SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
|X | Preliminary Proxy Statement
| | Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
| | Definitive Proxy Statement
| | Definitive Additional Materials
| | Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
The PBHG Funds, Inc.
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(Name of Registrant as Specified in Its Charter)
------------------------------------------------
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required
| | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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| | Fee paid previously with preliminary materials.
| | Check box if any part of the fee is offset as provided by Exchange
Act rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or Schedule and the date of its filing.
<PAGE>
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
DECEMBER 6, 2000
IMPORTANT NEWS FOR SHAREHOLDERS OF THE PBHG FUNDS, INC.
While we encourage you to read the full text of the enclosed Proxy
Statement, here is a brief overview of some matters affecting The PBHG Funds,
Inc. (the "Company") that require a shareholder vote.
Q & A: QUESTIONS AND ANSWERS
Q. WHAT IS HAPPENING?
A. Old Mutual plc, a United Kingdom-based financial services group ("Old
Mutual"), has acquired United Asset Management Corporation ("UAM"), the
parent company of the Company's investment adviser, Pilgrim Baxter &
Associates, Ltd. ("Pilgrim Baxter"), and two of the Company's
investment sub-advisers, Pilgrim Baxter Value Investors, Inc. and
Murray Johnstone International Limited. This acquisition caused a
change in the control of Pilgrim Baxter and those sub-advisers,
resulting in the automatic termination of the advisory and sub-advisory
agreements for the separate portfolios of the Company (Each separate
portfolio is referred to as a "Fund"; collectively, the separate
portfolios are referred to as the "Funds"). The Company's Board of
Directors has approved, subject to shareholder approval, new investment
advisory agreements for all Funds, and new sub-advisory agreements for
those Funds having a sub-advisor.
The Board of Directors is also taking this opportunity to ask
shareholders to vote on certain other matters affecting the Funds. The
following pages give you additional information about Old Mutual, the
acquisition, and the matters on which you are being asked to vote. THE
DIRECTORS OF THE COMPANY, INCLUDING THOSE WHO ARE INDEPENDENT DIRECTORS
OF THE COMPANY, UNANIMOUSLY RECOMMEND THAT YOU VOTE FOR EACH OF THESE
PROPOSALS.
Q. WHY DID YOU SEND ME THESE MATERIALS?
A. You are receiving these materials--a booklet that includes the Proxy
Statement and one or more proxy cards--because you have the right to
vote on the important proposals concerning your investment in one or
more of the Funds.
Q. WHY ARE MULTIPLE CARDS ENCLOSED?
A. If you own shares of more than one of the Funds, you will receive a
proxy card for each Fund you own.
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Q. WHY AM I BEING ASKED TO VOTE ON A PROPOSED NEW ADVISORY AND
SUB-ADVISORY AGREEMENTS IN PROPOSALS NO. 1 AND 2?
A. Under the Investment Company Act of 1940 (which regulates investment
companies such as the Company), a change in control of an investment
company's adviser results in a termination of all advisory agreements
between that investment company and the adviser and requires the
shareholders to approve new advisory agreements. Therefore, the
advisory agreement between the Company and Pilgrim Baxter terminated as
a result of UAM's Transaction with Old Mutual. In addition, all
sub-advisory agreements for those Funds having a sub-advisor have also
automatically terminated. Consequently, shareholder approval of new
advisory agreements between the Company and Pilgrim Baxter, and new
sub-advisory agreements among the Company, Pilgrim Baxter, and the
sub-advisers are now required. The new advisory and sub-advisory
agreements are identical in all material respects to the former
advisory and sub-advisory agreements including the fees paid under
them.
Q. HOW WILL THE UAM/OLD MUTUAL TRANSACTION AFFECT ME?
A. Pilgrim Baxter and Old Mutual have assured the Board that there will be
no reduction in the nature or quality of its services to the Funds as a
result of the transaction, nor will there be any increase in fees or
expenses as a result of the transaction.
Q. WHAT OTHER ITEMS AM I BEING ASKED TO VOTE ON?
A. You are being asked to vote on proposals to standardize the various
fundamental investment policies of the Funds. Additionally, you are
being asked to vote on reorganizing the Company, which is currently a
Maryland corporation, into a Delaware business trust. THE BOARD OF
DIRECTORS OF THE COMPANY, INCLUDING THOSE WHO ARE INDEPENDENT DIRECTORS
OF THE COMPANY, UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR EACH OF THESE
PROPOSALS.
Q. WHOM DO I CALL FOR MORE INFORMATION OR TO PLACE MY VOTE?
A. You can vote easily and quickly at the proxy solicitors' web site,
WWW.PROXYVOTE.COM, by calling the toll-free telephone number printed on
your proxy card, by mail, or in person. If you need more information on
how to vote, or if you have any questions, please call your financial
representative or the Company's information agent at 1-800-433-0051.
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YOUR VOTE IS IMPORTANT AND WILL HELP AVOID THE ADDITIONAL EXPENSE OF
ANOTHER SOLICITATION.
THANK YOU FOR PROMPTLY RECORDING YOUR VOTE.
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THE PBHG FUNDS, INC.
PBHG Growth Fund
PBHG Emerging Growth Fund
PBHG Large Cap Growth Fund
PBHG Select Equity Fund
PBHG Core Growth Fund
PBHG Limited Fund
PBHG Large Cap 20 Fund
PBHG New Opportunities Fund
PBHG Large Cap Value Fund
PBHG Mid-Cap Value Fund
PBHG Small Cap Value Fund
PBHG Focused Value Fund
PBHG International Fund
PBHG Cash Reserves Fund
PBHG Technology & Communications Fund
PBHG Strategic Small Company Fund
PBHG Global Technology & Communications Fund
P.O. Box 219534
Kansas City, MO 64121-9534
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON January 25, 2001
NOTICE IS HEREBY GIVEN that a special meeting of shareholders of each series
portfolio (each, a "Fund") of The PBHG Funds, Inc. (the "Company"), will be held
at the Peninsula Hotel, Le Grande Salle Room, 700 Fifth Avenue in New York City
on January 25, 2001 at 10:00 AM for the following purposes:
1. To approve new investment advisory agreements for each Fund.
2. To approve new investment sub-advisory agreements:
a. With Pilgrim Baxter Value Investors, Inc. for PBHG Large Cap
Value Fund, PBHG Mid-Cap Value Fund, PBHG Small Cap Value Fund,
PBHG Focused Value Fund and PBHG Strategic Small Company Fund;
b. With Wellington Management Company, LLP for PBHG Cash Reserves
Fund; and
c. With Murray Johnstone International Limited for PBHG
International Fund.
3. To approve changes to each Fund's fundamental investment restrictions.
4. To approve reorganizing the Company as a Delaware business trust and
thereafter dissolving the existing Maryland corporation.
1
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5. To transact any other business that may properly come before the
meeting or any adjournments thereof.
Shareholders of record at the close of business on November 17, 2000 are
entitled to notice of, and to vote at, the meeting or any adjournments thereof.
You are invited to attend the meeting, but if you cannot do so, please complete
and sign the enclosed proxy and return it in the accompanying envelope as
promptly as possible. Your vote is important no matter how many shares you own.
You can vote easily and quickly at the proxy solicitors' web site
www.proxyvote.com, by calling the toll-free telephone number printed on your
proxy card, by mail, or in person. You may change your vote even though a proxy
has already been returned either by written notice to the Company, by mail,
submitting a subsequent proxy, or by voting in person at the meeting.
By Order of the Board of Directors of the Company.
John M. Zerr
Secretary
Kansas City, MO
November __, 2000
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The PBHG Funds, Inc.
P.O. Box 219534
Kansas City, MO 64121-9534
1-800-433-0051
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS OF
THE PBHG FUNDS, INC.
TO BE HELD ON January 25, 2001
This proxy statement is furnished in connection with the solicitation
by the Board of Directors of The PBHG Funds, Inc. (the "Company"), for the
special meeting of shareholders of PBHG Growth Fund, PBHG Emerging Growth Fund,
PBHG Large Cap Growth Fund, PBHG Select Equity Fund, PBHG Core Growth Fund, PBHG
Limited Fund, PBHG Large Cap 20 Fund, PBHG New Opportunities Fund, PBHG Large
Cap Value Fund, PBHG Mid-Cap Value Fund, PBHG Small Cap Value Fund, PBHG Focused
Value Fund, PBHG International Fund, PBHG Cash Reserves Fund, PBHG Technology &
Communications Fund, PBHG Strategic Small Company Fund, and PBHG Global
Technology & Communications Fund (each a "Fund" and collectively the "Funds"),
to be held at the Peninsula Hotel, La Grande Salle Room, 700 Fifth Avenue in New
York City on Thursday, January 25, 2001 at 10:00 A.M., and all adjournments
thereof (the "Meeting"). Shareholders of record at the close of business on
November 17, 2000 (the "Record Date") are entitled to notice of, and to vote at,
the Meeting. This proxy statement and the accompanying notice of meeting and
proxy card(s) are first being mailed to shareholders on or about December 6,
2000.
A director who is an interested person of the Company is referred to in
this proxy statement as an "Interested Director." A director may be an
interested person of the Company because he or she is affiliated with a Fund's
investment adviser, sub-adviser or the Company's distributor, SEI Investments
Distribution Co. ("SEI"). Directors who are not interested persons of the
Company are referred to in this proxy statement as "Independent Directors."
SHAREHOLDER VOTING
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The Board intends to bring before the Meeting the matters set forth in
the foregoing notice. If you wish to participate in the Meeting you may submit
the proxy card(s) included with this proxy statement or attend in person. YOUR
VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN. You can vote easily and
quickly at the proxy solicitors' web site, by toll-free telephone, by mail, by
facsimile or in person. You may change your vote even though a proxy has already
been returned either by written notice to the Company, by mail, submitting a
subsequent proxy, or by voting in person at the meeting. A more detailed
description of the
<PAGE>
various voting procedures is provided in the section SHAREHOLDER VOTING
PROCEDURES beginning on page 19 below.
SUMMARY OF PROPOSALS REQUIRING SHAREHOLDER VOTE
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REQUIRED VOTE
The following table summarizes the proposals submitted at the Meeting,
the Fund shareholders entitled to vote on the proposals and the vote required
approving each proposal.
<TABLE>
<CAPTION>
Proposal Fund Shareholders
Number Proposal Description Entitled to Vote
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<S> <C> <C>
1* To approve a new investment advisory agreement with Pilgrim ALL FUNDS
Baxter & Associates, Ltd. ("Pilgrim Baxter")
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2 To approve new investment sub-advisory agreements SEE 2A, B AND C BELOW
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2A* TO APPROVE A NEW INVESTMENT SUB-ADVISORY AGREEMENT PBHG LARGE CAP VALUE FUND
WITH PILGRIM BAXTER VALUE INVESTORS, INC. ("VALUE INVESTORS") PBHG MID-CAP VALUE FUND
PBHG SMALL CAP VALUE FUND
PBHG FOCUSED VALUE FUND
PBHG STRATEGIC SMALL COMPANY FUND
(EACH A "VALUE FUND;"
COLLECTIVELY, THE "VALUE FUNDS")
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2B* TO APPROVE A NEW INVESTMENT SUB-ADVISORY AGREEMENT WITH PBHG CASH RESERVES FUND
WELLINGTON MANAGEMENT COMPANY, LTD. ("WELLINGTON")
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2C* TO APPROVE A NEW INVESTMENT SUB-ADVISORY AGREEMENT WITH MURRAY PBHG INTERNATIONAL FUND
JOHNSTONE INTERNATIONAL LTD. ("MURRAY JOHNSTONE")
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3 To adopt changes to the fundamental investment SEE 3A THROUGH 3M BELOW
restrictions for each Fund as listed below:
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3A* ISSUER DIVERSIFICATION ALL FUNDS EXCEPT
PBHG TECHNOLOGY &
COMMUNICATIONS FUND,
PBHG GLOBAL TECHNOLOGY &
COMMUNICATIONS FUND,
PBHG LARGE CAP 20 FUND,
PBHG CASH PBHG
RESERVES FUND AND
PBHG FOCUSED VALUE FUND
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3B* BORROWING MONEY AND ISSUING SENIOR SECURITIES ALL FUNDS
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3C* UNDERWRITING SECURITIES ALL FUNDS
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2
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Proposal Fund Shareholders
Number Proposal Description Entitled to Vote
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3D* INDUSTRY CONCENTRATION ALL FUNDS EXCEPT
PBHG TECHNOLOGY &
COMMUNICATIONS FUND AND
PBHG GLOBAL TECHNOLOGY &
COMMUNICATIONS FUND
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3E* PURCHASING OR SELLING REAL ESTATE ALL FUNDS
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3F* PURCHASING OR SELLING COMMODITIES ALL FUNDS
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3G* MAKING LOANS ALL FUNDS
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3H* INVESTING ALL ASSETS IN AN OPEN END FUND ALL FUNDS
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3I* INVESTING IN OIL, GAS OR OTHER MINERAL EXPLORATION ALL FUNDS EXCEPT
OR DEVELOPMENT PROGRAMS PBHG FOCUSED VALUE FUND AND
PBHG NEW OPPORTUNITIES
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3J* INVESTING IN COMPANIES FOR THE PURPOSE OF CONTROL ALL FUNDS EXCEPT PBHG GROWTH FUND,
PBHG FOCUSED VALUE FUND AND
PBHG NEW OPPORTUNITIES
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3K* MAKING SHORT SALES OR MARGIN PURCHASES ALL FUNDS EXCEPT PBHG GROWTH FUND,
PBHG FOCUSED VALUE FUND,
AND PBHG NEW OPPORTUNITIES
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3L* PLEDGING ASSETS ALL FUNDS EXCEPT PBHG FOCUSED VALUE
FUND AND PBHG NEW OPPORTUNITIES FUND
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3M* INVESTING IN PUTS AND CALLS PBHG GROWTH FUND
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4** TO REORGANIZE AS A DELAWARE BUSINESS TRUST ALL FUNDS
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<FN>
* Under the Investment Company Act of 1940, as amended (the "1940 Act"), approval of each of these proposals
requires the affirmative vote of the lesser of (a) 67% or more of the voting securities of the particular
Fund present at the meeting or represented by proxy if the holders of more than 50% of the outstanding
voting securities of that Fund are present or represented by proxy or (b) more than 50% of the outstanding
voting securities of the particular Fund.
** Approval of this proposal requires a majority of all outstanding shares of the Company.
</FN>
</TABLE>
PROPOSAL 1: APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT
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INTRODUCTION
ASSIGNMENT OF FORMER ADVISORY AGREEMENTS AND APPROVAL OF INTERIM
ADVISORY ARRANGEMENTS
On September 26, 2000, Old Mutual plc, an English public limited
company, ("Old Mutual"), acquired the outstanding shares of United Asset
Management Corporation ("UAM"),
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<PAGE>
the parent company of Pilgrim Baxter, Value Investors and Murray Johnstone,
through a cash tender offer and subsequent merger (the "Transaction").
Old Mutual is a United Kingdom-based financial services group with a
substantial life assurance business in South Africa and other southern African
countries and an integrated, international portfolio of activities in asset
management, banking and general insurance. The acquisition of UAM increased Old
Mutual's assets under management to approximately $275 billion. Old Mutual's
principal offices are located at 3rd Floor, Lansdowne House, 57 Berkley Square,
London, WIX 5DH, United Kingdom.
The consummation of the Transaction constituted an "assignment," as
that term is defined in the 1940 Act, of the Fund's Former Investment Advisory
and Sub-Advisory Agreements for the Funds. As required by the 1940 Act, these
Former Investment Advisory and Sub-Advisory Agreements (collectively, the
"Former Advisory Agreements") automatically terminated upon their assignment.
As an interim measure to avoid any lapse in investment advisory
services to the Funds as a consequence of these terminations, the Board has
continued the advisory services under an Interim Investment Advisory Agreement
between each Fund and Pilgrim Baxter, and Interim Investment Sub-Advisory
Agreements among the PBHG Value Funds, Pilgrim Baxter and Value Investors, among
PBHG International Fund, Pilgrim Baxter and Murray Johnstone, and among Pilgrim
Baxter, PBHG Cash Reserves Fund, Pilgrim Baxter and Wellington (collectively,
the "Interim Advisory Agreements"). (Wellington is not affiliated with Pilgrim
Baxter, UAM or Old Mutual.)
All compensation earned by Pilgrim Baxter or by a sub-advisor under the
Interim Advisory Agreements is being held in interest-bearing escrow accounts
pending shareholder approval of new investment advisory and sub-advisory
agreements for a period of up to 150 days from the termination of the Former
Advisory Agreements. If shareholders approve the new investment advisory and
sub-advisory agreements, the amount held in the escrow accounts, plus interest,
will be paid to Pilgrim Baxter, Value Investors, Murray Johnstone, and
Wellington. If shareholders do not approve any of the related new advisory
agreements, Pilgrim Baxter, Value Investors, Murray Johnstone, and Wellington,
as applicable, will each receive the lesser of the costs incurred in performing
its services under the applicable Interim Advisory Agreement or the total amount
in the escrow account, plus interest earned.
All of the Funds are currently operating under these Interim Advisory
Agreements which became effective on September 26, 2000, and none of these
Agreements have been voted upon by shareholders.
Shareholders of the PBHG International Fund should also know that
subsequent September 26, 2000, the effective date of the Fund's Interim
Investment Sub-Advisory Agreement, Old Mutual announced it had reached an
agreement to sell Murray Johnstone to Aberdeen Asset Management plc. The
consummation of this sale would constitute an "assignment," as that term is
defined in the 1940 Act of the Fund's Interim Investment Sub-Advisory Agreement,
and as required by the 1940 Act this Interim Investment Sub-Adviosry Agreement
would automatically terminate upon its assignment. As an interim measure to
avoid any lapse in the investment sub-advisory services to the PBHG
International Fund as a consequence of the termination of the Interim Investment
Sub-Advisory Agreement, the Board
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approved continuing the sub-advisory services of Murray Johnstone under another
interim agreement which would become effective upon the termination of the
Interim Investment Sub-Advisory Agreement. As of the date this proxy statement
was printed, shareholders of the PBHG International Fund have not voted upon the
this other interim investment sub-adviosry agreement and the PBHG International
Fund was still operating under the Interim Investment Sub-Advisory Agreement
which became effective on September 26, 2000.
NEW ADVISORY AGREEMENTS
The Board has also approved, subject to shareholder approvals, longer
term investment advisory agreements under a New Investment Advisory Agreement
between the Company on behalf of each Fund and Pilgrim Baxter, and New
Investment Sub-Advisory Agreements among the Company, Pilgrim Baxter and Value
Investors for the Value Funds, among the Company, Pilgrim Baxter and Murray
Johnstone for the PBHG International Fund, and among the Company, Pilgrim Baxter
and Wellington for PBHG Cash Reserves Fund (collectively, the "New Advisory
Agreements"). THE NEW ADVISORY AGREEMENTS ARE BEING SUBMITTED TO SHAREHOLDERS OF
EACH FUND FOR APPROVAL.
TRANSFERS OF CONTROL OF AN INVESTMENT ADVISER UNDER THE 1940 ACT
Section 15(f) of the 1940 Act provides that an investment adviser to a
registered investment company, and the affiliates of such adviser, may receive
any amount or benefit in connection with a sale of any interest in such
investment adviser which results in an assignment of an investment advisory
contract if the following two conditions are satisfied: (1) for a period of
three years after such assignment, at least 75% of the board of directors of the
investment company cannot be "interested persons" (within the meaning of Section
2(a)(19) of the 1940 Act) of the new investment adviser or its predecessor, and
(2) an unfair burden may not be imposed on the investment company as a result of
the assignment or any express or implied terms, conditions or understandings
applicable thereto.
Consistent with the first condition of Section 15(f), Old Mutual agreed
as part of the Transaction that, for a period of three years after the closing
of the Transaction, it will not take or recommend any action that would cause
more than 25% of the Company's directors to be interested persons of any entity
affiliated with Pilgrim Baxter.
With respect to the second condition of Section 15(f), an unfair burden
on an investment company is defined in the 1940 Act to include any arrangement
during the two-year period after any such transaction occurs whereby the manager
or investment adviser or its predecessor or successor, or any interested person
of such adviser, predecessor or successor, receives or is entitled to receive
any compensation from the investment company of two types, either directly or
indirectly. The first type is compensation from any person in connection with
the purchase or sale of securities or other property to, from or on behalf of
the investment company, other than bona fide ordinary compensation as principal
underwriter for such company. The second type is compensation from the
investment company or its security holders for other than bona fide investment
advisory or other services.
Old Mutual has also agreed not to take or recommend any action that
would constitute an unfair burden on the Company or the Funds within the meaning
of Section 15(f). In this regard, Old Mutual and Pilgrim Baxter have represented
to the Company that they will maintain the
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<PAGE>
Funds' existing expense limitation agreements for a period of two years from the
date of the consummation of the Transaction. The expense limitation agreements
are discussed in greater detail below under Description of New Investment
Advisory Agreement - Expense Limitations.
DESCRIPTION OF THE NEW INVESTMENT ADVISORY AGREEMENT WITH PILGRIM BAXTER
THE NEW INVESTMENT ADVISORY AGREEMENT WILL BE IDENTICAL IN ALL MATERIAL
RESPECTS TO THE COMPANY'S FORMER INVESTMENT ADVISORY AGREEMENT EXCEPT FOR THE
ELIMINATION OF THE EXPENSE LIMITATIONS PREVIOUSLY REQUIRED BY STATE SECURITIES
LAWS. EACH FUND'S ADVISORY FEE RATE WILL REMAIN UNCHANGED.
SERVICES AND EXPENSES
The Company and Pilgrim Baxter had previously entered into a Former
Investment Advisory Agreement with respect to each Fund. Both the former
Investment Advisory Agreement and the New Investment Advisory Agreement obligate
Pilgrim Baxter to: (i) provide a program of continuous investment management for
the Fund in accordance with the Fund's investment objectives, policies and
limitations; (ii) make investment decisions for the Fund; and (iii) place orders
to purchase and sell securities for the Fund, subject to the supervision of the
Company's Board of Directors.
Both the Former and the New Investment Advisory Agreement
(collectively, the "Advisory Agreements") require Pilgrim Baxter to pay its
overhead and employee costs and the compensation and expenses of all its
directors, officers and employees who serve as officers and executive employees
of the Company. The Advisory Agreements provide that Pilgrim Baxter is not
responsible for other expenses of operating the Company (these expenses include,
but are not limited to, organization and certain offering expenses, legal
expenses, auditing and accounting expenses, interest expenses, taxes and
governmental fees, and custodial expenses).
INVESTMENT ADVISORY FEES
For its services under the New Investment Advisory Agreement, Pilgrim
Baxter is entitled to a fee, which is calculated daily and paid monthly, at an
annual rate of: 0.85 % of each of PBHG Growth Fund's, PBHG Emerging Growth
Fund's, PBHG Select Equity Fund's, PBHG Core Growth Fund's, PBHG Large Cap 20
Fund's, PBHG Mid-Cap Value Fund's, PBHG Focused Value Fund's and PBHG Technology
& Communications Fund's average daily net assets; 0.75 % of the PBHG Large Cap
Growth Fund's average daily net assets; 0.65% of the PBHG Large Cap Value Fund's
average daily net assets; 1.00% of each of the PBHG Limited Fund's, PBHG New
Opportunities Fund's, PBHG Small Cap Value Fund's, PBHG International Fund's and
PBHG Strategic Small Company Funds' average daily net assets; 1.50% of the PBHG
Global Technology & Communications Fund's average daily net assets; and 0.30% of
the PBHG Cash Reserves Fund's average daily net assets. The investment advisory
fees paid by certain of the Funds are higher than those paid by most investment
companies, although Pilgrim Baxter believes the fees to be comparable to those
paid by investment companies with similar investment objectives and policies.
The same fees were payable under the Former Investment Advisory Agreement. A
schedule of the Investment Advisory fees received by Pilgrim Baxter
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(and any fee waivers) from each of the Funds for the fiscal year ended March 31,
2000 is attached as Schedule 1.
EXPENSE LIMITATIONS
In the interest of limiting the expenses of the Funds, Pilgrim Baxter
has voluntarily entered into expense limitation agreements with the Company
("Expense Limitation Agreements") on behalf of certain Funds pursuant to which,
with respect to the PBHG Class shares, Pilgrim Baxter has agreed to waive or
limit a portion of its fee and to assume other expenses in an amount necessary
to limit total annual operating expenses (exclusive of fees and expenses
incurred under the Fund's Service Plan, interest, taxes, brokerage commissions,
any expenditures that are capitalized in accordance with generally accepted
accounting principles and any extraordinary expenses not incurred in the
ordinary course of the Fund's business) for that Class to not more than 1.50% of
the average daily net assets of each of the PBHG Growth Fund, PBHG Core Growth
Fund, PBHG Limited Fund, PBHG New Opportunities Fund, PBHG Large Cap 20 Fund,
PBHG Large Cap Value Fund, PBHG Mid-Cap Value Fund, PBHG Small Cap Value Fund,
PBHG Focused Value Fund and PBHG Strategic Small Company Fund, to not more than
2.15% of the average daily net assets of PBHG Global Technology & Communications
Fund and to not more than 2.25% of the average daily net assets of the PBHG
International Fund. Reimbursement by these Funds of the advisory fees waived or
limited and other expenses paid by Pilgrim Baxter pursuant to the Expense
Limitation Agreements may be made at a later date when the Funds have reached a
sufficient asset size to permit reimbursement to be made without causing the
total annual expense rate of each Fund (exclusive of fees and expenses incurred
under the Fund's Service Plan, interest, taxes, brokerage commissions, any
expenditures that are capitalized in accordance with generally accepted
accounting principles and any extraordinary expenses not incurred in the
ordinary course of the Fund's business) to exceed 1.50% (or 2.15% for the PBHG
Global Technology & Communications Fund and 2.25% for the PBHG International
Fund). Consequently, no reimbursement by a Fund will be made unless: (i) the
Fund's assets exceed $75 million; (ii) the Fund's total annual expense ratio
(exclusive of fees and expenses incurred under the Fund's Service Plan,
interest, taxes, brokerage commissions, any expenditures that are capitalized in
accordance with generally accepted accounting principles and any extraordinary
expenses not incurred in the ordinary course of the Fund's business) is less
than 1.50% (or 2.15% for the PBHG Global Technology & Communications Fund and
2.25% for the PBHG International Fund); and (iii) the payment of such
reimbursement was approved by the Board of Directors.
For purposes of calculating the extent to which advisory fees are
waived or other expenses are reimbursed, the Company and Pilgrim Baxter will
look to compensation payable under the Former Investment Advisory Agreement, the
Interim Investment Advisory Agreement and the New Investment Advisory Agreement.
The former Investment Advisory Agreement contained a provision
previously required by state securities laws limiting expenses; those applicable
state securities laws have been voided by the Federal National Securities
Markets Improvement Act of 1996, and therefore the provision has been deleted
from the New Investment Advisory Agreement.
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<PAGE>
LIMITATIONS ON LIABILITY
The Advisory Agreements provide certain limitations on Pilgrim Baxter's
liability, but also provided that Pilgrim Baxter shall not be protected against
any liability to the Company, the Funds or its shareholders by reason of willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or from reckless disregard of its obligations and duties thereunder.
CONTINUANCE AND RENEWALS
The continuance of the New Investment Advisory Agreement after the
first two years must be specifically approved at least annually (i) by the
Company's Board of Directors or by vote of a majority of the Fund's outstanding
voting securities and (ii) by the affirmative vote of a majority of the
Directors who are not parties to the agreement or interested persons of any such
party by votes cast in person at a meeting called for such purpose. The New
Investment Advisory Agreement may be terminated (i) at any time without penalty
by the Fund upon the vote of a majority of the directors or by vote of the
majority of the Fund's outstanding voting securities upon 60 days' written
notice to Pilgrim Baxter or (ii) by Pilgrim Baxter at any time without penalty
upon 60 days' written notice to the Fund. The New Investment Advisory Agreement
will also terminate automatically in the event of its assignment (as defined in
the 1940 Act). The Former Investment Advisory Agreement contained identical
provisions.
INFORMATION ABOUT PILGRIM BAXTER
Pilgrim Baxter currently has discretionary management authority with
respect to over $25 billion in assets. In addition to advising the Funds,
Pilgrim Baxter provides advisory services to PBHG Insurance Series Fund, Inc.,
pension and profit-sharing plans, charitable institutions, corporations, trusts,
and other investment companies. The principal business address of Pilgrim Baxter
is 825 Duportail Road, Wayne, Pennsylvania 19087. PBHG Fund Services, the
Company's Administrator, is a wholly-owned subsidiary of Pilgrim Baxter. Value
Investors, sub-adviser to the Value Funds, is a wholly-owned subsidiary of
Pilgrim Baxter. A schedule of other investment companies with investment
objectives similar to the Funds for which Pilgrim Baxter serves as investment
adviser or sub-adviser, and related fees, is attached as SCHEDULE 2. The form of
New Investment Advisory Agreement is attached to this proxy statement as EXHIBIT
A.
DIRECTORS CONSIDERATION AND RECOMMENDATION
At the April 4, 2000 and June 6, 2000 meetings of the Board of
Directors, Harold Baxter, Chairman of the Company's Board of Directors and Chief
Executive Officer of Pilgrim Baxter and Value Investors, informed the
Independent Directors that UAM was engaged in merger discussions that might
result in the future acquisition of UAM. The Independent Directors requested Mr.
Baxter to keep them informed if any such plans materialized. At the meeting on
June 6, the Independent Directors retained the firm of Kramer Levin Naftalis &
Frankel, LLP ("Special Counsel") to advise them in the event that UAM entered
into an acquisition agreement that would result in an assignment and termination
of the Company's investment advisory and sub-advisory agreements. On June 19,
2000, both Old Mutual and UAM announced that they
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had entered into an agreement whereby Old Mutual would acquire UAM, subject to
certain conditions.
Following the announcement, and after the details of the Transaction
had become clearer, the Board met by telephone on July 13, 2000 to review the
Transaction. At that meeting, the Independent Directors asked Special Counsel to
request from Old Mutual and Pilgrim Baxter information that would be necessary
and appropriate for them to consider with respect to the approval of new
investment advisory and sub-advisory agreements. On July 21, 2000, Special
Counsel, in a letter to Old Mutual and Pilgrim Baxter, requested that they
provide detailed information relating to the Transaction. The request indicated
that the information would be important to the Independent Directors in making
their decision on whether to approve the Interim Advisory Agreements and any New
Advisory Agreements.
On August 8, 2000, the Board, including all of the Independent
Directors, met by telephone to discuss the material received from Old Mutual in
response to Special Counsel's request. The Independent Directors requested that
Special Counsel provide them with a complete analysis of the material provided.
That analysis was provided to the Directors on August 28, 2000.
On September 6, 2000, the Board, including all of the Independent
Directors, again met by telephone to discuss in detail the information received
and Special Counsel's analysis. The Independent Directors also discussed with
Mr. Baxter how he expected the Transaction to affect Pilgrim Baxter and the
Company. Among other things, Independent Directors determined that additional
information from Old Mutual was necessary to adequately reach a conclusion on
the advisory and sub-advisory agreements. Special Counsel requested supplemental
information, and it was considered by the Independent Directors at their meeting
on September 22, 2000.
The Board met in person on September 22, 2000 for the purpose of
considering the Interim Advisory Agreements. At the meeting, the Independent
Directors reviewed the following information and representations:
1. Information about Old Mutual, its corporate structure and general
information about the Transaction;
2. Information about how the Transaction would affect UAM, and Old
Mutual's plan with respect to the future operation of UAM;
3. Information about how the Transaction would affect Pilgrim Baxter,
and Old Mutual's plan with respect to the future operation of Pilgrim Baxter;
4. Old Mutual's stated commitment to retain the existing Pilgrim Baxter
management team, including the portfolio managers for the Funds;
5. Old Mutual's representation that there were no current plans to
change any of the sub-advisory relationships in existence with the Funds; and
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6. The fact that there were no material differences between the Interim
Advisory Agreements and the former Investment Advisory Agreements, and that the
advisory fees to be imposed under the Interim Advisory Agreements would be
identical to those that existed under the former Investment Advisory Agreements.
After reviewing all of this information and the representations
provided, and after the Independent Directors consulted with Special Counsel,
the Board, including the Independent Directors voting unanimously, approved the
Interim Advisory Agreements and requested that appropriate individuals
representing Old Mutual attend a meeting called for November 13, 2000 to
consider the new Investment Advisory and Investment Sub-Advisory Agreements.
At its meeting on November 13, 2000, the Directors met in person for
the purpose of considering new Investment Advisory and Investment Sub-Advisory
Agreements and for the purpose of considering a another interim investment
sub-advisory agreement with Murray Johnstone for the PBHG International Fund in
light of events that occurred subsequent to the Board approving the Interim
Advisory Agreements on September 22, 2000. At the November 13, 2000 meeting, the
Directors reviewed and reconsidered all of the information provided, including
the information and representations considered at the September 22, 2000
meeting, and the analysis of that information, as well as information from
Murray Johnstone and Old Mutual regarding Old Mutual's sale of Murray Johnstone
to Aberdeen. In addition, the Directors met with Kevin Carter, Chairman and CEO
of OM Asset Management (the "Old Mutual Representative"). Further, with respect
to the new Investment Advisory Agreement between each Fund and Pilgrim Baxter,
the Board particularly considered the following factors: (1) the experience of
Old Mutual in the asset management business; (2) the financial strength of Old
Mutual; (3) the stated expectation that there would be no material change to the
corporate structure of Pilgrim Baxter; (4) Old Mutual's stated commitment to
retain the existing Pilgrim Baxter management team, including the portfolio
managers for the Funds; (5) that there were no current plans to materially
change the Value Investors and Wellington sub-advisory relationships that
existed with the Funds; the Old Mutual Representative indicated, however, that
although Old Mutual had agreed to sell its ownership interest in Murray
Johnstone to Aberdeen, Old Mutual did not know the date upon which the sale
would be consummated; (6) that the advisory fees imposed under the new
Investment Advisory Agreement are identical to those that existed under the
former Investment Advisory Agreement and currently exist under the Interim
Investment Advisory Agreement (and would exist under the second interim
investment advisory agreement for the PBHG International Fund; (7) the fact that
there will be no material difference in the expense ratios of the Funds under
the new Investment Advisory Agreement; (8) the representation by Old Mutual and
Pilgrim Baxter that they will maintain the Funds' existing expense limitation
agreements for a period of two years from the date of the consummation of the
Transaction; (9) that for a period of three years from the date of the
completion of the Transaction, at least 75% of the Company's Board will be
comprised of directors who are not "interested persons" (as defined in the 1940
Act) of Pilgrim Baxter or any of the sub-advisers; (10) that there is no "unfair
burden", as that term is described in the 1940 Act, imposed on the Company as a
result of the Transaction and that Old Mutual has agreed not to take or
recommend any action that would constitute such an unfair burden on the Company
or the Funds; and (11) the fairness of the compensation payable to Pilgrim
Baxter under the new
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Investment Advisory Agreement in light of the services to be provided and
Pilgrim Baxter's past performance.
Based upon its review of all of the information provided, the
consideration of the factors described above and such other factors it
considered relevant, and after consulting with Special Counsel, the Board,
including all of the Independent Directors, (a) approved the second interim
investment sub-advisory agreement among the Company, on behalf of the PBHG
International Fund, Pilgrim Baxter and Murray Johnstone and (b) determined that
the new Investment Advisory Agreement between the Funds and Pilgrim Baxter is in
the best interests of the Funds and their shareholders. Accordingly, the Board
of Directors of the Company, including the Independent Directors by unanimous
vote, approved the new Investment Advisory Agreement and recommended that each
Fund's shareholders vote for the new Investment Advisory Agreement.
PROPOSAL 2: APPROVAL OF NEW INVESTMENT SUB-ADVISORY AGREEMENTS
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2A: VALUE INVESTORS
Prior to the closing of the Transaction, Sub-Advisory Agreements were
in effect with Value Investors for the Value Funds. As a result of the
Transaction, these Former Sub-Advisory Agreements terminated. Value Investors is
currently providing sub-advisory services to the Value Funds under an Interim
Investment Sub-Advisory Agreement. For more information, please refer to the
"Introduction" section under Proposal 1.
THE BOARD HAS APPROVED, SUBJECT TO SHAREHOLDER APPROVAL, A NEW
INVESTMENT SUB-ADVISORY AGREEMENT WITH VALUE INVESTORS FOR THE VALUE FUNDS. THE
NEW SUB-ADVISORY AGREEMENT WILL BE IDENTICAL IN ALL MATERIAL RESPECTS TO THE
COMPANY'S FORMER SUB-ADVISORY AGREEMENT (COLLECTIVELY, THE "SUB-ADVISORY
AGREEMENTS"). EACH FUND'S ADVISORY FEE RATE WILL REMAIN UNCHANGED.
SERVICES
The Sub-Advisory Agreements with Value Investors obligate Value
Investors to: (1) manage the investment operations of the relevant Value Fund
and the composition of the Value Funds' investment portfolio, including the
purchase, retention and disposition thereof in accordance with each Value Fund's
investment objective, policies and limitations; (ii) provide supervision of the
Value Funds' investments and determine from time to time what investments and
securities will be purchased, retained or sold by the Value Funds and what
portion of the assets will be invested or held uninvested in cash; and (iii)
place orders with or through such persons, brokers or dealers to carry out the
policy with respect to brokerage set forth in the Value Funds' Registration
Statement and Prospectus or as the Board of Directors or Pilgrim Baxter may
direct from time to time, in conformity with Federal securities laws.
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INVESTMENT SUB-ADVISORY FEES
For the services provided pursuant to the New Investment Sub-Advisory
Agreement for each of PBHG Large Cap Value Fund, PBHG Mid-Cap Value Fund, PBHG
Small Cap Value Fund, PBHG Focused Value Fund and PBHG Strategic Small Company
Fund, Value Investors is entitled to receive from Pilgrim Baxter a sub-advisory
fee with respect to the average daily net assets of each Fund at annual rates of
0.50%, 0.50%, 0.50%, 0.40% and 0.50%, respectively, less 50% of any fee waivers
borne by Pilgrim Baxter. Value Investors does not receive any sub-advisory fee
directly from the Value Funds. The same fees were payable under the Former
Sub-Advisory Agreement. During the fiscal year ended March 31, 2000, Value
Investors received investment sub-advisory fees from Pilgrim Baxter in the
amounts of: $150,902 for PBHG Large Cap Value Fund, $ 214,213 for PBHG Mid-Cap
Value Fund, $ 419,013 for PBHG Small Cap Value Fund, $ 21,572 for PBHG Focused
Value Fund, and $ 153,778 for PBHG Strategic Small Company Fund. During the
fiscal year ended March 31, 2000, Value Investors waived receipt of investment
sub-advisory fees from Pilgrim Baxter in the amounts of: $ 37,592 for PBHG Small
Cap Value Fund, $1,341 for PBHG Focused Value Fund and $7,361 for PBHG Strategic
Small Company Fund.
LIMITATIONS ON LIABILITY
The New Investment Sub-Advisory Agreement provides certain limitations
on Value Investors' liability, but also provides that Value Investors shall not
be protected against any liability to the Value Funds or their shareholders by
reason of willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard of its obligations or
duties thereunder or from a breach of fiduciary duty with respect to the receipt
of compensation for services thereunder. The same provision was included in the
Former Sub-Advisory Agreement.
CONTINUANCE AND RENEWAL
The continuance of the New Investment Sub-Advisory Agreement after the
first two years must be specifically approved for each PBHG Value Fund at least
annually (i) by the Company's Board of Directors or by vote of a majority of the
outstanding voting securities of the relevant Value Fund and (ii) by the
affirmative vote of a majority of the directors who are not parties to the
agreement or interested persons of any such party by votes cast in person at a
meeting called for such purpose. The New Investment Sub-Advisory Agreement may
be terminated (i) by the relevant Value Fund, without the payment of any
penalty, by the vote of a majority of the directors of the Company or by the
vote of a majority of the outstanding voting securities of the relevant Value
Fund, (ii) by Pilgrim Baxter at any time, without the payment of any penalty, on
not more than 60 days' nor less than 30 days' written notice to the other
parties, or (iii) by Value Investors at any time, without the payment of any
penalty, on 90 days' written notice to the other parties. The New Investment
Sub-Advisory Agreement will also terminate automatically in the event of its
assignment (as defined in the 1940 Act). The same provisions were included in
the Former Sub-Advisory Agreement.
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INFORMATION ABOUT VALUE INVESTORS
Value Investors is a wholly-owned subsidiary of Pilgrim
Baxter. Value Investors currently has discretionary management authority with
respect to over $950 million in assets. In addition to advising the Value Funds,
Value Investors provides advisory services to the PBHG Insurance Series Fund,
Inc., pension and profit-sharing plans, charitable institutions, corporations,
trusts, and other investment companies. The principal business address of Value
Investors is 825 Duportail Road, Wayne, Pennsylvania 19087. A schedule of other
investment companies with investment objectives similar to the Value Funds for
which Value Investors serves as investment adviser or sub-adviser, and related
fees, is attached as SCHEDULE 3. The form of the PBHG Value Funds' New
Sub-Advisory Agreement is attached to this proxy statement as EXHIBIT B.
2B: WELLINGTON
Prior to the closing of the Transaction, a Sub-Advisory agreement was
in effect with Wellington for the PBHG Cash Reserves Fund. While Wellington is
not affiliated with Pilgrim Baxter, UAM, or Old Mutual, its Sub-Advisory
Agreement terminated automatically upon the termination of Pilgrim Baxter's
agreements. Wellington is currently providing sub-advisory services to the PBHG
Cash Reserves Fund under an Interim Investment Sub-Advisory Agreement. For more
information, please refer to the "Introduction" section under Proposal 1.
THE BOARD HAS APPROVED, SUBJECT TO SHAREHOLDER APPROVAL, A NEW
INVESTMENT SUB-ADVISORY AGREEMENT WITH WELLINGTON FOR THE PBHG CASH RESERVES
FUND. THE NEW SUB-ADVISORY AGREEMENT WILL BE IDENTICAL IN ALL MATERIAL RESPECTS
TO THE PBHG CASH RESERVES FUND'S FORMER SUB-ADVISORY AGREEMENT (COLLECTIVELY,
THE "SUB-ADVISORY AGREEMENTS"). SPECIFICALLY, THE PBHG CASH RESERVES FUND'S
ADVISORY FEE RATE WILL REMAIN UNCHANGED.
SERVICES
The Sub-Advisory Agreements obligate Wellington to: (i) manage the
investment operations of the PBHG Cash Reserves Fund and the composition of that
Fund's portfolio, including the purchase, retention and disposition thereof in
accordance with that Fund's investment objectives, policies and limitations;
(ii) provide supervision of that Fund's investments and determine from time to
time what investments and securities will be purchased, retained or sold by that
Fund, and what portion of the assets will be invested or held uninvested in
cash; and (iii) place orders with or through such persons, brokers or dealers to
carry out the policy with respect to brokerage set forth in that Fund's
Registration Statement and Prospectus or as the Board of Directors or Pilgrim
Baxter may direct from time to time, in conformity with Federal securities laws.
INVESTMENT SUB-ADVISORY FEES
For the services provided pursuant to the New Investment Sub-Advisory
Agreement, Wellington is entitled to receive a fee from Pilgrim Baxter at an
annual rate of 0.075% of that Fund's average daily net assets up to and
including $500 million, and 0.020% above $500 million, subject to a $50,000
minimum. Wellington receives no fees directly from the PBHG Cash Reserves Fund.
The same fees were payable under the Former Investment Sub-Advisory Agreement.
During the fiscal year ended March 31, 2000, Wellington received
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investment sub-advisory fees from Pilgrim Baxter in the amount of $146,339 for
the PBHG Cash Reserves Fund.
LIMITATIONS ON LIABILITY
The New Investment Sub-Advisory Agreement provides certain limitations
on Wellington's liability, but also provides that Wellington shall not be
protected against any liability to the PBHG Cash Reserves Fund or its
shareholders by reason of willful misfeasance, bad faith or gross negligence on
its part in the performance of its duties or from a breach of fiduciary duty
with respect to the receipt of compensation for services thereunder. The same
provision was included in the Former Sub-Advisory Agreement.
CONTINUANCE AND RENEWAL
The continuance of the New Investment Sub-Advisory Agreement after the
first two years must be specifically approved at least annually (i) by the
Company's Board of Directors or by vote of a majority of the PBHG Cash Reserves
Fund's outstanding voting securities and (ii) by the affirmative vote of a
majority of the directors who are not parties to the agreement or interested
persons of any such party by votes cast in person at a meeting called for such
purpose. The new Investment Sub-Advisory Agreement may be terminated (i) by the
PBHG Cash Reserves Fund at any time, without the payment of any penalty, by the
vote of a majority of directors of the Company or by the vote of a majority of
the outstanding voting securities of that Fund, (ii) by Pilgrim Baxter at any
time, without the payment of any penalty, on not more than 60 days' nor less
than 30 days' written notice to the other parties, or (iii) by Wellington at any
time, without the payment of any penalty, on 90 days' written notice to the
other parties. The New Investment Sub-Advisory Agreement will also terminate
automatically in the event of its assignment (as defined in the 1940 Act). The
same provisions were included in the Former Sub-Advisory Agreement.
INFORMATION ABOUT WELLINGTON
Wellington is a Massachusetts limited liability partnership with
principal offices at 75 State Street, Boston, Massachusetts 02109. Wellington is
a professional investment counseling firm which provides investment services to
investment companies, employee benefit plans, endowments, foundations and other
institutions. Wellington's predecessor organizations have provided investment
advisory services for over 70 years. As of September 30, 2000, Wellington
Management had investment management authority with respect to approximately
$266 billion in assets. A schedule of other investment companies with investment
objectives similar to the PBHG Cash Reserves Fund for which Wellington serves as
investment adviser or sub-adviser, and related fees, is attached as SCHEDULE 4.
The form of the PBHG Cash Reserves Fund's New Sub-Advisory Agreement is attached
to this proxy statement as EXHIBIT C.
2C: MURRAY JOHNSTONE
Prior to the closing of the Transaction, a Sub-Advisory agreement was
in effect with Murray Johnstone for the PBHG International Fund. Murray
Johnstone is a wholly-owned subsidiary of Old Mutual. As a result of the
Transaction, the Former Sub-Advisory Agreement terminated. Murray Johnstone is
currently providing sub-advisory services to the PBHG International Fund under
an Interim Investment Sub-Advisory Agreement. For more information, please refer
to the "Introduction" section under Proposal 1.
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Old Mutual has indicated that it is seeking to sell Murray Johnstone,
possibly to a third party, in the future. Also, the Company intends to propose
to shareholders of the PBHG International Fund that they approve the
reorganization of that Fund into the Company's PBHG Global Technology &
Communications Fund. The Company is proposing that the PBHG International Fund
shareholders approve, at the Meeting, a New Investment Sub-Advisory Agreement
for the PBHG International Fund, to continue the investment advisory services of
Murray Johnstone in the event that the contemplated reorganization does not
occur. THE NEW INVESTMENT SUB-ADVISORY AGREEMENT WILL BE IDENTICAL IN ALL
MATERIAL RESPECTS TO THE PBHG INTERNATIONAL FUND'S FORMER SUB-ADVISORY AGREEMENT
(COLLECTIVELY, THE "SUB-ADVISORY AGREEMENTS"). SPECIFICALLY, THE PBHG
INTERNATIONAL FUND'S ADVISORY FEE RATE WILL REMAIN UNCHANGED.
SERVICES
The Sub-Advisory Agreements obligate Murray Johnstone to: (i) manage
the investment operations of the PBHG International Fund and the composition of
that Fund's portfolio, including the purchase, retention and disposition thereof
in accordance with that Fund's investment objectives, policies and limitations;
(ii) provide supervision of that Fund's investments and determine from time to
time what investments and securities will be purchased, retained or sold by that
Fund, and what portion of the assets will be invested or held uninvested in
cash; and (iii) place orders with or through such persons, brokers or dealers to
carry out the policy with respect to brokerage set forth in that Fund's
Registration Statement and Prospectus or as the Board of Directors or Pilgrim
Baxter may direct from time to time, in conformity with Federal securities laws.
INVESTMENT SUB-ADVISORY FEES
For the services provided pursuant to the New Investment Sub-Advisory
Agreement, Murray Johnstone is entitled to receive a fee from Pilgrim Baxter at
an annual rate of 0.50% of PBHG International Fund's average daily net assets,
less 50% of any fee waivers borne by Pilgrim Baxter. Murray Johnstone receives
no fees directly from the PBHG International Fund. The same fee was payable
under the Former Sub-Advisory Agreement. During the fiscal year ended March 31,
2000, Murray Johnstone received investment sub-advisory fees from Pilgrim Baxter
in the amount of $58,343 for the PBHG International Fund.
LIMITATIONS ON LIABILITY
The New Investment Sub-Advisory Agreement provides certain limitations
on Murray Johnstone's liability, but also provides that Murray Johnstone shall
not be protected against any liability to the PBHG International Fund or its
shareholders by reason of willful misfeasance, bad faith or gross negligence on
its part in the performance of its duties or from a breach of fiduciary duty
with respect to the receipt of compensation for services thereunder. The same
provision was included in the Former Sub-Advisory Agreement.
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CONTINUANCE AND RENEWAL
The continuance of the New Investment Sub-Advisory Agreement after the
first two years must be specifically approved at least annually (i) by the
Company's Board of Directors or by vote of a majority of the PBHG International
Fund's outstanding voting securities and (ii) by the affirmative vote of a
majority of the directors who are not parties to the agreement or interested
persons of any such party by votes cast in person at a meeting called for such
purpose. The New Investment Sub-Advisory Agreement may be terminated (i) by that
Fund at any time, without the payment of any penalty, by the vote of a majority
of directors of the Company or by the vote of a majority of the outstanding
voting securities of that Fund, (ii) by Pilgrim Baxter at any time, without the
payment of any penalty, on not more than 60 days' nor less than 30 days' written
notice to the other parties, or (iii) by Murray Johnstone at any time, without
the payment of any penalty, on 90 days' written notice to the other parties. The
New Investment Sub-Advisory Agreement will also terminate automatically in the
event of its assignment (as defined in the 1940 Act). The same provisions were
included in the Former Sub-Advisory Agreement.
INFORMATION ABOUT MURRAY JOHNSTONE
Murray Johnstone is an wholly-owned subsidiary of Old Mutual. Murray
Johnstone currently has discretionary management authority with respect to over
$[XX] billion in assets. In addition to advising the PBHG International Fund,
Murray Johnstone provides advisory services to the pension and profit-sharing
plans, charitable institutions, corporations, trusts and estates, and other
investment companies. The principal business address of Murray Johnstone in the
United States is John Hancock Center, 875 North Michigan Avenue, Chicago, IL
60611. A schedule of other investment companies with investment objectives
similar to the PBHG International Fund for which Murray Johnstone serves as
investment adviser or sub-adviser, and related fees, is attached as SCHEDULE 5.
The form of the PBHG International Fund's New Sub-Advisory Agreement is attached
to this proxy statement as EXHIBIT D.
DIRECTORS CONSIDERATION AND RECOMMENDATION
In considering whether to recommend that the new Investment
Sub-Advisory Agreements be approved by shareholders, the Board of Directors
considered, among other things, the qualifications of each sub-adviser's
professional staff and information related to each sub-adviser's past
performance. In addition, the Board considered the importance of maintaining
continuity of management in light of Old Mutual's acquisition of UAM, and the
relationship each sub-adviser has had with Pilgrim Baxter and the Funds over the
years. Moreover, the Board noted that the fee to be paid under the new
Investment Sub-Advisory Agreements would remain the same as they had been under
the former Investment Sub-Advisory Agreements and currently are under the
Interim Investment Sub-Advisory Agreements and would be under the second interim
investment sub-advisory agreement with Murray Johnstone for the PBHG
International Fund. Finally, the Board considered the fact that there would be
no material changes to the new Investment Sub-Advisory Agreements from the
former Investment Sub-Advisory Agreements.
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The Board gave particular consideration to the Old Mutual's agreement
to sell Murray Johnstone to Aberdeen in the future. The Board also specifically
considered that, subject to shareholder approval, the PBHG International Fund
would be reorganized into the PBHG Global Technology & Communications Fund. The
Board concluded that it would be in the best interest of the shareholders of the
PBHG International Fund to approve the new Investment Sub-Advisory Agreement
with Murray Johnstone in order to maintain continuity of management until such
time as the plans for the PBHG International Fund become more clear.
Based upon its review of all of the information provided, the
consideration of the factors described above and such other factors it
considered relevant, the Board has determined that the new Investment
Sub-Advisory Agreements are in the best interests of the applicable Funds and
their shareholders. Accordingly, the Board of Directors of the Company,
including the Independent Directors by unanimous vote, approved the new
Investment Sub-Advisory Agreements and recommended that the shareholders of the
Value Funds vote for the new Investment Sub-Advisory Agreement with Value
Investors, that the shareholders of PBHG Cash Reserves Fund vote for the new
Investment Sub-Advisory Agreement with Wellington and that the shareholders of
PBHG International Fund vote for the new Investment Sub-Advisory Agreement with
Murray Johnstone.
PROPOSAL 3: CHANGES TO THE FUNDS' FUNDAMENTAL INVESTMENT RESTRICTIONS
---------------------------------------------------------------------
INTRODUCTION
We are proposing to change the Funds' fundamental investment
restrictions because they are outdated and reflect regulatory, business or
industry conditions that are no longer applicable or are unnecessary.
(Fundamental investment restrictions are those restrictions that under the 1940
Act may be changed only by a vote of a majority of a Fund's outstanding voting
securities as defined under the 1940 Act.) The proposed changes will NOT affect
any Fund's investment objective.
We believe that there are several factors that have caused the Funds'
fundamental investment restrictions to become outdated. For example, certain
fundamental investment restrictions imposed by the various state "Blue Sky" laws
and regulations were preempted by the National Securities Markets Improvement
Act of 1996 ("NSMIA") and, therefore, are no longer applicable to the Funds. In
addition, although some of the Funds' investment restrictions reflect current
federal regulatory requirements, they are not required to be fundamental. Also,
as new series portfolios of the Company have been created in recent years,
substantially similar fundamental investment restrictions have been phrased
differently resulting in unintended differences in interpretation.
The Funds are expected to benefit from these changes. First, the
proposed changes will provide each Fund with as much investment flexibility as
is permitted under current law. The proposed changes are designed to provide
flexibility to respond to future legal, regulatory and
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market changes. In addition, standardizing the fundamental investment
restrictions among the Funds will enhance the Funds' and Pilgrim Baxter's
ability to efficiently and effectively manage the Funds' assets in changing
regulatory and investment environments. Finally, minimizing the number of
investment restrictions that may only be changed by a shareholder vote will
reduce the costs and delays associated with holding future shareholder meetings
to revise fundamental investment restrictions that have become outdated or
inappropriate.
ALTHOUGH THE PROPOSED CHANGES IN FUNDAMENTAL INVESTMENT RESTRICTIONS
WILL GIVE THE FUNDS GREATER FLEXIBILITY TO RESPOND TO FUTURE INVESTMENT
OPPORTUNITIES, THE CHANGES, INDIVIDUALLY AND IN THE AGGREGATE, ARE NOT
ANTICIPATED TO RESULT IN A MATERIAL CHANGE IN THE LEVEL OF INVESTMENT RISK
ASSOCIATED WITH ANY FUND. IN ADDITION, THE PROPOSED CHANGES WILL NOT MATERIALLY
AFFECT THE MANNER IN WHICH ANY FUND IS CURRENTLY MANAGED.
Moreover, even though the Funds will have increased investment
flexibility if these proposed changes are approved, the Board has approved
several new non-fundamental investment restrictions (which function as internal
guidelines) which the Fund must follow in complying with the new fundamental
investment restrictions. Of course, if circumstances change, the Board of
Directors may change or eliminate any non-fundamental investment restriction in
the future without shareholder approval.
The proposed changes are set forth below in sub-proposals. Each Fund's
current fundamental investment restrictions are set forth in SCHEDULE 6. You are
asked to vote separately on each sub-proposal. If any sub-proposal is not
approved by a Fund, the fundamental investment restriction in that sub-proposal
will remain unchanged. If approved, the sub-proposals will become effective as
soon as the Fund's updated Prospectus and/or Statement of Additional Information
reflect these changes.
Several of the proposed fundamental investment restrictions include the
defined term "1940 Act Laws, Interpretations and Exemptions." This term means:
the Investment Company Act of 1940, as amended, and the rules and regulations
promulgated thereunder, as such statute, rule and regulations are amended from
time to time or are interpreted from time to time by the staff of the Securities
and Exchange Commission ("SEC") and any exemptive order or similar relief
granted to a Fund.
3A: ISSUER DIVERSIFICATION (all Funds except PBHG Technology &
Communications Fund, PBHG Global Technology & Communications Fund, PBHG
Large Cap 20 Fund, PBHG Cash Reserves Fund and PBHG Focused Value Fund)
We want to restate each PBHG Fund's policy on issuer diversification.
The proposed policy will provide these Funds with greater flexibility to respond
to future 1940 Act rules, regulations, interpretations, exemptions, orders or
similar relief relating to issuer diversification. The proposed policy will not
have any material impact on any Fund's current investment operations.
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If approved, each Fund's fundamental investment restriction will be
restated to read as follows:
The Fund is a "diversified company" as defined in the 1940 Act. This
means that the Fund will not purchase the securities of any issuer if,
as a result, the Fund would fail to be a diversified company within the
meaning of the 1940 Act Laws, Interpretations and Exemptions. This
restriction does not prevent the Fund from purchasing the securities of
other investment companies to the extent permitted by the 1940 Act
Laws, Interpretations and Exemptions.
If you approve the proposed change, the following non-fundamental
investment restriction will become effective for your Fund:
In complying with the Fund's fundamental restriction regarding issuer
diversification, the Fund will not, with respect to 75% of its total
assets, purchase securities of any issuer (other than securities issued
or guaranteed by the U.S. government or any of its agencies or
instrumentalities), if, as a result, (i) more than 5% of the Fund's
total assets would be invested in the securities of that issuer, or
(ii) the Fund would hold more than 10% of the outstanding voting
securities of that issuer. The Fund may (i) purchase securities of
other investment companies as permitted by Section 12(d)(1) of the 1940
Act and (ii) invest its assets in securities of other money market
funds and lend money to other investment companies and their series
portfolios that have Pilgrim Baxter & Associates Ltd. or an affiliate
of Pilgrim Baxter as an investment advisor (a "Pilgrim Baxter Advised
Fund"), subject to the terms and conditions of any exemptive orders
issued by the SEC.
Because each of PBHG Cash Reserves Fund, PBHG Focused Value Fund, PBHG
Global Technology & Communications Fund, PBHG Large Cap 20 Fund and PBHG
Technology & Communications Fund is non-diversified, the foregoing restrictions
do not apply to it.
3B: BORROWING MONEY AND ISSUING SENIOR SECURITIES (all Funds)
We want to change each Fund's policy on borrowing money and issuing
senior securities. Currently, each Fund's policy on borrowings is more
restrictive than required by the 1940 Act. The proposed policy will provide each
Fund with the maximum flexibility for future contingencies. Also, the proposed
policy will standardize the policy on borrowing money and issuing senior
securities among all Funds. Standardized policies will assist each Fund and
Pilgrim Baxter in maintaining compliance with the various investment
restrictions to which the Funds are subject. The proposed policy will not have a
material impact on any Fund's current investment operations.
If approved, each Fund's fundamental investment restrictions on
borrowing money and issuing senior securities will be changed to read as
follows:
The Fund may not borrow money or issue senior securities, except as
permitted by the 1940 Act Laws, Interpretations and Exemptions.
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If you approve the proposed change, the following non-fundamental
investment restriction will become effective for each Fund:
In complying with the Fund's fundamental investment restriction
regarding borrowing money and issuing senior securities, the Fund may
borrow money in an amount not exceeding 33 1/3 % of the total assets
(including the amount borrowed) less liabilities (other than
borrowings). The Fund may borrow from banks, broker dealers or a
Pilgrim Baxter Advised Fund. The Fund may not borrow for leveraging,
but may borrow for temporary or emergency purposes, in anticipation of
or in response to adverse market conditions, or for cash management
purposes.
3C: UNDERWRITING SECURITIES (all Funds)
We want to restate each Fund's policy on underwriting securities. The
proposed policy will expand the types of transactions in which each Fund may
engage, even if it may be considered to be an underwriter. Also, the proposed
policy will eliminate minor differences in the wording among the Funds' current
policies on underwriting securities. The proposed policy will not have any
material impact on any Fund's current investment operations.
If approved, each Fund's fundamental investment restriction will be
restated to read as follows:
The Fund may not underwrite the securities of other issuers. This
restriction does not prevent the Fund from engaging in transactions
involving the acquisition, disposition or resale of its portfolio
securities, regardless of whether the Fund may be considered to be an
underwriter under the Securities Act of 1933.
3D: INDUSTRY CONCENTRATION (all Funds except PBHG Technology &
Communications Fund and PBHG Global Technology & Communications Fund)
We want to restate each affected Fund's policy on industry
concentration. The proposed policy would eliminate minor inconsistencies in the
wording among the Funds' current policies on industry concentration.
Standardized policies will assist each Fund and Pilgrim Baxter in maintaining
compliance with the various investment restrictions to which the Funds are
subject. The proposed policy will not have any material impact on any Fund's
current investment operations.
If approved, each Fund's fundamental investment restriction will be
restated to read as follows:
The Fund will not make investments that will result in the
concentration (as that term may be defined or interpreted by the 1940
Act rules, regulations, interpretations, exemptions, orders or similar
relief thereunder) of its investments in the securities of issuers
primarily engaged in the same industry. This restriction does not limit
the Funds' investments in (i) obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities, (ii) tax-
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exempt obligations issued by governments or political subdivisions of
governments or (iii) repurchase agreements collateralized by such
obligations, and does not limit PBHG Cash Reserves Fund's investment in
bank obligations. In complying with this restriction, the Funds will
not consider a bank-issued guaranty or financial guaranty insurance as
a separate security.
If you approve the proposed change, the following non-fundamental
investment restriction will become effective for each affected Fund:
In complying with the Fund's fundamental investment restriction
regarding industry concentration, the Fund may invest up to 25% of its
total assets in the securities of issuers whose principal business
activities are in the same industry.
Because both the PBHG Technology & Communications Fund and PBHG Global
Technology & Communications Fund have investment policies to concentrate their
investments in specific industries, this proposed change will not apply to those
Funds. The PBHG Cash Reserves Fund is not requesting a change to its policy.
3E: PURCHASING OR SELLING REAL ESTATE (all Funds)
We propose changing each Fund's policy on purchasing or selling real
estate. The proposed policy would eliminate inconsistencies in the wording among
the Funds' current policies on purchasing or selling real estate and clarify the
types of real estate related securities that are permissible investments for
each Fund. Standardized policies will assist each Fund and Pilgrim Baxter in
maintaining compliance with the various investment restrictions to which the
Funds are subject. Also, the proposed policy includes an exception that permits
the Funds to hold real estate acquired as a result of ownership of securities or
other instruments. The proposed policy will not have a material impact on any
Fund's current investment operations.
If approved, each Fund's fundamental investment restriction on
purchasing or selling real estate will be changed to read as follows:
The Fund may not purchase or sell real estate unless acquired as a
result of ownership of securities or other instruments. This
restriction does not prevent the Fund from investing in issuers that
invest, deal or otherwise engage in transactions in real estate or
interests therein, or investing in securities that are secured by real
estate or interests therein.
3F: PURCHASING OR SELLING COMMODITIES (all Funds)
We propose changing each Fund's policy on purchasing or selling
commodities. The purpose of the proposed policy is three-fold. First, it will
eliminate inconsistencies in the wording among the Funds' current policies on
purchasing or selling commodities. Standardized policies will assist each Fund
and Pilgrim Baxter in maintaining compliance with the various investment
restrictions to which the Funds are subject. Second, it will give each Fund the
maximum flexibility to enter into hedging and other transactions utilizing and
financial contracts
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derivative products. Finally, the proposed policy will allow each Fund to
respond to the rapid and continuing development of derivative products. The
proposed policy will not have a material impact on any fund's current investment
operations.
If approved, each Fund's fundamental investment restriction on
purchasing or selling commodities will be changed to read as follows:
The Fund may not purchase or sell physical commodities unless acquired
as a result of ownership of securities or other instruments. This
restriction does not prevent the Fund from engaging in transactions
involving futures contracts and options thereon or investing in
securities that are secured by physical commodities.
3G: MAKING LOANS (all Funds)
We propose changing each Fund's policy on making loans. The proposed
policy will standardize the policy on making loans for all Funds. Standardized
policies will assist the Funds and Pilgrim Baxter in maintaining compliance with
the various fundamental investment restrictions to which the Funds are subject.
In addition, it will broaden the potential circumstances under which the Funds
could make loans and will permit all funds to lend their securities. For PBHG
Growth Fund, the proposed policy will also eliminate a restriction on investing
in illiquid securities. This restriction is already a non-fundamental policy of
PBHG Growth Fund and is not required to be fundamental. The proposed policy also
clarifies the types of debt instruments that are not considered a loan. The
proposed policy will not have a material impact on any Fund's current investment
operations.
If approved, each Fund's fundamental investment restriction on making
loans will be changed to read as follows:
The Fund may not make personal loans or loans of its assets to persons
who control or are under common control with the Fund, except to the
extent permitted by the 1940 Act Laws, Interpretations or Exemptions.
This restriction does not prevent the Fund from, among other things,
purchasing debt obligations, entering repurchase agreements, loaning
its assets to broker-dealers or institutional investors or investing in
loans, including assignments and participation interests.
If you approve the proposed change, the following non-fundamental
investment restriction will become effective for each Fund:
In complying with the Fund's fundamental investment restriction
regarding making loans, the Fund may lend up to 33 1/3 % of its total
assets and may lend money to another Pilgrim Baxter Advised Fund, on
such terms and conditions as the SEC may require in an exemptive order.
3H: INVESTING ALL ASSETS IN AN OPEN-END FUND (all Funds)
We want to change each Fund's policy on investing in securities of
other investment companies so that each Fund may invest all of its assets
in another open-end fund. At present the Board has not considered any specific
proposal to authorize a Fund to invest all of its assets
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in this fashion. The Board will authorize investing a Fund's assets in another
open-end fund only if the Board first determines that is in the best interests
of such Fund and its shareholders.
The purpose of this proposal is to enhance the flexibility of each Fund
and permit it to take advantage of potential efficiencies in the future
available through investment in another open-end fund. This structure allows
several funds with different distribution pricing structures, but the same
investment objective, policies and limitations, to combine their investments in
a pooled fund instead of managing them separately. This could lower the costs of
obtaining portfolio execution, custodial, investment advisory and other services
for the Fund and could assist in portfolio management to the extent the cash
flows of each investment vehicle offset each other or provide for less volatile
asset changes. Of course, such benefits may not occur.
At present, the fundamental investment restrictions of each Fund may
prevent it from investing all of its assets in another registered investment
company and would require a vote of Fund shareholders before such a structure
could be adopted. To avoid the costs associated with a subsequent shareholder
meeting, the Board recommends that you vote to permit all of the assets of your
Fund to be invested in an open-end fund, without a further vote of shareholders,
but only if the Board subsequently determines that such action is in the best
interests of your Fund and its shareholders. If you approve this proposal, the
fundamental restrictions of your Fund would be modified to permit such
investment.
A Fund's methods of operation and shareholder services would not be
materially affected by its investment in an open-end fund, except that the
assets of the Fund might be managed as part of a larger pool. If a Fund invested
all of its assets in an open-end fund, it would hold only investment securities
issued by the open-end fund, and the open-end fund would invest directly in
individual securities of other issuers. The Fund otherwise would continue its
normal operations. The Board would retain the right to withdraw the Fund's
investments from the open-end fund, and the Fund then would resume investing
directly in individual securities of other issuers as it does currently.
Pilgrim Baxter may benefit from the use of this structure if, as a
result, overall assets under management are increased (since management fees are
based on assets). Also, Pilgrim Baxter's expense of providing investment and
other services to the Funds may be reduced.
If approved, the fundamental investment restriction of each Fund (other
than PBHG Focused Value Fund and PBHG New Opportunities Fund) on investing in
securities of other investment companies will be changed, and PBHG New
Opportunities Fund will add a new fundamental investment restriction, to read as
follows:
The Fund may, notwithstanding any other fundamental investment policy
or restriction, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies and restrictions as the
Fund.
If you approve the proposed restriction, each Fund will have the
ability to invest all of its assets in another open-end investment company.
Because the Funds do not currently intend to
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do so, the following non-fundamental investment restriction will become
effective for each Fund:
Notwithstanding the fundamental restriction with regard to investing
all assets in an open-end fund, the Fund may not invest all of its
assets in the securities of a single open-end management investment
company with the same fundamental investment objectives, policies and
restrictions as the Fund.
3I: INVESTING IN OIL, GAS OR OTHER MINERAL EXPLORATION OR
DEVELOPMENT PROGRAMS (all Funds except PBHG Focused Value Fund and
PBHG New Opportunities Fund)
We want to eliminate each Fund's policy on investing in oil, gas or
other mineral exploration or development programs. The 1940 Act does not require
a Fund to have a fundamental investment restriction on investing in oil, gas or
other mineral exploration or development programs. This restriction was
originally adopted to address state "blue sky" requirements in connection with
the registration of shares of a Fund for sale in certain states. Under NSMIA,
this restriction no longer applies to any Fund. In addition, although the Funds
have no current intention of making any such investments, eliminating this
restriction will increase a Fund's flexibility when choosing investments in the
future.
PBHG Focused Value Fund and PBHG New Opportunities Fund do not have a
fundamental investment restriction on investing in oil, gas or other mineral
exploration or development programs.
3J: INVESTING IN COMPANIES FOR THE PURPOSE OF CONTROL (all Funds except
PBHG Growth Fund, PBHG Focused Value Fund and PBHG New Opportunities
Fund)
We propose eliminating each Fund's policy on investing in companies for
the purpose of control. There is no legal requirement that a Fund have a
fundamental investment restriction on investing in companies for the purpose of
control. Eliminating this restriction will standardize all Funds on this matter.
Standardized policies will assist a Fund and Pilgrim Baxter in maintaining
compliance with the various investment restrictions to which the Funds are
subject. In addition, although the Funds do not currently intend to become
involved in directing or administering the day-to-day operations of any company,
eliminating this restriction would clarify each Fund's ability to freely
exercise its rights in the companies in which it invests. Pilgrims Baxter
believes that it should be able communicate a Fund's views as a shareholder on
important matters of policy to a company when Pilgrim Baxter believes the value
of a Fund's investment may be significantly affected. Pilgrim Baxter believes
that each Fund currently may communicate its views without necessarily violating
this restriction. Nevertheless, the existence of this fundamental investment
restriction might give rise to a claim that communicating a Fund's views
constituted investing for control or management.
PBHG Growth Fund, PBHG Focused Value Fund and PBHG New Opportunities
Fund do not have a fundamental investment restriction on investing in companies
for the purpose of control.
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3K: MAKING SHORT SALES OR MARGIN PURCHASES (all Funds except PBHG
Growth Fund, PBHG Focused Value Fund and PBHG New Opportunities Fund)
We propose eliminating each affected Fund's policy on making short
sales and margin purchases. There is no legal requirement that a Fund have a
fundamental investment restriction on making short sales and margin purchases,
and therefore, each Fund should be provided with the maximum flexibility to
pursue its investment objectives. In addition, eliminating this restriction will
standardize all Funds on this matter. Standardized policies will assist the
Funds and Pilgrim Baxter in maintaining compliance with the various investment
restrictions to which the Funds are subject.
PBHG Growth Fund, PBHG Focused Value Fund and PBHG New Opportunities
Fund do not have a fundamental investment restriction making short sales or
margin purchases.
3L: PLEDGING ASSETS (all Funds except PBHG Focused Value Fund and PBHG
New Opportunities Fund)
We want to eliminate each Fund's policy that limits its ability to
pledge its assets. The current policy generally prohibits each Fund other than
the PBHG Mid-Cap Value Fund and the PBHG Small Cap Value Fund from pledging more
than 10% of its total assets, and only permits pledges of assets to secure
permitted borrowings, and as may be necessary in connection with the Fund's use
of options and futures contracts. Although the PBHG Mid-Cap Value Fund and the
PBHG Small Cap Value Fund are not subject to that 10% of total assets
limitation, these Funds are only permitted to pledge assets to secure permitted
borrowings and as may be necessary in connection with their use of options and
futures contracts. The 1940 Act does not require a Fund to have a fundamental
investment restriction on pledging assets. Eliminating this restriction will
eliminate any uncertainties regarding whether certain types of transactions that
require the segregation of assets will result in the pledging of assets. In
addition, although the Fund has no current intention of pledging its assets,
eliminating this restriction will provide the Fund with greater flexibility in
entering into transactions that may require the pledge of assets.
PBHG Focused Value Fund and PBHG New Opportunities Fund do not have a
fundamental investment restriction on pledging assets.
3M: INVESTING IN PUTS AND CALLS (PBHG Growth Fund)
We want to eliminate PBHG Growth Fund's policy that limits its ability
to purchase or write puts, calls or combinations thereof. The 1940 Act does not
require a Fund to have a fundamental investment restriction on purchasing or
writing puts and calls. This restriction was originally adopted to address state
"blue sky" requirements in connection with the registration of share of the Fund
for sale in certain states. Under NSMIA, this restriction no longer applies to
the Fund. In addition, although the Funds have no current intention of
purchasing or writing puts, calls or combinations thereof, eliminating this
restriction will provide the Fund with greater flexibility in entering into
these types of transactions.
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The other PBHG Funds do not have a fundamental investment restriction
on investing in puts and calls.
THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS,
UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" EACH SUB-PROPOSAL OF PROPOSAL 3.
PROPOSAL 4 - REORGANIZATION AS A DELAWARE BUSINESS TRUST
--------------------------------------------------------------------------------
The Board of Directors has approved a plan to reorganize the Company
into a Delaware business trust. THE PURPOSE OF THE REORGANIZATION IS TO PROVIDE
INCREASED FLEXIBILITY IN THE BUSINESS STRUCTURE OF THE COMPANY. To proceed with
the reorganization, we need shareholder approval of the plan of reorganization,
which includes the dissolution of the current legal entity after the
reorganization occurs. The next few pages of this proxy statement discuss
important details of the reorganization plan.
INTRODUCTION
The Company currently is organized as a Maryland corporation. The Board
has approved an Agreement and Plan of Reorganization (the "Plan"), which
provides for a series of transactions to convert each Fund of the Company (each,
a "Current Fund") to a corresponding series (each, a "New Fund") of a newly
created open-end, management investment company organized as a business trust
(the "Trust") under the Delaware Business Trust Act. Under the Plan, each
Current Fund will transfer all its assets to a corresponding New Fund in
exchange solely for voting shares of beneficial interest in the New Fund and the
New Fund's assumption of all the Current Fund's liabilities (collectively, the
"Reorganization"). A form of the Plan relating to the proposed Reorganization is
in EXHIBIT E. If Proposal 4 is not approved by the Company's shareholders, the
Company will continue to operate as a Maryland corporation.
The Reorganization is being proposed primarily to provide the Company
with greater flexibility in conducting its business operations. The operations
of each New Fund following the Reorganization will be substantially similar to
those of its predecessor Current Fund. The fundamental investment restrictions
for all of the New Funds will conform to the changes proposed in Proposal 3, to
the extent that Proposal 3 is approved. Finally, as described below, the Trust's
Agreement and Declaration of Trust differs from the Company's Charter in certain
respects that are expected to improve the Company's and each New Fund's
operations.
REASONS FOR THE REORGANIZATION
The Company's Board of Directors and Pilgrim Baxter believe that the
Delaware business trust organizational form offers a number of advantages over
the Maryland corporate organizational form. As a result of these advantages, the
Delaware business trust organizational form has been increasingly used by other
investment companies.
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The Delaware business trust organizational form offers greater
flexibility than the Maryland corporate form. A Maryland corporation is governed
by the detailed requirements imposed by Maryland corporate law and by the terms
of its Charter. A Delaware business trust is subject to fewer statutory
requirements. The Trust will be governed primarily by the terms of an Agreement
and Declaration of Trust ("Trust Agreement") and Bylaws (collectively, the
"Governing Instruments"). In particular, the Trust will have greater flexibility
to conduct business without the necessity of engaging in expensive proxy
solicitations of shareholders. For example, under Maryland corporation law,
amendments to the Company's Charter would typically require shareholder
approval. Under Delaware law, unless the Trust Agreement of a Delaware business
trust provides otherwise, amendments to it may be made without first obtaining
shareholder approval. In addition, unlike Maryland corporation law, which
restricts the delegation of a board of directors' functions, Delaware law
permits the board of trustees of a Delaware business trust to delegate certain
of its responsibilities. For example, the board of trustees of a Delaware
business trust may delegate the responsibility of declaring dividends to duly
empowered committees of the board or to appropriate officers. Finally, Delaware
law permits the Trustees to adapt a Delaware business trust to future
contingencies. For example, the Trustees may, without a shareholder vote, change
a Delaware business trust's domicile or organizational form. In contrast, under
Maryland corporation law, a Company's board of directors would be required to
obtain shareholder approval prior to changing domicile or organizational form.
The Reorganization will also have certain other effects on the Company,
its shareholders and management, which are described below under the heading
"How the Trust Will Compare to the Company"
WHAT THE PROPOSED REORGANIZATION WILL INVOLVE
To accomplish the Reorganization, the Trust has been formed as a
Delaware business trust pursuant to its Trust Agreement, and each New Fund has
been established as a series of the Trust. On the closing date, each Current
Fund will transfer all of its assets to the corresponding classes of the New
Fund in exchange solely for a number of full and fractional shares of the PBHG
Class and Advisor Class shares of the New Fund equal to the number of full and
fractional shares of common stock of the corresponding classes of the Current
Fund then outstanding and the New Fund's assumption of the Current Fund's
liabilities. Immediately thereafter, each Current Fund will distribute those New
Fund shares to its shareholders in complete liquidation and will, as soon as
practicable thereafter, be terminated. Upon completion of the Reorganization,
each shareholder of each Current Fund will be the owner of full and fractional
shares of the corresponding New Fund equal in number and aggregate net asset
value to the shares he or she held in the Current Fund. After completion of the
Reorganization, the Company will be dissolved as a Maryland corporation. A vote
to approve the Reorganization will be deemed to be a vote to approve the
dissolution of the Company.
The obligations of the Company and the Trust under the Plan are subject
to various conditions stated therein. To provide against unforeseen events, the
Plan may be terminated or amended at any time prior to the closing of the
Reorganization by action of the Board,
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notwithstanding the approval of the Plan by the shareholders of the Company.
However, no amendments may be made that would materially adversely affect the
interests of shareholders of any Current Fund. The Company and the Trust may at
any time waive compliance with any condition contained in the Plan, provided
that the waiver does not materially adversely affect the interests of
shareholders of any Current Fund.
The Plan authorizes the Company to acquire one share of each class of
each New Fund and, as the sole shareholder of the Trust prior to the
Reorganization, to do each of the following:
o Approve with respect to each New Fund a new investment advisory
and, if applicable, sub-advisory agreement that will be
substantially identical to that described in Proposals 1 and 2.
o Approve a new distribution agreement with PBHG Fund Distributors,
Inc., an affiliate of Pilgrim Baxter, which will be substantially
identical to the current distribution agreement between the
Company's and its current distributor, SEI,
o Approve a new distribution plan pursuant to Rule 12b-1 under the
1940 Act with respect to the Advisor Class of shares of each New
Fund other than the PBHG International Fund and the PBHG Cash
Reserves Fund that will contain the same financial terms as the
existing distribution plan for that Advisor Class.
o Approve with respect to PBHG International Fund and PBHG Global
Technology & Communications Fund a custodian agreement with
Northern Trust, with respect to every other New Fund a custodian
agreement with First Union National Bank and with respect to each
new Fund a transfer agency and servicing agreement with DST
Systems, Inc., each of which currently provides such services to
the corresponding Current Fund, and a multiple class plan pursuant
to Rule 18f-3 of the 1940 Act which will be substantially
identical to the multiple class plan that exists for the
corresponding Current Fund.
o Elect the directors of the Company as the trustees of the Trust to
serve without limit in time, except as they may resign or be
removed by action of the Trust's trustees or shareholders.
o Ratify the selection of PricewaterhouseCoopers LLP, the
accountants for the Company, as the independent public accountants
for the Trust.
o Approve such other agreements and plans as are necessary for each
New Fund's operation as a series of an open-end, management
investment company.
The Trust's transfer agent will establish for each shareholder an
account containing the appropriate number of shares of each class of each New
Fund. Such accounts will be identical in all respects to the accounts currently
maintained by the Company's transfer agent for each shareholder of the Current
Funds. Shares held in the Current Fund accounts will automatically be designated
as shares of the New Funds. Certificates for Current Fund shares issued before
their organization will represent shares of the corresponding New Fund after
their organization. The Trust, however, will not normally issue share
certificates. Any account options or privileges on accounts of shareholders of
the Current Funds will be replicated on their New Fund account.
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THE FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATION
The Company and the Trust will receive an opinion of Ballard Spahr
Andrews & Ingersoll, LLP to the effect that the Reorganization will constitute a
tax-free reorganization under section 368(a)(1)(F) of the Internal Revenue Code
of 1986, as amended. Accordingly, the Current Funds, the New Funds and the
shareholders of the New Funds will recognize no gain or loss for federal income
tax purposes as a result of the Reorganization. Shareholders of the Current
Funds should consult their tax advisers regarding the effect, if any, of the
Reorganization in light of their individual circumstances and as to state and
local consequences, if any.
APPRAISAL RIGHTS
Appraisal rights are not available to shareholders. However,
shareholders retain the right to redeem their shares of the Current Funds or the
New Funds, as the case may be, at any time before or after the Reorganization.
HOW THE TRUST WILL COMPARE WITH THE COMPANY
STRUCTURE OF THE TRUST
The Trust has been established under the laws of the State of Delaware
by the filing of a certificate of trust in the office of the Secretary of State
of Delaware. The Trust has established series corresponding to and having
identical designations as the series portfolios of the Company. The Trust has
also established an Advisor Class of shares for each New Fund other than the
PBHG International Fund and the PBHG Cash Reserves Fund corresponding to and
having identical designations as the Advisor Class of the corresponding Current
Fund. Each New Fund will have the same investment objectives, policies, and
restrictions as its predecessor Current Fund, except that the New Funds'
fundamental restrictions will conform to the changes proposed in Proposal 3
(assuming approval of each of item in Proposal 3 by the shareholders). If any of
the items in Proposal 3 is not approved by shareholders, the New Funds affected
by the non-approval will continue to be subject to the corresponding Current
Funds' existing fundamental restrictions. The Trust's fiscal year is the same as
that of the Company. The Trust will not have any operations prior to the
Reorganization. Initially, the Company will be the sole shareholder of the
Trust.
As a Delaware business trust, the Trust's operations are governed by
its Governing Instruments and applicable Delaware law rather than by the
Company's Charter and Amended and Restated Bylaws and applicable Maryland law.
Certain differences between the two domiciles and organizational forms are
summarized below. The operations of the Trust will continue to be subject to the
provisions of the 1940 Act and the rules and regulations thereunder.
TRUSTEES AND OFFICERS OF THE TRUST
Subject to the provisions of the Governing Instruments, the business of
the Trust will be managed by its trustees, who serve indefinite terms and who
have all powers necessary or
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convenient to carry out their responsibilities. The responsibilities, powers,
and fiduciary duties of the trustees are substantially the same as those of the
directors of the Company.
The trustees of the Trust would be those persons who currently serve as
directors of the Company. The current officers of the Company will be elected to
serve as officers of the Trust and the current officers of the Company will
perform the same functions on behalf of the Trust following the Reorganization
that they now perform on behalf of the Company.
SHARES OF THE TRUST
The beneficial interests in the New Funds will be represented by
transferable shares, par value $0.001 per share. Shareholders do not have the
right to demand or require the Trust to issue share certificates, although the
Trust, in its sole discretion, may issue them. The Trustees have the power under
the Trust Instrument to establish new series and classes of shares; the
Company's directors currently have a similar right. The Governing Instruments
permit the Trustees to issue an unlimited number of shares of each class and
series. The Company is authorized to issue only the number of shares specified
in the Charter and may issue additional shares only with Board approval and
after payment of a fee to the State of Maryland on any additional shares
authorized.
Only the current PBHG Growth Fund offers two classes of shares: the
PBHG Class and the Advisor Class. The Trust has established for each New Fund
the classes that currently exist for its predecessor Current Fund. Except as
discussed in this proxy statement, shares of each class of the New Funds will
have rights, privileges, and terms substantially similar to those of the
corresponding class of the Current Funds.
SHAREHOLDER MEETING REQUIREMENTS
Maryland law provides that a special meeting of shareholders shall be
called upon the written request of shareholders holding 25% of the Company's
shares. The Trust's Bylaws provide that a special meeting of shareholders for
the purpose of voting on the removal of any trustee may be called by the holders
of 10% or more of the outstanding shares of the Trust.
The Trust, like the Company, will operate as an open-end, management
investment Company registered with the Securities and Exchange Commission (the
"SEC") under the 1940 Act. As permitted by SEC rules, the Trust will adopt as
its own the registration statement of the Company. Shareholders of the New Funds
therefore will have the power to vote at special meetings with respect to, among
other things, changes in any fundamental investment objectives and the
fundamental restrictions and policies of the New Funds; approval of certain
changes to investment advisory contracts and plans of distribution; and
additional matters relating to the Trust as required by the 1940 Act.
SHAREHOLDER VOTING RIGHTS
Under Maryland law, shareholders of the Company have the right to vote
on the following matters: the substantive amendment or complete restatement of
the Company's
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Charter; generally, a consolidation, merger, or share exchange involving the
Company or a transfer of the Company's assets not in the ordinary course of
business; and the voluntary or, in some cases, involuntary dissolution of the
Company.
Shareholders of the Trust will have only those voting rights that are
explicitly set forth in the Governing Instruments. Under the Governing
Instruments, shareholders of the Trust have the right to vote on the following
matters: the election or removal of trustees, provided that a meeting of
shareholders has been called for that purpose; the termination of the Trust or
any Fund or class, provided that a meeting of shareholders has been called for
that purpose and unless there are fewer than 100 holders of record of the Trust
or such terminating Fund or class; the sale of all or substantially all of the
assets of the Trust or any Fund or class, unless the primary purpose of such
sale is to change the Trust's domicile or organizational form; under certain
circumstances, the merger or consolidation of the Trust or any Fund or class
with and into another company or with and into another Fund or class of the
Trust; and the amendment of the section of the Trust Agreement that governs
shareholders' voting rights.
DOLLAR BASED VOTING
After the Reorganization your voting rights will become "dollar-based,"
which will ensure that shareholders' voting rights remain proportionate to their
economic interests. Currently, Current Fund shareholders are entitled to one
vote for each share that they own. However this "share-based" system is
inequitable if all of the shares of a particular Current Fund do not have the
same share price. This occurs when the Company offers more than one series of
shares or more than one class of shares. The share prices of the Company's
Current Funds inevitably diverge over time due to their different investment
programs. Similarly, the share prices of a Current Fund's different share
classes will deviate over time because of their different expense structures. As
a result, when issues are voted at the Current Fund level, the owners of
lower-priced shares have more votes per dollar than the owners of higher-priced
shares. Although only the Current Growth Fund offers two classes of shares,
dollar-based voting rights would apply to any additional share classes that the
remaining Current Funds might offer in the future. Dollar-based voting rights
would also apply to any additional portfolios the Company might offer in the
future.
REMOVAL OF DIRECTORS AND TRUSTEES
The Company's Charter permits removal of a director prior to the
expiration of his or her term of office for cause, and not otherwise, by the
affirmative vote of a majority of all votes entitled to be cast for the election
of directors. Under the Trust Agreement, a trustee may be removed by a written
instrument, signed by at least two-thirds of the number of trustees prior to
such removal, or by the affirmative vote of holders of two-thirds of the Trust's
outstanding shares at a special meeting called for that purpose.
SHAREHOLDERS' RIGHTS OF INSPECTION
Maryland law provides generally that persons who have been
shareholders of record for six months or more and who own of record at least 5%
of a Current Fund's outstanding shares of any class may inspect that Current
Fund's books of account and stock ledger. Under the Trust's
31
<PAGE>
Governing Instruments, New Fund shareholders who have held shares of record for
at least six months and who hold at least 5% of the outstanding shares of any
class of a New Fund are permitted, upon written request, to inspect a list of
the shareholders of that Fund.
SHAREHOLDER LIABILITY
Maryland law provides that a shareholder is not obligated to the
Company with respect to the stock held therein, except to the extent that: (1)
the subscription price or other agreed consideration for the stock has not been
paid (subject to limited exceptions); (2) the shareholder knowingly accepted an
illegal distribution; or (3) the shareholder is subject to any liability imposed
by law upon the dissolution, voluntary or involuntary, of the Company.
Under Delaware law, shareholders of a Delaware business trust shall be
entitled to the same limitations of liability extended to shareholders of
private for-profit corporations; however, there is a remote possibility that
shareholders could, under certain circumstances, be held liable for the
obligations of the Trust to the extent the courts of another state which does
not recognize such limited liability were to apply the laws of such state to a
controversy involving such obligations. However, the Trust Agreement disclaims
shareholder liability for acts or obligations of the Trust and requires that
notice of such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Trust or the trustees to all parties, and each
party thereto must expressly waive all rights of action directly against
shareholders of the Trust. The Governing Instruments provide for indemnification
out of the property of a New Fund for all losses and expenses of any shareholder
of such New Fund held liable on account of being or having been a shareholder.
Thus, the risk of a shareholder incurring financial loss due to shareholder
liability is limited to circumstances in which a New Fund would be unable to
meet its obligations and the complaining party was held not to be bound by the
liability disclaimer.
LIABILITY OF DIRECTORS AND TRUSTEES
Under its Charter, the Company limits the liability of and indemnifies
its present and past directors and officers to the maximum extent permitted by
Maryland law and the 1940 Act. Directors may be personally liable to the Company
by reason of willful misfeasance, bad faith, or gross negligence in the
performance of their duties or by reason of reckless disregard of their duties
as directors. In the event of any litigation or other proceeding against a
director or officer of the Company, Maryland law permits the Company to
indemnify the director or officer for certain expenses and to advance money for
such expenses unless (a) it is established that the act or omission of the
director or officer was material to the matter giving rise to the proceeding and
the act or omission was committed in bad faith or was the result of active and
deliberate dishonesty; (b) the director or officer actually received an improper
personal benefit in money, property or services; or (c) in the case of any
criminal proceeding, the director or officer had reasonable cause to believe the
act or omission was unlawful. The Governing Instruments provide indemnification
for current and former trustees, officers, employees and agents of the Trust to
the fullest extent permitted by Delaware law and other applicable law. Trustees
of the Trust may be personally liable to the Trust and its shareholders by
reason of willful misfeasance, bad faith, or gross negligence in the performance
of their duties or by reason of reckless disregard of their duties as trustees.
32
<PAGE>
AMENDMENT OF CHARTER AND TRUST AGREEMENT
Under the Company's Charter and Maryland law, the Charter may be
amended upon (a) adoption by the Board of a resolution setting forth the
proposed amendment and declaring that such amendment is advisable and (b)
approval of such resolution by the holders of a majority of the Company's
outstanding shares. The Trust Agreement may be amended by a majority of the
trustees without any shareholder vote, except that the shareholders will have
the right to vote on any amendment that affects their voting rights, that
reduces the indemnification provided to shareholders or former shareholders,
that is required to have shareholder approval by law or by the Trust's
registration statement, or that is submitted to the shareholders by the
trustees.
The foregoing is only a summary of certain differences between and
among the Company's Charter and Bylaws and Maryland law and the Trust's Trust
Agreement and Bylaws and Delaware law. It is not a complete list of the
differences. Shareholders should refer to the provisions of these documents and
state law directly for a more thorough comparison. Copies of the Charter and
Bylaws of the Company, and of the Trust's Trust Agreement and the Bylaws are
available to shareholders without charge upon written request to the Company or
the Trust at P.O. Box 219534, Kansas City, Missouri, 64121-9534.
WHEN THE REORGANIZATION WILL BE IMPLEMENTED
Assuming shareholder approval of Proposal 4, the Company currently
contemplates that the Reorganization will close on or about April 1, 2001.
However, the Reorganization may close on another date if circumstances warrant.
THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS,
UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL 4.
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
PBHG Fund Services is the Company's administrator, shareholder
servicing agent and web servicing agent. PBHG Fund Services also serves as
administrator to PBHG Insurance Series Fund, Inc., an investment company also
managed by Pilgrim Baxter. PBHG Fund Services is located at 825 Duportail Road,
Wayne, Pennsylvania 19087.
SEI, the Fund's Distributor, is located at One Freedom Valley Road,
Oaks, Pennsylvania 19456.
SCHEDULE 7 lists other material payments by the Funds to Pilgrim
Baxter, or other affiliated persons of Pilgrim Baxter for the fiscal year ended
March 31, 2000.
SCHEDULE 8 lists Officers and Directors of Pilgrim Baxter and Value
Investors.
SCHEDULE 9 lists the General Partners and Senior Vice Presidents of
Wellington Management.
33
<PAGE>
SCHEDULE 10 lists Officers and Directors of Murray Johnstone.
BROKERAGE COMMISSIONS
The Pilgrim Baxter or sub-advisers are authorized to select brokers and
dealers to effect securities transactions for the Funds. The Pilgrim Baxter or
sub-advisers will seek to obtain the most favorable net results by taking into
account various factors, including price, commission, if any, size of the
transactions and difficulty of executions, the firm's general execution and
operational facilities and the firm's risk in positioning the securities
involved. While the Pilgrim Baxter or sub-advisers generally seek reasonably
competitive spreads or commissions, the Fund will not necessarily be paying the
lowest spread or commission available. The Pilgrim Baxter or sub-advisers seek
to select brokers or dealers that offer the Funds best price and execution or
other services that are of benefit to the Funds. Certain brokers or dealers
assist their clients in the purchase of shares from the SEI and charge a fee for
this service in addition to a Fund's public offering price. In the case of
securities traded in the over-the-counter market, the Pilgrim Baxter or
sub-advisers expect normally to seek to select primary market makers.
The Pilgrim Baxter or sub-advisers may, consistent with the interests
of the Funds, select brokers on the basis of the research services they provide
to the Pilgrim Baxter or sub-advisers. Such services may include analyses of the
business or prospects of a company, industry or economic sector, or statistical
and pricing services. Information so received by the Pilgrim Baxter will be in
addition to and not in lieu of the services required to be performed by the
Adviser under the New Investment Advisory Agreement. If, in the judgment of the
Pilgrim Baxter or sub-Adviser, a Fund or other accounts managed by the Pilgrim
Baxter or sub-Adviser will be benefited by supplemental research services, the
Pilgrim Baxter or sub-advisers are authorized to pay brokerage commissions to a
broker furnishing such services which are in excess of commissions which another
broker may have charged for effecting the same transaction. These research
services include advice, either directly or through publications or writings, as
to the value of securities, the advisability of investing in, purchasing or
selling securities, and the availability of securities or purchasers or sellers
of securities; furnishing of analyses and reports concerning issuers, securities
or industries; providing information on economic factors and trends; assisting
in determining portfolio strategy; providing computer software used in security
analyses; and providing portfolio performance evaluation and technical market
analyses. The expenses of the Pilgrim Baxter or sub-advisers will not
necessarily be reduced as a result of the receipt of such information, and such
services may not be used exclusively, or at all, with respect to the Fund or
account generating the brokerage, and there can be no guarantee that the Pilgrim
Baxter or sub-advisers will find all of such services of value in advising the
Funds.
It is expected that the Funds may execute brokerage or other agency
transactions through the SEI, which is a registered broker-dealer, for a
commission in conformity with the 1940 Act, the Securities Exchange Act of 1934,
as amended, and rules promulgated by the SEC. Under these provisions, the SEI is
permitted to receive and retain compensation for effecting portfolio
transactions for the Funds on an exchange if a written contract is in effect
34
<PAGE>
between the SEI and the Fund expressly permitting the SEI to receive and retain
such compensation. These rules further require that commissions paid to the SEI
by the Fund for exchange transactions not exceed "usual and customary" brokerage
commissions. The rules define "usual and customary" commissions to include
amounts which are "reasonable and fair compared to the commission, fee or other
remuneration received or to be received by other brokers in connection with
comparable transactions involving similar securities being purchased or sold on
a securities exchange during a comparable period of time." In addition, the
Pilgrim Baxter or sub-advisers may direct commission business to one or more
designated broker-dealers, including the SEI, in connection with such
broker-dealer's payment of certain of the Fund's or the Fund's expenses. In
addition, the Pilgrim Baxter or sub-adviser may place orders for the purchase or
sale of portfolio securities with qualified broker-dealers that refer
prospective shareholders to the Funds. The Directors, including those who are
not "interested persons" of the Fund, have adopted procedures for evaluating the
reasonableness of commissions paid to the SEI and will review these procedures
periodically. SCHEDULE 11 list the commission paid to SEI in the last fiscal
year. These commissions were paid to the SEI in connection with repurchase
agreement transactions.
Consistent with the Conduct Rules of the National Association of
Securities Dealers, Inc. ("NASD") and subject to seeking best execution and such
other policies as the Board of Directors may determine, the Pilgrim Baxter may
consider sales of the Fund's shares as a factor in the selection of
broker-dealers to execute portfolio transactions for the Fund.
SHAREHOLDER VOTING PROCEDURES
The Company expects that the solicitation of proxies from shareholders
will be made by mail, but solicitation also may be made by telephone
communications from officers or employees of Pilgrim Baxter or its affiliates.
These officers and employees will not receive any special compensation for their
assistance in the solicitation of proxies from the Company.
The Company has engaged the services of Shareholder Communications
Corporation ("SCC") to assist it in soliciting proxies for the meeting. The
Company estimates that the aggregate cost of SCC's services will be
approximately $902,900. The Company will not bear the cost of soliciting proxies
that will be paid by Pilgrim Baxter or its affiliates. The Company expects to
solicit proxies principally by mail, but either the company or SCC may also
solicit proxies by telephone, facsimile, the Internet or personal interview. The
Company may also reimburse certain firms and others for their expenses in
forwarding solicitation materials to the beneficial owners of shares of the
Funds.
As the Meeting date approaches, certain shareholders of the Company may
receive a telephone call if their votes have not yet been received. Shareholders
of the Company may authorize a telephone solicitor to execute proxies by
telephonically transmitted instructions. Proxies that are obtained
telephonically will be recorded in accordance with the procedures set forth
below. The directors believe that these procedures are reasonably designed to
ensure that the identity of the shareholder casting the vote is accurately
determined and that the voting instructions of the shareholder are accurately
determined.
35
<PAGE>
In all cases where a telephonic proxy is solicited, the telephone
solicitor will ask for each shareholder's full name, address, social security or
taxpayer identification number, title (if the shareholder is authorized to act
on behalf of an entity, such as a corporation), and the number of shares owned.
The telephone solicitor will also confirm that the shareholder has received the
Proxy Statement and proxy card in the mail. If the information provided by the
shareholder agrees with the record information, the telephone solicitor will
explain the process, read the proposals listed on the proxy card, and ask for
the shareholder's instructions on each proposal. The telephone solicitor,
although permitted to answer questions about the process, is not permitted to
recommend to the shareholder how to vote, other than to read any recommendation
set forth in the Proxy Statement. The telephone solicitor will record the
shareholder's instructions on the card. Within 72 hours, the telephone solicitor
will send the shareholder a letter or mailgram to confirm his or her vote and
ask the shareholder to call the telephone solicitor immediately if his or her
instructions are not correctly reflected in the confirmation.
If you wish to participate in the Meeting, but do not wish to give your
proxy by any of the methods outlined above, you may still submit the proxy card
originally sent with the Proxy Statement or attend in person. Should you require
additional information regarding the Proxy or replacement proxy cards, you may
contact the Company at 1-800-433-0051. You may revoke an executed proxy by (i) a
written instrument received by the Secretary of the Company at any time before
they are exercised; (ii) delivery of a later-dated proxy; or (iii) attendance at
the Meeting and voting in person.
All proxy cards solicited that are properly executed and received in
time to be voted at the Meeting will be voted at the Meeting or any adjournment
thereof according to the instructions on the proxy card. IF NO SPECIFICATION IS
MADE ON A PROXY CARD, IT WILL BE VOTED FOR EACH OF THE MATTERS SPECIFIED ON THE
PROXY CARD. For purposes of determining the presence of a quorum, abstentions,
broker non-votes or withheld votes will be counted as present; however, they
will have no effect on the outcome of the vote to approve any Proposal requiring
a vote based on the percentage of shares actually voted. You should note that
while votes to ABSTAIN will count toward establishing a quorum, passage of any
Proposal being considered at the Meeting will occur only if a sufficient number
of votes are cast FOR the Proposal. Accordingly, votes to ABSTAIN and votes
AGAINST will have the same effect in determining whether the Proposal is
approved.
If a quorum is not present at the Meeting, or if a quorum is present at
the Meeting but sufficient votes to approve one or more of the proposed items
are not received, or if one or more Funds require additional votes on a selected
item, or if other matters arise requiring shareholder attention, the persons
named as proxy agents may propose one or more adjournments of the Meeting to
permit further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those shares present at the Meeting or
represented by proxy. A shareholder vote may be taken on one or more of the
items in this Proxy Statement prior to such adjournment if sufficient votes have
been received and it is otherwise appropriate. The persons named as proxies will
vote those proxies that they are entitled to vote FOR any such proposal, in
favor of such an adjournment, and will vote those proxies required to be voted
AGAINST any such proposal, against any such adjournment.
36
<PAGE>
PAYMENT OF EXPENSES
Pilgrim Baxter or its affiliates will pay the expenses relating to the
holding of this meeting of shareholders including the preparation, printing and
mailing of this proxy statement and its enclosures and of all solicitations,
including telephone or internet voting.
BENEFICIAL OWNERSHIP OF SHARES
SCHEDULE 12 lists the beneficial owners of five percent or more of each
Fund's outstanding shares as of November 17, 2000. [?? ON THAT DATE, THE
DIRECTORS AND OFFICERS OF THE FUNDS, TOGETHER AS A GROUP, BENEFICIALLY OWNED
LESS THAN ONE PERCENT OF EACH FUND'S OUTSTANDING SHARES.]
SCHEDULE 13 contains information on the total number of outstanding
shares of each Fund as of November 17, 2000.
The term "beneficial ownership" is as defined under Section 13(d) of
the Securities and Exchange Act of 1934. The information as to beneficial
ownership is based on statements furnished to each Fund by the existing
directors and officers of the Company and/or on the records of the Company's
transfer agent.
ANNUAL AND SEMI-ANNUAL REPORTS TO SHAREHOLDERS
FOR A FREE COPY OF THE COMPANY'S MOST RECENT ANNUAL REPORT (AND MOST
RECENT SEMI-ANNUAL REPORT SUCCEEDING THE ANNUAL REPORT, IF ANY) SHAREHOLDERS OF
THE FUNDS MAY CALL 800-433-0051 OR WRITE TO THE COMPANY AT PO BOX 219081, KANSAS
CITY, MO 64121.
CERTAIN TRANSACTIONS
Since the beginning of the most recently completed fiscal year, Harold
J. Baxter, Chairman of the Board of Directors of the Company had warrants and
options to purchase 1,246,274 shares of common stock of UAM. In connection with
Old Mutuals' acquisition of UAM, Old Mutual purchased or redeemed from all
holders shares of common stock of UAM, including those shares underlying stock
options and warrants for a gross price of $25 a share.
In connection with the Transaction and in order to help ensure the
continued services of Mr. Baxter with the Advisor in the future, Old Mutual and
Mr. Baxter have entered into a new long-term employment contract and have
restructured the existing revenue sharing agreement among UAM, the Advisor, Mr.
Baxter and another individual pursuant to which the parties shared in the
revenues of the Advisor. In exchange, Mr. Baxter has received consideration in
the form of a combination of phantom equity (contractual rights which provide
the economic equivalent of stock ownership) in the Advisor, a cash payment and a
reduced interest in the revenues of the Advisor pursuant to a restructured
revenue sharing arrangement. Old Mutual has the option in the future to
terminate Mr. Baxter's interest in the revenues of the Advisor pursuant to the
restructured revenue sharing arrangement in exchange for an additional cash
payment.
37
<PAGE>
SHAREHOLDER PROPOSALS
As a general matter, the Funds do not hold regular meetings of
shareholders. If you wish to submit a proposal for consideration at a meeting of
shareholders of a Fund, you should send such proposal to the Company at the
address set forth on the first page of this Proxy Statement. To be considered
for presentation at a shareholder's meeting, the Company must receive proposals
a reasonable time before proxy materials are prepared relating to that meeting.
Mere submission of a shareholder proposal does not guarantee the inclusion of
the proposal in the proxy statement or presentation of the proposal at the
meeting since inclusion and presentation are subject to compliance with certain
Federal regulations.
OTHER BUSINESS
The Board does not intend to present any other business at the Meeting.
Other matters will be considered if notice is given within a reasonable amount
of time prior to the meeting. If any other matter may properly come before the
meeting, or any adjournment thereof, the persons named in the accompanying proxy
card(s) intend to vote, act, or consent thereunder in accordance with their best
judgment at that time with respect to such matters.
The Directors, Including the Independent Directors, Recommend Approval
of each Proposal. Any Unmarked Proxies without Instructions to the Contrary will
be Voted in Favor of Approval of each Proposal.
38
<PAGE>
SCHEDULE 1
Advisory Fees Paid and advisory fees waived
Under the former Investment Advisory Agreement
for fiscal year ended march 31, 2000
The amount of advisory fees paid by each Fund to Pilgrim Baxter &
Associates, Ltd. under the Former Investment Advisory Agreement for the fiscal
year ended March 31, 2000 is set forth below under the column "Advisory Fees
Paid." The amount of advisory fees waived for each Fund by Pilgrim Baxter &
Associates, Ltd. under the expense limitation agreements for the fiscal year
ended March 31, 2000 is set forth below under the column "Advisory Fees Waived."
Note: No advisory fees paid or waived are listed for PBHG Global Technology &
Communications Fund because it had not commenced operations as of March 31,
2000.
<TABLE>
<CAPTION>
Fund Advisory Fees Paid Advisory Fees Waived
<S> <C> <C>
PBHG Growth $32,748,339 $0
PBHG Emerging Growth $7,263,497 $0
PBHG New Opportunities $1,418,924 $0
PBHG Large Cap Growth $1,148,240 $0
PBHG Select Equity $4,326,181 $0
PBHG Core Growth $941,429 $0
PBHG Limited $1,142,585 $0
PBHG Large Cap 20 $5,274,451 $0
PBHG Large Cap Value $245,217 $0
PBHG Mid-Cap Value $364,163 $0
PBHG Small Cap Value $702,546 $57,833
PBHG Focused Value $48,688 $2,849
PBHG International $116,700 $0
PBHG Cash Reserves $582,869 $0
PBHG Technology & Communications $12,141,268 $0
PBHG Strategic Small Company $537,130 $24,537
</TABLE>
<PAGE>
SCHEDULE 2 - OTHER INVESTMENT COMPANIES ADVISED BY PILGRIM BAXTER
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EXPENSE
NET ASSETS LIMITATION/FEE
INVESTMENT ($ MIL) AS OF RATE PAID AFTER
FUND OBJECTIVE 10/31/00 FEE WAIVER
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PBHG Growth II Portfolio Growth $ 482,162,608 0.85% 1.20%
0.85%
------------------------------------------------------------------------------------------------------------------------------------
PBHG Large Cap Growth Portfolio Large Cap Growth $ 81,312,386 0.75% 1.10%
0.75%
------------------------------------------------------------------------------------------------------------------------------------
PBHG Select Value Portfolio Large Cap Value $ 73,440,367 0.65% 1.00%
0.65%
------------------------------------------------------------------------------------------------------------------------------------
PBHG Select 20 Portfolio Growth $ 922,330,865 0.85% 1.20%
0.85%
------------------------------------------------------------------------------------------------------------------------------------
PBHG Mid-Cap Value Portfolio Mid-Cap Value $ 851,794 0.85% 1.20%
0.00%
------------------------------------------------------------------------------------------------------------------------------------
PBHG Small Cap Value Portfolio Small Cap Value $ 225,833,641 1.00% 1.20%
1.000%
------------------------------------------------------------------------------------------------------------------------------------
PBHG Technology & Communications Technology $1,949,144,495 0.85% 1.20%
Portfolio 0.85%
------------------------------------------------------------------------------------------------------------------------------------
WRL PB Mid Cap Growth (Sub-adviser) Mid Cap Growth $ 265,457,054 0.50% to $100 No expense limitation
million; 0.40% on receipt of
above $100 million sub-advisory fees
------------------------------------------------------------------------------------------------------------------------------------
IDEX PB Mid Cap Growth (Sub-adviser) Mid Cap Growth $ 147,604,939 0.50% to $100 No expense
million; 0.40% limitation on receipt
above $100 million of sub-advisory fees
------------------------------------------------------------------------------------------------------------------------------------
Ohio National Fund Inc (Sub-adviser) Growth $ 45,284,286 0.75% to $50 No expense limitation
million; 0.70% on receipt of
above $50 million sub-advisory fees
to $150 million;
0.50% above
$150 million
------------------------------------------------------------------------------------------------------------------------------------
ONE Fund, Inc (Sub-adviser) Growth $ 7,911,774 0.75% to $50 No expense limitation
million; 0.70% on receipt of
above $50 million sub-advisory fees
to $150 million;
0.50% above
$150 million
------------------------------------------------------------------------------------------------------------------------------------
IDEX PB Technology (Sub-adviser) Technology $ 87,153,157 0.55% to $100 No expense limitation
million; 0.50% on receipt of
above $100 million sub-advisory fees
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 3 - OTHER INVESTMENT COMPANIES ADVISED BY VALUE INVESTORS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET ASSETS
INVESTMENT ($ MIL) AS OF EXPENSE
FUND OBJECTIVE 10/31/00 FEE LIMITATION/FEE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PBHG Select Value Portfolio Large Cap Value $ 73,440,367 0.40% No expense limitation
agreement with
the Portfolio
------------------------------------------------------------------------------------------------------------------------------------
PBHG Mid-Cap Value Portfolio Mid-Cap Value $ 851,794 0.50% No expense limitation
agreement with
the Portfolio
------------------------------------------------------------------------------------------------------------------------------------
PBHG Small Cap Value Portfolio Small Cap Value $ 225,833,641 0.65% No expense limitation
agreement with
the Portfolio
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 4 - OTHER INVESTMENT COMPANIES ADVISED BY WELLINGTON
<TABLE>
<CAPTION>
NET ASSETS
INVESTMENT ($ MIL) AS OF ADVISORY FEE
FUND OBJECTIVE 10/31/00 FEE WAIVER
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SEI Daily Income Trust-- Money Market $1,160 0.075% to $500 From time to time,
Money Market* million; 0.02% a voluntary fee
above $500 million waiver may apply
------------------------------------------------------------------------------------------------------------------------------------
SEI Daily Income Trust-- Money Market $4,547 0.075% to $500 From time to time,
Prime Obligation* million; 0.02% a voluntary fee
above $500 million waiver may apply
------------------------------------------------------------------------------------------------------------------------------------
SEI Daily Income Trust-- Money Market $4,547 0.075% to $500 From time to time,
Prime Obligation* million; 0.02% a voluntary fee waiver
above $500 million may apply
------------------------------------------------------------------------------------------------------------------------------------
SEI Liquid Asset Trust- Money Market $1,471 0.075% to $500 From time to time,
Prime Obligation * million; 0.02% a voluntary fee waiver
above $500 million may apply
------------------------------------------------------------------------------------------------------------------------------------
SEI Insurance Products Trust- Money Market $5 0.075% to $500 No waiver
VP Prime Obligation million; 0.02%
above $500 million
------------------------------------------------------------------------------------------------------------------------------------
Bishop Street- Money Money Market $313 0.075% to $500 No waiver
Market Fund million; 0.02%
above $500 million
------------------------------------------------------------------------------------------------------------------------------------
Golden Oak Prime Money Market $127 0.075% to $500 No waiver
Obligation Portfolio* million; 0.02%
above $500 million
------------------------------------------------------------------------------------------------------------------------------------
OVB Prime Obligations Money Market $64 0.075% to $500 No waiver
Portfolio* million; 0.02%
above $500 million
------------------------------------------------------------------------------------------------------------------------------------
Anchor Series Trust Money Market $61 0.075% to No waiver
$500 million; 0.02%
above $500 million
------------------------------------------------------------------------------------------------------------------------------------
* Fee schedule is applied to aggregate 2a-7 assets within the trust.
</TABLE>
<PAGE>
SCHEDULE 5 - OTHER INVESTMENT COMPANIES ADVISED BY MURRAY JOHNSTONE
<TABLE>
<CAPTION>
NET ASSETS ADVISORY FEE
INVESTMENT ($ MIL) AS OF RATE PAID AFTER
FUND OBJECTIVE 10/31/00 FEE WAIVER
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Calvert World Values (sub-adviser) International 0.45% to
(Social Values) $250 million;
0.425% above
$250 million
------------------------------------------------------------------------------------------------------------------------------------
Sun Trust Equitable Securities International 0.50%
ESC Fund(sub-adviser)
------------------------------------------------------------------------------------------------------------------------------------
UAM MJI Fund International 0.75%
------------------------------------------------------------------------------------------------------------------------------------
Stratus Fund (sub-adviser) International 0.65% to
(ADRs only) $10 million;
0.60% above
$10 million
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 6 - CURRENT FUNDAMENTAL RESTRICTIONS
PBHG Growth Fund may not:
1. Make loans, except that the Portfolio, in accordance with its
investment objective and policies, may (i) purchase debt
instruments, and (ii) enter into repurchase agreements, provided
that the Portfolio will not make any investment in repurchase
agreements maturing in more than seven days if such investments,
together with any other illiquid securities held by the Portfolio,
would exceed 15% of the value of its net assets.
2. Act as an underwriter of securities of other issuers, except as it
may be deemed an underwriter under the 1933 Act in connection with
the sale of portfolio securities.
3. Purchase or sell commodities or commodity contracts, except that
the Portfolio, in accordance with its investment objective and
policies, may enter into futures contracts and options thereon.
4. Purchase or sell real estate, or real estate investment
partnerships.
5. Issue senior securities (as defined in the 1940 Act) except as
permitted in connection with the Portfolio's policies on borrowing
and pledging, or as permitted by rule, regulation or order of the
SEC.
6. Purchase more than 10% of the voting securities of any one issuer
or purchase securities of any one issuer if, at the time of
purchase, more than 5% of its total assets will be invested in
that issuer, except with respect to the Portfolio, up to 25% of
its assets may be invested without regard to these limits.
7. Pledge any of its assets, except that the Portfolio may pledge
assets having a value of not more than 10% of its total assets in
order to (i) secure permitted borrowings, or (ii) as may be
necessary in connection with the Portfolio's use of options and
futures contracts.
8. Purchase securities of other investment companies except as
permitted by the 1940 Act and the rules and regulations
thereunder.
9. Invest in interests in oil, gas or other mineral exploration or
development programs.
10. Purchase or write puts, calls or combinations thereof, except
that the Portfolio may invest in and commit its assets to writing
and purchasing only put and call options that are listed on a
national securities exchange and issued by the Options Clearing
Corporation to the extent permitted by the Prospectus and this
Statement of
<PAGE>
Additional Information. In order to comply with the securities
laws of several states, the Portfolio (as a matter of operating
policy) will not write a covered call option if, as a result, the
aggregate market value of all portfolio securities covering call
options or subject to put options for that Portfolio exceeds 25%
of the market value of that Portfolio's net assets.
11 Invest 25% or more of its total assets at the time of purchase in
securities of issuers (other than obligations issued or guaranteed
by the U.S. Government, its agencies or instrumentalities and
repurchase agreements collateralized by such obligations) whose
principal business activities are in the same industry. For
purposes of this investment limitation, state and municipal
governments and their agencies and authorities are not deemed to
be industries; utility companies will be divided according to
their services (e.g., gas, gas transmission, electric, electric
and gas, and telephone) and financial service companies will be
classified according to end use of their service (e.g., automobile
finance, bank finance, and diversified finance).
12. Borrow money (other than pursuant to reverse repurchase
agreements) except for temporary or emergency purposes and then
only in amounts up to 33 1/3% of the total assets of the PBHG
Growth Fund. The temporary borrowing will include, for example,
borrowing to facilitate the orderly sale of portfolio securities
to accommodate substantial redemption requests if they should
occur, to facilitate the settlement of securities transactions,
and is not for investment purposes. All borrowings in excess of 5%
of the Portfolio's total assets will be repaid before making
additional investments.
Each of 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 Large Cap Value Fund, PBHG Mid-Cap Value Fund, PBHG Small Cap Value Fund,
PBHG International Fund, PBHG Cash Reserves Fund, PBHG Technology &
Communications Fund, PBHG Strategic Small Company Fund and PBHG Global
Technology & Communications Fund may not:
1. Make loans, except that each Portfolio, in accordance with that
Portfolio's investment objectives and policies, may (i) purchase
or hold debt instruments, and (ii) enter into repurchase
agreements. In addition, the PBHG Limited Fund, the PBHG Large Cap
20 Fund, the PBHG Large Cap Value Fund, the PBHG Mid-Cap Value
Fund, the PBHG Small Cap Value Fund, the PBHG International Fund,
PBHG Strategic Small Company Fund and the PBHG Global Technology &
Communications Fund may each lend its portfolio securities in an
amount not exceeding one-third the value of its total assets.
<PAGE>
2. Act as an underwriter of securities of other issuers except as it
may be deemed an underwriter under the 1933 Act in connection with
the purchase and sale of portfolio securities.
3. Purchase or sell commodities or commodity contracts, except that a
Portfolio, in accordance with its objectives and policies, may:
(i) invest in readily marketable securities of issuers which
invest or engage in such activities; and (ii) enter into futures
contracts and options thereon.
4. Purchase or sell real estate or real estate partnership interests,
except that this limitation shall not prevent a Portfolio from
investing directly or indirectly in readily marketable securities
of issuers which can invest in real estate, institutions that
issue mortgages, or real estate investment trusts that deal with
real estate or interests therein.
5. Issue senior securities (as defined in the 1940 Act) except as
permitted in connection with the Portfolio's policies on borrowing
and pledging, or as permitted by rule, regulation or order of the
SEC.
6. Purchase more than 10% of the voting securities of any one issuer
or purchase securities of any one issuer if, at the time of
purchase, more than 5% of its total assets will be invested in
that issuer, except with respect to the Portfolio, up to 25% of
its assets may be invested without regard to these limits. This
limitation does not apply to the PBHG Large Cap 20 Fund, the PBHG
Technology & Communications Fund, PBHG Global Technology &
Communications Fund or the PBHG Cash Reserves Fund.
In addition, for purposes of this investment limitation, the term
"issuer" does not include obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities and repurchase
agreements collateralized by such obligations.
7. Invest 25% or more of its total assets at the time of purchase in
securities of one or more issuers (other than obligations issued
or guaranteed by the U.S. Government or its agencies and
instrumentalities and repurchase agreements collateralized by such
obligations) whose principal business activities are in the same
industry. For purposes of this limitation, supranational
organizations are deemed to be issuers conducting their principal
business activities in the same industry; state and municipal
governments and their agencies and authorities are not deemed to
be industries; utility companies will be divided according to
their services, for example, gas distribution, gas transmission,
electric and telephone will each be considered a separate
industry; and financial service companies will be classified
according to the end users of their services (e.g. automobile
finance, bank finance and diversified finance).
With respect to the PBHG Technology & Communications Fund and the
PBHG
<PAGE>
Global Technology & Communications Fund, up to 50% of the
Fund's assets may be invested without regard to these limits.
8. Borrow money except for temporary or emergency purposes and then
only in an amount not exceeding 10% of the value of total assets
(except not exceeding 33 1/3% of the value of total assets with
respect to the PBHG Mid-Cap Value Fund and the PBHG Small Cap
Value Fund). This borrowing provision is included solely to
facilitate the orderly sale of portfolio securities to accommodate
substantial redemption requests if they should occur and is not
for investment purposes. All borrowings in excess of 5% of the
Portfolio's total assets will be repaid before making investments.
9. Invest in companies for the purpose of exercising control.
10. Pledge, mortgage or hypothecate assets, except: (i) to secure
temporary borrowings permitted by each Portfolio's limitation on
permitted borrowings; or (ii) in connection with permitted
transactions regarding options and futures contracts and, except
for the PBHG Mid-Cap Value Fund and the PBHG Small Cap Value Fund,
in aggregate amounts not to exceed 10% of total assets taken at
current value at the time of the occurrence of such pledge,
mortgage or hypothecation.
11. Make short sales of securities, maintain a short position or
purchase securities on margin, except that each Portfolio may: (i)
obtain short-term credits as necessary for the clearance of
security transactions; and (ii) establish margin accounts as may
be necessary in connection with the Portfolio's use of options and
futures contracts.
12. Purchase securities of other investment companies except as
permitted by the 1940 Act and the rules and regulations
thereunder.
13. Invest in interests in oil, gas or other mineral exploration or
development programs and, except for the PBHG Mid-Cap Value Fund
and the PBHG Small Cap Value Fund, invest in oil, gas or mineral
leases.
Each of PBHG Focused Value Fund and PBHG New Opportunities Fund may not:
1. Make loans except that each such Portfolio, in accordance with its
investment objective and policies, may (i) purchase debt
obligations, (ii) enter into repurchase agreements and (iii) lend
its portfolio securities.
2. Act as an underwriter of securities of other issuers, except as it
may be deemed to be an underwriter under the 1933 Act in
connection with the purchase and sale of portfolio securities.
<PAGE>
3. Purchase or sell commodities or commodity contracts, except that
each such Portfolio, in accordance with its investment objective
and policies, may: (i) invest in readily marketable securities of
issuers which invest or engage in such activities; and (ii) enter
into forward contracts, futures contracts and options thereon.
4. Purchase or sell real estate, or real estate partnership
interests, except that this limitation shall not prevent any such
Portfolio from investing directly or indirectly in readily
marketable securities of issuers which can invest in real estate,
institutions that issue mortgages, or real estate investment
trusts which deal with real estate or interests therein.
5. Issue senior securities (as defined in the 1940 Act) except as
permitted in connection with the Portfolio's policies on
borrowing and pledging, or as permitted by rule, regulation or
order of the SEC.
6. Purchase more than 10% of the voting securities of any one issuer
or purchase securities of any one issuer if, at the time of
purchase, more than 5% of its total assets will be invested in
that issuer, except that up to 25% of its assets may be invested
without regard to these limits.
This limitation does not apply to the PBHG Focused Value Fund. For
purposes of this investment limitation, the term "issuer" does not
include obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities and repurchase agreements
collateralized by such obligations.
7. Invest 25% or more of its total assets at the time of purchase in
securities of issuers (other than obligations issued or guaranteed
by the U.S. Government, its agencies or instrumentalities and
repurchase agreements collateralized by such obligations) whose
principal business activities are in the same industry. For
purposes of this investment limitation, state and municipal
governments and their agencies and authorities are not deemed to
be industries; utility companies will be divided according to
their services (e.g., gas, gas transmission, electric, electric
and gas, and telephone) and financial service companies will be
classified according to end use of their service (e.g., automobile
finance, bank finance, and diversified finance).
8. Borrow money (other than pursuant to reverse repurchase
agreements) except for temporary or emergency purposes and then
only in amounts up to 33 1/3% of the total assets of the PBHG
Focused Value Fund and the PBHG New Opportunities Fund. The
temporary borrowing will include, for example, borrowing to
facilitate the orderly sale of portfolio securities to accommodate
substantial redemption requests if they should occur, to
facilitate the settlement of securities transactions, and is not
for investment purposes. All borrowings in excess of 5% of a
Portfolio's total assets will be repaid before making additional
investments.
<PAGE>
SCHEDULE 7 - OTHER MATERIAL PAYMENTS
The following chart sets forth the fees paid during the fiscal year
ended March 31, 2000 by each Fund to PBHG Fund Services, a wholly-owned
subsidiary of Pilgrim Baxter, for administrative services and shareholder
services. These services will continue to be provided by PBHG Fund Services if
the New Investment Advisory Contract with Pilgrim Baxter is approved. Note: No
fees are listed for PBHG Global Technology & Communications Fund because it had
not commenced operations as of March 31, 2000.
--------------------------------------------------------------------------------
FUND ADMINISTRATIVE
AND SHAREHOLDER
SERVICES FEES PAID
TO PBHG FUND SERVICES
--------------------------------------------------------------------------------
PBHG Growth Fund
--------------------------------------------------------------------------------
PBHG Emerging Growth Fund
--------------------------------------------------------------------------------
PBHG Large Cap Growth Fund
--------------------------------------------------------------------------------
PBHG Select Equity Fund
--------------------------------------------------------------------------------
PBHG Core Growth Fund
--------------------------------------------------------------------------------
PBHG Limited Fund
--------------------------------------------------------------------------------
PBHG Large Cap 20 Fund
--------------------------------------------------------------------------------
PBHG New Opportunities Fund
--------------------------------------------------------------------------------
PBHG Large Cap Value Fund
--------------------------------------------------------------------------------
PBHG Mid-Cap Value Fund
--------------------------------------------------------------------------------
PBHG Small Cap Value Fund
--------------------------------------------------------------------------------
PBHG Focused Value Fund
--------------------------------------------------------------------------------
PBHG International Fund
--------------------------------------------------------------------------------
PBHG Cash Reserves Fund
--------------------------------------------------------------------------------
PBHG Technology & Communications Fund
--------------------------------------------------------------------------------
PBHG Strategic Small Company Fund
--------------------------------------------------------------------------------
<PAGE>
SCHEDULE 8
PRINCIPAL EXECUTIVE OFFICER & DIRECTORS
OF PILGRIM BAXTER AND VALUE INVESTORS
OFFICERS & DIRECTORS OF THE PBHG FUNDS, INC. WHO ARE OFFICERS,
EMPLOYEES, DIRECTORS OF PILGRIM BAXTER AND VALUE INVESTORS
The following table provides information with respect to the principal
executive officer and the directors of Pilgrim Baxter and Value Investors and
officers and directors of The PBHG Funds, Inc., all of whose business address is
825 Duportail Road, Wayne, Pennsylvania 19087.
<TABLE>
<CAPTION>
PILGRIM BAXTER
----------------------------------------------------------------------------------------------
Position with
Name Pilgrim Baxter Principal Occupation
----------------------------------------------------------------------------------------------
<S> <C> <C>
Harold J. Baxter Director, Chairman of the Board Same
and Chief Executive Officer
----------------------------------------------------------------------------------------------
Gary L. Pilgrim Director, President Same
and Chief Investment Officer
----------------------------------------------------------------------------------------------
VALUE INVESTORS
----------------------------------------------------------------------------------------------
Position with
Name Pilgrim Baxter Principal Occupation
----------------------------------------------------------------------------------------------
Harold J. Baxter Director, Chairman of the Same
Board and Chief Executive Officer
----------------------------------------------------------------------------------------------
Gary L. Pilgrim Director, President and Same
Chief Investment Officer
----------------------------------------------------------------------------------------------
Eric C. Schneider Treasurer, Chief Financial Same
Officer, Controller
----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
THE PBHG FUNDS, INC.
----------------------------------------------------------------------------------------------
Position with Position with Position with
Name The PBHG Funds, Inc. Pilgrim Baxter Value Investors
----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Harold J. Baxter Chairman/Director Director/CEO Director/CEO
Chairman Chairman
----------------------------------------------------------------------------------------------
Gary L. Pilgrim President Director/President Director/President
CIO
----------------------------------------------------------------------------------------------
Lee T. Cummings Treasurer, Chief N/A N/A
Financial Officer,
Controller
----------------------------------------------------------------------------------------------
John M. Zerr Vice President/ General Counsel/ General Counsel/
Secretary Secretary Secretary
----------------------------------------------------------------------------------------------
Meghan M. Mahon Vice President/ Counsel/ Counsel/
Assistant Secretary Assistant Secretary Assistant Secretary
----------------------------------------------------------------------------------------------
Matthew R. DiClemente Assistant Secretary Legal Assistant Legal Assistant
----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 9 - PRINCIPAL EXECUTIVE OFFICERS AND PARTNERS OF WELLINGTON
The following table provides information with respect to the principal executive
officers and partners of Wellington, all of whose business address is Wellington
Management Company, 75 State Street, Boston, MA 02109
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
Name Position with Wellington Principal Occupation
---------------------------------------------------------------------------------------------------
<S> <C> <C>
Kenneth L. Abrams General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Nicholas C. Adams General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Rand L. Alexander General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Deborah L. Allinson General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
James H. Averill General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Karl E. Bandtel General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Mark J. Beckwith General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Marie-Claude Bernal General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
William N. Booth General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Paul Braverman General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Robert A. Bruno General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Maryann E. Carroll General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Pamela Dippel General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Robert L. Evans General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Lisa d. Finkel General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Charles T. Freeman General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Laurie A. Gabriel Managing General Partner Same
---------------------------------------------------------------------------------------------------
John H. Gooch General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
<PAGE>
---------------------------------------------------------------------------------------------------
Nicholas P. Greville General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Paul Hamel General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Lucius T. Hill, III General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Paul D. Kaplan General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
John C. Keogh General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
George C. Lodge, Jr. General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Nancy T. Lukitsh General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Mark T. Lynch General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Christine S. Manfredi General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Patrick J. McCloskey General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Earl E. McEvoy General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Duncan M. McFarland Managing General Partner Same
---------------------------------------------------------------------------------------------------
Paul M. Mecray III General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Matthew E. Megargel General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
James N. Mordy General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Diane C. Nordin General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Stephen T. O'Brien General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Edward P. Owens General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Saul J. Pannell General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Thomas L. Pappas General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Jonathan M. Payson General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Philip H. Perelmuter General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Robert D. Rands General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
<PAGE>
---------------------------------------------------------------------------------------------------
Eugene E. Record, Jr. General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
James A. Rullo General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
John R. Ryan Managing General Partner Same
---------------------------------------------------------------------------------------------------
Joseph H. Schwartz General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Theodore E. Shasta General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Binkley C. Shorts General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Trond Skramstad General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Catherine A. Smith General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Stephen A. Soderberg General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Eric Stromquist General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Brendan J. Swords General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Harriett Tee Taggart General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Perry M. Traquina General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Gene R. Tremblay General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Michael A. Tyler General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Mary Ann Tynan General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Clare Villari General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Ernst H. von Metzsch General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
James L. Walters General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Kim Williams General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
Francis V. Wisneski General Partner & Senior Vice President Same
---------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 10 - PRINCIPAL EXECUTIVE OFFICER AND DIRECTORS OF MURRAY JOHNSTONE
The following table provides information with respect to the principal executive
officer and directors of Murray Johnstone, all of whose business address is John
Hancock Center, 875 No. Michigan Avenue, Suite 3640, Chicago, Illinois 60611.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
Name Position with Murray Johnstone Principal Occupation
-------------------------------------------------------------------------------------------
<S> <C> <C>
-------------------------------------------------------------------------------------------
C. Giles H. Weaver Director, Executive Chairman Same
-------------------------------------------------------------------------------------------
A. David MacLellan Managing Director Same
-------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 11 - BROKERAGE COMMISSIONS PAID TO SEI INVESTMENTS
DISTRIBUTION CO. FOR THE FISCAL YEAR ENDED MARCH 31, 2000
The following chart sets forth the aggregate amount of brokerage
commissions paid by each Fund to SEI Investments Distribution Co., distributor
for The PBHG Funds, Inc. for the fiscal year ended March 31, 2000 and the
percentage of each Fund's aggregate brokerage commissions paid to SEI
Investments Distribution Co. for the fiscal year ended March 31, 2000. These
commissions were paid to SEI Investments Distribution Co. in connection with
repurchase agreement transactions. Note: No commission information is listed for
PBHG Global Technology & Communications Fund because it had not commenced
operations as of March 31, 2000.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
Fund AGGREGATE AMOUNT OF BROKERAGE PERCENT OF AGGREGATE
COMMISSIONS PAID TO BROKERAGE COMMISSIONS
SEI INVESTMENTS DISTRIBUTION CO. PAID TO SEI INVESTMENTS
(IN THOUSANDS) DISTRIBUTION CO.
----------------------------------------------------------------------------------------------
<S> <C> <C>
PBHG Growth $113,877 7%
----------------------------------------------------------------------------------------------
PBHG Emerging Growth $ 38,328 7%
----------------------------------------------------------------------------------------------
PBHG New Opportunities $ 2,596 1%
----------------------------------------------------------------------------------------------
PBHG Large Cap Growth $ 3,174 1%
----------------------------------------------------------------------------------------------
PBHG Select Equity $ 23,035 5%
----------------------------------------------------------------------------------------------
PBHG Core Growth $ 2,359 1%
----------------------------------------------------------------------------------------------
PBHG Limited $ 5,926 17%
----------------------------------------------------------------------------------------------
PBHG Large Cap 20 $ 20,174 3%
----------------------------------------------------------------------------------------------
PBHG Large Cap Value $ 891 0%
----------------------------------------------------------------------------------------------
PBHG Mid-Cap Value $ 1,007 0%
----------------------------------------------------------------------------------------------
PBHG Small Cap Value $ 1,639 0%
----------------------------------------------------------------------------------------------
PBHG Focused Value $ 233 0%
----------------------------------------------------------------------------------------------
PBHG International N/A 0%
----------------------------------------------------------------------------------------------
PBHG Cash Reserves N/A 0%
----------------------------------------------------------------------------------------------
PBHG Technology & Communications $ 29,680 1%
----------------------------------------------------------------------------------------------
PBHG Strategic Small Company $ 1,023 0%
----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 12 - BENEFICIAL OWNERS OF 5% OR MORE OF EACH FUNDS SHARES
AS OF NOVEMBER 17, 2000
--------------------------------------------------------------------------------
Fund 5% of More Beneficial Owners
--------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13 -- OUTSTANDING SHARES OF THE COMPANY AS OF
NOVEMBER 17, 2000
--------------------------------------------------------------------------------
Number of Shares
Name of Fund Outstanding
--------------------------------------------------------------------------------
PBHG Growth Fund
PBHG Class
Advisor Class
--------------------------------------------------------------------------------
PBHG Emerging Growth Fund
PBHG Class
--------------------------------------------------------------------------------
PBHG Large Cap Growth Fund
PBHG Class
--------------------------------------------------------------------------------
PBHG Select Equity Fund
PBHG Class
--------------------------------------------------------------------------------
PBHG Core Growth Fund
PBHG Class
--------------------------------------------------------------------------------
PBHG Limited Fund
PBHG Class
--------------------------------------------------------------------------------
PBHG Large Cap 20 Fund
PBHG Class
--------------------------------------------------------------------------------
PBHG New Opportunities Fund
PBHG Class
--------------------------------------------------------------------------------
PBHG Large Cap Value Fund
PBHG Class
--------------------------------------------------------------------------------
PBHG Mid-Cap Value Fund
PBHG Class
--------------------------------------------------------------------------------
PBHG Small Cap Value Fund
PBHG Class
--------------------------------------------------------------------------------
PBHG Focused Value Fund
PBHG Class
--------------------------------------------------------------------------------
PBHG International Fund
PBHG Class
--------------------------------------------------------------------------------
PBHG Cash Reserves Fund
PBHG Class
--------------------------------------------------------------------------------
PBHG Technology &
Communications Fund
PBHG Class
--------------------------------------------------------------------------------
PBHG Global Technology &
Communications Fund
PBHG Class
--------------------------------------------------------------------------------
PBHG Strategic Small
Company Fund
PBHG Class
--------------------------------------------------------------------------------
<PAGE>
The PBHG Funds, Inc.
PBHG Growth Fund
P.O. Box 219534
Kansas City, MO 64121-9534
1-800-xxx-xxxx
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 25, 2001
The undersigned hereby appoints Lee T. Cummings and John M. Zerr and each of
them as proxies with full powers of substitution and revocation, to represent
and to vote on behalf of the undersigned, all shares of the Fund referenced
hereon (the "Fund"), which the undersigned is entitled to vote at a Special
Meeting of Shareholders of the Fund to be held at the Peninsula Hotel, Le Grande
Salle Room, 700 Fifth Avenue, New York, New York on January 25, 2001, at 10:00
A.M. and any adjournments thereof (the "Meeting"). The undersigned acknowledges
receipt of the Notice of Meeting and Proxy Statement, and hereby instructs said
proxies to vote said shares as indicated hereon. Unless indicated to the
contrary, this proxy shall be voted "For" all proposals relating to the Fund.
The proxies are hereby authorized to vote in their discretion on any matter that
may properly come before the meeting or any adjournment thereof. The undersigned
hereby revokes any proxy previously given.
Note: Please sign exactly as your name appears on
this proxy. If joint owners, both should sign this
proxy. An authorized individual should sign corporate
or partnership proxies in full corporate or
partnership name. When signing as attorney, executor,
administrator, trustee, guardian, or corporate
officer, please give your full title.
DATE_____________________________
_____________________________
_____________________________
Signature(s) and Title(s), If Applicable
THE BOARD OF DIRECTORS, INCLUDING THOSE DIRECTORS WHO ARE INDEPENDENT,
RECOMMENDS A VOTE "FOR" EACH PROPOSAL.
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY TO ENSURE THAT A QUORUM IS
PRESENT AT THE SPECIAL MEETING. YOU CAN VOTE YOUR SHARES AT THE PROXY
SOLICITORS' WEB SITE, BY TOLL-FREE TELEPHONE, BY MAIL, BY FACSIMILE OR IN
PERSON. A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE, IF YOU CHOOSE TO VOTE BY MAIL.
<PAGE>
To vote by Telephone
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Call 1-800-xxx-xxxx
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Go to web site WWW.XXXXX.COM
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
2
<PAGE>
This proxy will be voted as specified below with respect to the action to be
taken on the following proposals. In the absence of any specification, this
proxy will be voted IN FAVOR of the proposals. Please mark your vote below in
blue or black ink. Do not use red ink.
1. To approve the Investment Advisory Agreement between The PBHG Funds,
Inc., on behalf of PBHG Growth Fund, with Pilgrim Baxter & Associates,
Ltd.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. THIS ITEM IS NOT APPLICABLE.
(a) THIS ITEM IS NOT APPLICABLE.
(b) THIS ITEM IS NOT APPLICABLE.
(c) THIS ITEM IS NOT APPLICABLE.
3. To approve the proposed changes to the Fund's fundamental investment
restrictions.
(a) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Issuer Diversification [ ] [ ] [ ]
(b) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Borrowing Money and Issuing Senior [ ] [ ] [ ]
Securities
(c) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Underwriting Securities [ ] [ ] [ ]
(d) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Industry Concentration [ ] [ ] [ ]
(e) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Real Estate [ ] [ ] [ ]
(f) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Commodities [ ] [ ] [ ]
(g) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Making Loans [ ] [ ] [ ]
3
<PAGE>
(h) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing all Assets in an Open End [ ] [ ] [ ]
Fund
(i) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing in Oil, Gas or Other Mineral [ ] [ ] [ ]
Exploration or Development Programs
(j) THIS ITEM IS NOT APPLICABLE.
(k) THIS ITEM IS NOT APPLICABLE.
(l) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Pledging Assets [ ] [ ] [ ]
(m) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing in Puts and Calls [ ] [ ] [ ]
4. To approve the Agreement and Plan of Reorganization and subsequent
dissolution of the Maryland corporation.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
<PAGE>
The PBHG Funds, Inc.
PBHG Emerging Growth Fund
P.O. Box 219534
Kansas City, MO 64121-9534
1-800-xxx-xxxx
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 25, 2001
The undersigned hereby appoints Lee T. Cummings and John M. Zerr and each of
them as proxies with full powers of substitution and revocation, to represent
and to vote on behalf of the undersigned, all shares of the Fund referenced
hereon (the "Fund"), which the undersigned is entitled to vote at a Special
Meeting of Shareholders of the Fund to be held at the Peninsula Hotel, Le Grande
Salle Room, 700 Fifth Avenue, New York, New York on January 25, 2001, at 10:00
A.M. and any adjournments thereof (the "Meeting"). The undersigned acknowledges
receipt of the Notice of Meeting and Proxy Statement, and hereby instructs said
proxies to vote said shares as indicated hereon. Unless indicated to the
contrary, this proxy shall be voted "For" all proposals relating to the Fund.
The proxies are hereby authorized to vote in their discretion on any matter that
may properly come before the meeting or any adjournment thereof. The undersigned
hereby revokes any proxy previously given.
Note: Please sign exactly as your name appears on
this proxy. If joint owners, both should sign this
proxy. An authorized individual should sign corporate
or partnership proxies in full corporate or
partnership name. When signing as attorney, executor,
administrator, trustee, guardian, or corporate
officer, please give your full title.
DATE_____________________________
_____________________________
_____________________________
Signature(s) and Title(s), If Applicable
THE BOARD OF DIRECTORS, INCLUDING THOSE DIRECTORS WHO ARE INDEPENDENT,
RECOMMENDS A VOTE "FOR" EACH PROPOSAL.
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY TO ENSURE THAT A QUORUM IS
PRESENT AT THE SPECIAL MEETING. YOU CAN VOTE YOUR SHARES AT THE PROXY
SOLICITORS' WEB SITE, BY TOLL-FREE TELEPHONE, BY MAIL, BY FACSIMILE OR IN
PERSON. A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE, IF YOU CHOOSE TO VOTE BY MAIL.
<PAGE>
To vote by Telephone
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Call 1-800-xxx-xxxx
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Go to web site WWW.XXXXX.COM
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
2
<PAGE>
This proxy will be voted as specified below with respect to the action to be
taken on the following proposals. In the absence of any specification, this
proxy will be voted IN FAVOR of the proposals. Please mark your vote below in
blue or black ink. Do not use red ink.
1. To approve the Investment Advisory Agreement between The PBHG Funds,
Inc., on behalf of PBHG Emerging Growth Fund, with Pilgrim Baxter &
Associates, Ltd.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. THIS ITEM IS NOT APPLICABLE.
(a) THIS ITEM IS NOT APPLICABLE.
(b) THIS ITEM IS NOT APPLICABLE.
(c) THIS ITEM IS NOT APPLICABLE.
3. To approve the proposed changes to the Fund's fundamental investment
restrictions.
(a) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Issuer Diversification [ ] [ ] [ ]
(b) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Borrowing Money and Issuing Senior [ ] [ ] [ ]
Securities
(c) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Underwriting Securities [ ] [ ] [ ]
(d) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Industry Concentration [ ] [ ] [ ]
(e) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Real Estate [ ] [ ] [ ]
(f) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Commodities [ ] [ ] [ ]
3
<PAGE>
(g) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Making Loans [ ] [ ] [ ]
(h) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing all Assets in an Open End [ ] [ ] [ ]
Fund
(i) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing in Oil, Gas or Other Mineral [ ] [ ] [ ]
Exploration or Development Programs
(j) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing in Companies for the Purpose [ ] [ ] [ ]
of Control
(k) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Making Short Sales or Margin Purchases [ ] [ ] [ ]
(l) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Pledging Assets [ ] [ ] [ ]
(m) THIS ITEM IS NOT APPLICABLE.
4. To approve the Agreement and Plan of Reorganization and subsequent
dissolution of the Maryland corporation.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4
<PAGE>
The PBHG Funds, Inc.
PBHG Large Cap Growth Fund
P.O. Box 219534
Kansas City, MO 64121-9534
1-800-xxx-xxxx
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 25, 2001
The undersigned hereby appoints Lee T. Cummings and John M. Zerr and each of
them as proxies with full powers of substitution and revocation, to represent
and to vote on behalf of the undersigned, all shares of the Fund referenced
hereon (the "Fund"), which the undersigned is entitled to vote at a Special
Meeting of Shareholders of the Fund to be held at the Peninsula Hotel, Le Grande
Salle Room, 700 Fifth Avenue, New York, New York on January 25, 2001, at 10:00
A.M. and any adjournments thereof (the "Meeting"). The undersigned acknowledges
receipt of the Notice of Meeting and Proxy Statement, and hereby instructs said
proxies to vote said shares as indicated hereon. Unless indicated to the
contrary, this proxy shall be voted "For" all proposals relating to the Fund.
The proxies are hereby authorized to vote in their discretion on any matter that
may properly come before the meeting or any adjournment thereof. The undersigned
hereby revokes any proxy previously given.
Note: Please sign exactly as your name appears on
this proxy. If joint owners, both should sign this
proxy. An authorized individual should sign corporate
or partnership proxies in full corporate or
partnership name. When signing as attorney, executor,
administrator, trustee, guardian, or corporate
officer, please give your full title.
DATE_____________________________
_____________________________
_____________________________
Signature(s) and Title(s), If Applicable
THE BOARD OF DIRECTORS, INCLUDING THOSE DIRECTORS WHO ARE INDEPENDENT,
RECOMMENDS A VOTE "FOR" EACH PROPOSAL.
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY TO ENSURE THAT A QUORUM IS
PRESENT AT THE SPECIAL MEETING. YOU CAN VOTE YOUR SHARES AT THE PROXY
SOLICITORS' WEB SITE, BY TOLL-FREE TELEPHONE, BY MAIL, BY FACSIMILE OR IN
PERSON. A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE, IF YOU CHOOSE TO VOTE BY MAIL.
<PAGE>
To vote by Telephone
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Call 1-800-xxx-xxxx
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Go to web site www.xxxxx.com
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
2
<PAGE>
This proxy will be voted as specified below with respect to the action to be
taken on the following proposals. In the absence of any specification, this
proxy will be voted IN FAVOR of the proposals. Please mark your vote below in
blue or black ink. Do not use red ink.
1. To approve the Investment Advisory Agreement between The PBHG Funds,
Inc., on behalf of PBHG Large Cap Growth Fund, with Pilgrim Baxter &
Associates, Ltd.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. This item is not applicable.
(a) This item is not applicable.
(b) This item is not applicable.
(c) This item is not applicable.
3. To approve the proposed changes to the Fund's fundamental investment
restrictions.
(a) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Issuer Diversification [ ] [ ] [ ]
(b) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Borrowing Money and Issuing Senior [ ] [ ] [ ]
Securities
(c) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Underwriting Securities [ ] [ ] [ ]
(d) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Industry Concentration [ ] [ ] [ ]
(e) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Real Estate [ ] [ ] [ ]
(f) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Commodities [ ] [ ] [ ]
3
<PAGE>
(g) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Making Loans [ ] [ ] [ ]
(h) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing all Assets in an Open End [ ] [ ] [ ]
Fund
(i) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing in Oil, Gas or Other Mineral [ ] [ ] [ ]
Exploration or Development Programs
(j) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing in Companies for the Purpose [ ] [ ] [ ]
of Control
(k) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Making Short Sales or Margin Purchases [ ] [ ] [ ]
(l) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Pledging Assets [ ] [ ] [ ]
(m) This item is not applicable.
4. To approve the Agreement and Plan of Reorganization and subsequent
dissolution of the Maryland corporation.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4
<PAGE>
The PBHG Funds, Inc.
PBHG Select Equity Fund
P.O. Box 219534
Kansas City, MO 64121-9534
1-800-xxx-xxxx
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 25, 2001
The undersigned hereby appoints Lee T. Cummings and John M. Zerr and each of
them as proxies with full powers of substitution and revocation, to represent
and to vote on behalf of the undersigned, all shares of the Fund referenced
hereon (the "Fund"), which the undersigned is entitled to vote at a Special
Meeting of Shareholders of the Fund to be held at the Peninsula Hotel, Le Grande
Salle Room, 700 Fifth Avenue, New York, New York on January 25, 2001, at 10:00
A.M. and any adjournments thereof (the "Meeting"). The undersigned acknowledges
receipt of the Notice of Meeting and Proxy Statement, and hereby instructs said
proxies to vote said shares as indicated hereon. Unless indicated to the
contrary, this proxy shall be voted "For" all proposals relating to the Fund.
The proxies are hereby authorized to vote in their discretion on any matter that
may properly come before the meeting or any adjournment thereof. The undersigned
hereby revokes any proxy previously given.
Note: Please sign exactly as your name appears on
this proxy. If joint owners, both should sign this
proxy. An authorized individual should sign corporate
or partnership proxies in full corporate or
partnership name. When signing as attorney, executor,
administrator, trustee, guardian, or corporate
officer, please give your full title.
DATE_____________________________
_____________________________
_____________________________
Signature(s) and Title(s), If Applicable
THE BOARD OF DIRECTORS, INCLUDING THOSE DIRECTORS WHO ARE INDEPENDENT,
RECOMMENDS A VOTE "FOR" EACH PROPOSAL.
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY TO ENSURE THAT A QUORUM IS
PRESENT AT THE SPECIAL MEETING. YOU CAN VOTE YOUR SHARES AT THE PROXY
SOLICITORS' WEB SITE, BY TOLL-FREE TELEPHONE, BY MAIL, BY FACSIMILE OR IN
PERSON. A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE, IF YOU CHOOSE TO VOTE BY MAIL.
<PAGE>
To vote by Telephone
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Call 1-800-xxx-xxxx
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Go to web site WWW.XXXXX.COM
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
2
<PAGE>
This proxy will be voted as specified below with respect to the action to be
taken on the following proposals. In the absence of any specification, this
proxy will be voted IN FAVOR of the proposals. Please mark your vote below in
blue or black ink. Do not use red ink.
1. To approve the Investment Advisory Agreement between The PBHG Funds,
Inc., on behalf of PBHG Select Equity Fund, with Pilgrim Baxter &
Associates, Ltd.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. THIS ITEM IS NOT APPLICABLE.
(a) THIS ITEM IS NOT APPLICABLE.
(b) THIS ITEM IS NOT APPLICABLE.
(c) THIS ITEM IS NOT APPLICABLE.
3. To approve the proposed changes to the Fund's fundamental investment
restrictions.
(a) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Issuer Diversification [ ] [ ] [ ]
(b) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Borrowing Money and Issuing Senior [ ] [ ] [ ]
Securities
(c) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Underwriting Securities [ ] [ ] [ ]
(d) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Industry Concentration [ ] [ ] [ ]
(e) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Real Estate [ ] [ ] [ ]
(f) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Commodities [ ] [ ] [ ]
3
<PAGE>
(g) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Making Loans [ ] [ ] [ ]
(h) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing all Assets in an Open End [ ] [ ] [ ]
Fund
(i) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing in Oil, Gas or Other Mineral [ ] [ ] [ ]
Exploration or Development Programs
(j) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing in Companies for the Purpose [ ] [ ] [ ]
of Control
(k) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Making Short Sales or Margin Purchases [ ] [ ] [ ]
(l) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Pledging Assets [ ] [ ] [ ]
(m) THIS ITEM IS NOT APPLICABLE.
4. To approve the Agreement and Plan of Reorganization and subsequent
dissolution of the Maryland corporation.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4
<PAGE>
The PBHG Funds, Inc.
PBHG Core Growth Fund
P.O. Box 219534
Kansas City, MO 64121-9534
1-800-xxx-xxxx
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 25, 2001
The undersigned hereby appoints Lee T. Cummings and John M. Zerr and each of
them as proxies with full powers of substitution and revocation, to represent
and to vote on behalf of the undersigned, all shares of the Fund referenced
hereon (the "Fund"), which the undersigned is entitled to vote at a Special
Meeting of Shareholders of the Fund to be held at the Peninsula Hotel, Le Grande
Salle Room, 700 Fifth Avenue, New York, New York on January 25, 2001, at 10:00
A.M. and any adjournments thereof (the "Meeting"). The undersigned acknowledges
receipt of the Notice of Meeting and Proxy Statement, and hereby instructs said
proxies to vote said shares as indicated hereon. Unless indicated to the
contrary, this proxy shall be voted "For" all proposals relating to the Fund.
The proxies are hereby authorized to vote in their discretion on any matter that
may properly come before the meeting or any adjournment thereof. The undersigned
hereby revokes any proxy previously given.
Note: Please sign exactly as your name appears on
this proxy. If joint owners, both should sign this
proxy. An authorized individual should sign corporate
or partnership proxies in full corporate or
partnership name. When signing as attorney, executor,
administrator, trustee, guardian, or corporate
officer, please give your full title.
DATE_____________________________
_____________________________
_____________________________
Signature(s) and Title(s), If Applicable
THE BOARD OF DIRECTORS, INCLUDING THOSE DIRECTORS WHO ARE
INDEPENDENT, RECOMMENDS A VOTE "FOR" EACH PROPOSAL.
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY TO ENSURE THAT A QUORUM IS
PRESENT AT THE SPECIAL MEETING. YOU CAN VOTE YOUR SHARES AT THE PROXY
SOLICITORS' WEB SITE, BY TOLL-FREE TELEPHONE, BY MAIL, BY FACSIMILE OR IN
PERSON. A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE, IF YOU CHOOSE TO VOTE BY MAIL.
<PAGE>
To vote by Telephone
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Call 1-800-xxx-xxxx
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Go to web site WWW.XXXXX.COM
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
2
<PAGE>
This proxy will be voted as specified below with respect to the action to be
taken on the following proposals. In the absence of any specification, this
proxy will be voted IN FAVOR of the proposals. Please mark your vote below in
blue or black ink. Do not use red ink.
1. To approve the Investment Advisory Agreement between The PBHG Funds,
Inc., on behalf of PBHG Core Growth Fund, with Pilgrim Baxter &
Associates, Ltd.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. THIS ITEM IS NOT APPLICABLE.
(a) THIS ITEM IS NOT APPLICABLE.
(b) THIS ITEM IS NOT APPLICABLE.
(c) THIS ITEM IS NOT APPLICABLE.
3. To approve the proposed changes to the Fund's fundamental investment
restrictions.
(a) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Issuer Diversification [ ] [ ] [ ]
(b) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Borrowing Money and Issuing Senior [ ] [ ] [ ]
Securities
(c) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Underwriting Securities [ ] [ ] [ ]
(d) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Industry Concentration [ ] [ ] [ ]
(e) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Real Estate [ ] [ ] [ ]
(f) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Commodities [ ] [ ] [ ]
3
<PAGE>
(g) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Making Loans [ ] [ ] [ ]
(h) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing all Assets in an Open End [ ] [ ] [ ]
Fund
(i) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing in Oil, Gas or Other Mineral [ ] [ ] [ ]
Exploration or Development Programs
(j) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing in Companies for the Purpose [ ] [ ] [ ]
of Control
(k) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Making Short Sales or Margin Purchases [ ] [ ] [ ]
(l) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Pledging Assets [ ] [ ] [ ]
(m) THIS ITEM IS NOT APPLICABLE.
4. To approve the Agreement and Plan of Reorganization and subsequent
dissolution of the Maryland corporation.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4
<PAGE>
The PBHG Funds, Inc.
PBHG Limited Fund
P.O. Box 219534
Kansas City, MO 64121-9534
1-800-xxx-xxxx
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 25, 2001
The undersigned hereby appoints Lee T. Cummings and John M. Zerr and each of
them as proxies with full powers of substitution and revocation, to represent
and to vote on behalf of the undersigned, all shares of the Fund referenced
hereon (the "Fund"), which the undersigned is entitled to vote at a Special
Meeting of Shareholders of the Fund to be held at the Peninsula Hotel, Le Grande
Salle Room, 700 Fifth Avenue, New York, New York on January 25, 2001, at 10:00
A.M. and any adjournments thereof (the "Meeting"). The undersigned acknowledges
receipt of the Notice of Meeting and Proxy Statement, and hereby instructs said
proxies to vote said shares as indicated hereon. Unless indicated to the
contrary, this proxy shall be voted "For" all proposals relating to the Fund.
The proxies are hereby authorized to vote in their discretion on any matter that
may properly come before the meeting or any adjournment thereof. The undersigned
hereby revokes any proxy previously given.
Note: Please sign exactly as your name appears on
this proxy. If joint owners, both should sign this
proxy. An authorized individual should sign corporate
or partnership proxies in full corporate or
partnership name. When signing as attorney, executor,
administrator, trustee, guardian, or corporate
officer, please give your full title.
DATE_____________________________
_____________________________
_____________________________
Signature(s) and Title(s), If Applicable
THE BOARD OF DIRECTORS, INCLUDING THOSE DIRECTORS WHO ARE INDEPENDENT,
RECOMMENDS A VOTE "FOR" EACH PROPOSAL.
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY TO ENSURE THAT A QUORUM IS
PRESENT AT THE SPECIAL MEETING. YOU CAN VOTE YOUR SHARES AT THE PROXY
SOLICITORS' WEB SITE, BY TOLL-FREE TELEPHONE, BY MAIL, BY FACSIMILE OR IN
PERSON. A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE, IF YOU CHOOSE TO VOTE BY MAIL.
<PAGE>
To vote by Telephone
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Call 1-800-xxx-xxxx
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Go to web site WWW.XXXXX.COM
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
2
<PAGE>
This proxy will be voted as specified below with respect to the action to be
taken on the following proposals. In the absence of any specification, this
proxy will be voted IN FAVOR of the proposals. Please mark your vote below in
blue or black ink. Do not use red ink.
1. To approve the Investment Advisory Agreement between The PBHG Funds,
Inc., on behalf of PBHG Limited Fund, with Pilgrim Baxter & Associates,
Ltd.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. THIS ITEM IS NOT APPLICABLE.
(a) THIS ITEM IS NOT APPLICABLE.
(b) THIS ITEM IS NOT APPLICABLE.
(c) THIS ITEM IS NOT APPLICABLE.
3. To approve the proposed changes to the Fund's fundamental investment
restrictions.
(a) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Issuer Diversification [ ] [ ] [ ]
(b) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Borrowing Money and Issuing Senior [ ] [ ] [ ]
Securities
(c) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Underwriting Securities [ ] [ ] [ ]
(d) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Industry Concentration [ ] [ ] [ ]
(e) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Real Estate [ ] [ ] [ ]
(f) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Commodities [ ] [ ] [ ]
3
<PAGE>
(g) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Making Loans [ ] [ ] [ ]
(h) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing all Assets in an Open End [ ] [ ] [ ]
Fund
(i) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing in Oil, Gas or Other Mineral [ ] [ ] [ ]
Exploration or Development Programs
(j) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing in Companies for the Purpose [ ] [ ] [ ]
of Control
(k) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Making Short Sales or Margin Purchases [ ] [ ] [ ]
(l) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Pledging Assets [ ] [ ] [ ]
(m) THIS ITEM IS NOT APPLICABLE.
4. To approve the Agreement and Plan of Reorganization and subsequent
dissolution of the Maryland corporation.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4
<PAGE>
The PBHG Funds, Inc.
PBHG Large Cap 20 Fund
P.O. Box 219534
Kansas City, MO 64121-9534
1-800-xxx-xxxx
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 25, 2001
The undersigned hereby appoints Lee T. Cummings and John M. Zerr and each of
them as proxies with full powers of substitution and revocation, to represent
and to vote on behalf of the undersigned, all shares of the Fund referenced
hereon (the "Fund"), which the undersigned is entitled to vote at a Special
Meeting of Shareholders of the Fund to be held at the Peninsula Hotel, Le Grande
Salle Room, 700 Fifth Avenue, New York, New York on January 25, 2001, at 10:00
A.M. and any adjournments thereof (the "Meeting"). The undersigned acknowledges
receipt of the Notice of Meeting and Proxy Statement, and hereby instructs said
proxies to vote said shares as indicated hereon. Unless indicated to the
contrary, this proxy shall be voted "For" all proposals relating to the Fund.
The proxies are hereby authorized to vote in their discretion on any matter that
may properly come before the meeting or any adjournment thereof. The undersigned
hereby revokes any proxy previously given.
Note: Please sign exactly as your name appears on
this proxy. If joint owners, both should sign this
proxy. An authorized individual should sign corporate
or partnership proxies in full corporate or
partnership name. When signing as attorney, executor,
administrator, trustee, guardian, or corporate
officer, please give your full title.
DATE_____________________________
_____________________________
_____________________________
Signature(s) and Title(s), If Applicable
THE BOARD OF DIRECTORS, INCLUDING THOSE DIRECTORS WHO ARE INDEPENDENT,
RECOMMENDS A VOTE "FOR" EACH PROPOSAL.
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY TO ENSURE THAT A QUORUM IS
PRESENT AT THE SPECIAL MEETING. YOU CAN VOTE YOUR SHARES AT THE PROXY
SOLICITORS' WEB SITE, BY TOLL-FREE TELEPHONE, BY MAIL, BY FACSIMILE OR IN
PERSON. A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE, IF YOU CHOOSE TO VOTE BY MAIL.
<PAGE>
To vote by Telephone
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Call 1-800-xxx-xxxx
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Go to web site WWW.XXXXX.COM
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
2
<PAGE>
This proxy will be voted as specified below with respect to the action to be
taken on the following proposals. In the absence of any specification, this
proxy will be voted IN FAVOR of the proposals. Please mark your vote below in
blue or black ink. Do not use red ink.
1. To approve the Investment Advisory Agreement between The PBHG Funds,
Inc., on behalf of PBHG Large Cap 20 Fund, with Pilgrim Baxter &
Associates, Ltd.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. THIS ITEM IS NOT APPLICABLE.
(a) THIS ITEM IS NOT APPLICABLE.
(b) THIS ITEM IS NOT APPLICABLE.
(c) THIS ITEM IS NOT APPLICABLE.
3. To approve the proposed changes to the Fund's fundamental investment
restrictions.
(a) THIS ITEM IS NOT APPLICABLE.
(b) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Borrowing Money and Issuing Senior [ ] [ ] [ ]
Securities
(c) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Underwriting Securities [ ] [ ] [ ]
(d) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Industry Concentration [ ] [ ] [ ]
(e) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Real Estate [ ] [ ] [ ]
(f) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Commodities [ ] [ ] [ ]
3
<PAGE>
(g) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Making Loans [ ] [ ] [ ]
(h) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing all Assets in an Open End [ ] [ ] [ ]
Fund
(i) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing in Oil, Gas or Other Mineral [ ] [ ] [ ]
Exploration or Development Programs
(j) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing in Companies for the Purpose [ ] [ ] [ ]
of Control
(k) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Making Short Sales or Margin Purchases [ ] [ ] [ ]
(l) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Pledging Assets [ ] [ ] [ ]
(m) THIS ITEM IS NOT APPLICABLE.
4. To approve the Agreement and Plan of Reorganization and subsequent
dissolution of the Maryland corporation.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4
<PAGE>
The PBHG Funds, Inc.
PBHG New Opportunities Fund
P.O. Box 219534
Kansas City, MO 64121-9534
1-800-xxx-xxxx
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 25, 2001
The undersigned hereby appoints Lee T. Cummings and John M. Zerr and each of
them as proxies with full powers of substitution and revocation, to represent
and to vote on behalf of the undersigned, all shares of the Fund referenced
hereon (the "Fund"), which the undersigned is entitled to vote at a Special
Meeting of Shareholders of the Fund to be held at the Peninsula Hotel, Le Grande
Salle Room, 700 Fifth Avenue, New York, New York on January 25, 2001, at 10:00
A.M. and any adjournments thereof (the "Meeting"). The undersigned acknowledges
receipt of the Notice of Meeting and Proxy Statement, and hereby instructs said
proxies to vote said shares as indicated hereon. Unless indicated to the
contrary, this proxy shall be voted "For" all proposals relating to the Fund.
The proxies are hereby authorized to vote in their discretion on any matter that
may properly come before the meeting or any adjournment thereof. The undersigned
hereby revokes any proxy previously given.
Note: Please sign exactly as your name appears on
this proxy. If joint owners, both should sign this
proxy. An authorized individual should sign corporate
or partnership proxies in full corporate or
partnership name. When signing as attorney, executor,
administrator, trustee, guardian, or corporate
officer, please give your full title.
DATE_____________________________
_____________________________
_____________________________
Signature(s) and Title(s), If Applicable
THE BOARD OF DIRECTORS, INCLUDING THOSE DIRECTORS WHO ARE INDEPENDENT,
RECOMMENDS A VOTE "FOR" EACH PROPOSAL.
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY TO ENSURE THAT A QUORUM IS
PRESENT AT THE SPECIAL MEETING. YOU CAN VOTE YOUR SHARES AT THE PROXY
SOLICITORS' WEB SITE, BY TOLL-FREE TELEPHONE, BY MAIL, BY FACSIMILE OR IN
PERSON. A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE, IF YOU CHOOSE TO VOTE BY MAIL.
<PAGE>
To vote by Telephone
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Call 1-800-xxx-xxxx
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Go to web site WWW.XXXXX.COM
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
2
<PAGE>
This proxy will be voted as specified below with respect to the action to be
taken on the following proposals. In the absence of any specification, this
proxy will be voted IN FAVOR of the proposals. Please mark your vote below in
blue or black ink. Do not use red ink.
1. To approve the Investment Advisory Agreement between The PBHG Funds,
Inc., on behalf of PBHG New Opportunities Fund, with Pilgrim Baxter &
Associates, Ltd.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. THIS ITEM IS NOT APPLICABLE.
(a) THIS ITEM IS NOT APPLICABLE.
(b) THIS ITEM IS NOT APPLICABLE.
(c) THIS ITEM IS NOT APPLICABLE.
3. To approve the proposed changes to the Fund's fundamental investment
restrictions.
(a) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Issuer Diversification [ ] [ ] [ ]
(b) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Borrowing Money and Issuing Senior [ ] [ ] [ ]
Securities
(c) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Underwriting Securities [ ] [ ] [ ]
(d) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Industry Concentration [ ] [ ] [ ]
(e) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Real Estate [ ] [ ] [ ]
(f) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Commodities [ ] [ ] [ ]
3
<PAGE>
(g) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Making Loans [ ] [ ] [ ]
(h) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing all Assets in an Open End [ ] [ ] [ ]
Fund
(i) THIS ITEM IS NOT APPLICABLE.
(j) THIS ITEM IS NOT APPLICABLE.
(k) THIS ITEM IS NOT APPLICABLE.
(l) THIS ITEM IS NOT APPLICABLE.
(m) THIS ITEM IS NOT APPLICABLE.
4. To approve the Agreement and Plan of Reorganization and subsequent
dissolution of the Maryland corporation.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4
<PAGE>
The PBHG Funds, Inc.
PBHG Mid-Cap Value Fund
P.O. Box 219534
Kansas City, MO 64121-9534
1-800-xxx-xxxx
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 25, 2001
The undersigned hereby appoints Lee T. Cummings and John M. Zerr and each of
them as proxies with full powers of substitution and revocation, to represent
and to vote on behalf of the undersigned, all shares of the Fund referenced
hereon (the "Fund"), which the undersigned is entitled to vote at a Special
Meeting of Shareholders of the Fund to be held at the Peninsula Hotel, Le Grande
Salle Room, 700 Fifth Avenue, New York, New York on January 25, 2001, at 10:00
A.M. and any adjournments thereof (the "Meeting"). The undersigned acknowledges
receipt of the Notice of Meeting and Proxy Statement, and hereby instructs said
proxies to vote said shares as indicated hereon. Unless indicated to the
contrary, this proxy shall be voted "For" all proposals relating to the Fund.
The proxies are hereby authorized to vote in their discretion on any matter that
may properly come before the meeting or any adjournment thereof. The undersigned
hereby revokes any proxy previously given.
Note: Please sign exactly as your name appears on
this proxy. If joint owners, both should sign this
proxy. An authorized individual should sign corporate
or partnership proxies in full corporate or
partnership name. When signing as attorney, executor,
administrator, trustee, guardian, or corporate
officer, please give your full title.
DATE_____________________________
_____________________________
_____________________________
Signature(s) and Title(s), If Applicable
THE BOARD OF DIRECTORS, INCLUDING THOSE DIRECTORS WHO ARE
INDEPENDENT, RECOMMENDS A VOTE "FOR" EACH PROPOSAL.
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY TO ENSURE THAT A QUORUM IS
PRESENT AT THE SPECIAL MEETING. YOU CAN VOTE YOUR SHARES AT THE PROXY
SOLICITORS' WEB SITE, BY TOLL-FREE TELEPHONE, BY MAIL, BY FACSIMILE OR IN
PERSON. A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE, IF YOU CHOOSE TO VOTE BY MAIL.
<PAGE>
To vote by Telephone
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Call 1-800-xxx-xxxx
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow th
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Go to web site WWW.XXXXX.COM
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
2
<PAGE>
This proxy will be voted as specified below with respect to the action to be
taken on the following proposals. In the absence of any specification, this
proxy will be voted IN FAVOR of the proposals. Please mark your vote below in
blue or black ink. Do not use red ink.
1. To approve the Investment Advisory Agreement between The PBHG Funds,
Inc., on behalf of PBHG Mid-Cap Value Fund, with Pilgrim Baxter &
Associates, Ltd.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. To approve the Investment Sub-Advisory Agreement for the PBHG Mid-Cap Value
Fund with:
(a) Pilgrim Baxter Value Investors, Inc. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(b) THIS ITEM IS NOT APPLICABLE.
(c) THIS ITEM IS NOT APPLICABLE.
3. To approve the proposed changes to the Fund's
fundamental investment restrictions.
(a) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Issuer Diversification [ ] [ ] [ ]
(b) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Borrowing Money and Issuing Senior [ ] [ ] [ ]
Securities
(c) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Underwriting Securities [ ] [ ] [ ]
(d) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Industry Concentration [ ] [ ] [ ]
(e) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Real Estate [ ] [ ] [ ]
(f) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Commodities [ ] [ ] [ ]
3
<PAGE>
(g) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Making Loans [ ] [ ] [ ]
(h) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing all Assets in an Open End [ ] [ ] [ ]
Fund
(i) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing in Oil, Gas or Other Mineral [ ] [ ] [ ]
Exploration or Development Programs
(j) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing in Companies for the Purpose [ ] [ ] [ ]
of Control
(k) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Making Short Sales or Margin Purchases [ ] [ ] [ ]
(l) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Pledging Assets [ ] [ ] [ ]
(m) THIS ITEM IS NOT APPLICABLE.
4. To approve the Agreement and Plan of Reorganization and subsequent
dissolution of the Maryland corporation.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4
<PAGE>
The PBHG Funds, Inc.
PBHG Small Cap Value Fund
P.O. Box 219534
Kansas City, MO 64121-9534
1-800-xxx-xxxx
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 25, 2001
The undersigned hereby appoints Lee T. Cummings and John M. Zerr and each of
them as proxies with full powers of substitution and revocation, to represent
and to vote on behalf of the undersigned, all shares of the Fund referenced
hereon (the "Fund"), which the undersigned is entitled to vote at a Special
Meeting of Shareholders of the Fund to be held at the Peninsula Hotel, Le Grande
Salle Room, 700 Fifth Avenue, New York, New York on January 25, 2001, at 10:00
A.M. and any adjournments thereof (the "Meeting"). The undersigned acknowledges
receipt of the Notice of Meeting and Proxy Statement, and hereby instructs said
proxies to vote said shares as indicated hereon. Unless indicated to the
contrary, this proxy shall be voted "For" all proposals relating to the Fund.
The proxies are hereby authorized to vote in their discretion on any matter that
may properly come before the meeting or any adjournment thereof. The undersigned
hereby revokes any proxy previously given.
Note: Please sign exactly as your name appears on
this proxy. If joint owners, both should sign this
proxy. An authorized individual should sign corporate
or partnership proxies in full corporate or
partnership name. When signing as attorney, executor,
administrator, trustee, guardian, or corporate
officer, please give your full title.
DATE_____________________________
_____________________________
_____________________________
Signature(s) and Title(s), If Applicable
THE BOARD OF DIRECTORS, INCLUDING THOSE DIRECTORS WHO ARE INDEPENDENT,
RECOMMENDS A VOTE "FOR" EACH PROPOSAL.
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY TO ENSURE THAT A QUORUM IS
PRESENT AT THE SPECIAL MEETING. YOU CAN VOTE YOUR SHARES AT THE PROXY
SOLICITORS' WEB SITE, BY TOLL-FREE TELEPHONE, BY MAIL, BY FACSIMILE OR IN
PERSON. A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE, IF YOU CHOOSE TO VOTE BY MAIL.
<PAGE>
To vote by Telephone
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Call 1-800-xxx-xxxx
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Go to web site WWW.XXXXX.COM
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
2
<PAGE>
This proxy will be voted as specified below with respect to the action to be
taken on the following proposals. In the absence of any specification, this
proxy will be voted IN FAVOR of the proposals. Please mark your vote below in
blue or black ink. Do not use red ink.
1. To approve the Investment Advisory Agreement between The PBHG Funds,
Inc., on behalf of PBHG Small Cap Value Fund, with Pilgrim Baxter &
Associates, Ltd.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. To approve the Investment Sub-Advisory Agreement for the PBHG Small Cap
Value Fund with:
(a) Pilgrim Baxter Value Investors, Inc. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(b) THIS ITEM IS NOT APPLICABLE.
(c) THIS ITEM IS NOT APPLICABLE.
3. To approve the proposed changes to the Fund's fundamental investment
restrictions.
(a) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Issuer Diversification [ ] [ ] [ ]
(b) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Borrowing Money and Issuing Senior [ ] [ ] [ ]
Securities
(c) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Underwriting Securities [ ] [ ] [ ]
(d) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Industry Concentration [ ] [ ] [ ]
(e) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Real Estate [ ] [ ] [ ]
(f) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Commodities [ ] [ ] [ ]
3
<PAGE>
(g) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Making Loans [ ] [ ] [ ]
(h) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing all Assets in an Open End [ ] [ ] [ ]
Fund
(i) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing in Oil, Gas or Other Mineral [ ] [ ] [ ]
Exploration or Development Programs
(j) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing in Companies for the Purpose [ ] [ ] [ ]
of Control
(k) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Making Short Sales or Margin Purchases [ ] [ ] [ ]
(l) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Pledging Assets [ ] [ ] [ ]
(m) THIS ITEM IS NOT APPLICABLE.
4. To approve the Agreement and Plan of Reorganization and subsequent
dissolution of the Maryland corporation.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4
<PAGE>
The PBHG Funds, Inc.
PBHG Focused Value Fund
P.O. Box 219534
Kansas City, MO 64121-9534
1-800-xxx-xxxx
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 25, 2001
The undersigned hereby appoints Lee T. Cummings and John M. Zerr and each of
them as proxies with full powers of substitution and revocation, to represent
and to vote on behalf of the undersigned, all shares of the Fund referenced
hereon (the "Fund"), which the undersigned is entitled to vote at a Special
Meeting of Shareholders of the Fund to be held at the Peninsula Hotel, Le Grande
Salle Room, 700 Fifth Avenue, New York, New York on January 25, 2001, at 10:00
A.M. and any adjournments thereof (the "Meeting"). The undersigned acknowledges
receipt of the Notice of Meeting and Proxy Statement, and hereby instructs said
proxies to vote said shares as indicated hereon. Unless indicated to the
contrary, this proxy shall be voted "For" all proposals relating to the Fund.
The proxies are hereby authorized to vote in their discretion on any matter that
may properly come before the meeting or any adjournment thereof. The undersigned
hereby revokes any proxy previously given.
Note: Please sign exactly as your name appears on
this proxy. If joint owners, both should sign this
proxy. An authorized individual should sign corporate
or partnership proxies in full corporate or
partnership name. When signing as attorney, executor,
administrator, trustee, guardian, or corporate
officer, please give your full title.
DATE_____________________________
_____________________________
_____________________________
Signature(s) and Title(s), If Applicable
THE BOARD OF DIRECTORS, INCLUDING THOSE DIRECTORS WHO ARE
INDEPENDENT, RECOMMENDS A VOTE "FOR" EACH PROPOSAL.
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY TO ENSURE THAT A QUORUM IS
PRESENT AT THE SPECIAL MEETING. YOU CAN VOTE YOUR SHARES AT THE PROXY
SOLICITORS' WEB SITE, BY TOLL-FREE TELEPHONE, BY MAIL, BY FACSIMILE OR IN
PERSON. A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE, IF YOU CHOOSE TO VOTE BY MAIL.
<PAGE>
To vote by Telephone
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Call 1-800-xxx-xxxx
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Go to web site WWW.XXXXX.COM
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
2
<PAGE>
This proxy will be voted as specified below with respect to the action to be
taken on the following proposals. In the absence of any specification, this
proxy will be voted IN FAVOR of the proposals. Please mark your vote below in
blue or black ink. Do not use red ink.
1. To approve the Investment Advisory Agreement between The PBHG Funds,
Inc., on behalf of PBHG Focused Value Fund, with Pilgrim Baxter &
Associates, Ltd.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. To approve the Investment Sub-Advisory Agreement for the PBHG Focused Value
Fund with:
(a) Pilgrim Baxter Value Investors, Inc. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(b) THIS ITEM IS NOT APPLICABLE.
(c) THIS ITEM IS NOT APPLICABLE.
3. To approve the proposed changes to the Fund's fundamental investment
restrictions.
(a) THIS ITEM IS NOT APPLICABLE.
(b) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Borrowing Money and Issuing Senior [ ] [ ] [ ]
Securities
(c) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Underwriting Securities [ ] [ ] [ ]
(d) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Industry Concentration [ ] [ ] [ ]
(e) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Real Estate [ ] [ ] [ ]
(f) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Commodities [ ] [ ] [ ]
3
<PAGE>
(g) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Making Loans [ ] [ ] [ ]
(h) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing all Assets in an Open End [ ] [ ] [ ]
Fund
(i) THIS ITEM IS NOT APPLICABLE.
(j) THIS ITEM IS NOT APPLICABLE.
(k) THIS ITEM IS NOT APPLICABLE.
(l) THIS ITEM IS NOT APPLICABLE.
(m) THIS ITEM IS NOT APPLICABLE.
4. To approve the Agreement and Plan of Reorganization and subsequent
dissolution of the Maryland corporation.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4
<PAGE>
The PBHG Funds, Inc.
PBHG International Fund
P.O. Box 219534
Kansas City, MO 64121-9534
1-800-xxx-xxxx
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 25, 2001
The undersigned hereby appoints Lee T. Cummings and John M. Zerr and each of
them as proxies with full powers of substitution and revocation, to represent
and to vote on behalf of the undersigned, all shares of the Fund referenced
hereon (the "Fund"), which the undersigned is entitled to vote at a Special
Meeting of Shareholders of the Fund to be held at the Peninsula Hotel, Le Grande
Salle Room, 700 Fifth Avenue, New York, New York on January 25, 2001, at 10:00
A.M. and any adjournments thereof (the "Meeting"). The undersigned acknowledges
receipt of the Notice of Meeting and Proxy Statement, and hereby instructs said
proxies to vote said shares as indicated hereon. Unless indicated to the
contrary, this proxy shall be voted "For" all proposals relating to the Fund.
The proxies are hereby authorized to vote in their discretion on any matter that
may properly come before the meeting or any adjournment thereof. The undersigned
hereby revokes any proxy previously given.
Note: Please sign exactly as your name appears on
this proxy. If joint owners, both should sign this
proxy. An authorized individual should sign corporate
or partnership proxies in full corporate or
partnership name. When signing as attorney, executor,
administrator, trustee, guardian, or corporate
officer, please give your full title.
DATE_____________________________
_____________________________
_____________________________
Signature(s) and Title(s), If Applicable
THE BOARD OF DIRECTORS, INCLUDING THOSE DIRECTORS WHO ARE
INDEPENDENT, RECOMMENDS A VOTE "FOR" EACH PROPOSAL.
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY TO ENSURE THAT A QUORUM IS
PRESENT AT THE SPECIAL MEETING. YOU CAN VOTE YOUR SHARES AT THE PROXY
SOLICITORS' WEB SITE, BY TOLL-FREE TELEPHONE, BY MAIL, BY FACSIMILE OR IN
PERSON. A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE, IF YOU CHOOSE TO VOTE BY MAIL.
<PAGE>
To vote by Telephone
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Call 1-800-xxx-xxxx
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Go to web site WWW.XXXXX.COM
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
2
<PAGE>
This proxy will be voted as specified below with respect to the action to be
taken on the following proposals. In the absence of any specification, this
proxy will be voted IN FAVOR of the proposals. Please mark your vote below in
blue or black ink. Do not use red ink.
1. To approve the Investment Advisory Agreement between The PBHG Funds, Inc.,
on behalf of PBHG International Fund, with Pilgrim Baxter & Associates, Ltd.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. To approve the Investment Sub-Advisory Agreement for the PBHG International
Fund with:
(a) THIS ITEM IS NOT APPLICABLE.
(b) THIS ITEM IS NOT APPLICABLE.
(c) Murray Johnstone International Ltd. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To approve the proposed changes to the Fund's fundamental investment
restrictions.
(a) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Issuer Diversification [ ] [ ] [ ]
(b) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Borrowing Money and Issuing Senior [ ] [ ] [ ]
Securities
(c) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Underwriting Securities [ ] [ ] [ ]
(d) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Industry Concentration [ ] [ ] [ ]
(e) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Real Estate [ ] [ ] [ ]
(f) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Commodities [ ] [ ] [ ]
3
<PAGE>
(g) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Making Loans [ ] [ ] [ ]
(h) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing all Assets in an Open End [ ] [ ] [ ]
Fund
(i) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing in Oil, Gas or Other Mineral [ ] [ ] [ ]
Exploration or Development Programs
(j) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing in Companies for the Purpose [ ] [ ] [ ]
of Control
(k) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Making Short Sales or Margin Purchases [ ] [ ] [ ]
(l) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Pledging Assets [ ] [ ] [ ]
(m) THIS ITEM IS NOT APPLICABLE.
4. To approve the Agreement and Plan of Reorganization and subsequent
dissolution of the Maryland corporation.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4
<PAGE>
The PBHG Funds, Inc.
PBHG Cash Reserves Fund
P.O. Box 219534
Kansas City, MO 64121-9534
1-800-xxx-xxxx
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 25, 2001
The undersigned hereby appoints Lee T. Cummings and John M. Zerr and each of
them as proxies with full powers of substitution and revocation, to represent
and to vote on behalf of the undersigned, all shares of the Fund referenced
hereon (the "Fund"), which the undersigned is entitled to vote at a Special
Meeting of Shareholders of the Fund to be held at the Peninsula Hotel, Le Grande
Salle Room, 700 Fifth Avenue, New York, New York on January 25, 2001, at 10:00
A.M. and any adjournments thereof (the "Meeting"). The undersigned acknowledges
receipt of the Notice of Meeting and Proxy Statement, and hereby instructs said
proxies to vote said shares as indicated hereon. Unless indicated to the
contrary, this proxy shall be voted "For" all proposals relating to the Fund.
The proxies are hereby authorized to vote in their discretion on any matter that
may properly come before the meeting or any adjournment thereof. The undersigned
hereby revokes any proxy previously given.
Note: Please sign exactly as your name appears on
this proxy. If joint owners, both should sign this
proxy. An authorized individual should sign corporate
or partnership proxies in full corporate or
partnership name. When signing as attorney, executor,
administrator, trustee, guardian, or corporate
officer, please give your full title.
DATE_____________________________
_____________________________
_____________________________
Signature(s) and Title(s), If Applicable
THE BOARD OF DIRECTORS, INCLUDING THOSE DIRECTORS WHO ARE
INDEPENDENT, RECOMMENDS A VOTE "FOR" EACH PROPOSAL.
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY TO ENSURE THAT A QUORUM IS
PRESENT AT THE SPECIAL MEETING. YOU CAN VOTE YOUR SHARES AT THE PROXY
SOLICITORS' WEB SITE, BY TOLL-FREE TELEPHONE, BY MAIL, BY FACSIMILE OR IN
PERSON. A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE, IF YOU CHOOSE TO VOTE BY MAIL.
<PAGE>
To vote by Telephone
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Call 1-800-xxx-xxxx
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Go to web site WWW.XXXXX.COM
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
2
<PAGE>
This proxy will be voted as specified below with respect to the action to be
taken on the following proposals. In the absence of any specification, this
proxy will be voted IN FAVOR of the proposals. Please mark your vote below in
blue or black ink. Do not use red ink.
1. To approve the Investment Advisory Agreement between The PBHG Funds,
Inc., on behalf of PBHG Cash Reserves Fund, with Pilgrim Baxter &
Associates, Ltd.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. To approve the Investment Sub-Advisory Agreement for the PBHG Cash Reserves
Fund with:
(a) THIS ITEM IS NOT APPLICABLE.
(b) Wellington Management Company, Ltd. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(c) THIS ITEM IS NOT APPLICABLE.
3. To approve the proposed changes to the Fund's fundamental investment
restrictions.
(a) THIS ITEM IS NOT APPLICABLE.
(b) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Borrowing Money and Issuing Senior [ ] [ ] [ ]
Securities
(c) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Underwriting Securities [ ] [ ] [ ]
(d) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Industry Concentration [ ] [ ] [ ]
(e) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Real Estate [ ] [ ] [ ]
(f) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Commodities [ ] [ ] [ ]
3
<PAGE>
(g) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Making Loans [ ] [ ] [ ]
(h) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing all Assets in an Open End [ ] [ ] [ ]
Fund
(i) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing in Oil, Gas or Other Mineral [ ] [ ] [ ]
Exploration or Development Programs
(j) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing in Companies for the Purpose [ ] [ ] [ ]
of Control
(k) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Making Short Sales or Margin Purchases [ ] [ ] [ ]
(l) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Pledging Assets [ ] [ ] [ ]
(m) THIS ITEM IS NOT APPLICABLE.
4. To approve the Agreement and Plan of Reorganization and subsequent
dissolution of the Maryland corporation.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4
<PAGE>
The PBHG Funds, Inc.
PBHG Technology & Communications Fund
P.O. Box 219534
Kansas City, MO 64121-9534
1-800-xxx-xxxx
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 25, 2001
The undersigned hereby appoints Lee T. Cummings and John M. Zerr and each of
them as proxies with full powers of substitution and revocation, to represent
and to vote on behalf of the undersigned, all shares of the Fund referenced
hereon (the "Fund"), which the undersigned is entitled to vote at a Special
Meeting of Shareholders of the Fund to be held at the Peninsula Hotel, Le Grande
Salle Room, 700 Fifth Avenue, New York, New York on January 25, 2001, at 10:00
A.M. and any adjournments thereof (the "Meeting"). The undersigned acknowledges
receipt of the Notice of Meeting and Proxy Statement, and hereby instructs said
proxies to vote said shares as indicated hereon. Unless indicated to the
contrary, this proxy shall be voted "For" all proposals relating to the Fund.
The proxies are hereby authorized to vote in their discretion on any matter that
may properly come before the meeting or any adjournment thereof. The undersigned
hereby revokes any proxy previously given.
Note: Please sign exactly as your name appears on
this proxy. If joint owners, both should sign this
proxy. An authorized individual should sign corporate
or partnership proxies in full corporate or
partnership name. When signing as attorney, executor,
administrator, trustee, guardian, or corporate
officer, please give your full title.
DATE_____________________________
_____________________________
_____________________________
Signature(s) and Title(s), If Applicable
THE BOARD OF DIRECTORS, INCLUDING THOSE DIRECTORS WHO ARE
INDEPENDENT, RECOMMENDS A VOTE "FOR" EACH PROPOSAL.
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY TO ENSURE THAT A QUORUM IS
PRESENT AT THE SPECIAL MEETING. YOU CAN VOTE YOUR SHARES AT THE PROXY
SOLICITORS' WEB SITE, BY TOLL-FREE TELEPHONE, BY MAIL, BY FACSIMILE OR IN
PERSON. A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE, IF YOU CHOOSE TO VOTE BY MAIL.
<PAGE>
To vote by Telephone
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Call 1-800-xxx-xxxx
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Go to web site WWW.XXXXX.COM
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
2
<PAGE>
This proxy will be voted as specified below with respect to the action to be
taken on the following proposals. In the absence of any specification, this
proxy will be voted IN FAVOR of the proposals. Please mark your vote below in
blue or black ink. Do not use red ink.
1. To approve the Investment Advisory Agreement between The PBHG Funds,
Inc., on behalf of PBHG Technology & Communications Fund, with Pilgrim
Baxter & Associates, Ltd.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. THIS ITEM IS NOT APPLICABLE.
(a) THIS ITEM IS NOT APPLICABLE.
(b) THIS ITEM IS NOT APPLICABLE.
(c) THIS ITEM IS NOT APPLICABLE.
3. To approve the proposed changes to the Fund's fundamental investment
restrictions.
(a) THIS ITEM IS NOT APPLICABLE.
(b) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Borrowing Money and Issuing Senior [ ] [ ] [ ]
Securities
(c) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Underwriting Securities [ ] [ ] [ ]
(d) THIS ITEM IS NOT APPLICABLE.
(e) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Real Estate [ ] [ ] [ ]
(f) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Commodities [ ] [ ] [ ]
3
<PAGE>
(g) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Making Loans [ ] [ ] [ ]
(h) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing all Assets in an Open End [ ] [ ] [ ]
Fund
(i) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing in Oil, Gas or Other Mineral [ ] [ ] [ ]
Exploration or Development Programs
(j) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing in Companies for the Purpose [ ] [ ] [ ]
of Control
(k) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Making Short Sales or Margin Purchases [ ] [ ] [ ]
(l) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Pledging Assets [ ] [ ] [ ]
(m) THIS ITEM IS NOT APPLICABLE.
4. To approve the Agreement and Plan of Reorganization and subsequent
dissolution of the Maryland corporation.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4
<PAGE>
The PBHG Funds, Inc.
PBHG Strategic Small Company Fund
P.O. Box 219534
Kansas City, MO 64121-9534
1-800-xxx-xxxx
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 25, 2001
The undersigned hereby appoints Lee T. Cummings and John M. Zerr and each of
them as proxies with full powers of substitution and revocation, to represent
and to vote on behalf of the undersigned, all shares of the Fund referenced
hereon (the "Fund"), which the undersigned is entitled to vote at a Special
Meeting of Shareholders of the Fund to be held at the Peninsula Hotel, Le Grande
Salle Room, 700 Fifth Avenue, New York, New York on January 25, 2001, at 10:00
A.M. and any adjournments thereof (the "Meeting"). The undersigned acknowledges
receipt of the Notice of Meeting and Proxy Statement, and hereby instructs said
proxies to vote said shares as indicated hereon. Unless indicated to the
contrary, this proxy shall be voted "For" all proposals relating to the Fund.
The proxies are hereby authorized to vote in their discretion on any matter that
may properly come before the meeting or any adjournment thereof. The undersigned
hereby revokes any proxy previously given.
Note: Please sign exactly as your name appears on
this proxy. If joint owners, both should sign this
proxy. An authorized individual should sign corporate
or partnership proxies in full corporate or
partnership name. When signing as attorney, executor,
administrator, trustee, guardian, or corporate
officer, please give your full title.
DATE_____________________________
_____________________________
_____________________________
Signature(s) and Title(s), If Applicable
THE BOARD OF DIRECTORS, INCLUDING THOSE DIRECTORS WHO ARE
INDEPENDENT, RECOMMENDS A VOTE "FOR" EACH PROPOSAL.
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY TO ENSURE THAT A QUORUM IS
PRESENT AT THE SPECIAL MEETING. YOU CAN VOTE YOUR SHARES AT THE PROXY
SOLICITORS' WEB SITE, BY TOLL-FREE TELEPHONE, BY MAIL, BY FACSIMILE OR IN
PERSON. A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE, IF YOU CHOOSE TO VOTE BY MAIL.
<PAGE>
To vote by Telephone
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Call 1-800-xxx-xxxx
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Go to web site WWW.XXXXX.COM
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
2
<PAGE>
This proxy will be voted as specified below with respect to the action to be
taken on the following proposals. In the absence of any specification, this
proxy will be voted IN FAVOR of the proposals. Please mark your vote below in
blue or black ink. Do not use red ink.
1. To approve the Investment Advisory Agreement between The PBHG Funds,
Inc., on behalf of PBHG Strategic Small Company Fund, with Pilgrim
Baxter & Associates, Ltd.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. To approve the Investment Sub-Advisory Agreement for the PBHG Strategic
Small Company Fund with:
(a) Pilgrim Baxter Value Investors, Inc. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(b) THIS ITEM IS NOT APPLICABLE.
(c) THIS ITEM IS NOT APPLICABLE.
3. To approve the proposed changes to the Fund's fundamental investment
restrictions.
(a) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Issuer Diversification [ ] [ ] [ ]
(b) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Borrowing Money and Issuing Senior [ ] [ ] [ ]
Securities
(c) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Underwriting Securities [ ] [ ] [ ]
(d) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Industry Concentration [ ] [ ] [ ]
(e) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Real Estate [ ] [ ] [ ]
(f) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Commodities [ ] [ ] [ ]
3
<PAGE>
(g) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Making Loans [ ] [ ] [ ]
(h) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing all Assets in an Open End [ ] [ ] [ ]
Fund
(i) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing in Oil, Gas or Other Mineral [ ] [ ] [ ]
Exploration or Development Programs
(j) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing in Companies for the Purpose [ ] [ ] [ ]
of Control
(k) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Making Short Sales or Margin Purchases [ ] [ ] [ ]
(l) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Pledging Assets [ ] [ ] [ ]
(m) THIS ITEM IS NOT APPLICABLE.
4. To approve the Agreement and Plan of Reorganization and subsequent
dissolution of the Maryland corporation.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4
<PAGE>
The PBHG Funds, Inc.
PBHG Global Technology & Communications Fund
P.O. Box 219534
Kansas City, MO 64121-9534
1-800-xxx-xxxx
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 25, 2001
The undersigned hereby appoints Lee T. Cummings and John M. Zerr and each of
them as proxies with full powers of substitution and revocation, to represent
and to vote on behalf of the undersigned, all shares of the Fund referenced
hereon (the "Fund"), which the undersigned is entitled to vote at a Special
Meeting of Shareholders of the Fund to be held at the Peninsula Hotel, Le Grande
Salle Room, 700 Fifth Avenue, New York, New York on January 25, 2001, at 10:00
A.M. and any adjournments thereof (the "Meeting"). The undersigned acknowledges
receipt of the Notice of Meeting and Proxy Statement, and hereby instructs said
proxies to vote said shares as indicated hereon. Unless indicated to the
contrary, this proxy shall be voted "For" all proposals relating to the Fund.
The proxies are hereby authorized to vote in their discretion on any matter that
may properly come before the meeting or any adjournment thereof. The undersigned
hereby revokes any proxy previously given.
Note: Please sign exactly as your name appears on
this proxy. If joint owners, both should sign this
proxy. An authorized individual should sign corporate
or partnership proxies in full corporate or
partnership name. When signing as attorney, executor,
administrator, trustee, guardian, or corporate
officer, please give your full title.
DATE_____________________________
_____________________________
_____________________________
Signature(s) and Title(s), If Applicable
THE BOARD OF DIRECTORS, INCLUDING THOSE DIRECTORS WHO ARE
INDEPENDENT, RECOMMENDS A VOTE "FOR" EACH PROPOSAL.
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY TO ENSURE THAT A QUORUM IS
PRESENT AT THE SPECIAL MEETING. YOU CAN VOTE YOUR SHARES AT THE PROXY
SOLICITORS' WEB SITE, BY TOLL-FREE TELEPHONE, BY MAIL, BY FACSIMILE OR IN
PERSON. A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE, IF YOU CHOOSE TO VOTE BY MAIL.
<PAGE>
To vote by Telephone
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Call 1-800-xxx-xxxx
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Go to web site WWW.XXXXX.COM
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
2
<PAGE>
This proxy will be voted as specified below with respect to the action to be
taken on the following proposals. In the absence of any specification, this
proxy will be voted IN FAVOR of the proposals. Please mark your vote below in
blue or black ink. Do not use red ink.
1. To approve the Investment Advisory Agreement between The PBHG Funds,
Inc., on behalf of PBHG Global Technology & Communications Fund, with
Pilgrim Baxter & Associates, Ltd.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. THIS ITEM IS NOT APPLICABLE.
(a) THIS ITEM IS NOT APPLICABLE.
(b) THIS ITEM IS NOT APPLICABLE.
(c) THIS ITEM IS NOT APPLICABLE.
3. To approve the proposed changes to the Fund's fundamental investment
restrictions.
(a) THIS ITEM IS NOT APPLICABLE.
(b) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Borrowing Money and Issuing Senior [ ] [ ] [ ]
Securities
(c) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Underwriting Securities [ ] [ ] [ ]
(d) THIS ITEM IS NOT APPLICABLE.
(e) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Real Estate [ ] [ ] [ ]
(f) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Commodities [ ] [ ] [ ]
3
<PAGE>
(g) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Making Loans [ ] [ ] [ ]
(h) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing all Assets in an Open End [ ] [ ] [ ]
Fund
(i) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing in Oil, Gas or Other Mineral [ ] [ ] [ ]
Exploration or Development Programs
(j) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing in Companies for the Purpose [ ] [ ] [ ]
of Control
(k) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Making Short Sales or Margin Purchases [ ] [ ] [ ]
(l) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Pledging Assets [ ] [ ] [ ]
(m) THIS ITEM IS NOT APPLICABLE.
4. To approve the Agreement and Plan of Reorganization and subsequent
dissolution of the Maryland corporation.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4
<PAGE>
The PBHG Funds, Inc.
PBHG Large Cap Value Fund
P.O. Box 219534
Kansas City, MO 64121-9534
1-800-xxx-xxxx
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 25, 2001
The undersigned hereby appoints Lee T. Cummings and John M. Zerr and each of
them as proxies with full powers of substitution and revocation, to represent
and to vote on behalf of the undersigned, all shares of the Fund referenced
hereon (the "Fund"), which the undersigned is entitled to vote at a Special
Meeting of Shareholders of the Fund to be held at the Peninsula Hotel, Le Grande
Salle Room, 700 Fifth Avenue, New York, New York on January 25, 2001, at 10:00
A.M. and any adjournments thereof (the "Meeting"). The undersigned acknowledges
receipt of the Notice of Meeting and Proxy Statement, and hereby instructs said
proxies to vote said shares as indicated hereon. Unless indicated to the
contrary, this proxy shall be voted "For" all proposals relating to the Fund.
The proxies are hereby authorized to vote in their discretion on any matter that
may properly come before the meeting or any adjournment thereof. The undersigned
hereby revokes any proxy previously given.
Note: Please sign exactly as your name appears on
this proxy. If joint owners, both should sign this
proxy. An authorized individual should sign corporate
or partnership proxies in full corporate or
partnership name. When signing as attorney, executor,
administrator, trustee, guardian, or corporate
officer, please give your full title.
DATE_____________________________
_____________________________
_____________________________
Signature(s) and Title(s), If Applicable
THE BOARD OF DIRECTORS, INCLUDING THOSE DIRECTORS WHO ARE
INDEPENDENT, RECOMMENDS A VOTE "FOR" EACH PROPOSAL.
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY TO ENSURE THAT A QUORUM IS
PRESENT AT THE SPECIAL MEETING. YOU CAN VOTE YOUR SHARES AT THE PROXY
SOLICITORS' WEB SITE, BY TOLL-FREE TELEPHONE, BY MAIL, BY FACSIMILE OR IN
PERSON. A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE, IF YOU CHOOSE TO VOTE BY MAIL.
<PAGE>
To vote by Telephone
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Call 1-800-xxx-xxxx
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Go to web site WWW.XXXXX.COM
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
2
<PAGE>
This proxy will be voted as specified below with respect to the action to be
taken on the following proposals. In the absence of any specification, this
proxy will be voted IN FAVOR of the proposals. Please mark your vote below in
blue or black ink. Do not use red ink.
1. To approve the Investment Advisory Agreement between The PBHG Funds, Inc.,
on behalf of PBHG Large Cap Value Fund, with Pilgrim Baxter & Associates,
Ltd.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. To approve the Investment Sub-Advisory Agreement for the PBHG Large Cap
Value Fund with:
(a) Pilgrim Baxter Value Investors, Inc. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(b) THIS ITEM IS NOT APPLICABLE.
(c) THIS ITEM IS NOT APPLICABLE.
3. To approve the proposed changes to the Fund's fundamental investment
restrictions.
(a) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Issuer Diversification [ ] [ ] [ ]
(b) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Borrowing Money and Issuing Senior [ ] [ ] [ ]
Securities
(c) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Underwriting Securities [ ] [ ] [ ]
(d) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Industry Concentration [ ] [ ] [ ]
(e) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Real Estate [ ] [ ] [ ]
(f) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Purchasing or Selling Commodities [ ] [ ] [ ]
3
<PAGE>
(g) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Making Loans [ ] [ ] [ ]
(h) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing all Assets in an Open End [ ] [ ] [ ]
Fund
(i) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing in Oil, Gas or Other Mineral [ ] [ ] [ ]
Exploration or Development Programs
(j) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Investing in Companies for the Purpose [ ] [ ] [ ]
of Control
(k) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Making Short Sales or Margin Purchases [ ] [ ] [ ]
(l) Change to Fundamental Restriction FOR AGAINST ABSTAIN
on Pledging Assets [ ] [ ] [ ]
(m) THIS ITEM IS NOT APPLICABLE.
4. To approve the Agreement and Plan of Reorganization and subsequent
dissolution of the Maryland corporation.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4
<PAGE>
