The Board of Directors
Pilgrim Advisory Funds, Inc.:
In planning and performing our audit of the financial statements of the Pilgrim
LargeCap Leaders Fund, Pilgrim MidCap Value Fund, and Pilgrim Asia Pacific
Equity Fund (three of the Funds constituting the Pilgrim Advisory Funds, Inc.)
for the year ended June 30, 2000, we considered the Funds' internal control,
including control activities for safeguarding securities, in order to determine
our auditing procedures for the purpose of expressing our opinion on the
financial statements and to comply with the requirements of Form N-SAR, not to
provide assurance on internal control.
The management of the Funds is responsible for establishing and maintaining
internal control. In fulfilling this responsibility, estimates and judgments by
management are required to assess the expected benefits and related costs of
controls. Generally, controls that are relevant to an audit pertain to the
entity's objective of preparing financial statements for external purposes that
are fairly presented in conformity with generally accepted accounting
principles. Those controls include the safeguarding of assets against
unauthorized acquisition, use, or disposition.
Because of inherent limitations in internal control, error or fraud may occur
and not be detected. Also, projection of any evaluation of internal control to
future periods is subject to the risk that it may become inadequate because of
changes in conditions or that the effectiveness of the design and operation may
deteriorate.
Our consideration of internal control would not necessarily disclose all matters
in internal control that might be material weaknesses under standards
established by the American Institute of Certified Public Accountants. A
material weakness is a condition in which the design or operation of the
specific internal control components does not reduce to a relatively low level
the risk that misstatements caused by error or fraud in amounts that would be
material in relation to the financial statements being audited may occur and not
be detected within a timely period by employees in the normal course of
performing their assigned functions. However, we noted no matters involving
internal control, including controls for safeguarding securities, that we
consider to be material weaknesses as defined above as of June 30, 2000.
This report is intended solely for the information and use of management and the
Board of Directors of the Funds and the Securities and Exchange Commission and
is not intended to be and should not be used by anyone other than these
specified parties.
/s/ KPMG LLP
August 4, 2000
