NOTE 1 -- ORGANIZATION
Organization. The Pilgrim Funds are comprised of Pilgrim Mutual Funds ("PMF"), Pilgrim Bank and Thrift Fund,
Inc. ("Bank and Thrift Fund"), Pilgrim Investment Funds, Inc. ("PIF"), Pilgrim Advisory Funds, Inc. ("PAF") and
Pilgrim Government Securities Income Fund ("Government Securities Income Fund") which are each open-end
investment management companies registered under the Investment Company Act of 1940, as amended.
PMF, formerly Nicholas-Applegate Mutual Funds, is a Delaware business trust organized in 1992 with twelve
separate series (Portfolios). The "Funds" are Pilgrim LargeCap Growth Fund, Pilgrim MidCap Growth Fund,
Pilgrim SmallCap Growth Fund, Pilgrim Worldwide Growth Fund, Pilgrim International Core Growth Fund,
Pilgrim International SmallCap Growth Fund, Pilgrim Emerging Countries Fund, Pilgrim Strategic Income Fund
(formerly High Quality Bond Fund), Pilgrim High Yield Fund II, Pilgrim Money Market Fund, Pilgrim Balanced
Fund and Pilgrim Convertible Fund. In a transaction that closed on May 21, 1999, Pilgrim Investments, Inc.
became the Investment Manager and Pilgrim Securities, Inc. became the Distributor of the Funds in PMF. While
Pilgrim Investments, Inc. manages all the portfolios of PMF, Nicholas-Applegate Capital Management acts as
sub-advisor to all the PMF portfolios with the exception of Strategic Income Fund, High Yield Fund II, Money
Market Fund and Balanced Fund.
Bank and Thrift Fund was organized as a Maryland Corporation in 1986. PIF, a Maryland Corporation
organized in 1969, consists of Pilgrim MagnaCap Fund and Pilgrim High Yield Fund. PAF, a Maryland
Corporation organized in 1995, consists of Pilgrim MidCap Value Fund, Pilgrim LargeCap Leaders Fund and
Pilgrim Asia-Pacific Equity Fund. Government Securities Income Fund, a California Corporation organized in
1984, is the single series of Government Securities Income Fund. The investment objective of each Fund is
described in each Fund's prospectus.
The Money Market Fund seeks to achieve i