Supplement dated February 3, 1998 to the
Prospectus for the Pilgrim America Elite Series
Dated November 1, 1997
Change to Certain Investment Policies of Pilgrim America MagnaCap Fund
On February 2, 1998, the Board of Directors of Pilgrim America Investment
Funds, Inc. (the "Company") approved changes to certain investment policies of
the Pilgrim America MagnaCap Fund ("MagnaCap Fund"), which became effective on
February 2. The investment objective of MagnaCap Fund continues to be growth of
capital, with dividend income as a secondary consideration. The changes in
investment policies revise to some degree the criteria generally used to select
portfolio companies. The investment objective and policies of the MagnaCap Fund,
as described on page 8 of the Prospectus, are changed to read as follows:
MagnaCap Fund. The Fund's objective is growth of capital, with dividend
income as a secondary consideration. In selecting investments for the
Fund, preservation of capital is also an important consideration. The
Fund normally seeks its objectives by investing primarily in equity
securities issued by companies that the Investment Manager determines
are of high quality based upon the selection criteria described below.
The equity securities in which the Fund may invest include common
stocks, securities convertible into common stocks, rights or warrants
to subscribe for or purchase common stocks, repurchase agreements, and
foreign securities (including American Depository Receipts (ADRs)),
although it is anticipated that the Fund normally will be invested as
fully as practicable in equity securities in accordance with its
investment policies. Assets of the Fund not invested in equity
securities may be invested in high quality debt securities, as
described in "Investment Techniques--Temporary Defensive and other
Short-Term Positions." In a period that the Investment Manager believes
presents weakness in the stock market or in economic conditions, the
Fund may establish a defensive position to attempt to preserve capital
and increase its investment in these instruments.
MagnaCap Fund is managed in accordance with the philosophy that
companies that can best meet the Fund's objectives have paid increasing
dividends or have had the capability to pay rising dividends from their
operations. Normally, stocks are acquired only if at least 65% of the
Fund's assets are invested in companies that meet the following
criteria:
1. Consistent dividends. A company must have paid or had the
financial capability from its operations to pay a dividend in
8 out of the last 10 years.
2. Substantial dividend increases. A company must have increased
its dividend or had the financial capability from its
operations to have increased its dividend at least 100% over
the past 10 years.
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3. Reinvested earnings. Dividend payout must be less than
65% of current earnings.
4. Strong balance sheet. Long term debt should be no more than
25% of the company's total capitalization or a company's bonds
must be rated at least A- or A-3.
5. Attractive price. A company's current share price should be in
the lower half of the stock's price/earnings ratio range for
the past ten years, or the ratio of the share price to its
anticipated future earnings must be an attractive value in
relation to the average for its industry peer group or that of
the Standard & Poor's 500 Composite Stock Price Index.
The Investment Manager may also consider other factors in selecting
investments for the Fund. The remainder of the Fund's assets may be
invested in equity securities that the Investment Manager believes have
growth potential because they represent an attractive value. MagnaCap
Fund may not invest more than 5% of its total assets in the securities
of companies which, including predecessors, have not had a record of at
least three years of continuous operations, and it may not invest in
any restricted securities.
No change has been made to the investment objectives or policies of the
Pilgrim America High Yield Fund or the Pilgrim Government Securities Income
Fund.
