456) 10,480
-----------
- --------------------------------------------------------------------------------
PREFERRED STOCK -- 2.5%
GERMANY -- 2.2%
Marschollek Lauten* 425 252
-----------
252
- --------------------------------------------------------------------------------
AUSTRALIA -- 0.3%
Newscorp* 3,000 36
-----------
36
-----------
TOTAL PREFERRED STOCK (COST $82) 288
-----------
TOTAL INVESTMENTS-- 94.6% (COST $8,538) $ 10,768
-----------
-----------
Percentages indicated are based on net assets of $11,381,963.
* Non-income producing security
ADR -- American Depository Receipt
The accompanying notes are an integral part of the financial statements.
71
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG CASH RESERVES FUND
Face Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
BANK NOTES -- 0.2%
US Bank Note
5.92%, 10/02/00 $ 1,000 $ 1,000
TOTAL BANK NOTES (COST $1,000) 1,000
-----------
- --------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT -- 2.3%
Bank Scotland
5.76%, 07/03/00 2,000 2,000
Barclays Bank N.Y.
6.68%, 02/20/01 1,500 1,500
Desdner Bank
6.71%, 02/26/01 1,500 1,499
Deutsche Bank
6.55%, 01/22/01 1,500 1,499
Royal Bank Of Canada
5.70%, 07/03/00 2,000 2,000
Suntrust Atlanta
5.90%, 04/10/00 3,000 3,000
Svenska Handelsbanken N.Y.
6.75%, 03/16/01 2,000 1,999
TOTAL CERTIFICATES OF DEPOSIT (COST $13,497) 13,497
-----------
- --------------------------------------------------------------------------------
COMMERCIAL PAPER -- 9.6%
Aesop Funding
5.95%, 05/05/00 3,000 2,983
Archer-Daniels Midland
6.03%, 05/19/00 3,500 3,472
Associates Corporation of North America
5.81% 04/04/00 3,000 2,999
Bear Stearns
6.06%, 05/17/00 3,500 3,473
Centric Capital
6.06%, 04/10/00 3,000 2,995
Coca-Cola Enterprises
5.85%, 04/17/00 3,000 2,992
Enterprise Funding
5.92%, 04/04/00 3,000 2,998
Eureka Securities
6.06%, 05/19/00 3,000 2,976
Falcon Asset Securities
5.95%, 05/23/00 3,670 3,638
General Motors Acceptance
6.05%, 05/09/00 3,500 3,478
Goldman Sachs Group
6.04%, 05/17/00 3,000 2,977
Kitty Hawk Funding
5.85%, 04/03/00 3,000 2,999
Park Avenue Receivable
5.95%, 04/11/00 3,000 2,995
PPG Industries
5.88%, 04/06/00 3,000 2,998
Preferred Receivable Funding
6.06%, 05/10/00 3,000 2,980
Riverwoods Funding
6.05%, 05/17/00 3,000 2,977
United Technologies
6.05%, 04/28/00 3,000 2,986
Face Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
COMMERCIAL PAPER -- CONTINUED
Variable Funding Capital
5.92%, 05/22/00 $ 3,000 $ 2,975
TOTAL COMMERCIAL PAPER (COST $55,891) 55,891
-----------
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS -- 0.5%
IBM
5.95%, 08/17/00 3,000 2,999
-----------
TOTAL CORPORATE OBLIGATIONS (COST $2,999) 2,999
-----------
- --------------------------------------------------------------------------------
GOVERNMENT BOND -- 0.9%
Federal Home Loan Bank (FNLB)
6.52%, 03/28/01 5,000 4,997
-----------
TOTAL GOVERNMENT BOND (COST $4,997) 4,997
-----------
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS -- 86.6%
ABN AMRO
6.18%, dated 03/31/00, matures 04/03/00,
repurchase price $30,015,450 (collateralized
by U.S. Government Obligations: total
market value $30,600,000) (A) 30,000 30,000
Deutsche Bank Securities
6.25%, dated 03/31/00, matures 04/03/00,
repurchase price $140,072,917 (collateralized
by U.S. Government Obligations: total
market value $142,800,258) (A) 140,000 140,000
Goldman Sachs
6.22%, dated 03/31/00, matures 04/03/00,
repurchase price $35,018,142 (collateralized
by U.S. Government Obligations: total
market value $35,700,001) (A) 35,000 35,000
Paribas
6.18%, dated 03/31/00, matures 04/03/00,
repurchase price $40,020,600 (collateralized
by U.S. Government Obligations: total
market value $40,800,817) (A) 40,000 40,000
Warburg Dillon Reed, LLC
6.22%, dated 03/31/00, matures 04/03/00,
repurchase price $93,248,309 (collateralized
by U.S. Government Obligations: total
market value $95,066,929) (A) 93,200 93,200
JP Morgan Securities
6.18%, dated 03/31/00, matures 04/03/00,
repurchase price $140,072,100 (collateralized
by U.S. Government Obligations: total
market value $142,800,001) (A) 140,000 140,000
Paribas
6.20%, dated 03/31/00, matures 04/03/00,
repurchase price $23,731,255 (collateralized
by U.S. Government Obligations: total
market value $23,856,000) 23,719 23,719
-----------
TOTAL REPURCHASE AGREEMENTS (COST $501,919) 501,919
-----------
TOTAL INVESTMENTS-- 100.1% (COST $580,303) 580,303
-----------
- --------------------------------------------------------------------------------
72
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG CASH RESERVES FUND
Market
Description Value (000)
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- (0.1%)
Other Assets and Liabilities, Net $ (845)
-----------
- --------------------------------------------------------------------------------
NET ASSETS:
Fund Shares of PBHG Class (authorized 1 billion,
800 million shares -- $0.001
par value) based on 579,457,052
outstanding shares of common stock 579,458
Undistributed net investment income 6
Accumulated net realized loss on investments (6)
-----------
TOTAL NET ASSETS-- 100.0% $579,458
-----------
-----------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE $1.00
-----------
-----------
(A) -- Tri-party repurchase agreement
The accompanying notes are an integral part of the financial statements.
73
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG TECHNOLOGY & COMMUNICATIONS FUND
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
COMMON STOCK -- 94.9%
CONSUMER CYCLICAL -- 2.3%
AUDIO/VIDEO PRODUCTS -- 1.5%
Gemstar International* 335,300 $ 28,836
Polycom* 359,600 28,476
-----------
57,312
- --------------------------------------------------------------------------------
CABLE TV -- 0.2%
Mediacom Communication* 550,300 7,670
-----------
7,670
- --------------------------------------------------------------------------------
E-COMMERCE -- 0.6%
Purchasepro.com* 318,800 23,113
-----------
23,113
-----------
TOTAL CONSUMER CYCLICAL (COST $122,167) 88,095
-----------
- --------------------------------------------------------------------------------
INDUSTRIAL -- 1.7%
CIRCUIT BOARDS -- 0.2%
Viasystems Group* 570,700 8,846
-----------
8,846
- --------------------------------------------------------------------------------
INSTRUMENTS-CONTROLS -- 1.0%
Microchip Technology* 567,700 37,326
-----------
37,326
- --------------------------------------------------------------------------------
MACHINERY-GENERAL INDUSTRIAL -- 0.5%
FSI International* 513,300 10,523
Gasonics International* 195,400 7,749
-----------
18,272
-----------
TOTAL INDUSTRIAL (COST $64,590) 64,444
-----------
- --------------------------------------------------------------------------------
SERVICES -- 0.7%
ADVERTISING SERVICES -- 0.7%
Getty Images* 709,400 25,494
-----------
25,494
-----------
TOTAL SERVICES (COST $33,380) 25,494
-----------
- --------------------------------------------------------------------------------
TECHNOLOGY -- 90.2%
APPLICATIONS SOFTWARE -- 2.7%
Citrix Systems* 777,800 51,529
Intertrust Technologies* 51,900 2,206
J.D. Edwards & Company* 239,700 7,805
New Era of Networks* 321,000 12,599
Quest Software* 281,600 31,750
-----------
105,889
- --------------------------------------------------------------------------------
CIRCUITS -- 0.3%
Integrated Device Technology* 259,900 10,299
-----------
10,299
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
COMPUTER DATA SECURITY -- 1.4%
Entrust Technologies* 194,300 $ 16,531
Verisign* 248,200 37,106
-----------
53,637
- --------------------------------------------------------------------------------
COMPUTERS-INTEGRATED SYSTEMS -- 5.0%
ASM Lithography Holding* 128,100 14,315
Brocade Communications Systems* 532,400 95,466
Redback Networks* 274,800 82,423
-----------
192,204
- --------------------------------------------------------------------------------
COMPUTERS-MEMORY DEVICES -- 4.3%
Sandisk* 601,700 73,708
Veritas Software* 698,050 91,445
-----------
165,153
- --------------------------------------------------------------------------------
ELECTRONIC COMPONENTS-SEMICONDUCTORS-- 19.5%
Amkor Technology* 311,900 16,550
Applied Materials* 448,200 42,243
Applied Micro Circuits* 559,200 83,915
Atmel* 619,400 31,977
Broadcom* 369,400 89,718
Cypress Semiconductor* 911,800 44,963
Globespan* 736,100 75,036
Lam Research* 791,700 35,676
Lattice Semiconductor* 399,800 27,061
LSI Logic* 581,400 42,224
Metalink Limited* 41,500 1,593
Micron Technology 230,900 29,093
SDL* 496,800 105,756
Silicon Image* 260,100 18,630
TranSwitch* 434,100 41,728
Triquint Semiconductor* 488,200 35,883
Xilinx* 346,800 28,719
-----------
750,765
- --------------------------------------------------------------------------------
ENTERPRISE SOFTWARE/SERVICES -- 4.0%
Aspect Development* 280,200 18,038
BEA Systems* 707,800 51,935
I2 Technologies* 210,200 25,671
Informatica* 87,900 6,752
Microstrategy* 597,700 52,037
-----------
154,433
- --------------------------------------------------------------------------------
FIBER OPTICS -- 13.0%
Avanex* 325,700 49,425
Ciena* 302,600 38,165
E-Tek Dynamics* 230,900 54,319
JDS Uniphase* 1,226,100 147,822
Metromedia Fiber Network* 600,800 58,127
MRV Communications* 576,500 52,822
Sycamore Networks* 764,500 98,620
-----------
499,300
- --------------------------------------------------------------------------------
74
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG TECHNOLOGY & COMMUNICATIONS FUND
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
INTERNET CONTENT -- 12.4%
China.Com, Cl A* 385,700 $ 31,242
Go2Net* 386,500 31,137
Infospace* 1,605,000 233,427
Network Solutions* 570,000 87,611
Rare Medium Group* 2,112,300 93,205
-----------
476,622
- --------------------------------------------------------------------------------
INTERNET SOFTWARE -- 13.7%
Active Software* 164,400 10,457
Agile Software* 849,800 53,112
Akamai Technologies* 151,000 24,283
Alteon Websystems* 34,200 2,804
Ariba* 190,000 39,829
Art Technology* 644,600 42,342
Clarent* 778,900 70,247
Commerce One* 547,400 81,699
E.Piphany* 89,600 11,967
Exodus Communications* 357,800 50,271
Interwoven* 122,700 13,466
Tibco Software* 219,100 17,857
U.S. Internetworking* 176,325 6,833
Vignette* 480,600 77,016
Vitria Technology* 238,900 24,084
-----------
526,267
- --------------------------------------------------------------------------------
NETWORKING PRODUCTS -- 6.7%
Emulex* 183,300 20,003
Extreme Networks* 932,900 73,699
Foundry Networks* 406,100 58,377
Juniper Networks* 334,500 88,162
Network Appliance* 233,400 19,314
-----------
259,555
- --------------------------------------------------------------------------------
SOFTWARE TOOLS -- 0.1%
Mercury Interactive* 36,600 2,901
-----------
2,901
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT -- 5.7%
ADC Telecommunications* 580,700 31,285
Advanced Fibre* 1,228,600 77,018
Ditech Communications* 584,000 61,941
Next Level Communications* 151,100 16,432
Qualcomm* 70,100 10,467
Tekelec* 545,700 20,259
-----------
217,402
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS SERVICES -- 0.1%
Telocity* 257,000 $ 3,180
-----------
3,180
- --------------------------------------------------------------------------------
WIRELESS EQUIPMENT -- 1.3%
Netro* 278,900 18,133
RF Micro Devices* 244,500 32,855
-----------
50,988
-----------
TOTAL TECHNOLOGY (COST $2,718,883) 3,468,595
-----------
TOTAL COMMON STOCK (COST $2,939,020) 3,646,628
-----------
TOTAL INVESTMENTS-- 94.9% (COST $2,939,020) $3,646,628
-----------
- --------------------------------------------------------------------------------
Percentages are based on Net Assets of $3,843,946,370.
* Non-income producing security
Cl -- Class
The accompanying notes are an integral part of the financial statements.
75
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG STRATEGIC SMALL COMPANY FUND
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
COMMON STOCK -- 95.9%
BASIC MATERIALS -- 1.8%
CHEMICALS-PLASTICS -- 0.1%
Hanna 3,500 $ 40
-----------
40
- --------------------------------------------------------------------------------
CHEMICALS-SPECIALTY -- 1.3%
CK Witco 49,800 507
Cytec Industries* 14,100 432
W.R. Grace* 3,000 38
-----------
977
- --------------------------------------------------------------------------------
FERTILIZERS -- 0.2%
IMC Global 10,700 157
-----------
157
- --------------------------------------------------------------------------------
METAL-ALUMINUM -- 0.1%
Commonwealth Industries 7,300 66
-----------
66
- --------------------------------------------------------------------------------
STEEL-PRODUCERS -- 0.1%
LTV 31,800 113
-----------
113
-----------
TOTAL BASIC MATERIALS (COST $1,326) 1,353
-----------
- --------------------------------------------------------------------------------
CONSUMER CYCLICAL -- 10.0%
APPAREL MANUFACTURERS -- 0.0%
I.C. Isaacs & Company* 10,000 27
-----------
27
- --------------------------------------------------------------------------------
ATHLETIC EQUIPMENT -- 0.5%
Direct Focus* 12,500 348
-----------
348
- --------------------------------------------------------------------------------
AUDIO/VIDEO PRODUCTS -- 1.6%
Harman International 6,700 402
Polycom* 10,000 792
-----------
1,194
- --------------------------------------------------------------------------------
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL -- 0.7%
Delco Remy International* 73,800 549
-----------
549
- --------------------------------------------------------------------------------
BUILDING-MOBIL HOME/MANUFACTURED HOUSING -- 0.1%
Coachmen Industries 3,900 54
-----------
54
- --------------------------------------------------------------------------------
CASINO HOTELS -- 0.3%
Harrah's Entertainment* 13,500 251
-----------
251
- --------------------------------------------------------------------------------
DISTRIBUTION/WHOLESALE -- 0.5%
Scansource* 10,000 355
-----------
355
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
HOME FURNISHINGS -- 0.9%
Ethan Allen Interiors 8,700 $ 218
Furniture Brands International* 25,700 483
-----------
701
- --------------------------------------------------------------------------------
MOTION PICTURES & SERVICES -- 0.4%
Zomax* 5,000 301
-----------
301
- --------------------------------------------------------------------------------
PUBLISHING-NEWSPAPERS -- 0.5%
Journal Register* 5,200 77
Pulitzer 7,200 294
-----------
371
- --------------------------------------------------------------------------------
RADIO -- 0.4%
Citadel Communications* 7,500 316
-----------
316
- --------------------------------------------------------------------------------
RETAIL-CATALOG SHOPPING -- 0.2%
MSC Industrial Direct* 10,000 180
-----------
180
- --------------------------------------------------------------------------------
RETAIL-COMPUTER EQUIPMENT -- 1.0%
Insight Enterprises* 12,500 455
PC Connection* 9,600 271
-----------
726
- --------------------------------------------------------------------------------
RETAIL-CONSUMER ELECTRONICS -- 1.0%
Tweeter Home Entertainment Group* 16,200 717
-----------
717
- --------------------------------------------------------------------------------
RETAIL-JEWELRY -- 0.2%
Friedman's, Cl A 22,300 137
-----------
137
- --------------------------------------------------------------------------------
RETAIL-MAIL ORDER -- 0.1%
Wilmar Industries* 6,100 104
-----------
104
- --------------------------------------------------------------------------------
RETAIL-RESTAURANTS -- 0.9%
P.F Changs China Bistro* 10,800 358
Wendys International 15,900 321
-----------
679
- --------------------------------------------------------------------------------
STORAGE/WAREHOUSING -- 0.2%
Mobile Mini* 7,900 154
-----------
154
- --------------------------------------------------------------------------------
TELEVISION -- 0.4%
Paxson Communications* 14,600 113
Pegasus Communications* 1,100 155
-----------
268
- --------------------------------------------------------------------------------
TRAVEL SERVICES -- 0.1%
Hotel Reservations Network* 2,500 44
-----------
44
-----------
TOTAL CONSUMER CYCLICAL (COST $5,656) 7,476
-----------
- --------------------------------------------------------------------------------
76
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG STRATEGIC SMALL COMPANY FUND
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
CONSUMER NON-CYCLICAL -- 0.1%
FOOD-MISCELLANEOUS/DIVERSIFIED -- 0.1%
Aurora Foods* 35,100 $ 105
-----------
105
-----------
TOTAL CONSUMER NON-CYCLICAL (COST $311) 105
-----------
- --------------------------------------------------------------------------------
ENERGY -- 7.2%
OIL & GAS DRILLING -- 1.2%
Key Energy Services* 44,200 514
Patterson Energy* 7,500 238
Pride International* 5,400 123
-----------
875
- --------------------------------------------------------------------------------
OIL COMPANIES-EXPLORATION & PRODUCTION-- 5.0%
Barrett Resources* 2,600 78
Devon Energy 9,800 476
EOG Resources 39,500 837
Forest Oil* 42,900 456
Louis Dreyfus Natural Gas* 9,600 326
Newfield Exploration* 3,700 130
Noble Affiliates 11,900 390
Santa Fe Snyder* 69,600 670
Unit* 3,200 35
Vintage Petroleum 18,000 362
-----------
3,760
- --------------------------------------------------------------------------------
OIL REFINING & MARKETING -- 0.3%
Valero Energy 8,100 248
-----------
248
- --------------------------------------------------------------------------------
PIPELINES -- 0.7%
Kinder Morgan 16,000 552
-----------
552
-----------
TOTAL ENERGY (COST $4,243) 5,435
-----------
- --------------------------------------------------------------------------------
FINANCIAL -- 8.8%
COMMERCIAL BANKS-CENTRAL US -- 0.2%
Firstmerit 7,500 138
-----------
138
- --------------------------------------------------------------------------------
COMMERCIAL BANKS-EASTERN US -- 0.5%
Commercial Bank of New York 13,500 129
Mercantile 8,800 269
-----------
398
- --------------------------------------------------------------------------------
COMMERCIAL BANKS-SOUTHERN US -- 0.7%
Hibernia, Cl A 5,200 55
Southtrust 17,700 450
-----------
505
- --------------------------------------------------------------------------------
COMMERCIAL BANKS-WESTERN US -- 1.5%
BancWest 28,700 567
City National 11,074 373
Silicon Valley Bancshares* 2,700 194
-----------
1,134
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
FINANCE-INVESTMENT BANKER/BROKER -- 1.0%
Morgan Keegan 18,100 $ 317
Raymond James Financial 17,200 357
Wit Capital Group* 4,000 69
-----------
743
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT/ADVISORY SERVICES-- 1.4%
Affiliated Managers Group* 13,300 632
Federated Investors 3,600 98
Waddell & Reed Financial, Cl A 6,900 292
-----------
1,022
- --------------------------------------------------------------------------------
LIFE/HEALTH INSURANCE -- 1.1%
Money Group 13,700 443
Protective Life 13,400 425
-----------
868
- --------------------------------------------------------------------------------
PROPERTY/CASUALTY INSURANCE -- 0.3%
Fidelity National Financial 6,300 87
First American Financial 11,500 163
-----------
250
- --------------------------------------------------------------------------------
REITS-APARTMENTS -- 0.0%
Pennsylvania Real Estate Investment Trust1,900 31
-----------
31
- --------------------------------------------------------------------------------
REITS-REGIONAL MALLS -- 0.2%
CBL & Associates Properties 7,800 159
-----------
159
- --------------------------------------------------------------------------------
REITS-SHOPPING CENTERS -- 0.3%
JP Realty 11,400 203
-----------
203
- --------------------------------------------------------------------------------
S&L/THRIFTS-CENTRAL US -- 0.7%
Bank United, Cl A 2,200 69
Charter One Financial 20,900 439
-----------
508
- --------------------------------------------------------------------------------
S&L/THRIFTS-EASTERN US -- 0.5%
Roslyn Bancorp 15,700 280
Woronoco Bancorp 7,000 67
-----------
347
- --------------------------------------------------------------------------------
S&L/THRIFTS-WESTERN US -- 0.2%
ITLA Capital* 12,700 162
-----------
162
- --------------------------------------------------------------------------------
SUPER-REGIONAL BANKS US -- 0.2%
Comerica 3,100 130
-----------
130
-----------
TOTAL FINANCIAL (COST $6,056) 6,598
-----------
- --------------------------------------------------------------------------------
77
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG STRATEGIC SMALL COMPANY FUND
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
HEALTH CARE -- 6.3%
DIAGNOSTIC KITS -- 0.0%
Biosite Diagnostics* 800 $ 19
-----------
19
- --------------------------------------------------------------------------------
DISPOSABLE MEDICAL PRODUCTS -- 0.0%
ICU Medical* 400 7
-----------
7
- --------------------------------------------------------------------------------
DRUG DELIVERY SYSTEMS -- 0.2%
Noven Pharmacuticals* 12,500 137
-----------
137
- --------------------------------------------------------------------------------
MEDICAL INFORMATION SYSTEMS -- 0.5%
Allscripts* 5,000 301
Dendrite International* 5,000 105
-----------
406
- --------------------------------------------------------------------------------
MEDICAL PRODUCTS -- 0.9%
PSS World Medical* 32,400 220
Zoll Medical Group* 8,200 420
-----------
640
- --------------------------------------------------------------------------------
MEDICAL-BIOMEDICAL/GENETIC -- 0.7%
Aclara Biosciences* 11,400 450
Regeneron Pharmaceuticals* 1,100 32
-----------
482
- --------------------------------------------------------------------------------
MEDICAL-DRUGS -- 2.2%
Celgene* 4,500 448
Chirex* 5,700 110
Cima Labs* 17,300 297
Dura Pharmaceuticals* 10,600 130
Intrabiotics Pharmaceuticals* 15,600 234
King Pharmaceuticals* 6,850 216
Pharmacopeia* 5,000 245
-----------
1,680
- --------------------------------------------------------------------------------
MEDICAL-GENERIC DRUGS -- 0.8%
Alpharma, Cl A 16,100 592
-----------
592
- --------------------------------------------------------------------------------
MEDICAL-HOSPITALS -- 0.0%
Triad Hospitals* 1,500 25
-----------
25
- --------------------------------------------------------------------------------
MEDICAL-OUTPATIENT/HOME MEDICAL -- 0.1%
Lincare Holding* 2,800 79
-----------
79
- --------------------------------------------------------------------------------
MEDICAL-WHOLESALE DRUG DISTRIBUTION-- 0.2%
Syncor* 3,700 122
-----------
122
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
THERAPEUTICS -- 0.7%
CV Therapeutics* 3,500 $ 176
Titan Pharmaceuticals* 2,000 62
Tularik* 1,800 56
United Therapeutics* 2,900 225
-----------
519
-----------
TOTAL HEALTH CARE (COST $3,190) 4,708
-----------
- --------------------------------------------------------------------------------
INDUSTRIAL -- 9.6%
AEROSPACE/DEFENSE -- 0.2%
Teledyne Technologies* 8,000 139
-----------
139
- --------------------------------------------------------------------------------
AEROSPACE/DEFENSE-EQUIPMENT -- 0.4%
Orbital Sciences* 19,900 299
-----------
299
- --------------------------------------------------------------------------------
BUILDING & CONSTRUCTION PRODUCTS-MISCELLANEOUS -- 0.1%
Dal-Tile International* 8,300 66
-----------
66
- --------------------------------------------------------------------------------
BUILDING PRODUCTS-CEMENT/AGGREGATE-- 0.3%
Lafarge 8,100 192
-----------
192
- --------------------------------------------------------------------------------
DIVERSIFIED MANUFACTURING OPERATIONS-- 0.4%
ITT Industries 10,600 329
-----------
329
- --------------------------------------------------------------------------------
ELECTRONIC COMPONENTS-MISCELLANEOUS-- 0.5%
Kent Electronics* 2,900 85
Vishay Intertechnology* 5,500 306
-----------
391
- --------------------------------------------------------------------------------
ELECTRONIC CONNECTORS -- 0.2%
Amphenol* 1,400 143
-----------
143
- --------------------------------------------------------------------------------
ELECTRONIC MEASURING INSTRUMENTS -- 0.9%
Molecular Devices* 6,200 476
Robotic Vision Systems* 12,500 200
-----------
676
- --------------------------------------------------------------------------------
ELECTRONICS-MILITARY -- 0.8%
Aeroflex* 11,400 564
-----------
564
- --------------------------------------------------------------------------------
HAZARDOUS WASTE DISPOSAL -- 0.1%
Stericycle* 3,800 95
-----------
95
- --------------------------------------------------------------------------------
INDUSTRIAL AUDIO & VIDEO PRODUCTS -- 0.4%
California Amplifier* 8,500 263
-----------
263
- --------------------------------------------------------------------------------
78
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG STRATEGIC SMALL COMPANY FUND
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
INSTRUMENTS-CONTROLS -- 0.9%
Photon Dynamics* 10,000 $ 690
-----------
690
- --------------------------------------------------------------------------------
INSTRUMENTS-SCIENTIFIC -- 0.8%
FEI* 15,000 446
Varian* 5,000 192
-----------
638
- --------------------------------------------------------------------------------
LASERS-SYSTEMS/COMPONENTS -- 0.6%
Cyberoptics* 5,000 212
Cymer* 4,200 210
-----------
422
- --------------------------------------------------------------------------------
LIFE/HEALTH INSURANCE -- 0.2%
Torchmark 5,500 127
-----------
127
- --------------------------------------------------------------------------------
MACHINERY-GENERAL INDUSTRIAL -- 0.9%
Semitool* 20,000 364
Speedfam-Ipec* 16,800 334
-----------
698
- --------------------------------------------------------------------------------
MACHINERY-PUMPS -- 0.7%
Helix Technology 8,500 511
-----------
511
- --------------------------------------------------------------------------------
METAL PROCESSORS & FABRICATORS -- 0.1%
Wolverine Tube* 6,500 83
-----------
83
- --------------------------------------------------------------------------------
NON-HAZARDOUS WASTE DISPOSAL -- 0.1%
Republic Services* 7,800 85
-----------
85
- --------------------------------------------------------------------------------
POWER CONVERSION/SUPPLY EQUIPMENT -- 0.3%
Power-One* 4,000 242
-----------
242
- --------------------------------------------------------------------------------
STEEL PIPE & TUBE -- 0.4%
NS Group* 19,900 325
-----------
325
- --------------------------------------------------------------------------------
TRUCKING & LEASING -- 0.1%
Ryder Systems 4,500 102
-----------
102
- --------------------------------------------------------------------------------
WIRE & CABLE PRODUCTS -- 0.2%
Cable Design Technologies* 4,000 136
-----------
136
-----------
TOTAL INDUSTRIAL (COST $4,965) 7,216
-----------
- --------------------------------------------------------------------------------
SERVICES -- 4.4%
COMMERCIAL SERVICES -- 0.1%
AC Nielson* 4,200 95
-----------
95
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
COMPUTER SERVICES -- 1.8%
Breakaway Solutions* 10,000 $ 455
Factset Research Systems 8,000 217
Manhattan Associates* 20,600 706
-----------
1,378
- --------------------------------------------------------------------------------
CONSULTING SERVICES -- 1.4%
Corporate Executive Board* 7,500 381
Forrester Research* 8,500 461
Professional Detailing* 7,600 190
-----------
1,032
- --------------------------------------------------------------------------------
RENTAL AUTO/EQUIPMENT -- 0.3%
United Rentals* 11,300 195
-----------
195
- --------------------------------------------------------------------------------
RESEARCH & DEVELOPMENT -- 0.6%
Albany Molecular Research* 7,500 438
-----------
438
- --------------------------------------------------------------------------------
SCHOOLS -- 0.2%
Edison Schools* 10,200 200
-----------
200
-----------
TOTAL SERVICES (COST $2,636) 3,338
-----------
- --------------------------------------------------------------------------------
TECHNOLOGY -- 46.1%
APPLICATIONS SOFTWARE -- 3.8%
Actuate* 10,200 549
Exchange Applications* 15,000 794
Quest Software* 3,500 395
Sonic Foundry* 6,600 643
Web Trends* 7,200 518
-----------
2,899
- --------------------------------------------------------------------------------
CELLULAR TELECOMMUNICATIONS -- 0.1%
Alamosa PCS Holdings* 2,100 79
-----------
79
- --------------------------------------------------------------------------------
CIRCUITS -- 0.7%
Integrated Device Technology* 12,400 491
-----------
491
- --------------------------------------------------------------------------------
COMMUNICATIONS SOFTWARE -- 1.8%
Avid Technology* 31,500 563
General Magic* 7,600 68
Puma Technology* 8,500 430
Razorfish* 10,000 275
-----------
1,336
- --------------------------------------------------------------------------------
COMPUTER AIDED DESIGN -- 0.1%
Ansoft* 6,300 78
-----------
78
- --------------------------------------------------------------------------------
COMPUTER DATA SECURITY -- 0.6%
Axent Technologies* 7,300 137
RSA Security* 6,000 311
-----------
448
- --------------------------------------------------------------------------------
79
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG STRATEGIC SMALL COMPANY FUND
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
COMPUTERS-INTEGRATED SYSTEMS -- 1.1%
Blue Wave Systems* 5,000 $ 80
Mercury Computer Systems* 14,000 684
Systems & Computer Technology* 3,800 89
-----------
853
- --------------------------------------------------------------------------------
COMPUTERS-MEMORY DEVICES -- 4.8%
Advanced Digital Information* 25,000 856
M-Systems Flash Disk Pioneers* 7,500 398
Overland Data* 22,000 309
Sandisk* 10,200 1,250
Silicon Storage Technology* 9,500 702
Western Digital* 9,000 67
-----------
3,582
- --------------------------------------------------------------------------------
COMPUTERS-PERIPHERAL EQUIPMENT -- 1.0%
Cybex* 15,000 564
S3* 8,300 174
-----------
738
- --------------------------------------------------------------------------------
DATA PROCESSING/MANAGEMENT -- 1.8%
Acxiom* 7,500 249
Documentum* 5,700 445
Excelon* 16,300 183
Informix* 29,100 493
-----------
1,370
- --------------------------------------------------------------------------------
ELECTRONIC COMPONENTS-SEMICONDUCTORS-- 12.3%
Act Manufacturing* 5,300 296
Alpha Industries* 2,500 238
Applied Micro Circuits* 7,500 1,125
Cirrus Logic* 6,700 122
Cree* 3,500 395
Cypress Semiconductor* 8,800 434
Elantec Semiconductor* 7,500 552
Electroglas* 3,400 116
Exar* 6,000 429
Genus* 29,300 407
Ibis Technology* 2,500 225
Integrated Silicon Solutions* 13,100 384
LTX* 10,000 452
PLX Technology* 12,500 465
Qlogic* 5,000 678
Quantum Effect Devices* 2,500 199
Silicon Image* 1,200 86
Telcom Semiconductor* 7,500 227
Three-Five Systems* 10,000 600
TranSwitch* 9,000 865
Triquint Semiconductor* 9,000 662
Xicor* 7,500 106
Zoran* 3,900 220
-----------
9,283
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
ENTERPRISE SOFTWARE/SERVICES -- 2.4%
Business Objects ADR* 7,500 $ 746
Informatica* 7,600 584
Manugistics* 6,100 311
Symantec* 1,700 128
-----------
1,769
- --------------------------------------------------------------------------------
FIBER OPTICS -- 1.4%
Harmonic* 3,700 308
JDS Uniphase* 2,500 301
MRV Communications* 5,000 458
-----------
1,067
- --------------------------------------------------------------------------------
INTERNET CONTENT -- 0.7%
Launch Media* 2,200 34
Lifeminders.com* 5,000 339
S1* 1,220 105
-----------
478
- --------------------------------------------------------------------------------
INTERNET SOFTWARE -- 3.7%
Bluestone Software* 1,200 40
Clickaction* 7,500 372
Fire Pond* 7,500 307
Intraware* 3,900 161
Macromedia* 5,700 515
Netopia* 4,500 324
Proxicom* 9,400 417
Ravisent Technologies* 16,200 225
U.S. Internetworking* 9,000 349
Verio* 1,400 63
-----------
2,773
- --------------------------------------------------------------------------------
NETWORKING PRODUCTS -- 1.3%
Apex* 5,000 186
Extreme Networks* 6,100 482
Visual Networks* 5,000 284
-----------
952
- --------------------------------------------------------------------------------
PRINTERS & RELATED PRODUCTS -- 0.3%
Splash Technologies* 20,400 255
-----------
255
- --------------------------------------------------------------------------------
SATELLITE TELECOMMUNICATIONS -- 0.5%
Adaptive Broadband* 5,000 268
American Mobile Satellite* 1,400 34
Globecomm Systems* 2,200 59
-----------
361
- --------------------------------------------------------------------------------
SOFTWARE TOOLS -- 0.4%
Cysive* 4,200 288
-----------
288
- --------------------------------------------------------------------------------
80
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG STRATEGIC SMALL COMPANY FUND
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT -- 4.4%
Anaren Microwave* 5,000 $ 479
Audiocodes Limited* 3,000 301
Digital Lightwave* 7,700 480
MCK Communications* 7,500 359
Natural Microsystems* 7,500 643
Pairgain Technologies* 6,800 127
Tekelec* 13,400 498
TUT Systems* 5,000 298
Westell Technologies* 5,000 159
-----------
3,344
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS SERVICES -- 0.1%
ICG Communications* 2,200 79
-----------
79
- --------------------------------------------------------------------------------
WEB HOSTING/PUBLISHING -- 0.5%
Verity* 10,000 408
-----------
408
- --------------------------------------------------------------------------------
WIRELESS EQUIPMENT -- 2.3%
Glenayre Technologies* 37,000 650
Metro One Telecommunications* 6,400 85
Proxim* 4,300 515
RF Micro Devices* 3,100 416
Spectrian* 3,600 81
-----------
1,747
-----------
TOTAL TECHNOLOGY (COST $20,216) 34,678
-----------
- --------------------------------------------------------------------------------
TRANSPORTATION -- 1.2%
AIRLINES -- 0.2%
Midway Airlines* 37,700 189
-----------
189
- --------------------------------------------------------------------------------
TRANSPORTATION-AIR FREIGHT -- 0.3%
Airborne Freight 8,000 192
-----------
192
- --------------------------------------------------------------------------------
TRANSPORTATION-TRUCK -- 0.7%
Hunt (J.B.) Transportation Services 10,800 148
US Xpress Enterprises* 24,000 211
Yellow* 8,100 149
-----------
508
-----------
TOTAL TRANSPORTATION (COST $1,158) 889
-----------
- --------------------------------------------------------------------------------
UTILITIES -- 0.4%
ELECTRIC-INTEGRATED -- 0.1%
Idacorp 2,700 94
Madison Gas & Electric 400 7
-----------
101
- --------------------------------------------------------------------------------
Shares/Face Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
GAS-DISTRIBUTION -- 0.2%
UGI 6,800 $ 147
-----------
147
- --------------------------------------------------------------------------------
WATER -- 0.1%
Philadelphia Suburban 4,900 89
-----------
89
-----------
TOTAL UTILITIES (COST $338) 337
-----------
TOTAL COMMON STOCK (COST $50,095) 72,133
-----------
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 4.1%
J.P. Morgan
6.10%, dated 03/31/00, matures 04/03/00,
repurchase price $3,122,418 (collateralized
by U.S. Government Obligations: total
market value $3,184,928) (A) $3,121 3,121
-----------
TOTAL REPURCHASE AGREEMENT (COST $3,121) 3,121
-----------
TOTAL INVESTMENTS-- 100.0% (COST $53,216) $75,254
-----------
-----------
Percentages are based on Net Assets of $75,225,094.
* Non-income producing security
(A) -- Tri-party repurchase agreement
ADR -- American Depository Receipt
Cl -- Class
The accompanying notes are an integral part of the financial statements.
81
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES (000)
- --------------------------------------------------------------------------------
March 31, 2000
<TABLE>
<CAPTION>
---------- ------------ -----------
PBHG PBHG PBHG
CORE LARGE CAP MID-CAP
GROWTH VALUE VALUE
FUND FUND FUND
---------- ------------- -----------
<S> <C> <C> <C>
ASSETS:
Investment securities (Cost $133,845, $30,379, $52,212, $72,245,
$18,325, $8,538, $2,939,020 and $50,095 respectively) at market value $174,191 $31,877 $58,076
Repurchase Agreements (Cost $90, $1,612, $6,995, $6,641, $4,557
and $3,121 respectively) at market value 90 1,612 6,995
Cash -- -- --
Dividends and interest receivable 93 16 43
Receivable for capital shares sold 2,374 818 1,956
Receivable for investment securities sold 14,163 4,818 3,825
Other assets 26 5 5
-------- ------- -------
Total assets 190,937 39,146 70,900
-------- ------- -------
LIABILITIES:
Payable for investment securities purchased 6,536 5,488 10,157
Payable for capital shares purchased 5,175 216 24
Bank Overdraft 800 -- --
Line of credit borrowing 12,100 500 --
Accrued expenses 227 20 29
-------- ------- -------
Total liabilities 24,838 6,224 10,210
-------- ------- -------
NET ASSETS:
Portfolio shares (authorized 200 million shares for each of the PBHG Core
Growth, PBHG Large Cap Value, PBHG Mid-Cap Value, PBHG Small Cap Value,
PBHG Focused Value, PBHG International, PBHG Technology & Communications
and PBHG Strategic Small Company Funds -- $0.001 par value) based on
5,490,314, 2,751,257, 4,392,625, 4,940,457, 1,218,299, 879,650,
45,211,418 and 3,889,929 outstanding shares of common stock 116,637 31,493 55,510
Accumulated net investment income (loss) 6 (4) 1
Accumulated net realized gain (loss) on investments 9,110 (65) (685)
Net unrealized appreciation on investments and
foreign currency translation 40,346 1,498 5,864
-------- ------- -------
NET ASSETS $166,099 $32,922 $60,690
-------- ------- -------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE $30.25 $11.97 $13.82
-------- ------- -------
-------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
----------- ----------- --------------
PBHG PBHG
SMALL CAP FOCUSED PBHG
VALUE VALUE INTERNATIONAL
FUND FUND FUND
----------- ----------- --------------
<S> <C> <C> <C>
ASSETS:
Investment securities (Cost $133,845, $30,379, $52,212, $72,245,
$18,325, $8,538, $2,939,020 and $50,095 respectively) at market value $85,372 $20,746 $10,768
Repurchase Agreements (Cost $90, $1,612, $6,995, $6,641, $4,557
and $3,121 respectively) at market value 6,641 4,557 --
Cash -- -- 659
Dividends and interest receivable 10 13 20
Receivable for capital shares sold 3,791 1,250 66
Receivable for investment securities sold 7,807 1,440 16
Other assets 7 9 1
-------- -------- --------
Total assets 103,628 28,015 11,530
-------- -------- --------
LIABILITIES:
Payable for investment securities purchased 10,821 5,137 31
Payable for capital shares purchased 73 296 91
Bank Overdraft -- -- --
Line of credit borrowing -- -- --
Accrued expenses 100 26 26
-------- -------- --------
Total liabilities 10,994 5,459 148
-------- -------- --------
NET ASSETS:
Portfolio shares (authorized 200 million shares for each of the PBHG Core
Growth, PBHG Large Cap Value, PBHG Mid-Cap Value, PBHG Small Cap Value,
PBHG Focused Value, PBHG International, PBHG Technology & Communications
and PBHG Strategic Small Company Funds -- $0.001 par value) based on
5,490,314, 2,751,257, 4,392,625, 4,940,457, 1,218,299, 879,650,
45,211,418 and 3,889,929 outstanding shares of common stock 78,024 18,983 8,025
Accumulated net investment income (loss) (5) -- (40)
Accumulated net realized gain (loss) on investments 1,488 1,152 1,167
Net unrealized appreciation on investments and
foreign currency translation 13,127 2,421 2,230
-------- -------- --------
NET ASSETS $92,634 $22,556 $11,382
-------- -------- --------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE $18.75 $18.51 $12.94
-------- -------- --------
-------- -------- --------
</TABLE>
<TABLE>
<CAPTION>
---------------- --------------
PBHG PBHG
TECHNOLOGY & STRATEGIC
COMMUNICATIONS MALL COMPANY
FUND FUND
---------------- -------------
<S> <C> <C>
ASSETS:
Investment securities (Cost $133,845, $30,379, $52,212, $72,245,
$18,325, $8,538, $2,939,020 and $50,095 respectively) at market value $3,646,628 $72,133
Repurchase Agreements (Cost $90, $1,612, $6,995, $6,641, $4,557
and $3,121 respectively) at market value -- 3,121
Cash -- --
Dividends and interest receivable 1,241 7
Receivable for capital shares sold 144,526 115
Receivable for investment securities sold 590,796 3,944
Other assets 62 6
---------- -------
Total assets 4,383,253 79,326
---------- -------
LIABILITIES:
Payable for investment securities purchased 310,192 3,922
Payable for capital shares purchased 36,268 69
Bank Overdraft 72,636 --
Line of credit borrowing 116,000 --
Accrued expenses 4,211 110
---------- -------
Total liabilities 539,307 4,101
---------- -------
NET ASSETS:
Portfolio shares (authorized 200 million shares for each of the PBHG Core
Growth, PBHG Large Cap Value, PBHG Mid-Cap Value, PBHG Small Cap Value,
PBHG Focused Value, PBHG International, PBHG Technology & Communications
and PBHG Strategic Small Company Funds -- $0.001 par value) based on
5,490,314, 2,751,257, 4,392,625, 4,940,457, 1,218,299, 879,650,
45,211,418 and 3,889,929 outstanding shares of common stock 2,951,217 44,362
Accumulated net investment income (loss) -- 2
Accumulated net realized gain (loss) on investments 185,121 8,823
Net unrealized appreciation on investments and
foreign currency translation 707,608 22,038
---------- -------
NET ASSETS $3,843,946 $75,225
---------- -------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE $85.02 $19.34
---------- -------
---------- -------
</TABLE>
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
[LOGO OMITTED]
82 & 83
<PAGE>
THE PBHG FUNDS, INC.
STATEMENTS OF OPERATIONS (000)
- --------------------------------------------------------------------------------
For the Year Ended March 31, 2000
<TABLE>
<CAPTION>
--------- ---------- ----------- -------------- ------------ --------- ----------
PBHG PBHG PBHG
PBHG EMERGING LARGE CAP PBHG PBHG PBHG LARGE CAP
GROWTH GROWTH GROWTH SELECT EQUITY CORE GROWTH LIMITED 20
FUND FUND FUND FUND FUND FUND FUND
--------- ---------- ----------- -------------- ------------- --------- -----------
INVESTMENT INCOME:
<S> <C> <C> <C> <C> <C> <C> <C>
Dividends $ 253 $ 73 $ 252 $ 39 $ 95 $ 14 $ 463
Interest 12,173 4,054 333 2,499 248 617 2,117
Less: Foreign Taxes Withheld -- -- (3) -- (1) -- (27)
---------- -------- -------- -------- ------- ------- --------
Total Investment Income 12,426 4,127 582 2,538 342 631 2,553
---------- -------- -------- -------- ------- ------- --------
EXPENSES:
Investment Advisory Fees 32,748 7,263 1,148 4,326 941 1,143 5,274
Administrative Fees 5,779 1,282 230 763 166 171 931
Transfer Agent Fees 7,691 1,779 313 754 267 133 1,038
Registration and Filing Fees (168) (14) 23 6 16 8 104
Printing Fees 323 69 26 79 11 7 117
Professional Fees (13) (12) 10 6 (3) -- 46
Custodian Fees 17 12 8 6 8 10 19
Insurance 72 16 2 3 2 2 4
Directors' Fees 119 23 6 7 4 3 23
Miscellaneous Fees 175 82 16 29 15 17 56
Line of Credit Commitment Fees 270 55 11 9 6 6 33
Interest Expense 195 19 1 10 36 -- 1
Distribution Fees 1 228 -- -- -- -- -- --
---------- -------- -------- -------- ------- ------- --------
TOTAL EXPENSES 47,436 10,574 1,794 5,998 1,469 1,500 7,646
---------- -------- -------- -------- ------- ------- --------
Waiver of Investment Advisory Fees -- -- -- -- -- -- --
---------- -------- -------- -------- ------- ------- --------
Net Expenses 47,436 10,574 1,794 5,998 1,469 1,500 7,646
---------- -------- -------- -------- ------- ------- --------
NET INVESTMENT INCOME (LOSS) (35,010) (6,447) (1,212) (3,460) (1,127) (869) (5,093)
---------- -------- -------- -------- ------- ------- --------
Net Realized Gain (Loss) from
Security Transactions 1,444,408 253,905 73,256 243,578 68,016 48,591 272,534
Net Realized Loss on Foreign
Currency Transactions -- -- -- -- -- -- --
Net Change in Unrealized Appreciation
(Depreciation) on Investments 2,040,376 356,132 36,253 255,606 16,011 51,160 242,817
---------- -------- -------- -------- ------- ------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS 3,484,784 610,037 109,509 499,184 84,027 99,751 515,351
---------- -------- -------- -------- ------- ------- --------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $3,449,774 $603,590 $108,297 $495,724 $82,900 $98,882 $510,258
---------- -------- -------- -------- ------- ------- --------
---------- -------- -------- -------- ------- ------- --------
</TABLE>
<TABLE>
<CAPTION>
-------------- ----------- --------- ------------- --------- --------------
PBHG PBHG PBHG PBHG PBHG
NEW LARGE CAP MID-CAP SMALL CAP FOCUSED PBHG
OPPORTUNITIES VALUE VALUE VALUE VALUE INTERNATIONAL
FUND FUND FUND FUND FUND FUND
--------------- --------- ---------- ------------ -------- -------------
INVESTMENT INCOME:
<S> <C> <C> <C> <C> <C> <C>
Dividends $ -- $ 597 $ 451 $ 489 $ 56 $ 155
Interest 272 91 100 173 24 17
Less: Foreign Taxes Withheld -- (3) -- -- -- (11)
-------- ------ ------- ------- ------ ------
Total Investment Income 272 685 551 662 80 161
-------- ------ ------- ------- ------ ------
EXPENSES:
Investment Advisory Fees 1,419 245 364 703 49 117
Administrative Fees 213 57 64 105 9 17
Transfer Agent Fees 103 85 109 208 15 61
Registration and Filing Fees 7 16 19 33 4 3
Printing Fees 38 (1) 10 9 2 1
Professional Fees 9 (5) 3 2 1 --
Custodian Fees 26 13 16 17 8 18
Insurance -- 1 1 1 -- --
Directors' Fees 4 (2) 1 3 -- --
Miscellaneous Fees 8 3 14 18 -- 16
Line of Credit Commitment Fees 6 2 4 4 -- --
Interest Expense 69 5 11 7 -- --
Distribution Fees 1 -- -- -- -- -- --
-------- ------ ------- ------- ------ ------
TOTAL EXPENSES 1,902 419 616 1,110 88 233
-------- ------ ------- ------- ------ ------
Waiver of Investment Advisory Fees -- -- -- (58) (3) --
-------- ------ ------- ------- ------ ------
Net Expenses 1,902 419 616 1,052 85 233
-------- ------ ------- ------- ------ ------
NET INVESTMENT INCOME (LOSS) (1,630) 266 (65) (390) (5) (72)
-------- ------ ------- ------- ------ ------
Net Realized Gain (Loss) from
Security Transactions 124,962 5,419 10,140 13,720 2,109 3,924
Net Realized Loss on Foreign
Currency Transactions -- -- -- -- -- (38)
Net Change in Unrealized Appreciation
(Depreciation) on Investments 126,277 (715) 4,710 20,816 2,437 (1,438)
-------- ------ ------- ------- ------ ------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS 251,239 4,704 14,850 34,536 4,546 2,448
-------- ------ ------- ------- ------ ------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $249,609 $4,970 $14,785 $34,146 $4,541 $2,376
-------- ------ ------- ------- ------ ------
-------- ------ ------- ------- ------ ------
</TABLE>
<TABLE>
<CAPTION>
---------- -------------- --------------
PBHG PBHG PBHG
CASH TECHNOLOGY & STRATEGIC
RESERVES COMMUNICATIONS SMALL
FUND FUND COMPANY FUND
--------- -------------- --------------
INVESTMENT INCOME:
<S> <C> <C> <C>
Dividends $ -- $ 262 $ 202
Interest 10,656 3,166 105
Less: Foreign Taxes Withheld -- (28) --
------ ---------- -------
Total Investment Income 10,656 3,400 307
------ ---------- -------
EXPENSES:
Investment Advisory Fees 583 12,141 537
Administrative Fees 293 2,143 81
Transfer Agent Fees 247 1,899 122
Registration and Filing Fees 32 5 25
Printing Fees 50 327 10
Professional Fees 19 73 3
Custodian Fees 20 33 24
Insurance 2 5 1
Directors' Fees 7 43 3
Miscellaneous Fees 88 80 18
Line of Credit Commitment Fees -- 26 4
Interest Expense -- 267 1
Distribution Fees 1 -- -- --
------ ---------- -------
TOTAL EXPENSES 1,341 17,042 829
------ ---------- -------
Waiver of Investment Advisory Fee -- -- (25)
------ ---------- -------
Net Expenses 1,341 17,042 804
------ ---------- -------
NET INVESTMENT INCOME (LOSS) 9,315 (13,642) (497)
------ ---------- -------
Net Realized Gain (Loss) from
Security Transactions (12) 931,007 20,058
Net Realized Loss on Foreign
Currency Transactions -- -- --
Net Change in Unrealized Appreciation
(Depreciation) on Investments -- 545,653 17,961
------ ---------- -------
NET REALIZED AND UNREALIZED GAIN (LOSS
ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS (12) 1,476,660 38,019
------ ---------- -------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $9,303 $1,463,018 $37,522
------ ---------- -------
------ ---------- -------
</TABLE>
1. All distribution fees are incurred in the Advisor Class.
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
[LOGO OMITTED]
84 & 85
<PAGE>
THE PBHG FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS (000)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
------------------------- --------------------------- ------------------------------
PBHG PBHG PBHG
GROWTH EMERGING GROWTH LARGE CAP GROWTH
FUND FUND FUND
------------------------ --------------------------- -------------------------------
4/1/99 4/1/98 4/1/99 4/1/98 4/1/99 4/1/98
to to to to to to
3/31/00 3/31/99 3/31/00 3/31/99 3/31/00 3/31/99
----------- ------------ ----------- -------------- -------------- ----------------
INVESTMENT ACTIVITIES:
<S> <C> <C> <C> <C> <C> <C>
Net Investment Loss $ (35,010) $ (40,167) $ (6,447) $ (8,193) $ (1,212) $ (1,004)
Net Realized Gain (Loss) from
Security Transactions 1,444,408 (123,200) 253,905 (34,951) 73,256 11,109
Net Change in Unrealized Appreciation
(Depreciation) on Investments 2,040,376 (524,058) 356,132 (189,387) 36,253 9,077
--------- --------- --------- --------- ------- -------
Net Increase (Decrease) in Net Assets
Resulting from Operations 3,449,774 (687,425) 603,590 (232,531) 108,297 19,182
--------- --------- --------- --------- ------- -------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net Investment Income -- -- -- -- -- --
Net Realized Gains from Security
Transactions (146,848) -- (31,621) (3,473) (38,911) (9,078)
--------- --------- --------- --------- ------- -------
Total Distributions (146,848) -- (31,621) (3,473) (38,911) (9,078)
--------- --------- --------- --------- ------- -------
CAPITAL SHARE TRANSACTIONS:
PBHG Class
Shares Issued 8,396,419 2,989,888 4,764,340 2,067,441 161,752 130,237
Shares Issued upon Reinvestment of
Distributions 140,393 -- 30,659 3,287 36,766 8,663
Shares Redeemed (8,520,260) (4,423,533) (4,766,038) (2,502,873) (155,028) (150,577)
--------- --------- --------- --------- ------- -------
Total PBHG Class Transactions 16,552 (1,433,645) 28,961 (432,145) 43,490 (11,677)
--------- --------- --------- --------- ------- -------
Advisor Class
Shares Issued 30,264 21,461 -- -- -- --
Shares Issued upon Reinvestment of
Distributions 3,951 -- -- -- -- --
Shares Redeemed (39,497) (33,023) -- -- -- --
--------- --------- --------- --------- ------- -------
Total Advisor Class Transactions (5,282) (11,562) -- -- -- --
--------- --------- --------- --------- ------- -------
Increase (Decrease) in Net Assets
Derived from Capital Share
Transactions 11,270 (1,445,207) 28,961 (432,145) 43,490 (11,677)
--------- --------- --------- --------- ------- -------
Total Increase (Decrease) in
Net Assets 3,314,196 (2,132,632) 600,930 (668,149) 112,876 (1,573)
--------- --------- --------- --------- ------- -------
NET ASSETS:
Beginning of Period 3,294,975 5,427,607 736,008 1,404,157 144,089 145,662
--------- --------- --------- --------- ------- -------
End of Period $6,609,171 $3,294,975 $1,336,938 $736,008 $256,965 $144,089
--------- --------- --------- --------- ------- -------
--------- --------- --------- --------- ------- -------
SHARES ISSUED AND REDEEMED:
PBHG Class
Shares Issued 207,463 126,179 166,771 93,873 4,845 5,693
Shares Issued upon Reinvestment of
Distributions 3,293 -- 987 155 1,370 409
Shares Redeemed (232,422) (183,539) (170,053) (112,679) (5,381) (6,659)
--------- --------- --------- --------- ------- -------
Total PBHG Class Share Transactions (21,666) (57,360) (2,295) (18,651) 834 (557)
--------- --------- --------- --------- ------- -------
Advisor Class
Shares Issued 693 902 -- -- -- --
Shares Issued upon Reinvestment of
Distributions 94 -- -- -- -- --
Shares Redeemed (1,033) (1,354) -- -- -- --
--------- --------- --------- --------- ------- -------
Total Advisor Class Share Transactions (246) (452) -- -- -- --
--------- --------- --------- --------- ------- -------
Net Increase (Decrease) in Shares
Outstanding (21,912) (57,812) (2,295) (18,651) 834 (557)
--------- --------- --------- --------- ------- -------
--------- --------- --------- --------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
--------------------------- ------------------------------ ----------------------------
PBHG PBHG PBHG
SELECT EQUITY CORE GROWTH LIMITED
FUND FUND FUND
--------------------------- ------------------------------ -----------------------------
4/1/99 4/1/98 4/1/99 4/1/98 4/1/99 4/1/98
to to to to to to
3/31/00 3/31/99 3/31/00 3/31/99 3/31/00 3/31/99
------------ -------------- --------------- -------------- ------------ -------------
INVESTMENT ACTIVITIES:
<S> <C> <C> <C> <C> <C> <C>
Net Investment Loss $ (3,460) $ (2,540) $ (1,127) $ (1,331) $ (869) $ (1,131)
Net Realized Gain (Loss) from
Security Transactions 243,578 45,647 68,016 16,034 48,591 9,385
Net Change in Unrealized Appreciation
(Depreciation) on Investments 255,606 (31,961) 16,011 (15,463) 51,160 (27,057)
--------- ------- ------- ------- ------- -------
Net Increase (Decrease) in Net Assets
Resulting from Operations 495,724 11,146 82,900 (760) 98,882 (18,803)
--------- ------- ------- ------- ------- -------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net Investment Income -- -- -- -- -- --
Net Realized Gains from Security
Transactions (56,886) -- -- -- (22,649) (5,915)
--------- ------- ------- ------- ------- -------
Total Distributions (56,886) -- -- -- (22,649) (5,915)
--------- ------- ------- ------- ------- -------
CAPITAL SHARE TRANSACTIONS:
PBHG Class
Shares Issued 2,772,860 193,042 303,542 203,788 20,694 9,499
Shares Issued upon Reinvestment of
Distributions 55,117 -- -- -- 21,960 5,730
Shares Redeemed (1,811,421) (304,360) (306,828) (282,053) (71,768) (60,668)
--------- ------- ------- ------- ------- -------
Total PBHG Class Transactions 1,016,556 (111,318) (3,286) (78,265) (29,114) (45,439)
--------- ------- ------- ------- ------- -------
Advisor Class
Shares Issued -- -- -- -- -- --
Shares Issued upon Reinvestment of
Distributions -- -- -- -- -- --
Shares Redeemed -- -- -- -- -- --
--------- ------- ------- ------- ------- -------
Total Advisor Class Transactions -- -- -- -- -- --
--------- ------- ------- ------- ------- -------
Increase (Decrease) in Net Assets
Derived from Capital Share
Transactions 1,016,556 (111,318) (3,286) (78,265) (29,114) (45,439)
--------- ------- ------- ------- ------- -------
Total Increase (Decrease) in
Net Assets 1,455,394 (100,172) 79,614 (79,025) 47,119 (70,157)
--------- ------- ------- ------- ------- -------
NET ASSETS:
Beginning of Period 235,904 336,076 86,485 165,510 108,011 178,168
--------- ------- ------- ------- ------- -------
End of Period $1,691,298 $235,904 $166,099 $ 86,485 $155,130 $108,011
--------- ------- ------- ------- ------- -------
--------- ------- ------- ------- ------- -------
SHARES ISSUED AND REDEEMED:
PBHG Class
Shares Issued 41,645 8,480 14,737 16,673 1,126 777
Shares Issued upon Reinvestment of
Distributions 1,153 -- -- -- 1,270 484
Shares Redeemed (30,157) (13,299) (15,398) (22,754) (4,722) (4,876)
-------- ------- ------- ------- ------- -------
Total PBHG Class Share Transactions 12,641 (4,819) (661) (6,081) (2,326) (3,615)
-------- ------- ------- ------- ------- -------
Advisor Class
Shares Issued -- -- -- -- -- --
Shares Issued upon Reinvestment of
Distributions -- -- -- -- -- --
Shares Redeemed -- -- -- -- -- --
-------- ------- ------- ------- ------- -------
Total Advisor Class Share Transactions -- -- -- -- -- --
-------- ------- ------- ------- ------- -------
Net Increase (Decrease) in Shares
Outstanding 12,641 (4,819) (661) (6,081) (2,326) (3,615)
--------- ------- ------- ------- ------- -------
--------- ------- ------- ------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
-----------------------------
PBHG
LARGE CAP 20
FUND
-----------------------------
4/1/99 4/1/98
to to
3/31/00 3/31/99
------------ ----------------
INVESTMENT ACTIVITIES:
<S> <C> <C>
Net Investment Loss $ (5,093) $ (2,501)
Net Realized Gain (Loss) from
Security Transactions 272,534 32,587
Net Change in Unrealized Appreciation
(Depreciation) on Investments 242,817 149,316
---------- --------
Net Increase (Decrease) in Net Assets
Resulting from Operations 510,258 179,402
---------- --------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net Investment Income -- --
Net Realized Gains from Security
Transactions (104,393) (5,087)
---------- --------
Total Distributions (104,393) (5,087)
---------- --------
CAPITAL SHARE TRANSACTIONS:
PBHG Class
Shares Issued 768,942 747,561
Shares Issued upon Reinvestment of
Distributions 100,719 4,843
Shares Redeemed (795,143) (516,273)
---------- --------
Total PBHG Class Transactions 74,518 236,131
---------- --------
Advisor Class
Shares Issued -- --
Shares Issued upon Reinvestment of
Distributions -- --
Shares Redeemed -- --
---------- --------
Total Advisor Class Transactions -- --
---------- --------
Increase (Decrease) in Net Assets
Derived from Capital Share
Transactions 74,518 236,131
---------- --------
Total Increase (Decrease) in
Net Assets 480,383 410,446
---------- --------
NET ASSETS:
Beginning of Period 603,077 192,631
---------- --------
End of Period $1,083,460 $603,077
---------- --------
---------- --------
SHARES ISSUED AND REDEEMED:
PBHG Class
Shares Issued 22,265 40,903
Shares Issued upon Reinvestment of
Distributions 3,214 254
Shares Redeemed (26,069) (28,184)
---------- --------
Total PBHG Class Share Transactions (590) 12,973
---------- --------
Advisor Class
Shares Issued -- --
Shares Issued upon Reinvestment of
Distributions -- --
Shares Redeemed -- --
---------- --------
Total Advisor Class Share Transactions -- --
---------- --------
Net Increase (Decrease) in Shares
Outstanding (590) 12,973
---------- --------
---------- --------
</TABLE>
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
[LOGO OMITTED]
86 & 87
<PAGE>
THE PBHG FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS (000) -- Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
---------------------- --------------------- --------------------------
PBHG PBHG PBHG
NEW OPPORTUNITIES LARGE CAP VALUE MID-CAP VALUE
FUND FUND FUND
---------------------- --------------------- --------------------------
4/1/99 2/12/99(3) 4/1/99 4/1/98 4/1/99 4/1/98
to to to to to to
3/31/00 3/31/99 3/31/00 3/31/99 3/31/00 3/31/99
---------- ---------- --------- -------- ---------- -----------
INVESTMENT ACTIVITIES:
<S> <C> <C> <C> <C> <C> <C>
Net Investment Income (Loss) $ (1,630) $ (12) $ 266 $ 405 $ (65) $ 4
Net Realized Gain (Loss) from Security
Transactions 124,962 566 5,419 17,489 10,140 11,898
Net Realized Gain (Loss) on Foreign Currency
Transactions -- -- -- -- -- --
Net Change in Unrealized Appreciation
(Depreciation) on Investments and Foreign
Currency Transactions 126,277 2,061 (715) (2,893) 4,710 (2,155)
------- ------- ------- ------- ------- ------
Net Increase (Decrease) in Net Assets
Resulting from Operations 249,609 2,615 4,970 15,001 14,785 9,747
------- ------- ------- ------- ------- ------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net Investment Income -- -- (192) (579) (4) --
Distributions in excess of net
investment income -- -- -- -- -- --
Net Realized Gains from Security Transactions (11,102) -- (8,414) (9,589) (11,964) (3,487)
------- ------- ------- ------- ------- ------
Total Distributions (11,102) -- (8,606) (10,168) (11,968) (3,487)
------- ------- ------- ------- ------- ------
CAPITAL SHARE TRANSACTIONS:
PBHG Class
Shares Issued 423,099 4,982 30,431 38,949 62,855 130,518
Shares Transfered 1 -- 9,767 -- -- -- --
Shares Issued upon Reinvestment of
Distributions 10,730 -- 8,390 9,896 11,660 3,287
Shares Redeemed 2 (333,478) (622) (47,185) (85,232) (73,623) (137,257)
------- ------- ------- ------- ------- ------
Total PBHG Class Transactions 100,351 14,127 (8,364) (36,387) 892 (3,452)
------- ------- ------- ------- ------- ------
Increase (Decrease) in Net Assets Derived
from Capital Share Transactions 100,351 14,127 (8,364) (36,387) 892 (3,452)
------- ------- ------- ------- ------- ------
Total Increase (Decrease) in Net Assets 338,858 16,742 (12,000) (31,554) 3,709 2,808
------- ------- ------- ------- ------- ------
NET ASSETS:
Beginning of Period 16,742 -- 44,922 76,476 56,981 54,173
------- ------- ------- ------- ------- ------
End of Period $355,600 $16,742 $32,922 $44,922 $60,690 $56,981
------- ------- ------- ------- ------- ------
------- ------- ------- ------- ------- ------
SHARES ISSUED AND REDEEMED:
PBHG Class
Shares Issued 7,591 336 2,408 2,866 4,370 9,105
Shares Transfered 1 -- 723 -- -- -- --
Shares Issued upon Reinvestment of
Distributions 192 -- 715 762 1,026 286
Shares Redeemed 2 (5,178) (42) (3,616) (6,262) (4,780) (9,156)
------- ------- ------- ------- ------- ------
Total PBHG Class Share Transactions 2,605 1,017 (493) (2,634) 616 235
------- ------- ------- ------- ------- ------
Net Increase (Decrease) in Shares Outstanding 2,605 1,017 (493) (2,634) 616 235
------- ------- ------- ------- ------- ------
------- ------- ------- ------- ------- ------
</TABLE>
<TABLE>
<CAPTION>
--------------------------- ----------------------- -------------------------
PBHG PBHG PBHG
SMALL CAP VALUE FOCUSED VALUE INTERNATIONAL
FUND FUND FUND
--------------------------- ----------------------- -------------------------
4/1/99 4/1/98 4/1/99 2/12/99(3) 4/1/99 4/1/98
to to to to to to
3/31/00 3/31/99 3/31/00 3/31/99 3/31/00 3/31/99
----------- ------------ --------- ---------- ---------- ----------
INVESTMENT ACTIVITIES:
<S> <C> <C> <C> <C> <C> <C>
Net Investment Income (Loss) $ (390) $ (727) $ (5) $ -- $ (72) $ 5
Net Realized Gain (Loss) from Security
Transactions 13,720 (8,356) 2,109 93 3,924 624
Net Realized Gain (Loss) on Foreign Currency
Transactions -- -- -- -- (38) (61)
Net Change in Unrealized Appreciation
(Depreciation) on Investments and Foreign
Currency Transactions 20,816 (14,071) 2,437 (55) (1,438) (15)
------- ------- ------- ------- ------- -------
Net Increase (Decrease) in Net Assets
Resulting from Operations 34,146 (23,154) 4,541 38 2,376 553
------- ------- ------- ------- ------- -------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net Investment Income -- -- -- -- -- (5)
Distributions in excess of net
investment income -- -- -- -- -- (201)
Net Realized Gains from Security Transactions -- (6,608) (305) -- (781) (498)
------- ------- ------- ------- ------- -------
Total Distributions -- (6,608) (305) -- (781) (704)
------- ------- ------- ------- ------- -------
CAPITAL SHARE TRANSACTIONS:
PBHG Class
Shares Issued 105,635 122,004 20,548 3,079 38,500 54,185
Shares Transfered 1 -- -- -- 1,294 -- --
Shares Issued upon Reinvestment of
Distributions -- 5,980 304 -- 749 687
Shares Redeemed 2 (116,934) (154,269) (6,190) (753) (41,682) (63,406)
------- ------- ------- ------- ------- -------
Total PBHG Class Transactions (11,299) (26,285) 14,662 3,620 (2,433) (8,534)
------- ------- ------- ------- ------- -------
Increase (Decrease) in Net Assets Derived
from Capital Share Transactions (11,299) (26,285) 14,662 3,620 (2,433) (8,534)
------- ------- ------- ------- ------- -------
Total Increase (Decrease) in Net Assets 22,847 (56,047) 18,898 3,658 (838) (8,685)
------- ------- ------- ------- ------- -------
NET ASSETS:
Beginning of Period 69,787 125,834 3,658 -- 12,220 20,905
------- ------- ------- ------- ------- --------
End of Period $92,634 $ 69,787 $22,556 $ 3,658 $ 11,382 $ 12,220
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
SHARES ISSUED AND REDEEMED:
PBHG Class
Shares Issued 7,348 9,257 1,289 297 3,260 4,707
Shares Transfered 1 -- -- -- 126 -- --
Shares Issued upon Reinvestment of
Distributions -- 486 24 -- 59 61
Shares Redeemed 2 (8,540) (11,790) (445) (73) (3,493) (5,450)
------- ------- ------- ------- ------- -------
Total PBHG Class Share Transactions (1,192) (2,047) 868 350 (174) (682)
------- ------- ------- ------- ------- -------
Net Increase (Decrease) in Shares Outstanding (1,192) (2,047) 868 350 (174) (682)
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
--------------------------
PBHG
CASH RESERVES
FUND
-------------------------
4/1/99 4/1/98
to to
3/31/00 3/31/99
---------- -----------
INVESTMENT ACTIVITIES:
<S> <C> <C>
Net Investment Income (Loss) $ 9,315 $ 6,191
Net Realized Gain (Loss) from Security
Transactions (12) 6
Net Realized Gain (Loss) on Foreign Currency
Transactions -- --
Net Change in Unrealized Appreciation
(Depreciation) on Investments and Foreign
Currency Transactions -- --
----------- ----------
Net Increase (Decrease) in Net Assets
Resulting from Operations 9,303 6,197
----------- ----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net Investment Income (9,312) (6,192)
Distributions in excess of net
investment income -- --
Net Realized Gains from Security Transactions -- --
----------- ----------
Total Distributions (9,312) (6,192)
----------- ----------
CAPITAL SHARE TRANSACTIONS:
PBHG Class
Shares Issued 12,080,349 3,499,237
Shares Transfered 1 -- --
Shares Issued upon Reinvestment of
Distributions 6,503 4,628
Shares Redeemed 2 (11,651,624) (3,477,205)
----------- ----------
Total PBHG Class Transactions 435,228 26,660
----------- ----------
Increase (Decrease) in Net Assets Derived
from Capital Share Transactions 435,228 26,660
----------- ----------
Total Increase (Decrease) in Net Assets 435,219 26,665
----------- ----------
NET ASSETS:
Beginning of Period 144,239 117,574
----------- ----------
End of Period $ 579,458 $144,239
----------- ----------
----------- ----------
SHARES ISSUED AND REDEEMED:
PBHG Class
Shares Issued 12,080,349 3,499,237
Shares Transfered 1 -- --
Shares Issued upon Reinvestment of
Distributions 6,503 4,628
Shares Redeemed 2 (11,651,624) (3,477,205)
----------- ----------
Total PBHG Class Share Transactions 435,228 26,660
----------- ----------
Net Increase (Decrease) in Shares Outstanding 435,228 26,660
----------- ----------
----------- ----------
<FN>
1. Net asset value of shares issued in connection with the transfer of the PBHG
Advisor Funds, Inc. Reference note 6 to Financial Statements.
2. Included in capital shares redeemed for the PBHG Large Cap Value Fund was an
in-kind redemption on January 4, 1999 of 3,232,902 shares and $44,452,402.
3. The PBHG New Opportunities and PBHG Focused Value Funds commenced operations
on February 12, 1999.
</FN>
</TABLE>
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
[LOGO OMITTED]
88 & 89
<PAGE>
THE PBHG FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS (000) -- Concluded
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
-------------------------------- -----------------------------
PBHG TECHNOLOGY & PBHG STRATEGIC
COMMUNICATIONS SMALL COMPANY
FUND FUND
-------------------------------- -----------------------------
4/1/99 4/1/98 4/1/99 4/1/98
to to to to
3/31/00 3/31/99 3/31/00 3/31/99
---------------- ------------- ----------- -------------
INVESTMENT ACTIVITIES:
<S> <C> <C> <C> <C>
Net Investment Loss $ (13,642) $ (3,886) $ (497) $ (705)
Net Realized Gain from Security Transactions 931,007 119,887 20,058 2,035
Net Change in Unrealized Appreciation (Depreciation) on
Investments and Foreign Currency Transactions 545,653 34,248 17,961 (14,689)
--------- --------- ------- -------
Net Increase (Decrease) in Net Assets Resulting
from Operations 1,463,018 150,249 37,522 (13,359)
--------- --------- ------- -------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net Investment Income -- -- -- --
Net Realized Gains from Security Transactions (117,239) (5,296) (4,358) (2,717)
--------- --------- ------- -------
Total Distributions (117,239) (5,296) (4,358) (2,717)
--------- --------- ------- -------
CAPITAL SHARE TRANSACTIONS:
PBHG Class
Shares Issued 7,338,547 1,546,866 65,830 43,247
Shares Issued upon Reinvestment of Distributions 112,647 4,857 4,220 2,579
Shares Redeemed (5,489,432) (1,655,968) (76,018) (93,704)
--------- --------- ------- --------
Total PBHG Class Transactions 1,961,762 (104,245) (5,968) (47,878)
--------- --------- ------- --------
Increase (Decrease) in Net Assets Derived from
Capital Share Transactions 1,961,762 (104,245) (5,968) (47,878)
--------- --------- ------- --------
Total Increase (Decrease) in Net Assets 3,307,541 40,708 27,196 (63,954)
--------- --------- ------- --------
NET ASSETS:
Beginning of Period 536,405 495,697 48,029 111,983
--------- --------- ------- --------
End of Period $3,843,946 $536,405 $75,225 $48,029
--------- --------- ------- --------
--------- --------- ------- --------
SHARES ISSUED AND REDEEMED:
PBHG Class
Shares Issued 129,967 75,144 4,970 3,991
Shares Issued upon Reinvestment of Distributions 1,941 249 300 249
Shares Redeemed (106,139) (81,676) (5,936) (8,374)
--------- --------- ------- --------
Total PBHG Class Share Transactions 25,769 (6,283) (666) (4,134)
--------- --------- ------- --------
Net Increase (Decrease) in Shares Outstanding 25,769 (6,283) (666) (4,134)
--------- --------- ------- --------
--------- --------- ------- --------
</TABLE>
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
[LOGO OMITTED] 90
<PAGE>
THE PBHG FUNDS, INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For a Share Outstanding Throughout Each Period
For the Period Ended March 31, 2000
<TABLE>
<CAPTION>
Net Net Net
Asset Net Realized and Distributions Distributions Asset Assets
Value Investment Unrealized from Net from Value End
Beginning Income Gains or (Losses) Investment Capital End Total of Period
of Period (Loss) on Securities Income Gains of Period Return (000)
- ------------------------------------------------------------------------------------------------------------------------------
- -----------------
PBHG GROWTH FUND
- -----------------
PBHG CLASS
<S> <C> <C> <C> <C> <C> <C> <C>
2000 2 $24.51 $(0.33) $36.14 -- $(1.59) $58.73 148.57 $6,465,234
1999 2 28.23 (0.24) (3.48) -- -- 24.51 (13.18) 3,228,740
1998 21.06 (0.26) 7.43 -- -- 28.23 34.05 % 5,338,380
1997 25.30 (0.10) (4.14) -- -- 21.06 (16.76)% 4,634,138
1996 1 16.70 (0.06) 8.66 -- -- 25.30 51.50 % 3,298,666
PBHG ADVISOR CLASS
2000 2 $24.35 $(0.42) $35.85 -- $(1.59) $58.19 147.98 % $ 143,937
1999 2 28.12 (0.30) (3.47) -- -- 24.35 (13.41)% 66,235
1998 21.03 (0.15) 7.24 -- -- 28.12 33.71 % 89,227
1997 1 25.42 (0.06) (4.33) -- -- 21.03 (17.27)%+ 12,991
- --------------------------
PBHG EMERGING GROWTH FUND
- --------------------------
PBHG CLASS
2000 2 $20.61 $(0.21) $20.76 -- $(1.16) $40.00 101.33 % $1,336,938
1999 2 25.83 (0.18) (4.96) -- (0.08) 20.61 (19.91)% 736,008
1998 19.26 (0.24) 6.81 -- -- 25.83 34.11 % 1,404,157
1997 23.07 (0.11) (2.87) -- (0.83) 19.26 (13.71)% 1,195,620
1996 16.10 (0.07) 8.03 -- (0.99) 23.07 50.16 % 689,705
- ---------------------------
PBHG LARGE CAP GROWTH FUND
- ---------------------------
PBHG CLASS
2000 2 $24.57 $(0.23) $21.32 -- $(7.29) $38.37 98.60 % $ 256,965
1999 2 22.69 (0.16) 3.53 -- (1.49) 24.57 15.90 % 144,089
1998 14.26 (0.19) 8.82 -- (0.20) 22.69 60.80 % 145,662
1997 14.53 (0.05) (0.21) -- (0.01) 14.26 (1.77)% 119,971
1996 4 10.00 (0.03) 4.97 -- (0.41) 14.53 50.47 %* 53,759
- ------------------------
PBHG SELECT EQUITY FUND
- ------------------------
PBHG CLASS
2000 2 $25.93 $(0.34) $58.71 -- $(6.49) $77.81 240.82 % $1,691,298
1999 2 24.15 (0.21) 1.99 -- -- 25.93 7.37 % 235,904
1998 15.91 (0.44) 8.68 -- -- 24.15 51.79 % 336,076
1997 17.27 (0.13) (1.03) -- (0.20) 15.91 (6.94)% 372,486
1996 4 10.00 (0.05) 7.68 -- (0.36) 17.27 77.75 %* 202,796
- ----------------------
PBHG CORE GROWTH FUND
- ----------------------
PBHG CLASS
2000 2 $14.06 $(0.20) $16.39 -- -- $30.25 115.15 % $ 166,099
1999 2 13.53 (0.14) 0.67 -- -- 14.06 3.92 % 86,485
1998 10.34 (0.33) 3.52 -- -- 13.53 30.85 % 165,510
1997 11.82 (0.09) (1.39) -- -- 10.34 (12.52)% 283,995
1996 3 10.00 -- 1.82 -- -- 11.82 18.20 %+ 31,092
- ------------------
PBHG LIMITED FUND
- ------------------
PBHG CLASS
2000 2 $11.95 $(0.12) $15.20 -- $(3.92) $23.11 137.27 % $ 155,130
1999 2 14.08 (0.10) (1.45) -- (0.58) 11.95 (11.01)% 108,011
1998 9.05 (0.10) 5.53 -- (0.40) 14.08 60.78 % 178,168
1997 6 10.00 0.02 (0.93) $(0.03) (0.01) 9.05 (9.15)%+ 137,520
</TABLE>
<TABLE>
<CAPTION>
Ratio
Ratio of Net
of Net Ratio Investment
Investment of Expenses Income (Loss)
Ratio Income to Average to Average
of Expenses (Loss) Net Assets Net Assets Portfolio
to Average to Average (Excluding (Excluding Turnover
Net Assets Net Assets Waivers) Waivers) Rate
- ------------------------------------------------------------------------------------------------
- -----------------
PBHG GROWTH FUND
- -----------------
PBHG CLASS
<S> <C> <C> <C> <C> <C> <C>
2000 2 1.23% (0.90)% 1.23% (0.90)% 107.73%
1999 2 1.32% (0.99)% 1.32% (0.99)% 80.51%
1998 1.26% (0.74)% 1.26% (0.74)% 94.21%
1997 1.25% (0.69)% 1.25% (0.69)% 64.89%
1996 1 1.48% (0.79)% 1.48% (0.79)% 44.64%
PBHG ADVISOR CLASS
2000 2 1.48% (1.15)% 1.48% (1.15)% 107.73%
1999 2 1.57% (1.24)% 1.57% (1.24)% 80.51%
1998 1.51% (1.02)% 1.51% (1.02)% 94.21%
1997 1 1.53%* (1.11)%* 1.53%* (1.11)%* 64.89%
- --------------------------
PBHG EMERGING GROWTH FUND
- --------------------------
PBHG CLASS
2000 2 1.24% (0.76)% 1.24% (0.76)% 141.81%
1999 2 1.34% (0.80)% 1.34% (0.80)% 101.53%
1998 1.27% (0.80)% 1.27% (0.80)% 95.21%
1997 1.28% (0.36)% 1.28% (0.36)% 47.75%
1996 1.47% (0.42)% 1.47% (0.42)% 97.05%
- ---------------------------
PBHG LARGE CAP GROWTH FUND
- ---------------------------
PBHG CLASS
2000 2 1.17% (0.79)% 1.17% (0.79)% 184.36%
1999 2 1.25% (0.71)% 1.25% (0.71)% 46.16%
1998 1.22% (0.79)% 1.22% (0.79)% 46.56%
1997 1.23% (0.47)% 1.23% (0.47)% 51.70%
1996 4 1.50%* (0.66)%* 2.07%* (1.23)%* 116.75%
- ------------------------
PBHG SELECT EQUITY FUND
- ------------------------
PBHG CLASS
2000 2 1.18% (0.68)% 1.18% (0.68)% 200.56%
1999 2 1.34% (0.90)% 1.34% (0.90)% 56.59%
1998 1.35% (1.15)% 1.35% (1.15)% 72.16%
1997 1.26% (0.76)% 1.26% (0.76)% 71.70%
1996 4 1.50%* (0.74)%* 1.73%* (0.97)%* 206.22%
- ----------------------
PBHG CORE GROWTH FUND
- ----------------------
PBHG CLASS
2000 2 1.33% (1.02)% 1.33% (1.02)% 312.32%
1999 2 1.45% (1.16)% 1.45% (1.16)% 120.93%
1998 1.35% (1.07)% 1.35% (1.07)% 72.78%
1997 1.36% (0.77)% 1.36% (0.77)% 46.75%
1996 3 1.50%* (0.18)%* 2.92%* (1.60)%* 17.00%
- ------------------
PBHG LIMITED FUND
- ------------------
PBHG CLASS
2000 2 1.32% (0.76)% 1.32% (0.76)% 107.78%
1999 2 1.40% (0.81)% 1.40% (0.81)% 111.07%
1998 1.40% (0.72)% 1.40% (0.72)% 81.36%
1997 6 1.42%* 0.33 %* 1.42%* 0.33 %* 75.46%
</TABLE>
The accompanying notes are an integral part of the financial statements.
91 [LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
FINANCIAL HIGHLIGHTS -- CONCLUDED
- --------------------------------------------------------------------------------
For a Share Outstanding Throughout Each Period
For the Period Ended March 31, 2000
<TABLE>
<CAPTION>
Net Net Net
Asset Net Realized and Distributions Distributions Asset Assets
Value Investment Unrealized from Net from Value End
Beginning Income Gains or (Losses) Investment Capital End Total of Period
of Period (Loss) on Securities Income Gains of Period Return (000)
- -------------------------------------------------------------------------------------------------------------------------------
- ----------------------
PBHG LARGE CAP 20 FUND
- ----------------------
PBHG CLASS
<S> <C> <C> <C> <C> <C> <C> <C>
2000 2 $24.10 $(0.25) $26.26 -- $(5.77) $44.34 117.88 % $1,083,460
1999 2 15.98 (0.12) 8.46 -- (0.22) 24.10 52.52 % 603,077
1998 9.25 (0.07) 6.80 -- -- 15.98 72.76 % 192,631
1997 7 10.00 (0.01) (0.73) $(0.01) -- 9.25 (7.40)%+ 69,819
- ---------------------------
PBHG NEW OPPORTUNITIES FUND
- ---------------------------
PBHG CLASS
2000 2 $16.47 $(0.71) $85.60 -- $(3.17) $98.19 529.94 % $ 355,600
1999 10 13.52 (0.01) 2.96 -- -- 16.47 21.82 %+ 16,742
- -------------------------
PBHG LARGE CAP VALUE FUND
- -------------------------
PBHG CLASS
2000 $13.85 $0.12 $1.78 $(0.08) $(3.70) $11.97 14.25 % $ 32,922
1999 13.01 0.08 2.45 (0.10) (1.59) 13.85 20.29 % 44,922
1998 10.11 0.02 3.84 (0.06) (0.90) 13.01 39.47 % 76,476
1997 8 10.00 0.02 0.09 -- -- 10.11 1.10 %+ 26,262
- ------------------------
PBHG MID-CAP VALUE FUND
- ------------------------
PBHG CLASS
2000 2 $15.09 $(0.02) $5.03 -- $(6.28) $13.82 42.21 % $ 60,690
1999 15.30 -- 0.92 -- (1.13) 15.09 8.35 % 56,981
1998 9 10.00 (0.01) 6.00 -- (0.69) 15.30 61.06 %+ 54,173
- -------------------------
PBHG SMALL CAP VALUE FUND
- -------------------------
PBHG CLASS
2000 2 $11.38 $(0.08) $7.45 -- -- $18.75 64.76 % $ 92,634
1999 2 15.38 (0.09) (3.06) -- $(0.85) 11.38 (20.93)% 69,787
1998 9 10.00 (0.03) 6.15 -- (0.74) 15.38 62.27 %+ 125,834
- -----------------------
PBHG FOCUSED VALUE FUND
- -----------------------
PBHG CLASS
2000 2 $10.46 $(0.01) $8.93 -- $(0.87) $18.51 89.17 % $ 22,556
1999 10 10.32 -- 0.14 -- -- 10.46 1.36 %+ 3,658
- -----------------------
PBHG INTERNATIONAL FUND
- -----------------------
PBHG CLASS
2000 2 $11.60 $(0.08) $2.30 -- $(0.88) $12.94 19.29 % $ 11,382
1999 11 12.04 (0.14) 0.29 $(0.17) (0.42) 11.60 1.42 % 12,220
1998 11.26 (0.03) 1.83 -- (1.02) 12.04 17.46 % 20,905
1997 10.55 -- 0.71 -- -- 11.26 6.7 % 21,265
1996 9.13 (0.04) 1.46 -- -- 10.55 15.55 % 11,243
- -----------------------
PBHG CASH RESERVES FUND
- -----------------------
PBHG CLASS
2000 $ 1.00 $0.05 -- $(0.05) -- $ 1.00 4.81 % $ 579,458
1999 1.00 0.05 -- (0.05) -- 1.00 4.84 % 144,239
1998 1.00 0.05 -- (0.05) -- 1.00 5.13 % 117,574
1997 1.00 0.05 -- (0.05) -- 1.00 4.89 % 341,576
1996 4 1.00 0.05 -- (0.05) -- 1.00 5.24 %* 99,001
</TABLE>
<TABLE>
<CAPTION>
Ratio
Ratio of Net
of Net Ratio Investment
Investment of Expenses Income (Loss)
Ratio Income to Average to Average
of Expenses (Loss) Net Assets Net Assets Portfolio
to Average to Average (Excluding (Excluding Turnover
Net Assets Net Assets Waivers Waivers Rate
- ---------------------------------------------------------------------------------------------
- ----------------------
PBHG LARGE CAP 20 FUND
- ----------------------
PBHG CLASS
<S> <C> <C> <C> <C> <C> <C>
2000 2 1.23% (0.82)% 1.23% (0.82)% 147.35%
1999 2 1.27% (0.64)% 1.27% (0.64)% 76.41%
1998 1.41% (0.79)% 1.41% (0.79)% 98.27%
1997 7 1.50%* 0.17 %* 1.50%* 0.17 %* 43.98%
- ---------------------------
PBHG NEW OPPORTUNITIES FUND
- ---------------------------
PBHG CLASS
2000 2 1.34% (1.15)% 1.34% (1.15)% 668.31%
1999 10 1.50%* (0.80)%* 1.59%* (0.89)%* 109.43%
- -------------------------
PBHG LARGE CAP VALUE FUND
- -------------------------
PBHG CLASS
2000 1.11% 0.71% 1.11% 0.71% 1018.03%
1999 1.01% 0.59% 1.01% 0.59% 568.20%
1998 1.17% 0.98% 1.17% 0.98% 403.59%
1997 8 1.50%* 1.61%* 1.74%* 1.37%* 0.00%
- ------------------------
PBHG MID-CAP VALUE FUND
- ------------------------
PBHG CLASS
2000 2 1.44% (0.15)% 1.44% (0.15)% 742.57%
1999 1.33% 0.01% 1.33% 0.01% 732.73%
1998 9 1.47%* (0.17)%* 1.47%* (0.17)%* 399.96%
- -------------------------
PBHG SMALL CAP VALUE FUND
- -------------------------
PBHG CLASS
2000 2 1.50% (0.56)% 1.58% (0.64)% 352.85%
1999 2 1.48% (0.71)% 1.48% (0.71)% 273.87%
1998 9 1.49%* (0.52)%* 1.49%* (0.52)%* 263.04%
- -----------------------
PBHG FOCUSED VALUE FUND
- -----------------------
PBHG CLASS
2000 2 1.50% (0.10)% 1.55% (0.15)% 853.36%
1999 10 1.50%* 0.09%* 2.67%* 1.08)%* 173.09%
- -----------------------
PBHG INTERNATIONAL FUND
- -----------------------
PBHG CLASS
2000 2 2.00% (0.62)% 2.00% (0.62)% 90.17%
1999 11 1.97% (0.35)% 1.97% (0.35)% 59.74%
1998 2.00% (0.13)% 2.00% (0.13)% 85.94%
1997 2.22% (0.32)% 2.22% (0.32)% 74.82%
1996 2.25% (0.22)% 3.03% (1.00)% 140.26%
- -----------------------
PBHG CASH RESERVES FUND
- -----------------------
PBHG CLASS
2000 0.69% 4.78% 0.69% 4.78% n/a
1999 0.70% 4.72% 0.70% 4.72% n/a
1998 0.68% 5.00% 0.68% 5.00% n/a
1997 0.68% 4.79% 0.68% 4.79% n/a
1996 4 0.70%* 5.05%* 0.88%* 4.87%* n/a
</TABLE>
The accompanying notes are an integral part of the financial statements.
92 [LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
<TABLE>
<CAPTION>
Net Net Net
Asset Net Realized and Distributions Distributions Asset Assets
Value Investment Unrealized from Net from Value End
Beginning Income Gains or (Losses) Investment Capital End Total of Period
of Period (Loss) on Securities Income Gains of Period Return (000)
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------
PBHG TECHNOLOGY & COMMUNICATIONS FUND
- -------------------------------------
PBHG CLASS
<S> <C> <C> <C> <C> <C> <C> <C>
2000 2 $27.59 $(0.54) $62.84 -- $(4.87) $85.02 233.99 % $3,843,946
1999 2 19.27 (0.19) 8.80 -- (0.29) 27.59 45.33 % 536,405
1998 14.63 (0.23) 5.72 -- (0.85) 19.27 38.29 % 495,697
1997 12.48 (0.05) 2.55 -- (0.35) 14.63 19.59 % 493,156
1996 5 10.00 (0.02) 2.50 -- -- 12.48 24.82 %+ 61,772
- ---------------------------------
PBHG STRATEGIC SMALL COMPANY FUND
- ---------------------------------
PBHG CLASS
2000 2 $ 10.54 $(0.13) $10.18 -- $(1.25) $19.34 99.74 % $ 75,225
1999 2 12.89 (0.11) (1.78) -- $(0.46) 10.54 (14.52)% 48,029
1998 8.86 (0.11) 5.01 -- (0.87) 12.89 56.54 % 111,983
1997 8 10.00 -- (1.14) -- -- 8.86 (11.40)%+ 61,382
</TABLE>
<TABLE>
<CAPTION>
Ratio
Ratio of Net
of Net Ratio Investment
Investment of Expenses Income (Loss)
Ratio Income to Average to Average
of Expenses (Loss) Net Assets Net Assets Portfolio
to Average to Average (Excluding (Excluding Turnover
Net Assets Net Assets Waivers Waivers Rate
- ----------------------------------------------------------------------------------------------
- -------------------------------------
PBHG TECHNOLOGY & COMMUNICATIONS FUND
- -------------------------------------
PBHG CLASS
<S> <C> <C> <C> <C> <C> <C>
2000 2 1.19% (0.96)% 1.19% (0.96)% 362.38%
1999 2 1.34% (0.96)% 1.34% (0.96)% 276.07%
1998 1.30% (0.91)% 1.30% (0.91)% 259.89%
1997 1.33% (0.59)% 1.33% (0.59)% 289.91%
1996 5 1.50%* (0.50)%* 2.00%* (1.00)%* 125.99%
- ---------------------------------
PBHG STRATEGIC SMALL COMPANY FUND
- ---------------------------------
PBHG CLASS
2000 2 1.50% (0.93)% 1.55% (0.98)% 240.55%
1999 2 1.50% (0.97)% 1.54% (1.01)% 140.89%
1998 1.45% (0.92)% 1.45% (0.92)% 215.46%
1997 8 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.
The accompanying notes are an integral part of the financial statements.
93
[LOGO OMITTED]
<PAGE>
THE PBHG FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
As of March 31, 2000
1. ORGANIZATION
The PBHG Funds, Inc. (the "Fund"), a Maryland corporation, is registered under
the Investment Company Act of 1940, as amended, as an open-end management
investment company with sixteen series: the PBHG Growth Fund (the "Growth
Fund"), the PBHG Emerging Growth Fund (the "Emerging Growth Fund"), the PBHG
Large Cap Growth Fund (the "Large Cap Growth Fund"), the PBHG Select Equity Fund
(the "Select Equity Fund"), the PBHG Core Growth Fund (the "Core Growth Fund"),
the PBHG Limited Fund (the "Limited Fund"), the PBHG Large Cap 20 Fund (the
"Large Cap 20 Fund"), the PBHG New Opportunities Fund (the "New Opportunities
Fund"), the PBHG Large Cap Value Fund (the "Large Cap Value Fund"), the PBHG
Mid-Cap Value Fund (the "Mid-Cap Value Fund"), the PBHG Small Cap Value Fund
(the "Small Cap Value Fund"), the PBHG Focused Value Fund (the "Focused Value
Fund"), the PBHG International Fund (the "International Fund"), the PBHG
Technology & Communications Fund (the "Technology & Communications Fund"), and
the PBHG Strategic Small Company Fund (the "Strategic Small Company Fund"),
(collectively referred to as the "Equity Portfolios"), and the PBHG Cash
Reserves Fund (the "Cash Reserves Fund") (each a "Portfolio" and, collectively,
the "Portfolios"). Each Portfolio is classified as a diversified management
investment company, with the exception of the Large Cap 20, the Focused Value
and the Technology & Communications Funds which are classified as
non-diversified management investment companies. Each Portfolio's prospectus
provides a description of it's investment objectives, policies and investment
strategies. The Fund is registered to offer two classes of shares, PBHG Class
and Advisor Class, formerly known as the "Trust Class." Currently, the Advisor
Class of shares is only offered by the Growth Fund. The assets of each Portfolio
are segregated, and a shareholder's interest is limited to the Portfolio in
which shares are held.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies followed by
the Portfolios.
SECURITY VALUATION -- Investment securities of the Equity Portfolios that are
listed on a securities exchange and for which market quotations are available
are valued at the last quoted sales price on each business day (normally 4:00 pm
Eastern time). If there is no such reported sale, these securities and unlisted
securities for which market quotations are readily available, are valued at the
last bid price. However, debt securities (other than short-term obligations),
including listed issues, are valued on the basis of valuations furnished by a
pricing service which utilizes electronic data processing techniques to
determine valuations for normal institutional size trading units of debt
securities, without exclusive reliance upon exchange or over-the-counter prices.
Short-term investments may be valued at amortized cost which approximates market
value. Foreign securities are valued based upon quotations from the primary
market in which they are traded, and are translated from the local currency into
U.S. dollars using current exchange rates. In addition, if quotations are not
readily available, or if the values have been materially affected by events
occurring after the closing of a foreign market, assets may be valued by another
method that the Board of Directors believes accurately reflects fair value. The
values of investment securities held by the Cash Reserves Fund are stated at
amortized cost, which approximates market value. Under this valuation method,
acquisition discounts and premiums are accreted and amortized ratably to
maturity and are included in interest income.
SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security transactions are
accounted for on the date the securities are purchased or sold (trade date).
Dividend income and distributions to shareholders are recognized on the
ex-dividend date; interest income is recognized on the accrual basis. Costs used
in determining realized capital gains and losses on the sale of investment
securities are those of the specific securities sold adjusted for the accretion
and amortization of acquisition discounts and premiums during the respective
holding periods.
DIVIDENDS -- Dividends from net investment income for the Equity Portfolios are
declared annually, if available. Dividends from net investment income for the
Cash Reserves Fund are declared daily and paid monthly. Distributions of net
realized capital gains, for each Portfolio, are generally made to shareholders
annually, if available.
Dividends from net investment income and distributions from net realized capital
gains are determined in accordance with U.S. Federal income tax regulations,
which may differ from those amounts determined under generally accepted
accounting principles. These book/tax differences are either temporary or
permanent in nature. To the extent these differences are permanent, they are
charged or credited to paid-in-capital or accumulated net realized gain, as
appropriate, in the period that the differences arise. Accordingly, the
following permanent differences as of March 31, 2000, attributable to certain
net operating losses which for tax purposes, are not available to offset future
income or have been used to offset net short-term capital gains, and the
utilization of earnings and profits distributed to shareholders on redemption of
shares as a part of the dividends paid deduction for income tax purposes, have
been reclassified to the following accounts:
ACCUMULATED NET UNDISTRIBUTED NET
PAID-IN-CAPITAL REALIZED GAIN INVESTMENT INCOME
(000) (000) (000)
--------------- --------------- ------------------
Growth Fund $632,959 $(667,969) $35,010
Emerging Growth Fund 150,279 (156,726) 6,447
Large Cap Growth Fund 19,966 (21,178) 1,212
Select Equity Fund 174,473 (177,933) 3,460
Core Growth Fund 18,845 (19,975) 1,130
Limited Fund 11,306 (12,175) 869
Large Cap 20 Fund 103,605 (108,696) 5,091
New Opportunities Fund 72,343 (73,973) 1,630
Large Cap Value Fund 5,143 (4,993) (150)
Mid-Cap Value Fund 10,619 (10,683) 64
Small Cap Value Fund 3,324 (3,669) 345
Focused Value Fund 734 (739) 5
International Fund 1,895 (1,960) 65
Cash Reserves Fund -- -- --
Technology &
Communications Fund 704,923 (718,565) 13,642
Strategic Small Company Fund 8,204 (8,684) 480
These reclassifications have no effect on net assets or net asset value per
share.
FEDERAL INCOME TAXES -- It is each Portfolio's intention to qualify or continue
to qualify as a regulated investment company for Federal income tax purposes and
to distribute all of its taxable income and net capital gains. Accordingly, no
provision has been made for Federal income taxes.
NET ASSET VALUE PER SHARE -- The net asset value per share is calculated each
business day by dividing the total value of each Portfolio's assets, less
liabilities, by the number of shares outstanding.
REPURCHASE AGREEMENTS -- Securities pledged as collateral for repurchase
agreements are held by a third party custodian bank until the respective
agreements mature. Provisions of the repurchase agreements and procedures
adopted by the Fund's Board of Directors require that the market value of the
collateral including accrued interest thereon, is sufficient in the event of
default by the counterparty. If the counterparty defaults and the value of the
collateral declines, or if the counterparty enters into insolvency proceedings,
realization of the collateral by a Portfolio may be delayed or limited.
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94
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THE PBHG FUNDS, INC.
FOREIGN CURRENCY TRANSLATION -- The books and records of the International Fund
are maintained in U.S. dollars. Foreign currency amounts are translated into
U.S. dollars on the following basis:
(I) market value of investment securities, other assets and liabilities at
the current rate of exchange; and
(II) purchases and sales of investment securities, income and expenses at the
relevant rates of exchange prevailing on the respective dates of such
transactions.
The International Fund does not isolate that portion of gains and losses on
investment securities that is due to changes in the foreign exchange rates from
that which is due to changes in market prices of such securities.
The International Fund reports gains and losses on foreign currency related
transactions as components of realized gains for financial reporting purposes,
whereas such components are treated as ordinary income or loss for Federal
income tax purposes.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- In connection with portfolio
purchases and sales of securities denominated in a foreign currency, the
International Fund may enter into forward foreign currency exchange contracts.
Foreign currency exchange contracts are recorded at market value. Certain risks
may arise upon entering into these contracts from the potential inability of
counterparties to meet the terms of their contracts. Realized gains or losses
arising from such transactions are included in net realized gain (loss) from
foreign currency transactions. At March 31, 2000 the International Fund had
forward foreign currency contracts outstanding as follows:
CONTRACTS UNREALIZED
TO (DELIVER)/ IN SETTLEMENT APPRECIATION
RECEIVE EXCHANGE FOR DATE (DEPRECIATION)
------------ ------------ ---------- ------------
DKK (4,621) (581) 04/03/00 ($12)
GBP (1,978) 19,108 04/04/00 $30
DKK = DANISH KRONER, GBP = BRITISH POUND
OTHER -- Expenses that are directly related to one of the Portfolios are charged
directly to that Portfolio. Other operating expenses are prorated to the
Portfolios on the basis of relative net assets. Class specific expenses, such as
12b-1 service fees, are borne by that class. Income, other expenses and realized
and unrealized gains and losses of a Portfolio are allocated to the respective
class on the basis of the relative net assets each day.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS -- The preparation
of financial statements, in conformity with generally accepted accounting
principles, requires management to make estimates and assumptions that affect
the reported amount of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reporting period. Actual results
could differ from those estimates.
3. INVESTMENT ADVISORY FEES, ADMINISTRATIVE FEES AND OTHER TRANSACTIONS WITH
AFFILIATES
The Fund and the Adviser are parties to an Investment Advisory Agreement (the
"Advisory Agreement"). Under the terms of the Advisory Agreement, the Adviser is
paid a monthly fee at an annual rate of 0.85% of the average daily net assets of
the Growth, Emerging Growth, Select Equity, Core Growth, Large Cap 20, Mid-Cap
Value, Focused Value and Technology & Communications Funds, 0.75% of the average
daily net assets of the Large Cap Growth Fund, 0.65% of the Large Cap Value
Fund, 1.00% of the average daily net assets of the Limited, New Opportunities,
Small Cap Value, International and Strategic Small Company Funds, and 0.30% of
the average daily net assets of the Cash Reserves Fund.
In the interest of limiting expenses of the Portfolios, the Adviser has entered
into expense limitation agreements with the Fund ("Expense Limitation
Agreements"), with respect to the Core Growth, Limited, Large Cap 20, New
Opportunities, Large Cap Value, Mid-Cap Value, Small Cap Value, Focused Value
and Strategic Small Company Funds, pursuant to which the Adviser has agreed to
waive or limit its fees and to assume other expenses of these Portfolios to the
extent necessary to limit the total annual expenses (expressed as a percentage
of the Portfolios' average daily net assets) to 1.50% and to not more than 2.25%
of the average daily net assets of the International Fund. Reimbursement by the
Portfolios of the advisory fees waived or limited and other expenses paid by the
Adviser pursuant to the Expense Limitation Agreements during any of the previous
two fiscal years may be made at a later date when the Portfolios have reached a
sufficient asset size to permit reimbursement to be made without causing the
total annual expense rate of each Portfolio to exceed 1.50% for the Core Growth,
Limited, Large Cap 20, New Opportunities, Large Cap Value, Mid-Cap Value, Small
Cap Value, Focused Value and Strategic Small Company Funds and 2.25% for the
International Fund. Consequently, no reimbursement by a Portfolio will be made
unless: (i) the Portfolio's assets exceed $75 million; (ii) the Portfolio's
total annual expense ratio is less than 1.50% for the Core Growth, Limited,
Large Cap 20, New Opportunities, Large Cap Value, Mid-Cap Value, Small Cap
Value, Focused Value and Strategic Small Company Funds and 2.25% for the
International Fund, and (iii) the payment of such reimbursement was approved by
the Board of Directors on a quarterly basis. At March 31, 2000, the amount of
advisory fee waiver and reimbursement of third party expenses by the Adviser
subject to possible reimbursement were as follows:
Small Cap Value Fund $57,833
Strategic Small Company Fund $52,037
Focused Value Fund $ 5,317
New Opportunities Fund $ 1,340
Pilgrim Baxter Value Investors, Inc. (formerly Newbold's Asset Management,
Inc.), a wholly-owned subsidiary of the Adviser serves as the sub-adviser to the
Large Cap Value Fund, Mid-Cap Value Fund, Small Cap Value Fund, Focused Value
Fund and the Strategic Small Company Fund. For its services provided pursuant to
its Investment Sub-Advisory Agreement with the Adviser and the Fund, Pilgrim
Baxter Value Investors receives a fee from the Adviser at an annual rate of
0.40%, 0.50%, 0.65%, 0.40% and 0.30%, respectively, of the average daily net
assets of the Large Cap Value Fund, Mid-Cap Value Fund, Small Cap Value Fund,
Focused Value Fund and the Strategic Small Company Fund. Pilgrim Baxter Value
Investors receives no fees directly from the Large Cap Value Fund, Mid-Cap Value
Fund, Small Cap Value Fund, Focused Value Fund or the Strategic Small Company
Fund.
Murray Johnstone International, Ltd. ("Murray Johnstone") serves as the
sub-adviser to the International Fund. For its services provided pursuant to its
Investment Sub-Advisory Agreement with the Adviser and the Fund, Murray
Johnstone receives a fee from the Adviser at an annual rate of 0.50% of the
International Fund's average daily net assets. Murray Johnstone receives no fees
directly from the International Fund.
Wellington Management Company, LLP ("WMC") serves as the sub-adviser to the Cash
Reserves Fund. For its services provided pursuant to the Investment Sub-Advisory
Agreement with the Adviser and the Fund, WMC is entitled to receive a fee from
the Adviser, computed daily and paid monthly, at an annual rate equal to 0.075%
of the Cash Reserves Fund's average daily net assets up to and including $500
million and 0.020% of the Cash Reserves Fund's average daily net assets over
$500 million, but subject to a minimum annual fee of $50,000. WMC may, from time
to time, waive all or a portion of its fee from the Adviser. WMC receives no
fees directly from the Cash Reserves Fund.
95
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THE PBHG FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS -- CONCLUDED
- --------------------------------------------------------------------------------
As of March 31, 2000
PBHG Fund Services (the "Administrator"), a wholly-owned subsidiary of the
Adviser, provides the Fund with administrative services, including regulatory
reporting and all necessary office space, equipment, personnel and facilities.
For these administrative services, the Administrator receives a fee, which is
calculated daily and paid monthly, at an annual rate of 0.15% of the average
daily net assets of each Portfolio.
SEI Investments Management Corporation, a wholly-owned subsidiary of SEI
Investments Company, is the owner of all beneficial interest in SEI Mutual Funds
Services (the "Sub-Administrator"). The Sub-Administrator is an affiliate of the
Fund's distributor and assists the Administrator in providing administrative
services to the Fund. For acting in this capacity, the Administrator pays the
Sub-Administrator a fee at the annual rate of 0.04% of the average daily assets
of each portfolio with respect to the first $2.5 billion of the total average
daily net assets of (i) the Fund, and (ii) PBHG Insurance Series Fund, Inc.,
another fund family managed by the Adviser (collectively known as the "PBHG Fund
Family"), 0.025% of the next $7.5 billion of the average daily assets of each
portfolio in the PBHG Fund Family, and 0.02% of the average daily net assets of
each portfolio in the PBHG Fund Family in excess of $10 billion.
The Adviser has entered into an agreement with SEI Investments to manage the
investments of repurchase agreements for the Portfolio. Listed below are the
amounts SEI Investments earned for its services from each Portfolio for the year
ended March 31, 2000, and are reflected as a reduction of interest income.
Growth Fund $113,877
Emerging Growth Fund 38,328
Large Cap Growth Fund 3,174
Select Equity Fund 23,035
Core Growth Fund 2,359
Limited Fund 5,926
Large Cap 20 Fund 20,174
New Opportunities Fund 2,596
Large Cap Value Fund 891
Mid-Cap Value Fund 1,007
Small Cap Value Fund 1,639
Focused Fund 233
Technology & Communications Fund 29,680
Strategic Small Company Fund 1,023
The Fund and SEI Investments Distribution Co. (the "Distributor") are parties to
a Distribution Agreement. The Distributor receives no fees for its distribution
services. The Fund has adopted a Service Plan (the "Plan") on behalf of the
Advisor Class shares pursuant to Rule 12b-1 under the Investment Company Act of
1940. The Plan provides for the payment by the Fund of up to 0.25% of the
average daily net assets of the Advisor Class shares for certain distribution
and shareholder services. Currently only the Growth Fund has Advisor Class
shareholders.
DST Systems, Inc. serves as the transfer agent and dividend disbursing agent of
the Fund. From time to time, the Fund may pay amounts to third parties that
provide sub-transfer agency and other administrative services relating to the
Fund to persons who beneficially own interests in the Fund. First Union National
Bank, serves as the custodian for each of the Portfolios except the
International Fund. The Northern Trust Company serves as the custodian for the
International Fund.
The Fund has entered into a shareholder servicing agreement with PBHG Fund
Services to provide shareholder support and other shareholder account-related
services. PBHG Fund Services has, in turn, contracted with UAM Shareholder
Service Center, Inc. ("UAMSSC") to assist in the provision of those services.
UAMSSC receives no fees directly from the Portfolios.
SHAREHOLDER SERVICE FEES (INCLUDING OUT OF POCKET EXPENSES) PAID TO PBHG FUND
SERVICES FOR THE FISCAL YEAR ENDED MARCH 31, 2000 WERE:
AMOUNT
(000)
--------------
Growth Fund $1,397
Emerging Growth Fund 456
Large Cap Growth Fund 116
Select Equity Fund 224
Core Growth Fund 113
Limited Fund 64
Large Cap 20 Fund 321
New Opportunities Fund 36
Large Cap Value Fund 52
Mid-Cap Value Fund 36
Small Cap Value Fund 34
Focused Value Fund 7
International Fund 24
Cash Reserves Fund 104
Technology & Communications Fund 520
Strategic Small Company Fund 43
Officers and directors of the Fund who are or were officers of the Adviser,
Administrator, Sub-Administrator and the Distributor received no compensation
from the Fund.
4. INVESTMENT TRANSACTIONS
The cost of securities purchased and the proceeds from securities sold, other
than short-term investments, for the Equity Portfolios for the fiscal year ended
March 31, 2000 were as follows:
PURCHASES SALES
(000) (000)
-------------- --------------
Growth Fund $3,915,198 $4,745,240
Emerging Growth Fund 1,097,303 1,191,454
Large Cap Growth Fund 271,747 281,337
Select Equity Fund 2,048,024 984,522
Core Growth Fund 331,653 327,225
Limited Fund 111,210 162,297
Large Cap 20 Fund 863,347 957,953
New Opportunities Fund 1,071,669 938,969
Large Cap Value Fund 361,723 376,582
Mid-Cap Value Fund 313,777 322,832
Small Cap Value Fund 237,647 254,801
Focused Value Fund 64,436 51,820
International Fund 2,461 6,245
Technology & Communications
Fund 6,658,980 4,984,267
Strategic Small Company Fund 124,200 137,039
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96
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THE PBHG FUNDS, INC.
The tax aggregate gross unrealized appreciation and depreciation of securities
held by the Portfolios at March 31, 2000 are as follows:
NET
UNREALIZED
UNREALIZED UNREALIZED APPRECIATION/
APPRECIATION DEPRECIATION (DEPRECIATION)
(000) (000) (000)
------------- ------------ -------------
Growth Fund $3,202,026 $135,174 $3,066,852
Emerging Growth Fund 547,662 36,213 511,449
Large Cap Growth Fund 100,481 3,792 96,689
Select Equity Fund 481,292 128,507 352,785
Core Growth Fund 51,896 11,550 40,346
Limited Fund 77,526 1,815 75,711
Large Cap 20 Fund 451,184 11,616 439,568
New Opportunities Fund 150,107 20,494 129,613
Large Cap Value Fund 2,019 521 1,498
Mid-Cap Value Fund 6,926 1,062 5,864
Small Cap Value Fund 16,904 3,777 13,127
Focused Value Fund 2,709 288 2,421
International Fund 2,524 294 2,230
Technology &
Communications Fund 1,036,171 328,563 707,608
Strategic Small
Company Fund 25,434 3,396 22,038
The difference between book and tax cost basis at March 31, 2000 was immaterial.
The Cash Reserves Fund had a capital loss carryforward of $11,635 expiring in
2008 at March 31, 2000, that can be used to offset future capital gains. During
fiscal year end of March 31, 2000 the PBHG Growth Fund, the PBHG Emerging Growth
Fund, the PBHG Select Equity Fund and the PBHG Small Cap Value Fund utilized
capital loss carryforwards of $279,086,766, $31,196,165, $38,691,458 and
$8,064,419 respectively, to offset capital gains.
5. CONCENTRATIONS
The Cash Reserves Fund invests primarily in a portfolio of money market
instruments maturing in 397 days or less whose ratings are within one of the two
highest ratings categories assigned by a nationally recognized statistical
rating agency, or, if not rated, are believed to be of comparable quality. The
ability of the issuers of the securities held by the Portfolio to meet their
obligations may be affected by economic developments in a specific industry,
state or region.
The International Fund invests in securities of foreign issuers in various
countries. These investments may involve certain considerations and risks not
typically associated with investments in the United States, as a result of,
among other factors, the possibility of future political and economic
developments and the level of governmental supervision and regulation of
securities markets in the respective countries.
Certain funds invest a high percentage of their assets in specific sectors of
the market, especially technology, in order to achieve a greater investment
return. As a result, the economic, political and regulatory developments in a
particular sector of the market, positive or negative, have a greater impact on
the fund's net asset value and will cause its shares to fluctuate more than if
the fund did not concentrate its investments in a particular section. In
addition, the Technology & Communications Fund is concentrated which means it
will invest 25% or more of its net assets in specifications within the
technology and communication sectors of the market in order to achieve a
potentially greater investment return.
6. ACQUISITION
On February 12, 1999 the net assets of the PBHG Advisor Core Value Fund and the
PBHG Advisor New Opportunities Fund, both series of the PBHG Advisor Funds, Inc.
were acquired by the PBHG Focused Value Fund and the PBHG New Opportunities Fund
respectively, pursuant to an agreement and plan of reorganization dated February
12, 1999. The transaction was structured to qualify as a tax-free reorganization
under the Internal Revenue Code. Prior to reorganization the PBHG Advisor Core
Value and PBHG Advisor New Opportunities had net assets of $1,294,123 and
$9,766,893, respectively, shares outstanding of 125,435 and 722,618
respectively, and NAV's of $10.32 and $13.52, respectively. The PBHG Focused
Value and the PBHG New Opportunities Funds were deemed to be the accounting
survivors of the tax-free reorganizations, accordingly each Portfolio's
performance history for financial reporting and advertising purposes began on
February 12, 1999.
7. LINE OF CREDIT
Except for the PBHG Cash Reserves Fund, each Portfolio may borrow, an amount up
to its prospectus defined limitations, from a $250 million committed line of
credit available to (i) the Funds and (ii) PBHG Insurance Series Fund, Inc.
Borrowings from the line of credit will bear interest at the Federal Funds Rate
plus 0.50%. As of March 31, 2000, the Select Equity Fund, the Core Growth Fund,
the New Opportunities Fund, the Large Cap Value Fund, and the Technology &
Communications Fund had outstanding borrowings of $32,500,000, $12,100,000,
$27,400,000, $500,000 and $116,000,000, respectively. Listed below are the Funds
which had outstanding balances during the fiscal year ended March 31, 2000.
DAILY
WEIGHTED
MAXIMUM AVERAGE AVERAGE
AMOUNT OUTSTANDING INTEREST
BORROWED BALANCE RATE
---------- ----------- --------
Growth Fund 121,600,000 3,272,951 5.75%
Emerging Fund 23,200,000 212,842 5.78%
Large Cap Growth Fund 3,100,000 17,213 5.71%
Select Equity Fund 32,500,000 180,874 5.91%
Core Growth Fund 12,100,000 578,518 5.86%
Large Cap 20 Fund 4,200,000 14,754 5.28%
New Opportunities Fund 47,400,000 1,033,880 6.06%
Large Cap Value Fund 5,400,000 74,317 5.78%
Mid Cap Value Fund 7,600,000 184,153 5.83%
Small Cap Value Fund 3,300,000 87,279 5.56%
Technology &
Communications Fund 116,000,000 4,472,131 5.79%
Strategic Small Company
Fund 1,000,000 16,940 5.42%
97
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THE PBHG FUNDS, INC.
NOTICE TO SHAREHOLDERS (unaudited)
- --------------------------------------------------------------------------------
For shareholders that do not have a March 31, 2000 tax year end, this notice is
for informational purposes only. For shareholders with a March 31, 2000 tax year
end, please consult your tax advisor as to the pertinance of this notice. For
the fiscal year ended March 31, 2000, each portfolio is designating the
following items with regard to distributions paid during the year. These
designations include the impact from utilizing earnings and profits distributed
to shareholders on redemption of shares which will be part of the dividends paid
deduction for each fund.
<TABLE>
<CAPTION>
Long Term
(20% Rate) Ordinary Foreign
Capital Gain Income Tax-Exempt Total Qualifying Tax
Fund Distribution Distributions Interest Distributions Dividends (1) Credit (2)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Emerging Growth Fund ............... 64.77% 35.23% 0.00% 100.0% 0.07% 0.00%
Cash Reserves Fund ................. 0.00% 100.00% 0.00% 100.0% 0.00% 0.00%
Growth Fund ........................ 88.25% 11.75% 0.00% 100.0% 0.14% 0.00%
Select Equity Fund ................. 39.22% 60.78% 0.00% 100.0% 0.02% 0.00%
Large Cap Growth Fund .............. 81.67% 18.33% 0.00% 100.0% 0.77% 0.00%
Technology & Communications Fund ... 6.86% 93.14% 0.00% 100.0% 0.02% 0.00%
Core Growth Fund ................... 35.76% 64.24% 0.00% 100.0% 0.48% 0.00%
Limited Fund ....................... 54.75% 45.25% 0.00% 100.0% 0.05% 0.00%
Large Cap 20 Fund .................. 72.18% 27.82% 0.00% 100.0% 0.35% 0.00%
Strategic Small Company Fund ....... 47.87% 52.13% 0.00% 100.0% 1.65% 0.00%
Large Cap Value Fund ............... 3.62% 96.38% 0.00% 100.0% 6.25% 0.00%
Mid-Cap Value Fund ................. 0.11% 99.89% 0.00% 100.0% 1.61% 0.00%
Small Cap Value Fund ............... 0.00% 100.00% 0.00% 100.0% 7.10% 0.00%
Focused Value Fund ................. 0.00% 100.00% 0.00% 100.0% 1.41% 0.00%
New Opportunities Fund ............. 0.15% 99.85% 0.00% 100.0% 0.00% 0.00%
International Fund ................. 82.40% 17.60% 0.00% 100.0% 0.00% 0.00%
</TABLE>
================================================================================
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction and is reflected as a percentage of "Ordinary
Income Distributions".
(2) The foreign tax credit represents dividends which qualify for the foreign
tax credit and is reflected as a percentage of "Ordinary Income Distributions".
SHAREHOLDERS MEETINGS
A special meeting of the shareholders of the PBHG Technology & Communications
Fund (the "Portfolio"), a series of the PBHG Funds, Inc. (the "Fund") was held
on November 2, 1999 to vote on the following matters:
1. To amend the fundamental investment restrictions of the Portfolio to
change the Portfolio's sub-classification under the Investment Company Act of
1940, as amended (the "1940 Act"), from a diversified investment company to a
non-diversified investment company ("Proposal 1"). With respect to Proposal 1,
of the number of shares voted, 89.46% voted for the proposal, 7.11% voted
against the proposal and 3.43% abstained.
2. To amend the fundamental investment restrictions of the Portfolio to
permit the Portfolio to concentrate its investments in an industry or group of
industries in the technology & communications sectors of the market ("Proposal
2"). With respect to Proposal 2, of the number of shares voted, 90.90% voted for
the proposal, 6.00% voted against the proposal, and 3.10% abstained.
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THE PBHG FUNDS, INC.
[This page is left intentionally left blank.]
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THE PBHG FUNDS, INC.
[This page is left intentionally left blank.]
100
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The PBHG Funds, Inc.
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P.O. Box 219534
Kansas City, MO 64121-9534
Investment Adviser:
Pilgrim Baxter & Associates, Ltd.
Distributor:
SEI Investments Distribution Co.
To open an account, receive account information,
or request literature please call 1-800-433-0051
www.pbhgfunds.com
PBHG-Annual Report-4/2000
