<PAGE> PAGE 1
000 A000000 12/31/98
000 C000000 0000944689
000 D000000 N
000 E000000 NF
000 F000000 Y
000 G000000 N
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001 A000000 PILGRIM ADVISORY FUNDS INC.
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001 C000000 6024178100
002 A000000 40 NORTH CENTRAL AVENUE, SUITE 1200
002 B000000 PHOENIX
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007 C030100 N
007 C010200 2
007 C020200 PILGRIM MIDCAP VALUE FUND
007 C030200 N
007 C010300 3
007 C020300 PILGRIM LARGECAP LEADERS FUND
007 C030300 N
007 C010400 4
007 C010500 5
007 C010600 6
007 C010700 7
007 C010800 8
007 C010900 9
007 C011000 10
008 A00AA01 PILGRIM INVESTMENTS, INC.
008 B00AA01 A
008 C00AA01 801-8178
008 D01AA01 PHOENIX
008 D02AA01 AZ
008 D03AA01 85004
008 D04AA01 4408
010 A00AA01 PILGRIM GROUP,INC.
010 C01AA01 PHOENIX
010 C02AA01 AZ
010 C03AA01 85004
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<PAGE> PAGE 2
011 A00AA01 PILGRIM SECURITIES, INC.
011 B00AA01 8-8272
011 C01AA01 PHOENIX
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011 C03AA01 85004
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012 A00AA01 PILGRIM GROUP, INC.
012 B00AA01 85-00535
012 C01AA01 PHOENIX
012 C02AA01 AZ
012 C03AA01 85004
012 C04AA01 4408
013 A00AA01 KPMG LLP
013 B01AA01 LOS ANGELES
013 B02AA01 CA
013 B03AA01 90017
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015 B00AA01 C
015 C01AA01 KANSAS CITY
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<PAGE> PAGE 3
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<PAGE> PAGE 4
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<PAGE> PAGE 5
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<PAGE> PAGE 6
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<PAGE> PAGE 7
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<PAGE> PAGE 8
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<PAGE> PAGE 9
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<PAGE> PAGE 10
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<PAGE> PAGE 11
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<PAGE> PAGE 12
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<PAGE> PAGE 13
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<PAGE> PAGE 14
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<PAGE> PAGE 15
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<PAGE> PAGE 16
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<PAGE> PAGE 17
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<PAGE> PAGE 18
SIGNATURE MIKE ROLAND
TITLE CHIEF FINANCIAL OFFI
SUPPLEMENT DATED NOVEMBER 1, 1998 TO THE
PROSPECTUS FOR THE PILGRIM FUNDS
DATED NOVEMBER 1, 1998
The Board of Directors of the Funds has approved a change in the name
of each Fund (except Pilgrim Government Securities Income Fund), to be effective
on November 16, 1998. The Prospectus for the Funds dated November 1, 1998
reflects the new names of each Fund effective on November 16, 1998. The
following table shows the name of each Fund as in effect prior to November 16,
1998, and the new names which will become effective on November 16, 1998:
NAME PRIOR TO NOVEMBER 16, 1998 NAME EFFECTIVE ON NOVEMBER 16, 1998
- ------------------------------- -----------------------------------
Pilgrim America MagnaCap Fund Pilgrim MagnaCap Fund
Pilgrim America Masters LargeCap Pilgrim LargeCap Leaders Fund
Value Fund
Pilgrim America Masters MidCap Value Fund Pilgrim MidCap Value Fund
Pilgrim America Bank and Thrift Fund Pilgrim Bank and Thrift Fund
Pilgrim America Masters Asia-Pacific Pilgrim Asia-Pacific Equity Fund
Equity Fund
Pilgrim America High Yield Fund Pilgrim High Yield Fund
Pilgrim Government Securities Pilgrim Government Securities
Income Fund Income Fund
Each Fund listed above is a series of a registered investment company.
The Board of Directors has also approved a change to the name of each such
investment company, also to be effective on November 16, 1998. On that date, the
name of Pilgrim America Masters Series, Inc. becomes Pilgrim Advisory Funds,
Inc., the name of Pilgrim America Investment Funds, Inc. becomes Pilgrim
Investment Funds, Inc., and the name of Pilgrim America Bank and Thrift Fund,
Inc. becomes Pilgrim Bank and Thrift Fund, Inc. The Prospectus reflects the
names of each investment company as they will become effective on November 16,
1998.
PILGRIM AMERICA MASTERS SERIES, INC.
ARTICLES SUPPLEMENTARY
PILGRIM AMERICA MASTERS SERIES, INC., a Maryland corporation having its
principal office in the State of Maryland in Baltimore City (the "Corporation"),
certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: There is hereby established and designated one additional series
of Common Stock, designated Strategic Income Fund, consisting of seventy million
(70,000,000) shares of the Corporation's authorized capital stock. Seventy
million (70,000,000) shares of the Corporation are hereby classified as
Strategic Income Fund shares.
SECOND: The preference, rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemptions of shares of Strategic Income Fund are as set forth in Article V of
the Articles of Incorporation of the Corporation, as amended.
THIRD: Shares of Strategic Income Fund were classified by vote of a
majority of the Board of Directors at a meeting on August 3, 1998 in accordance
with procedures established in Section 5.4 of Article V of the Corporation's
Articles of Incorporation, as amended.
IN WITNESS WHEREOF, PILGRIM AMERICA MASTERS SERIES, INC. has caused
these presents to be signed in its name and on its behalf by its President and
witnessed by its Secretary on ________, 1998.
ATTEST: PILGRIM AMERICA MASTERS SERIES, INC.
By: __________________________ By: ________________________________
James M. Hennessy Robert W. Stallings
Secretary President
<PAGE>
THE UNDERSIGNED, President of Pilgrim America Masters Series, Inc., who
executed on behalf of the Corporation the foregoing Articles Supplementary of
which this certificate is made a part, hereby acknowledges that these Articles
Supplementary are the act of the Corporation, that to the best of his knowledge,
information and belief the matters and facts set forth herein relating to the
authorization and approval of the Articles supplementary are true in all
material respects and that this statement is made under the penalties of
perjury.
By: ________________________________
Robert W. Stallings
President
PILGRIM AMERICA MASTERS SERIES, INC.
ARTICLES OF AMENDMENT
PILGRIM AMERICA MASTERS SERIES, INC., a Maryland corporation having its
principal office in the State of Maryland in Baltimore City (hereinafter called
the "Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby amended by
striking out Sections 2.1 and 2.2 of Article II of the Articles of Incorporation
and inserting in lieu thereof the following:
2.1 The name of the corporation is Pilgrim America Advisory
Funds, Inc. (the "Corporation").
2.2 The Corporation acknowledges that it uses the name
"Pilgrim America" in its corporate name and in the name of any
series designated pursuant to Article V hereof only with the
permission of Pilgrim America Investments, Inc., a Delaware
corporation that serves as investment manager to the
Corporation (the "Investment Manager"), and agrees that the
Investment Manager shall control the use of the name "Pilgrim
America" by the Corporation. The Corporation further agrees
that if the Investment Manager, its successors or assigns
should at any time cease to be investment manager to the
Corporation, the Corporation shall, at the written request of
the Investment Manager or its successors or assigns eliminate
the name "Pilgrim America" from its corporate name and any
materials or documents referring to the Corporation, and
henceforth will not use the name "Pilgrim America" in the
conduct of the Corporation's business, except to any extent
agreed to by the Investment Manager. The Corporation further
acknowledges that the Investment Manager reserves the right to
grant the non-exclusive right to use the name "Pilgrim
America" to any other persons or entities, including other
investment companies, whether now in existence or hereafter
created. The provisions of this paragraph are binding on the
Corporation, its successors and assigns and on its directors,
officers, stockholders, creditors and all other persons
claiming under or through it.
SECOND: The foregoing amendment to such Articles of
Incorporation of the Corporation was approved by a majority of the entire Board
of Directors of the Corporation; the charter amendment is limited to changes
expressly permitted by Section 2-605 of Subtitle 6 of Title 2 of the Maryland
General Corporation Law to be made without action by the stockholders, and the
Corporation is registered as an open-end investment company under the Investment
Company Act of 1940.
<PAGE>
THIRD: The undersigned President of the Corporation
acknowledges these Articles of Amendment to be the corporate act of the
Corporation and states to the best of his knowledge, information and belief that
the matters and facts set forth in these Articles with respect to authorization
and approval are true in all material respects and that this statement is made
under the penalties of perjury.
IN WITNESS WHEREOF, Pilgrim America Masters Series, Inc. has caused
this instrument to be signed in its name and on its behalf by its President,
Robert W. Stallings, and attested by its Secretary, James M. Hennessy, on the
___ day of August, 1998.
ATTEST: PILGRIM AMERICA MASTERS SERIES, INC.
_____________________________ By:_____________________________(SEAL)
James M. Hennessy Robert W. Stallings
Secretary President
-2-
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<NAME> PILGRIM LARGECAP LEADERS FUND CLASS M
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<CURRENCY> U.S. DOLLAR
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 23527
<INVESTMENTS-AT-VALUE> 27981
<RECEIVABLES> 165
<ASSETS-OTHER> 70
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 28216
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 93
<TOTAL-LIABILITIES> 93
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 21180
<SHARES-COMMON-STOCK> 350
<SHARES-COMMON-PRIOR> 380
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 109
<ACCUMULATED-NET-GAINS> 2599
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4453
<NET-ASSETS> 5459
<DIVIDEND-INCOME> 147
<INTEREST-INCOME> 35
<OTHER-INCOME> 0
<EXPENSES-NET> 291
<NET-INVESTMENT-INCOME> (109)
<REALIZED-GAINS-CURRENT> 2080
<APPREC-INCREASE-CURRENT> (232)
<NET-CHANGE-FROM-OPS> 1739
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 35
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 13
<NUMBER-OF-SHARES-REDEEMED> 45
<SHARES-REINVESTED> 2
<NET-CHANGE-IN-ASSETS> (621)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 698
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 128
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 357
<AVERAGE-NET-ASSETS> 4946
<PER-SHARE-NAV-BEGIN> 14.55
<PER-SHARE-NII> (0.17)
<PER-SHARE-GAIN-APPREC> 1.31
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0.10
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.59
<EXPENSE-RATIO> 2.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
