ING Advisory Funds Inc, et al. – ‘PRE 14A’ for 8/18/00

On:  Tuesday, 6/20/00, at 7:04pm ET   ·   As of:  6/21/00   ·   For:  8/18/00   ·   Accession #:  950147-0-951   ·   File #s:  811-01939, 811-04031, 811-04504, 811-07428, 811-07978, 811-08817, 811-09040

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Preliminary Proxy Solicitation Material   —   Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: PRE 14A     Preliminary N&Ps for Pilgrim Funds                   164    545K 

Document Table of Contents

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SCHEDULE 14A
(RULE 14a-101)
 INFORMATION REQUIRED IN PROXY STATEMENT

 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    
[ ]  Definitive Proxy Statement                 Commission Only (as permitted   
[ ]  Definitive Additional Materials            by Rule 14a-6(e)(2))            
[ ]  Soliciting Material Pursuant to                                            
Rule 14a-11(c) or Rule 14a-12                                         

Pilgrim Advisory Funds, Inc.
Pilgrim Bank and Thrift Fund, Inc.
Pilgrim Equity Trust
 Pilgrim Government Securities Income Fund, Inc.
Pilgrim Investment Funds, Inc.
 Pilgrim Mayflower Trust
Pilgrim Mutual Funds
--------------------------------------------------------------------------------
(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:            

--------------------------------------------------------------------------------
2)   Aggregate number of securities to which transaction applies:               

--------------------------------------------------------------------------------
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):                          

--------------------------------------------------------------------------------
4)   Proposed maximum aggregate value of transaction:                           

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5)   Total fee paid:                                                            

--------------------------------------------------------------------------------
[ ] 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.             

1)   Amount previously paid:                                            
                          ------------------------------------------
2)   Form, Schedule or Registration Statement No.:                      
                                                --------------------
3)   Filing Party:                                                      
                ----------------------------------------------------
4)   Date Filed:                                                        
              ------------------------------------------------------

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 PILGRIM FUNDS

 40 North Central Avenue, Suite 1200
Phoenix, Arizona 85004
(800) 992-1080

                                                                   June __, 2000

Dear Shareholder:                                                               

ReliaStar Financial Corp., the indirect parent company of Pilgrim     
Investments, Inc., the investment adviser to the Funds, is being acquired by the
financial services firm ING Groep N.V. Headquartered in Amsterdam, ING is a     
global financial institution active in the fields of insurance, banking, and    
asset management.                                                               

     At the shareholder meeting on August 18, 2000, you will be asked to approve
new advisory contracts and, as applicable, sub-advisory contracts to take effect
after the acquisition. If approved, Pilgrim Investments will continue to manage 
the Funds following the transaction. Except for the dates and the Sub-Advisory  
Agreement for Pilgrim Asia-Pacific Equity Fund, these new contracts are the same
as those currently in effect. Approval of the new advisory and sub-advisory     
contracts is sought so that management of each Fund can continue uninterrupted  
after the transaction, because the current agreements may terminate             
automatically as a result of the transaction. At the shareholder meeting, some  
of you also will be asked to ratify the independent auditors and to elect new   
Trustees for certain Funds.                                                     

   After careful consideration, the Board of Directors/Trustees of the Funds
unanimously approved each of the proposals and recommends that shareholders vote
"FOR" each proposal.                                                            

     YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. IN ORDER
TO AVOID THE ADDED COST OF FOLLOW-UP SOLICITATIONS AND POSSIBLE ADJOURNMENTS,   
PLEASE TAKE A FEW MINUTES TO READ THE PROXY STATEMENT AND CAST YOUR VOTE. IT IS 
IMPORTANT THAT YOUR VOTE BE RECEIVED BY NO LATER THAN AUGUST 17, 2000.          

 We appreciate your participation and prompt response in this matter and
thank you for your continued support.                                           

          Sincerely,

                    ROBERT W. STALLINGS,
                                     Chief Executive Officer and President

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 PILGRIM FUNDS

                                                        [Enlarge/Download Table]
                                                                                     
     Pilgrim Asia-Pacific Equity Fund      Pilgrim International SmallCap Growth Fund
          Pilgrim Balanced Fund                 Pilgrim International Value Fund     
       Pilgrim Bank and Thrift Fund               Pilgrim LargeCap Growth Fund       
         Pilgrim Convertible Fund                Pilgrim LargeCap Leaders Fund       
     Pilgrim Emerging Countries Fund                 Pilgrim MagnaCap Fund           
   Pilgrim Emerging Markets Value Fund             Pilgrim MidCap Growth Fund        
Pilgrim Government Securities Income Fund      Pilgrim MidCap Opportunities Fund     
       Pilgrim Growth + Value Fund                 Pilgrim MidCap Value Fund         
      Pilgrim High Total Return Fund               Pilgrim Money Market Fund         
    Pilgrim High Total Return Fund II         Pilgrim Research Enhanced Index Fund   
         Pilgrim High Yield Fund                  Pilgrim SmallCap Growth Fund       
        Pilgrim High Yield Fund II               Pilgrim Strategic Income Fund       
  Pilgrim International Core Growth Fund         Pilgrim Worldwide Growth Fund       

 (each a "Fund" and collectively, the "Funds")

 40 North Central Avenue, Suite 1200
Phoenix, Arizona 85004
(800) 992-1080

 NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON AUGUST 18, 2000

To the Shareholders:                                                            

     A Special Meeting (the "Meeting") of Shareholders of the Funds will be held
on August 18, 2000 at _____ a.m. local time, at 40 North Central Avenue, Suite  
1200, Phoenix, Arizona 85004 for the following purposes:                        

1.   For shareholders of the Pilgrim MidCap Opportunities Fund (a series of     
Pilgrim Equity Trust) and shareholders of the Pilgrim Emerging Markets
Value, Pilgrim Growth + Value, Pilgrim High Total Return, Pilgrim High
     Total Return II, Pilgrim International Value, and Pilgrim Research Enhanced
   Index Funds (series of Pilgrim Mayflower Trust), to elect eleven Trustees
to serve until their successors are elected and qualified;            

2.   For shareholders of all the Funds, to approve new Investment Management    
Agreements between the Funds and Pilgrim Investments, Inc. ("Pilgrim  
Investments") to reflect the acquisition of Pilgrim Investments by ING
    Groep N.V. ("ING"), with no change in the advisory fees payable to Pilgrim
Investments;                                                          

3.   (a)  For shareholders of the Pilgrim Asia-Pacific Equity Fund, to approve a
     new Sub-Advisory Agreement among HSBC Asset Management (Americas)
  Inc., HSBC Asset Management (Hong Kong) Limited and HSBC Asset
  Management (Europe) Limited (collectively, "HSBC") and Pilgrim
         Investments to reflect the acquisition of Pilgrim Investments by ING,
with no change in the sub-advisory fee payable to HSBC;     

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(b)  For shareholders of the Pilgrim Convertible, Pilgrim Emerging    
       Countries, Pilgrim International Core Growth, Pilgrim International
         SmallCap Growth, Pilgrim LargeCap Growth and Pilgrim Worldwide Growth
  Funds, to approve a new Sub-Advisory Agreement between Pilgrim
     Investments and Nicholas-Applegate Capital Management ("NACM") to
         reflect the acquisition of Pilgrim Investments by ING, with no change
in the sub-advisory fees payable to NACM;                   

 (c)  For shareholders of the Pilgrim Emerging Markets Value and Pilgrim
      International Value Funds, to approve a new Sub-Advisory Agreement
     between Pilgrim Investments and Brandes Investment Partners, L.P.
         ("Brandes") to reflect the acquisition of Pilgrim Investments by ING,
with no change in the sub-advisory fees payable to Brandes; 

   (d)  For shareholders of the Pilgrim Growth +Value Fund, to approve a new
         Sub-Advisory Agreement between Pilgrim Investments and Navellier Fund
         Management, Inc. ("Navellier"), to reflect the acquisition of Pilgrim
         Investments by ING, with no change in the sub-advisory fee payable to
Navellier; and                                              

(e)  For shareholders of the Pilgrim Research Enhanced Index Fund, to 
        approve a new Sub-Advisory Agreement between Pilgrim Investments and
         J.P. Morgan Investment Management Inc. ("J.P. Morgan") to reflect the
    acquisition of Pilgrim Investments by ING, with no change in the
sub-advisory fee payable to J.P. Morgan.                    

4.   For shareholders of the Pilgrim Emerging Markets Value, Pilgrim Growth +   
 Value, Pilgrim High Total Return, Pilgrim High Total Return II, Pilgrim
International Value, Pilgrim Research Enhanced Index Funds (series of 
Pilgrim Mayflower Trust) and shareholders of the Pilgrim MidCap       
Opportunities Fund (a series of Pilgrim Equity Trust), to ratify the  
   appointment of PricewaterhouseCoopers LLP as independent auditors for the
  Funds for the fiscal years ending October 31, 2000 or December 31, 2000.

5.   To transact such other business as may properly come before the Meeting of 
Shareholders or any adjournments thereof.                             

Shareholders of record at the close of business on June 19, 2000 are  
entitled to notice of, and to vote at, the Meeting. Your attention is called to 
the accompanying Proxy Statement. Regardless of whether you plan to attend the  
Meeting, PLEASE COMPLETE, SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY CARD so   
that a quorum will be present and a maximum number of shares may be voted. If   
you are present at the Meeting, you may change your vote, if desired, at that   
time.                                                                           

                                    By Order of the Board of Directors/Trustees,

                    JAMES M. HENNESSY, Secretary

Dated: June __, 2000                                                            

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 PILGRIM FUNDS

                                                        [Enlarge/Download Table]
                                                                                     
     Pilgrim Asia-Pacific Equity Fund      Pilgrim International SmallCap Growth Fund
          Pilgrim Balanced Fund                 Pilgrim International Value Fund     
       Pilgrim Bank and Thrift Fund               Pilgrim LargeCap Growth Fund       
         Pilgrim Convertible Fund                Pilgrim LargeCap Leaders Fund       
     Pilgrim Emerging Countries Fund                 Pilgrim MagnaCap Fund           
   Pilgrim Emerging Markets Value Fund             Pilgrim MidCap Growth Fund        
Pilgrim Government Securities Income Fund      Pilgrim MidCap Opportunities Fund     
       Pilgrim Growth + Value Fund                 Pilgrim MidCap Value Fund         
      Pilgrim High Total Return Fund               Pilgrim Money Market Fund         
    Pilgrim High Total Return Fund II         Pilgrim Research Enhanced Index Fund   
         Pilgrim High Yield Fund                  Pilgrim SmallCap Growth Fund       
        Pilgrim High Yield Fund II               Pilgrim Strategic Income Fund       
  Pilgrim International Core Growth Fund         Pilgrim Worldwide Growth Fund       

 (each a "Fund" and collectively, the "Funds")

 PROXY STATEMENT

 SPECIAL MEETING OF SHAREHOLDERS
 TO BE HELD ON AUGUST 18, 2000

     A Special Meeting (the "Meeting") of Shareholders of the Funds will be held
on August 18, 2000 at ___ a.m., local time, at 40 North Central Avenue, Suite   
1200, Phoenix, Arizona 85004 for the following purposes:                        

1.   For shareholders of the Pilgrim MidCap Opportunities Fund (a series of     
Pilgrim Equity Trust) and shareholders of the Pilgrim Emerging Markets
Value, Pilgrim Growth + Value, Pilgrim High Total Return, Pilgrim High
     Total Return II, Pilgrim International Value, and Pilgrim Research Enhanced
   Index Funds (series of Pilgrim Mayflower Trust), to elect eleven Trustees
to serve until their successors are elected and qualified;            

2.   For shareholders of all the Funds, to approve new Investment Management    
Agreements between the Funds and Pilgrim Investments, Inc. ("Pilgrim  
Investments") to reflect the acquisition of Pilgrim Investments by ING
    Groep N.V. ("ING"), with no change in the advisory fees payable to Pilgrim
Investments;                                                          

3.   (a)  For shareholders of the Pilgrim Asia-Pacific Equity Fund, to approve a
     new Sub-Advisory Agreement among HSBC Asset Management (Americas)
  Inc., HSBC Asset Management (Hong Kong) Limited and HSBC Asset
  Management (Europe) Limited (collectively, "HSBC") and Pilgrim
         Investments to reflect the acquisition of Pilgrim Investments by ING,
with no change in the sub-advisory fee payable to HSBC;     

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(b)  For shareholders of the Pilgrim Convertible, Pilgrim Emerging    
       Countries, Pilgrim International Core Growth, Pilgrim International
         SmallCap Growth, Pilgrim LargeCap Growth and Pilgrim Worldwide Growth
  Funds, to approve a new Sub-Advisory Agreement between Pilgrim
     Investments and Nicholas-Applegate Capital Management ("NACM") to
         reflect the acquisition of Pilgrim Investments by ING, with no change
in the sub-advisory fees payable to NACM;                   

 (c)  For shareholders of the Pilgrim Emerging Markets Value and Pilgrim
      International Value Funds, to approve a new Sub-Advisory Agreement
     between Pilgrim Investments and Brandes Investment Partners, L.P.
         ("Brandes") to reflect the acquisition of Pilgrim Investments by ING,
with no change in the sub-advisory fees payable to Brandes; 

    (d)  For shareholders of the Pilgrim Growth + Value Fund, to approve a new
         Sub-Advisory Agreement between Pilgrim Investments and Navellier Fund
        Management, Inc. ("Navellier") to reflect the acquisition of Pilgrim
         Investments by ING, with no change in the sub-advisory fee payable to
Navellier; and                                              

(e)  For shareholders of the Pilgrim Research Enhanced Index Fund, to 
        approve a new Sub-Advisory Agreement between Pilgrim Investments and
         J.P. Morgan Investment Management Inc. ("J.P. Morgan") to reflect the
    acquisition of Pilgrim Investments by ING, with no change in the
sub-advisory fee payable to J.P. Morgan.                    

4.   For shareholders of the Pilgrim Emerging Markets Value, Pilgrim Growth +   
 Value, Pilgrim High Total Return, Pilgrim High Total Return II, Pilgrim
International Value, Pilgrim Research Enhanced Index Funds (series of 
Pilgrim Mayflower Trust) and shareholders of the Pilgrim MidCap       
Opportunities Fund (a series of Pilgrim Equity Trust), to ratify the  
   appointment of PricewaterhouseCoopers LLP as independent auditors for the
  Funds for the fiscal years ending October 31, 2000 or December 31, 2000.

5.   To transact such other business as may properly come before the Meeting of 
Shareholders or any adjournments thereof.                             

    The date of the first mailing of this Proxy Statement is expected to be on
or about June ___, 2000. This is a combined proxy statement for all of the      
Funds. Each Fund is a registered investment company or a series thereof (each   
investment company is referred to in this proxy as a "Company"). The following  
table identifies the Companies to which this proxy relates and the Funds that   
are series thereof:                                                             

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                                                        [Enlarge/Download Table]
                                                                                      
PILGRIM ADVISORY FUNDS, INC.                    PILGRIM MAYFLOWER TRUST               
    Asia-Pacific Equity Fund                        Emerging Markets Value Fund       
    LargeCap Leaders Fund                           Growth + Value Fund               
    MidCap Value Fund                               High Total Return Fund            
                                                    High Total Return Fund II         
PILGRIM BANK AND THRIFT FUND, INC.                  International Value Fund          
    Bank and Thrift Fund                            Research Enhanced Index Fund      

PILGRIM EQUITY TRUST                            PILGRIM MUTUAL FUNDS                  
    MidCap Opportunities Fund                       Balanced Fund                     
                                                    Convertible Fund                  
PILGRIM GOVERNMENT SECURITIES INCOME FUND, INC.     Emerging Countries Fund           
    Government Securities Income Fund               High Yield Fund II                
                                                    International Core Growth Fund    
PILGRIM INVESTMENT FUNDS, INC.                      International SmallCap Growth Fund
    High Yield Fund                                 LargeCap Growth Fund              
    MagnaCap Fund                                   MidCap Growth Fund                
                                                    Money Market Fund                 
                                                    SmallCap Growth Fund              
                                                    Strategic Income Fund             
                                                    Worldwide Growth Fund             

    The Board of Directors/Trustees is soliciting votes from shareholders of a
Fund only with respect to the particular Proposals that affect that Fund. The   
following table identifies the Funds entitled to vote on each Proposal.         

                                                                [Download Table]

Fund                                                 Proposal                       
----                           -----------------------------------------------------
                                 1      2      3    3(b)   3(c)   3(d)   3(e)     4 
                               ----   ----   ----   ----   ----   ----   ----   ----
                                                                                    
Asia-Pacific Equity                    [X]    [X]                                   
Balanced                               [X]                                          
Bank and Thrift                        [X]                                          
Convertible                            [X]          [X]                             
Emerging Countries                     [X]          [X]                             
Emerging Markets Value          [X]    [X]                 [X]                   [X]
Government Securities Income           [X]                                          
Growth + Value                  [X]    [X]                        [X]            [X]
High Total Return               [X]    [X]                                       [X]
High Total Return II            [X]    [X]                                       [X]
High Yield                             [X]                                          
High Yield II                          [X]                                          
International Core Growth              [X]          [X]                             
International SmallCap Growth          [X]          [X]                             
International Value             [X]    [X]                 [X]                   [X]
LargeCap Growth                        [X]          [X]                             
LargeCap Leaders                       [X]                                          
MagnaCap                               [X]                                          
MidCap Opportunities            [X]    [X]                                       [X]
MidCap Growth                          [X]                                          
MidCap Value                           [X]                                          
Money Market                           [X]                                          
Research Enhanced Index         [X]    [X]                               [X]     [X]
SmallCap Growth                        [X]                                          
Strategic Income                       [X]                                          
Worldwide Growth                       [X]          [X]                             

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GENERAL OVERVIEW

         On April 30, 2000, ReliaStar Financial Corp. ("ReliaStar") entered into
an agreement (the "Transaction") to be acquired by ING Groep N.V. ("ING"). ING  
is a global financial institution active in the fields of insurance, banking and
asset management. Headquartered in Amsterdam, it conducts business in more than 
60 countries, and has almost 90,000 employees. ING seeks to provide a full range
of integrated financial services to private, corporate, and institutional       
clients through a variety of distribution channels. As of December 31, 1999, ING
had total assets of approximately $471.8 billion and assets under management of 
approximately $330.3 billion. ING includes, among its numerous direct and       
indirect subsidiaries, Baring Asset Management, Inc. in Boston, Mass., ING      
Investment Management Advisors B.V. in The Hague, The Netherlands, Furman Selz  
Capital Management LLC in New York, N.Y., ING Investment Management LLC in      
Atlanta, Georgia, Baring International Investment Limited in London, England and
Baring Asset Management (Asia) Limited in Hong Kong. Completion of the          
Transaction is contingent upon, among other things, approval by the             
Directors/Trustees of the Pilgrim Funds, and certain Pilgrim Fund shareholder   
and regulatory approvals. The closing of the Transaction is expected to occur   
during the third quarter of 2000.                                               

        In the Transaction, ING will issue to stockholders of ReliaStar $54.00
in cash for each share of ReliaStar common stock held by them, subject to       
possible adjustments. On __________, 2000, the total number of shares of        
ReliaStar outstanding was ___.                                                  

     Pilgrim is expected to remain intact after the Transaction. Pilgrim
does not currently anticipate that there will be any changes in the investment  
personnel primarily responsible for the management of the Funds as a result of  
the Transaction. ING's principal executive offices are located at Strawinskylaan
2631, 1077 zz Amsterdam, P.O. Box 810, 1000 AV Amsterdam, the Netherlands.      

PROPOSAL NO. 1
ELECTION OF TRUSTEES
(EMERGING MARKETS VALUE, GROWTH + VALUE, HIGH TOTAL RETURN, HIGH TOTAL
RETURN II, INTERNATIONAL VALUE, MIDCAP OPPORTUNITIES AND RESEARCH ENHANCED
 INDEX FUNDS ONLY)

     The Board of Trustees of Pilgrim Mayflower Trust and Pilgrim Equity
Trust has nominated eleven individuals (the "Nominees") for election to the     
Board of each Company. Shareholders are being asked to elect the Nominees to    
serve as Trustees, each to serve until his or her successor is duly elected and 
qualified. Pertinent information about each Nominee is set forth below. Each    
Nominee has consented to serve as a Trustee if elected.                         

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For Pilgrim Equity Trust (which has one series, Pilgrim MidCap
Opportunities Fund), all of the Nominees are currently Trustees of the Company. 
For Pilgrim Mayflower Trust (which is comprised of Pilgrim Emerging Markets     
Value, Pilgrim Growth + Value, Pilgrim High Total Return, Pilgrim High Total    
Return II, Pilgrim International Value, and Pilgrim Research Enhanced Index     
Funds), all of the Nominees except for Al Burton, Jock Patton and Robert W.     
Stallings are currently Trustees of the Company. Messrs. Burton, Patton and     
Stallings currently serve as Advisory Board Members of Pilgrim Mayflower Trust. 
As Advisory Board Members, Messrs. Burton, Patton and Stallings participate in  
board meetings for the Company, but do not vote on matters pertaining to the    
Company. Mark L. Lipson, a Trustee of both Companies, is not standing for       
election as a Trustee of the Companies.                                         

   The Nominees are being nominated to provide uniformity across the
Boards of Directors/Trustees of all of the Pilgrim Funds. In evaluating the     
Nominees, the Trustees took into account their background and experience,       
including their familiarity with the issues relating to these types of funds and
investments as well as their careers in business, finance, marketing and other  
areas.                                                                          

INFORMATION REGARDING NOMINEES                                                  

     Below are the names, ages, business experience during the past five
years and other directorships of the Nominees (as furnished to the Companies).  
An asterisk (*) has been placed next to the name of each Nominee who would      
constitute an "interested person," as defined in the Investment Company Act of  
1940 by virtue of that person's affiliation with any of the Funds or Pilgrim    
Investments or any of its affiliates.                                           

    The following tables summarize information about the Nominees, the
positions they will hold with each Fund, and their principal occupations. The   
address of each Nominee is 40 North Central Avenue, Suite 1200, Phoenix, Arizona
85004.                                                                          

                                                        [Enlarge/Download Table]

                        Position(s) to be                                                                       
Name, Age and Address  Held With the Fund**           Principal Occupation During Past 5 Years                  
---------------------  --------------------           ----------------------------------------                  
                                                                                                                
Al Burton (Age 72)       Director/Trustee    President of Al Burton Productions for more than the last five     
                                             years.  Mr. Burton is also a Director, Trustee or Advisory board   
                                             member of each of the funds managed by Pilgrim.                    

Paul S. Doherty          Director/Trustee    President, of Doherty, Wallace, Pillsbury and Murphy, P.C.,        
(Age 66)                                     Attorneys.  Formerly a Director of Tambrands, Inc. (1993-1998).    
                                             Mr. Doherty is also a Director or Trustee of each of the funds     
                                             managed by Pilgrim.                                                

Robert B. Goode          Director/Trustee    Retired.  Mr. Goode was formerly Chairman, American Direct Business
(Age 69)                                     Insurance Agency, Inc. (1996 - 2000).  Mr. Goode is also a Director
                                             or Trustee of each of the funds managed by Pilgrim.                

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                                                        [Enlarge/Download Table]

                        Position(s) to be                                                                         
Name, Age and Address  Held With the Fund**           Principal Occupation During Past 5 Years                    
---------------------  --------------------           ----------------------------------------                    
                                                                                                                  
Alan L. Gosule           Director/Trustee    Partner and Chairman of the Tax Department of Clifford Chance, Rogers
(Age 59)                                     & Wells (since 1991).  Mr. Gosule is a Director of F.L. Putnam       
                                             Investment Management Co., Inc., Simpson Housing Limited Partnership,
                                             Home Properties of New York, Inc., CORE Cap, Inc. and Colonnade      
                                             Partners.  Mr. Gosule is also a Director or Trustee of each of the   
                                             funds managed by Pilgrim.                                            

Walter H. May            Director/Trustee    Retired.  Mr. May was formerly Managing Director and Director of     
 (Age 63)                                    Marketing for Piper Jaffray, Inc.  Mr. May is also a director or     
                                             Trustee of each of the funds managed by Pilgrim.                     

Jock Patton (Age 54)     Director/Trustee    Private Investor.  Director of Hypercom Corporation (since January   
                                             1999), and JDA Software Group, Inc. (since January 1999).  Mr. Patton
                                             is also a Director of Buick of Scottsdale, Inc., National Airlines,  
                                             Inc., BG Associates, Inc., BK Entertainment, Inc., Arizona           
                                             Rotorcraft, Inc. and Director and Chief Executive Officer of Rainbow 
                                             Multimedia Group, Inc.  Mr. Patton was formerly Director of Stuart   
                                             Entertainment, Inc., Director of Artisoft, Inc. (August 1994-July    
                                             1998); and a President and Co-owner of StockVal, Inc. (April 1993 -  
                                             June 1997).  Mr. Patton is also a Director, Trustee, or a member of  
                                             the Advisory board of each of the funds managed by Pilgrim.          

David W.C. Putnam        Director/Trustee    President, Clerk and Director of F.L. Putnam Securities Company, Inc.
(Age 60)                                     and its affiliates (since 1978). Mr. Putnam is Director of Anchor    
                                             Investment Management Corporation and President and Director/Trustee 
                                             of Anchor Capital Accumulation Trust, Anchor International Bond      
                                             Trust, Anchor Gold and Currency Trust, Anchor Resources and          
                                             Commodities Trust and Anchor Strategic Assets Trust.  Mr. Putnam was 
                                             formerly Director of Trust Realty Corp. and Bow Ridge Mining Co.  Mr.
                                             Putnam is also a Director or Trustee of each of the funds managed by 
                                             Pilgrim.                                                             

John R. Smith            Director/Trustee    President of New England Fiduciary Company (since 1991). Mr. Smith   
(Age 76)                                     is Chairman of Massachusetts Educational Financing Authority (since  
                                             1987), Vice Chairman of Massachusetts Health and Education Authority 
                                             (since 1979) and Vice-Chairman of MHI, Inc. (Massachusetts Non-Profit
                                             Energy Purchasers Consortium) (since 1996).  Mr. Smith is also a     
                                             Director or Trustee of each of the funds managed by Pilgrim.         

*Robert W. Stallings     Director/Trustee    Chairman, Chief Executive Officer and President of Pilgrim Group,    
(Age 51)                                     Inc. ("Pilgrim Group") (since December 1994); Chairman, Pilgrim      
                                             Investments, Inc. (since December 1994); Chairman, Pilgrim           
                                             Securities, Inc. ("Pilgrim Securities") (since December 1994);       
                                             President and Chief Executive Officer of Pilgrim Funding, Inc. (since
                                             November 1999); and President and Chief Executive Officer of Pilgrim 
                                             Capital Corporation and its predecessors (since August 1991).  Mr.   
                                             Stallings is also a Director, Trustee, or a member of the Advisory   
                                             Board of each of the Pilgrim Funds.                                  

*John G. Turner          Director/Trustee/   Chairman and Chief Executive Officer of ReliaStar Financial Corp. and
(Age 60)                 Chairman            ReliaStar Life Insurance Co. (since 1993); Chairman of ReliaStar Life
                                             Insurance Company of New York (since 1995); Chairman of Northern Life
                                             Insurance Company (since 1992).  Mr. Turner was formerly,  Director  
                                             of Northstar Investment Management Corporation and affiliates (1993  
                                             to 1999) and  President of ReliaStar Financial Corp. and ReliaStar   
                                             Life Insurance Co. (1989-1991). Mr. Turner is also Chairman of each  
                                             of the funds managed by Pilgrim.                                     

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                        Position(s) to be                                                                         
Name, Age and Address  Held With the Fund**           Principal Occupation During Past 5 Years                    
---------------------  --------------------           ----------------------------------------                    
                                                                                                                  
David Wallace            Director/Trustee    Chairman of FECO Engineered Systems, Inc. Mr. Wallace is President   
(Age 76)                                     and Trustee of the Robert R. Young Foundation; Governor of the New   
                                             York Hospital, Trustee of Greenwit Hospital and Director of UMC      
                                             Electronics and Zurn Industries, Inc.  Mr. Wallace was formerly      
                                             Chairman of Lone Star Industries and Putnam Trust Company, Chairman  
                                             and Chief Executive Officer of Todd Shipyards, Bangor Punta          
                                             Corporation, and National Securities & Research Corporation.  Mr.    
                                             Wallace is also a Director or Trustee of each of the funds managed by
                                             Pilgrim.                                                             

----------                                                                      
*    An "interested person" as defined in section 2(a)(19) of the 1940 Act.     
**   None of the Directors/Trustees own beneficial shares of the Funds as of    
April 18, 2000.                                                       

    During the most recent fiscal year, the Board of Pilgrim Mayflower
Trust and Pilgrim Equity Trust held ___ meetings. Each Trustee attended more    
than 75% of such meetings during which period the Trustee served as a Trustee.  

COMMITTEES                                                                      

    The Board of Trustees of each Company has an Audit Committee whose
function is to meet with the independent auditors for the Company in order to   
review the scope of the Company's audit, the Company's financial statements and 
interim accounting controls, and to meet with management concerning these       
matters, among other things. The Committee for the Pilgrim Equity Trust         
currently consists of David W. Wallace, Paul S. Doherty, Robert B. Goode and    

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John R. Smith. Prior to November 1, 1999, the Committee consisted of David W.   
Wallace, Paul S. Doherty, Alan Gosule, Walter H. May and John R. Smith. The     
Committee for the Pilgrim Mayflower Trust currently consists of David. W.       
Wallace, Paul S. Doherty, Robert B. Goode and John R. Smith. Prior to November  
1, 1999, the Committee consisted of David W. Wallace, Paul S. Doherty, Alan     
Gosule, Walter H. May and John R. Smith. During the year ended December 31,     
1999, each Audit Committee met [one] time. Each member of each Audit Committee  
attended [ ] % of such meetings during the period in which he was a member of   
the Committee.                                                                  

       The Board of Trustees of each Company has a Valuation Committee whose
function is to review the determination of the value of securities held by the  
Funds for which market quotations are not available. The Committee for the      
Pilgrim Equity Trust currently consists of Jock Patton, Al Burton, Alan L.      
Gosule, Walter H. May and David W.C. Putnam. Prior to November 1, 1999, the     
Committee consisted of ________________. The Committee for the Pilgrim Mayflower
Trust currently consists of David W.C. Putnam, Alan Gosule and Walter H. May. Al
Burton and Jock Patton currently serve as Advisory Board Members of this        
Committee. Prior to November 1, 1999, the Committee consisted of _____________. 
During the year ended December 31, 1999, each Valuation Committee met _____     
times. Each member of each Valuation Committee attended [ ] % of such meetings  
during the period in which he was a member of the Committee.                    

         The Board of Trustees of each Company has an Executive Committee to act
for the full Board if necessary in the event that Board action is needed between
regularly scheduled Board meetings. The Committee for the Pilgrim Equity Trust  
and the Pilgrim Mayflower Trust currently consists of the following Trustees:   
Robert W. Stallings, John G. Turner, Walter H. May and Jock Patton. The         
Executive Committee was created on January 27, 2000, and therefore did not meet 
during the fiscal year ended December 31, 1999.                                 

      The Board of Trustees of each Company has a Nominating Committee for
the purpose of considering candidates to fill Independent Trustee vacancies on  
the Board. The Nominating Committee of Pilgrim Equity Trust currently consists  
of Walter H. May, Al Burton, Paul S. Doherty and Robert B. Goode. Prior to      
November 1, 1999, the Committee consisted of _______________. The Nominating    
Committee of Pilgrim Mayflower Trust currently consists of Walter H. May, Paul  
S. Doherty and Robert B. Goode. Al Burton currently serves as an Advisory Board 
Member of this Committee. Prior to November 1, 1999, the Committee consisted of 
_______________. Neither Company currently has a policy regarding whether the   
F`Nominating Committee will consider nominees recommended by shareholders of the
Company. Each Nominating Committee met [ ] during the year ended December 31,   
1999. Each member of each Nominating Committee attended the meeting(s).         

REMUNERATION OF TRUSTEES AND OFFICERS                                           

       Each Fund currently pays each Trustee or Advisory Board Member who is
not an "interested person" a pro rata share, as described below, of (i) an      
annual retainer of $20,000; (ii) $5,000 per quarterly Board meeting; (iii) $500 

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per committee meeting; (iv) $500 per special or telephonic meeting; and (v)     
out-of-pocket expenses. The pro rata share paid by each Fund is based on the    
Fund's average net assets as a percentage of the average net assets of all the  
funds managed by Pilgrim Investments for which the Trustees serve in common as  
Directors or Trustees or as Advisory Board Members, if applicable. Certain of   
the Funds had different compensation schedules in place for the Trustees during 
portions of 1999.                                                               

     The following table sets forth the compensation paid to each of the
Trustees (or, in the case of Al Burton, Jock Patton and Robert W. Stallings,    
Advisory Board Member) of each Company for the fiscal year ended October 31,    
1999 or December 31, 1999, as applicable. Trustees who are interested persons of
the Companies do not receive any compensation from the Companies. In the column 
headed "Total Compensation From Fund Complex Paid to Trustees," the number in   
parentheses indicates the total number of investment company boards of directors
in the Pilgrim Fund complex on which the Trustee or Advisory Board Member served
during that year.                                                               

                                                              Total Compensation
                                                             From Companies in
                            Pilgrim         Pilgrim           Fund Complex
Name of Person, Position     Equity Trust   Mayflower Trust    Paid to Trustees 
------------------------     ------------   ---------------    ---------------- 

Mary A. Baldwin (1)             $  385          $_____              $19,241     
  Advisory Board Member                                         (15 companies)
or Former Trustee                                                         

Al Burton (1)                   $  385          $_____              $20,717     
  Trustee                                                       (15 companies)

Paul S. Doherty                 $1,375          $8,086              $12,445     
  Trustee                                                       (15 companies)

Robert B. Goode                 $1,337          $7,817              $12,062     
  Trustee                                                       (15 companies)

Alan L. Gosule                  $1,346          $6,731              $______     
  Trustee                                                       (15 companies)

Mark L. Lipson (2)              $    0          $    0              $     0     
  Trustee                                                       (15 companies)

Walter H. May                   $1,375          $8,087              $12,446     
  Trustee                                                       (15 companies)

Jock Patton (1)                 $  385          $_____              $20,415     
  Trustee                                                       (15 companies)

David W.C. Putnam               $1,062          $7,466              $11,202     
  Trustee                                                       (15 companies)

John R. Smith                   $1,375          $8,086              $12,445     
  Trustee                                                       (15 companies)

Robert W. Stallings(1)(2)       $    0          $    0              $     0     
  Trustee                                                       (15 companies)

John G. Turner (2)              $    0          $    0              $     0     
  Trustee                                                       (15 companies)

David W. Wallace                $1,100          $7,735              $11,586     
  Trustee                                                       (15 companies)

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----------                                                                      
(1) Ms. Baldwin and Messrs. Burton, Patton and Stallings were elected Trustees  
of Pilgrim Equity Trust on November 1, 1999 and were elected as Advisory Board  
Members of Pilgrim Mayflower Trust on November 1, 1999. They are compensated by 
Pilgrim Mayflower Trust for their services as Advisory Board Members at the same
rate at which Trustees of the Company are compensated. Ms. Baldwin resigned as a
Trustee of Pilgrim Equity Trust effective June __, 2000.                        

(2) "Interested person," as defined in the Investment Company Act of 1940,      
because of affiliation with Pilgrim Investments.                                

VOTE REQUIRED                                                                   

      Shareholders of each Company must separately approve the election of
Nominees for that Company. For each Company, the affirmative vote of a plurality
of the shares of that Company voting at the Meeting is required to approve the  
election of each Nominee for that Company.                                      

         THE BOARD OF TRUSTEES OF THE FUNDS, INCLUDING THE INDEPENDENT TRUSTEES,
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" EACH OF THE NOMINEES UNDER PROPOSAL NO. 
1.                                                                              

PROPOSAL NO. 2
APPROVAL OF INVESTMENT ADVISORY AGREEMENTS

  Shareholders of each of the Funds are being asked to approve new
Investment Management Agreements (the "New Agreements") between the Funds and   
Pilgrim Investments. APPROVAL OF THE NEW AGREEMENTS IS SOUGHT SO THAT THE       
MANAGEMENT OF EACH FUND CAN CONTINUE UNINTERRUPTED AFTER THE TRANSACTION,       
BECAUSE THE CURRENT INVESTMENT MANAGEMENT AGREEMENTS (THE "CURRENT AGREEMENTS") 
MAY TERMINATE AUTOMATICALLY AS A RESULT OF THE TRANSACTION, WHICH IS DESCRIBED  
IN "GENERAL OVERVIEW" ABOVE.                                                    

    The Transaction between ReliaStar and ING is scheduled to close in
September 2000. As a result of this transaction, ReliaStar will become a        
wholly-owned subsidiary of ING America Insurance Holdings Inc., a subsidiary of 
ING. Pilgrim Investments will remain a wholly-owned subsidiary of ReliaStar. The
change in ownership of Pilgrim Investments resulting from this transaction may  
be deemed under the Investment Company Act of 1940 to be an assignment of the   
Current Agreements. The Current Agreements provide for their automatic          
termination upon an assignment. Accordingly, the New Agreements between Pilgrim 
Investments and the Funds are proposed for approval by shareholders of each     
Fund. Forms of the New Agreements are attached as Appendices A through H to this
proxy statement.                                                                

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       Pilgrim Investments and representatives of ING have advised the Funds
that currently no change is expected in the investment advisory and other       
personnel in connection with the Transaction and that it is currently           
anticipated the same persons responsible for management of the Funds under the  
Current Agreements will continue to be responsible under the New Agreements.    
Pilgrim Investments does not anticipate that the Transaction will cause any     
reduction in the quality of services now provided to the Funds or have any      
adverse effect on Pilgrim Investments' ability to fulfill its obligations to the
Funds.                                                                          

     The terms of the New Agreements are the same in all respects as the
terms of the Current Agreements, except for the dates. The Current Agreements   
were last approved by each Company's Board of Directors/Trustees, including a   
majority of the Directors/Trustees who were not parties to the Current          
Agreements or interested persons of such parties, at a Joint Meeting of the     
Board of Directors/Trustees held on August 2, 1999 (with respect to Pilgrim     
Advisory Funds, Inc., Pilgrim Bank and Thrift Fund, Inc., Pilgrim Government    
Securities Income Fund, Inc., Pilgrim Investment Funds, Inc., and Pilgrim Mutual
Funds) and April 27, 2000 (with respect to Pilgrim Equity Trust and Pilgrim     
Mayflower Trust). Even though the Board of Directors/Trustees of Pilgrim        
Advisory Funds, Inc., Pilgrim Bank and Thrift, Inc., Pilgrim Government         
Securities Income Fund, Inc., Pilgrim Investments Funds, Inc. and Pilgrim Mutual
Funds was not required to reapprove the Current Agreements at the April 27, 2000
meeting, the Boards reviewed at that meeting such information necessary to      
evaluate the terms of the Current Agreements.                                   

       The shareholders for each Fund comprising the Pilgrim Advisory Funds,
Inc., Pilgrim Bank and Thrift Fund, Inc., Pilgrim Investment Funds, Inc.,       
Pilgrim Government Securities Income Fund, Inc. and Pilgrim Mutual Funds last   
approved the Current Agreements with respect to those Funds on October 26, 1999.
The shareholders for Pilgrim MidCap Opportunities Fund (Pilgrim Equity Trust)   
last approved the Current Agreement for that Fund on __________. The            
shareholders of each Fund comprising the Pilgrim Mayflower Trust last approved  
the Current Agreement with respect to those Funds on ______________.            

       At the June 13, 2000 meeting of the Board of Directors/Trustees, each
New Agreement was approved unanimously by the Board of Directors/Trustees,      
including all of the Directors/Trustees who are not interested parties to the   
New Agreements or interested persons of such parties. Each New Agreement as     
approved by the Board of Directors/Trustees is submitted for approval by the    
shareholders of the Fund to which the New Agreement applies. Each New Agreement 
must be voted upon separately by each Fund to which it pertains.                

    If the New Agreements are approved by shareholders, they will take
effect immediately after the closing of the Transaction. The New Agreements will
remain in effect for two years from the date they take effect, and, unless      
earlier terminated, will continue from year to year thereafter, provided that   
each such continuance is approved annually with respect to each Fund (i) by the 

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applicable Company's Board of Directors/Trustees or by the vote of a majority of
the outstanding voting securities of the particular Fund, and, in either case,  
(ii) by a majority of the Company's Directors/Trustees who are not parties to   
the New Agreement or "interested persons" of any such party (other than as      
Directors/Trustees of the Company).                                             

If the shareholders of any Fund should fail to approve the New
Agreement pertaining to that Fund, the Transaction may not be consummated. If   
the Transaction is not consummated, Pilgrim Investments will continue to serve  
as adviser for all of the Funds under the Current Agreements.                   

THE TERMS OF THE NEW AGREEMENT                                                  

     The terms of each New Agreement will be the same in all respects as
that of its respective Current Agreement, except for the dates. Each New        
Agreement requires Pilgrim Investments to provide, subject to the supervision of
the Board of Directors/Trustees, investment advice and investment services to   
the Fund and to furnish advice and recommendations with respect to investment of
the Fund's assets and the purchase or sale of its portfolio securities. Pilgrim 
Investments also provides investment research and analysis.                     

      There will be no increase in advisory fees for any of the Funds. The
annual advisory fees under the New Agreements for each Fund are listed in       
Appendix O to this proxy statement.                                             

       Like the Current Agreements, each New Agreement provides that Pilgrim
Investments is not subject to liability to the Fund for any act or omission in  
the course of, or connected with, rendering services under the Agreement, except
by reason of willful misfeasance, bad faith, gross negligence or reckless       
disregard of its obligations and duties under the Agreement.                    

         Each New Agreement may be terminated by a Fund without penalty upon not
less than 60 days' notice by the Board of Directors/Trustees, by a vote of the  
holders of a majority of the Fund's outstanding shares voting as a single class,
or by Pilgrim Investments. Each New Agreement will terminate automatically in   
the event of its "assignment" (as defined in the Investment Company Act).       

INFORMATION ABOUT PILGRIM INVESTMENTS                                           

     Organized in December 1994, Pilgrim Investments is registered as an
investment adviser with the Securities and Exchange Commission. As of May 31,   
2000, Pilgrim Investments managed over $15.9 billion in assets. Pilgrim         
Investments is an indirect wholly-owned subsidiary of ReliaStar. Through its    
subsidiaries, ReliaStar offers individuals and institutions life insurance and  
annuities, employee benefits products and services, life and health reinsurance,
retirement plans, mutual funds, bank products, and personal finance education.  

      Prior to April 30, 2000, Pilgrim Advisors, Inc. ("Pilgrim Advisors")
served as investment adviser to certain of the Funds. On April 30, 2000, Pilgrim
Advisors, also an indirect wholly-owned subsidiary of ReliaStar, merged with    
Pilgrim Investments, and Pilgrim Investments is the surviving corporation from  
that merger.                                                                    

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     Pilgrim's principal address is 40 North Central Avenue, Suite 1200,
Phoenix, Arizona 85004.                                                         

        See Appendix P to this proxy statement for a list of the Directors and
principal executive officers of Pilgrim Investments and a list of other         
investment companies for which Pilgrim Investments acts as investment adviser.  
Appendix Q to this proxy statement identifies fees that have been paid by the   
Funds to Pilgrim Investments and certain of its affiliates during each Fund's   
most recent fiscal year.                                                        

        From time to time, Pilgrim Investments receives brokerage and research
services from brokers that execute securities transactions for certain of the   
Funds. The commission paid by a Fund to a broker that provides such services to 
Pilgrim Investments may be greater than the commission would be if the Fund used
a broker that does not provide the same level of brokerage and research         
services. Additionally, Pilgrim may use such services for clients other than the
specific Fund or Funds from which the related commissions are derived.          

EXPENSE LIMITATION AGREEMENTS                                                   

         Pilgrim Investments has entered into expense limitation agreements with
respect to certain of the Funds. The terms of the expense limitation agreements,
as disclosed in the May 1, 2000 prospectuses for the Pilgrim Funds, will not be 
affected by the Transaction. Each such expense limitation agreement will        
continue in effect after the Transaction until at least October 31, 2001.       
Thereafter, each agreement will automatically renew for one-year terms unless   
Pilgrim Investments provides written notice of the termination of the agreement 
to the Fund at least 30 days prior to the end of the then-current term. The     
expense limits for the Funds that have such agreements are shown in Appendix    
_______.                                                                        

EVALUATION BY THE BOARD OF DIRECTORS/TRUSTEES                                   

     In determining whether or not it was appropriate to approve the New
Agreements and to recommend approval to shareholders, the Board of              
Directors/Trustees, including the Directors/Trustees who are not interested     
persons of Pilgrim Investments, considered various materials and representations
provided by Pilgrim Investments and considered a report provided at the meeting 
by representatives of ING. The Independent Directors/Trustees were advised by   
independent legal counsel with respect to these matters.                        

        Information considered by the Directors/Trustees included, among other
things, the following: (1) Pilgrim Investments' representation that it is       
expected to remain intact after the Transaction, and that the same persons      
currently responsible for management of the Funds are expected to continue to   
manage the Funds after the Transaction closes; (2) that the compensation to be  
received by Pilgrim Investments under the New Agreements is the same as the     

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compensation paid under the Current Agreements; (3) ING America Insurance       
Holdings, Inc.'s representation that it will use reasonable best efforts to     
assure that an "unfair burden"(as defined in the Investment Company Act) is not 
imposed on the Funds as a result of the Transaction; (4) that the senior        
management personnel responsible for the management of Pilgrim Investments are  
expected to continue to be responsible for the management of Pilgrim            
Investments; (5) the commonality of the terms and provisions of the New         
Agreements and Current Agreements; (6) ING's financial strength and commitment  
to the advisory business; and (7) Pilgrim's representation that it will keep any
expense limitation agreements in effect until at least October 31, 2001.        

      Further, the Board of Directors/Trustees reviewed its determinations
reached at the meetings of the Board of Directors/Trustees of the Funds on      
August 2, 1999 and April 27, 2000 respecting the Current Agreements and, with   
respect to the Current Agreements, (1) the nature and quality of the services   
rendered by Pilgrim Investments under the Agreements; (2) the fairness of the   
compensation payable to Pilgrim Investments under the Agreements; (3) the       
results achieved by Pilgrim Investments for the Funds; and (4) the personnel,   
operations and financial condition, and investment management capabilities,     
methodologies, and performance of Pilgrim Investments. The Board also considered
the services provided by Pilgrim Group, Inc. as administrator to the Funds and  
the fees received by Pilgrim Group, Inc. for such services.,                    

        Based upon its review, the Board determined that, by approving the New
Agreements, the Funds can best be assured that services from Pilgrim Investments
will be provided without interruption. The Board also determined that the New   
Agreements are in the best interests of each Fund and its shareholders.         
Accordingly, after consideration of the above factors, and such other factors   
and information it considered relevant, each Board of Directors/Trustees        
unanimously approved the New Agreements and voted to recommend its approval by  
each Fund's shareholders.                                                       

The effectiveness of this Proposal No. 2 is conditioned on the
consummation of the Transaction. Accordingly, in the event that the Transaction 
is not consummated, Pilgrim Investments will continue to manage the Funds       
pursuant to the Current Agreements.                                             

VOTE REQUIRED                                                                   

      Shareholders of each Fund must separately approve the applicable New
Investment Advisory Agreement with respect to that Fund. Approval of this       
Proposal No. 2 by a Fund requires an affirmative vote of the lesser of (i) 67%  
or more of the shares of the Fund's shares present at the Meeting if more than  
50% of the outstanding shares of the Fund are present or represented by proxy,  
or (ii) more than 50% of the outstanding shares of the Fund.                    

       THE BOARD OF DIRECTORS/TRUSTEES OF THE FUNDS, INCLUDING A MAJORITY OF
THE INDEPENDENT DIRECTORS/TRUSTEES, RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL
NO. 2.                                                                          

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PROPOSAL NO. 3
 APPROVAL OF SUB-ADVISORY AGREEMENTS
(ASIA-PACIFIC EQUITY, CONVERTIBLE, EMERGING COUNTRIES, EMERGING MARKETS VALUE,
GROWTH + VALUE, INTERNATIONAL CORE GROWTH, INTERNATIONAL SMALLCAP GROWTH, 
INTERNATIONAL VALUE, LARGECAP GROWTH, RESEARCH ENHANCED INDEX AND WORLDWIDE 
GROWTH FUNDS ONLY)

     Shareholders of each Fund that is sub-advised by another investment
advisory firm (each a "Sub-Advised Fund") are being asked to approve a new      
Sub-Advisory Agreement with the sub-adviser (each a "Sub-Adviser") for that     
Fund. SHAREHOLDER APPROVAL OF NEW SUB-ADVISORY AGREEMENTS (EACH A "NEW          
SUB-ADVISORY AGREEMENT") IS BEING SOUGHT SO THAT THE MANAGEMENT OF EACH         
SUB-ADVISED FUND CAN CONTINUE UNINTERRUPTED AFTER THE TRANSACTION, BECAUSE THE  
TRANSACTION MAY TERMINATE AUTOMATICALLY THE CURRENT SUB-ADVISORY AGREEMENTS     
(EACH A "CURRENT SUB-ADVISORY AGREEMENT") FOR THE SUB-ADVISED FUNDS. The New    
Sub-Advisory Agreements are included as Appendices I through N.                 

        The following table lists the Funds for which approval is being sought
and identifies the Sub-Adviser for that Fund. While the Board is seeking        
shareholder approval of the New Sub-Advisory Agreements, these Agreements do not
restrict the Board's ability to terminate or replace the Sub-Adviser for a Fund 
at any time in the future, subject to any shareholder approval that may be      
required.                                                                       

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Fund(s)                                Sub-Adviser                              
-------                                -----------                              
PROPOSAL 3(A):                                                                  
Asia-Pacific Equity Fund               HSBC Asset Management (Americas) Inc. and
                                       HSBC Asset Management (Hong Kong) Limited
                                    HSBC Asset Management (Europe) Limited

PROPOSAL 3(B):                                                                  
Convertible, Emerging Countries,       Nicholas-Applegate Capital Management    
International Core Growth,                                                      
International SmallCap Growth,                                                  
LargeCap Growth and                                                             
Worldwide Growth Funds                                                          

PROPOSAL 3(C)                                                                   
Emerging Markets Value and             Brandes Investment Partners, L.P.        
International Value Funds                                                       

PROPOSAL 3(D)                                                                   
Growth +Value Fund                     Navellier Fund Management, Inc.          

PROPOSAL 3(E)                                                                   
Research Enhanced Index Fund           J.P. Morgan Investment Management, Inc.  

       The New Sub-Advisory Agreements must be voted upon separately by each
Sub-Advised Fund to which a New Sub-Advisory Agreement pertains. If a New       
Sub-Advisory Agreement is approved by shareholders of a Sub-Advised Fund, it    
will take effect immediately after the closing on the Transaction. It will      
remain in effect for two years from the date it takes effect, and, unless       
earlier terminated, will continue in effect from year to year thereafter,       
provided that each such continuance is approved at least annually (i) by the    
applicable Company's Board of Directors/Trustees or by the vote of a majority of
the outstanding voting securities of the particular Fund, and, in either case,  
(ii) by a majority of the Company's Directors/Trustees who are not parties to   
the New Sub-Advisory Agreement or "interested persons" of any such party (other 
than as Directors/Trustees of the Company).                                     

       At the June 13, 2000 meeting of the Board of Directors/Trustees, each
New Sub-Advisory Agreement was approved unanimously by the Board of             
Directors/Trustees, including all of the Directors/Trustees who are not         
interested parties to the New Sub-Advisory Agreements or interested persons of  
such parties.                                                                   

If the shareholders of a Fund should fail to approve the New  
Sub-Advisory Agreement that pertains to that Fund, the Sub-Adviser may continue 
to serve in that capacity with respect to any other Sub-Advised Funds whose     
shareholders approve the New Sub-Advisory Agreement. In such an event, the Board
of Directors/Trustees shall meet to consider appropriate action.                

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TERMS OF THE NEW SUB-ADVISORY AGREEMENTS                                        

  With the exception of the Sub-Advisory Agreement for the Pilgrim
Asia-Pacific Equity Fund, the terms of the Sub-Advisory Agreements are the same 
as those currently in effect. Each New Sub-Advisory Agreement, like the Current 
Sub-Advisory Agreements, requires the Sub-Adviser to provide, subject to        
supervision by the Board of Directors/Trustees and Pilgrim Investments, a       
continuous investment program for the Fund and to determine the composition of  
the assets of the Fund, including determination of the purchase, retention, or  
sale of the securities, cash and other investments for the Fund, in accordance  
with the Fund's investment objectives, policies and restrictions.               

 The fees payable to the Sub-Advisers, which are paid by Pilgrim
Investments and not by the Sub-Advised Funds, will remain the same under the New
Sub-Advisory Agreements. The sub-advisory fees are set forth on Appendix R      
hereto.                                                                         

 Like the Current Sub-Advisory Agreements, each New Sub-Advisory
Agreement provides that the Sub-Adviser is not subject to liability for any     
damages, expenses, or losses to the Sub-Advised Fund connected with or arising  
out of any investment advisory services rendered under the agreement, except by 
reason of willful misfeasance, bad faith, or gross negligence in the performance
of its duties, or by reason of reckless disregard of its obligations and duties 
under the agreement.                                                            

       The termination provisions of the New Sub-Advisory Agreements are the
same as those of the Current Sub-Advisory Agreements. Each such agreement may be
terminated by Pilgrim Investments upon 60 days' written notice to the           
Sub-Adviser and the Fund, by a Fund upon the vote of a majority of the Board of 
Directors/Trustees of the Company or a majority of the outstanding shares of the
applicable Fund, upon 60 days' written notice to Pilgrim Investments and the    
respective Sub-Adviser, and by the Sub-Adviser upon three months' written       
notice, with respect to Asia-Pacific Equity, Convertible, Emerging Countries,   
International Core Growth, International SmallCap Growth, Large Cap Growth and  
Worldwide Growth Funds, and upon 60 days' written notice with respect to        
Emerging Markets Value, Growth + Value, International Value and Research        
Enhanced Index Funds. Each New Sub-Advisory Agreement will terminate            
automatically in the event of its "assignment" (as defined in the Investment    
Company Act). See Appendix _____ for a list of the principal executive officers 
and the directors or general partners of each Sub-Adviser.                      

NEW SUB-ADVISORY AGREEMENT FOR ASIA-PACIFIC EQUITY FUND. The New Sub-Advisory   
Agreement for the Asia-Pacific Equity Fund is identical to the Current          
Sub-Advisory Agreement except for the addition of a new party to the agreement. 
The Fund's Sub-Advisers, HSBC Asset Management (Americas) Inc. and HSBC Asset   
Management (Hong Kong) Limited, have informed Pilgrim that they wish to transfer
responsibility for certain back office functions to an affiliate, HSBC Asset    
Management (Europe) Limited, and therefore have requested that this affiliate be
made a party to the Sub-Advisory Agreement. With the exception of this addition,
all other terms of the Sub-Advisory Agreement remain the same. Information about
HSBC is set forth below.                                                        

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INFORMATION ABOUT BRANDES INVESTMENT PARTNERS, L.P.                             

        Brandes Investment Partners, L.P. ("Brandes") serves as Sub-Adviser to
the Emerging Markets Value and International Value Funds. Brandes was formed in 
May 1996 as the successor to its general partner, Brandes Investment Partners   
which has been providing investment advisory services (through various          
predecessor entities) since 1974. Brandes currently manages over $33 billion in 
international portfolios.                                                       

        Brandes has managed the International Value and Emerging Markets Value
Funds pursuant to Portfolio Management Agreements dated January 23, 1997 and    
November 8, 1997, respectively. The Sub-Advisory Agreements were last approved  
by the Board of Trustees on April 27, 2000 and by shareholders of the Funds on  
_________. For the fiscal year ended October 31, 1999, Brandes was paid         
sub-advisory fees of $56,232 and $3,582,411 with respect to the Emerging Markets
Value and International Value Funds, respectively.                              

INFORMATION ABOUT HSBC                                                          

    HSBC Asset Management (Americas) Inc., HSBC Asset Management (Hong
Kong) Limited and HSBC Asset Management (Europe) Limited (collectively, HSBC)   
serve as Sub-Adviser to Asia-Pacific Equity Fund. The firms are part of HSBC    
Asset Management, the global investment advisory and fund management business   
unit of HSBC Holdings plc. HSBC Asset Management manages over approximately $75 
billion of assets worldwide for a wide variety of institutional, retail and     
private clients. HSBC Asset Management has advisory operations in Hong Kong and 
Singapore, among other locations. Its parent company has over a century of      
operations in local economies throughout the Asia-Pacific region.               

       HSBC Asset Management (Americas) Inc. and HSBC Asset Management (Hong
Kong) Limited have managed Asia-Pacific Equity Fund since its inception pursuant
to a Portfolio Management Agreement dated April 27, 1995. The Portfolio         
Management Agreement was last approved by the Board of Directors on August 2,   
1999 and was approved by shareholders of the Fund on October 26, 1999. For the  
fiscal year ended June 30, 1999, HSBC Asset Management (Americas) Inc., and HSBC
Asset Management (Hong Kong) Limited were paid sub-advisory fees of $121,638    
with respect to the Asia-Pacific Equity Fund.                                   

INFORMATION ABOUT J.P. MORGAN INVESTMENT MANAGEMENT INC.                        

  J.P. Morgan Investment Management Inc. ("J.P. Morgan") serves as
Sub-Adviser to the Research Enhanced Index Fund. J.P. Morgan was formed in May  
1984 and evolved from the Trust and Investment Division of Morgan Guaranty Trust
Company which acquired its first tax-exempt client in 1913 and its first pension
account in 1940. J.P. Morgan currently manages approximately $349 billion for   
institutions and pension funds.                                                 

        J.P. Morgan has managed the Research Enhanced Index Fund pursuant to a
Sub-Advisory Agreement dated December 21, 1998. The Sub-Advisory Agreement was  
last approved by the Board of Trustees on April 27, 2000 and was approved by    

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shareholders of the Fund on ____________. For the fiscal year ended October 31, 
1999, J.P. Morgan was paid sub-advisory fees of $199,666 with respect to the    
Research Enhanced Index Fund.                                                   

INFORMATION ABOUT NAVELLIER FUND MANAGEMENT, INC.                               

        Navellier Fund Management, Inc. ("Navellier") serves as Sub-Adviser to
the Growth + Value Fund. Navellier and its affiliate, Navellier & Associates,   
Inc., manage over $5 billion in institutions, pension funds and high net worth  
individuals.                                                                    

       Navellier has managed the Growth + Value Fund pursuant to a Portfolio
Management Agreement dated July 1, 1998. The Sub-Advisory Agreement was last    
approved by the Board of Trustees on April 27, 2000 and was approved by         
shareholders of the Fund on ____________. For the fiscal year ended October 31, 
1999, Navellier was paid sub-advisory fees of $1,355,700 with respect to the    
Growth + Value Fund.                                                            

INFORMATION ABOUT NICHOLAS-APPLEGATE CAPITAL MANAGEMENT                         

         Nicholas-Applegate Capital Management ("NACM") serves as Sub-Adviser to
the Convertible, Emerging Countries, International Core Growth, International   
SmallCap Growth, LargeCap Growth and Worldwide Growth Funds. Founded in 1984,   
NACM manages over $40 billion of discretionary assets for numerous clients,     
including employee benefit plans of corporations, public retirement systems and 
unions, university endowments, foundations, and other institutional investors   
and individuals. Sub-Advised Funds managed by NACM are managed by a team of     
portfolio managers and analysts employed by NACM.                               

  NACM manages the assets of the Funds listed above as sub-adviser
pursuant to a Portfolio Management Agreement dated May 24, 1999. Prior to May   
24, 1999, NACM served as adviser, rather than sub-adviser, to those Funds. The  
Portfolio Management Agreement with NACM was last approved by the Board of      
Trustees on August 2, 1999 and by the shareholders of each Fund at a meeting    
held on October 26, 1999. For the period from May 24, 1999 through June 30,     
1999, Pilgrim Investments paid sub-advisory fees to NACM in the following       
amounts with respect to the following Funds: Convertible Fund -- $101,904;      
Emerging Countries Fund -- $104,238; International Core Growth Fund -- $19,830; 
International SmallCap Growth Fund -- $58,033; LargeCap Growth Fund -- $33,219; 
and Worldwide Growth Fund -- $110,816.                                          

RECOMMENDATION OF DIRECTORS/TRUSTEES                                            

     In determining whether or not it was appropriate to approve the New
Sub-Advisory Agreement for each Fund and to recommend approval to shareholders, 
the Board of Trustees considered, among other things, the fact that the         
Sub-Advised Funds will continue to be managed by the same Sub-Advisers, that the
compensation to be received by the Sub-Advisers under the New Sub-Advisory      
Agreements is the same as the compensation paid under the Current Sub-Advisory  
Agreements, and that the Transaction is not expected to have any effect on      
services rendered by the Sub-Advisers. Further, the Board of Directors/Trustees 

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reviewed its determinations reached at the meetings of the Board of             
Directors/Trustees held on August 2, 1999 and April 27, 2000 respecting the     
Current Sub-Advisory Agreements and, with respect to the Current Sub-Advisory   
Agreements, (1) the nature and quality of the services rendered by the          
Sub-Advisers under the Agreements; (2) the fairness of the compensation payable 
to the Sub-Advisers under the Agreements; (3) the results achieved by the       
Sub-Advisers for the Funds; and (4) the personnel, operations and financial     
condition, and investment management capabilities, methodologies, and           
performance of the Sub-Advisers.                                                

        Based upon its review, the Board has determined that, by approving the
New Sub-Advisory Agreements, the Sub-Advised Funds can best be assured that     
services from the Sub-Advisers will be provided without interruption. The Board 
believes that retaining the Sub-Advisers is in the best interests of the        
Sub-Advised Funds and their shareholders. Accordingly, after consideration of   
the above factors, and such other factors and information it considered         
relevant, the Board of Directors/Trustees unanimously approved the New          
Sub-Advisory Agreements and voted to recommend its approval by each Fund's      
shareholders.                                                                   

The effectiveness of this Proposal No. 3 is conditioned on the
consummation of the Transaction. Accordingly, in the event that the Transaction 
is not consummated, each Sub-Adviser will continue to manage the respective     
Sub-Advised Funds pursuant to the Current Sub-Advisory Agreements.              

VOTE REQUIRED                                                                   

   Shareholders of each Sub-Advised Fund must separately approve the
respective New Sub-Advisory Agreement with respect to that Fund. Approval of    
this Proposal No. 3 by a Fund requires an affirmative vote of the lesser of (i) 
67% or more of the shares of the Fund's shares present at the Meeting if more   
than 50% of the outstanding shares of the Fund are present or represented by    
proxy, or (ii) more than 50% of the outstanding shares of the Fund.             

       THE BOARD OF DIRECTORS/TRUSTEES OF THE SUB-ADVISED FUNDS, INCLUDING A
MAJORITY OF THE INDEPENDENT DIRECTORS/TRUSTEES, RECOMMENDS THAT YOU VOTE "FOR"  
THIS PROPOSAL NO. 3.                                                            

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PROPOSAL NO. 4
RATIFICATION OF THE SELECTION OF INDEPENDENT PUBLIC AUDITORS
 (EMERGING MARKETS VALUE, GROWTH + VALUE, HIGH TOTAL RETURN,
 HIGH TOTAL RETURN II, INTERNATIONAL VALUE, RESEARCH ENHANCED INDEX,
AND MIDCAP OPPORTUNITIES FUNDS ONLY)

        For Pilgrim Emerging Markets Value, Growth + Value, High Total Return,
High Total Return II, International Value, and Research Enhanced Index Funds    
(series of Pilgrim Mayflower Trust) and MidCap Opportunities Funds ( a series of
Pilgrim Equity Trust), are being asked to ratify the selection of the accounting
firm of PricewaterhouseCooper LLP ("PricewaterhouseCoopers") to act as the      
independent auditors for the Companies for the fiscal years ending October 31,  
2000 or December 31, 2000, as applicable.                                       

  At a meeting of the Board held on January 27, 2000, the Board of
Trustees of Pilgrim Mayflower Trust and Pilgrim Equity Trust, including a       
majority of Trustees who are not "interested persons" as defined in the         
Investment Company Act of 1040, as amended, as well as the Trustees who were    
members of the Audit Committee, selected PricewaterhouseCoopers to act as the   
independent auditors for the fiscal year ending October 31, 2000 and December   
31, 2000, as applicable.                                                        

       PricewaterhouseCoopers has served as independent auditors for Pilgrim
Mayflower Trust with respect to its financial statements for the fiscal years   
ending October 31, 1997 through October 31, 1999. For Pilgrim Equity Trust,     
PricewaterhouseCoopers has served as independent auditors with respect to its   
financial statements for the fiscal years ended December 31, 1998 through       
December 31, 1999.                                                              

PricewaterhouseCoopers has advised the Companies that it is an
independent auditing firm and has no direct financial or material indirect      
financial interest in the Companies. PricewaterhouseCoopers has further informed
the Boards that certain PricewaterhouseCoopers professionals had investments in 
certain Pilgrim Funds during a period in which PricewaterhouseCoopers was       
performing audit services for the funds and during the period of the firm's     
engagement to conduct the audit, but that none of those professionals performed 
services for the Pilgrim Funds. Representatives of PricewaterhouseCoopers are   
not expected to be at the Meeting but have been given the opportunity to make a 
statement if they wish, and will be available telephonically should any matter  
arise requiring their participation.                                            

VOTE REQUIRED                                                                   

     Shareholders of each Company must separately ratify the independent
auditors for that Company. For each Company, the affirmative vote of a majority 
of the shares of that Company voted at the Meeting is required to approve this  
Proposal No. 4.                                                                 

         THE BOARD OF DIRECTOR/TRUSTEES, INCLUDING A MAJORITY OF THE INDEPENDENT
DIRECTORS/TRUSTEES, RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL NO. 4.         

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 GENERAL INFORMATION

OTHER MATTERS TO COME BEFORE THE MEETING                                        

         Management of the Funds does not know of any matters to be presented at
the Meeting other than those described in this Proxy Statement. If other        
business should properly come before the Meeting, the proxy holders will vote   
thereon in accordance with their best judgment.                                 

SECTION 15(F) OF THE INVESTMENT COMPANY ACT                                     

         ING America Insurance Holdings, Inc. and ReliaStar, the indirect parent
company of Pilgrim Investments, have agreed to use their reasonable best efforts
to assure compliance with the conditions of Section 15(f) of the Investment     
Company Act of 1940, as amended. Section 15(f) provides a non-exclusive safe    
harbor for an investment adviser or any affiliated persons thereof to receive   
any amount or benefit in connection with a transaction that results in a change 
in control of or identity of the investment adviser to an investment company as 
long as two conditions are met. First, no "unfair burden" may be imposed on the 
investment company as a result of the transaction relating to the change of     
control, or any express or implied terms, conditions or understandings          
applicable thereto. As defined in the Investment Company Act of 1940, the term  
"unfair burden" includes any arrangement during the two-year period after the   
change in control whereby the investment adviser (or predecessor or successor   
adviser), or any interested person of any such adviser, receives or is entitled 
to receive any compensation, directly or indirectly, from the investment company
or its security holders (other than fees for bona fide investment advisory or   
other services), or 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 of the     
investment company). Second, during the three year period immediately following 
the change of control, at least 75% of an investment company's board of         
directors/trustees must not be "interested persons" of the investment adviser or
the predecessor investment adviser within the meaning of the Investment Company 
Act of 1940, as amended.                                                        

VOTING RIGHTS                                                                   

Each share of each class of a Fund is entitled to one vote.   
Shareholders of each Fund at the close of business on June 19, 2000 (the "Record
Date") will be entitled to be present and to give voting instructions for the   
Funds at the Meeting and any adjournments thereof with respect to their shares  
owned as of the Record Date. As of the Record Date, the Funds had the following 
shares outstanding:                                                             

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           Fund                                               Shares Outstanding
           ----                                               ------------------
Pilgrim Asia-Pacific Fund                                            [ ]        
Pilgrim Balanced Fund                                                [ ]        
Pilgrim Bank and Thrift Fund                                         [ ]        
Pilgrim Convertible Fund                                             [ ]        
Pilgrim Emerging Countries Fund                                      [ ]        
Pilgrim Emerging Markets Value Fund                                  [ ]        
Pilgrim Government Securities Income Fund                            [ ]        
Pilgrim Growth + Value Fund                                          [ ]        
Pilgrim High Total Return Fund                                       [ ]        
Pilgrim High Total Return Fund II                                    [ ]        
Pilgrim High Yield Fund                                              [ ]        
Pilgrim High Yield Fund II                                           [ ]        
Pilgrim International Core Growth Fund                               [ ]        
Pilgrim International SmallCap Growth Fund                           [ ]        
Pilgrim International Value Fund                                     [ ]        
Pilgrim LargeCap Growth Fund                                         [ ]        
Pilgrim LargeCap Leaders Fund                                        [ ]        
Pilgrim MagnaCap Fund                                                [ ]        
Pilgrim MidCap Growth Fund                                           [ ]        
Pilgrim MidCap Opportunities Fund                                    [ ]        
Pilgrim MidCap Value Fund                                            [ ]        
Pilgrim Money Market Fund                                            [ ]        
Pilgrim Research Enhanced Index Fund                                 [ ]        
Pilgrim SmallCap Growth Fund                                         [ ]        
Pilgrim Strategic Income Fund                                        [ ]        
Pilgrim Worldwide Growth Fund                                        [ ]        

         For Pilgrim Advisory Funds, Inc. and Pilgrim Mutual Funds, one-third of
the outstanding shares of the Company or Fund on the Record Date, represented in
person or by proxy, must be present to constitute a quorum. For each remaining  
Company, a majority of the outstanding shares of the Company or Fund on the     
Record Date, represented in person or by proxy, must be present to constitute a 
quorum.                                                                         

      If a quorum is not present at the Meeting, or if a quorum is present
but sufficient votes to approve any or all of the Proposals are not received,   
the persons named as proxies may propose one or more adjournments of the Meeting
to permit further solicitation of proxies. A shareholder vote may be taken on   
one or more of the Proposals in this proxy statement prior to any adjournment if
sufficient votes have been received with respect to a Proposal. Any adjournment 
will require the affirmative vote of a majority of those shares represented at  
the Meeting in person or by proxy. The persons named in the enclosed proxies    
will vote in favor of such adjournment those proxies which they are entitled to 
vote in favor of any Proposal that has not been adopted, will vote against any  
adjournments those proxies required to be voted against any Proposal that has   
not been adopted, and will not vote any proxies that direct them to abstain from
voting on such Proposals.                                                       

        The Funds expect that, before the Meeting, broker-dealer firms holding
shares of the Funds in "street name" for their customers will request voting    
instructions from their customers and beneficial owners. If these instructions  
are not received by the date specified in the broker-dealer firms' proxy        
solicitation materials, the Funds understand that the broker-dealers that are   
members of the New York Stock Exchange may vote on the items to be considered at
the Meeting on behalf of their customers and beneficial owners under rules of   
the New York Stock Exchange.                                                    

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        If a shareholder abstains from voting as to any matter, or if a broker
returns a "non-vote" proxy, indicating a lack of authority to vote on a matter, 
then the shares represented by such abstention or non-vote will be considered to
be present at the Meeting for purposes of determining the existence of a quorum.
However, abstentions and broker non-votes will be disregarded in determining the
"votes cast" on an issue. For this reason, with respect to matters requiring the
affirmative vote of a majority of the total shares outstanding, an abstention or
broker non-vote will have the effect of a vote against such matters.            

To the knowledge of the Funds, as of ______, 2000, no current 
Director/Trustee of the Funds owned 1% or more of the outstanding shares of any 
Fund and the officers and Directors/Trustees of the Funds own, as a group, less 
than 1% of the shares of each Fund.                                             

BENEFICIAL OWNERS                                                               

   Appendix S to this proxy statement lists the persons that, to the
knowledge of the Funds, owned beneficially 5% or more of the outstanding shares 
of any class of a Fund as of ________, 2000.                                    

SOLICITATION OF PROXIES                                                         

        Solicitation of proxies is being made primarily by the mailing of this
Notice and Proxy Statement with its enclosures on or about _________,2000.      
Shareholders of the Funds whose shares are held by nominees, such as brokers,   
can vote their proxies by contacting their respective nominee. In addition to   
the solicitation of proxies by mail, officers of the Companies and employees of 
Pilgrim Investments and its affiliates, without additional compensation, may    
solicit proxies in person or by telephone, telegraph, facsimile, or oral        
communication.                                                                  

      A shareholder may revoke the accompanying proxy at any time prior to
its use by filing with his/her respective Company a written revocation or duly  
executed proxy bearing a later date. In addition, any shareholder who attends   
the Meeting in person may vote by ballot at the Meeting, thereby canceling any  
proxy previously given. The persons named in the accompanying proxy will vote as
directed by the proxy, but in the absence of voting directions in any proxy that
is signed and returned, they intend to vote "FOR" each of the proposals and may 
vote in their discretion with respect to other matters not now known to the     
Board of the Companies that may be presented at the Meeting.                    

EXPENSES                                                                        

       Pilgrim Investments or an affiliate, or ING, will pay the expenses of
the Funds in connection with this Notice and Proxy Statement and the Meeting,   
including the printing, mailing, solicitation and vote tabulation expenses,     
legal fees, and out of pocket expenses. The Funds will not bear the expenses of 
the Proxy Statement.                                                            

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ADVISER AND PRINCIPAL UNDERWRITER                                               

        Pilgrim Investments is located at 40 North Central Avenue, Suite 1200,
Phoenix, Arizona 85004, and serves as the investment adviser to each of the     
Funds. Pilgrim Securities, Inc., whose address is 40 North Central Avenue, Suite
1200, Phoenix, Arizona 85004, is the Distributor for each of the Funds.         

EXECUTIVE OFFICERS OF THE COMPANY                                               

      Officers of the Funds are elected by the Board and hold office until
they resign, are removed or are otherwise disqualified to serve. The principal  
executive officers of each Fund, together with such person's position with the  
Funds and principal occupation for the last five years, are listed on Appendix T
attached hereto.                                                                

SHAREHOLDER PROPOSALS                                                           

        The Funds are not required to hold annual meetings of shareholders and
currently do not intend to hold such meetings unless shareholder action is      
required in accordance with the Investment Company Act of 1940, as amended. A   
shareholder proposal to be considered for inclusion in the proxy statement at   
any subsequent meeting of shareholders must be submitted a reasonable time      
before the proxy statement for that meeting is mailed. Whether a proposal is    
submitted in the proxy statement will be determined in accordance with          
applicable federal and state laws.                                              

REPORTS TO SHAREHOLDERS                                                         

        Each Company will furnish, without charge, a copy of the Annual Report
and the most recent Semi-Annual Report regarding that Company on request.       
Requests for such reports should be directed to Pilgrim Investments at 40 North 
Central Avenue, Suite 1200, Phoenix, Arizona 85004 or at (800) 992-1080.        

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       IN ORDER THAT THE PRESENCE OF A QUORUM AT THE MEETING MAY BE ASSURED,
PROMPT EXECUTION AND RETURN OF THE ENCLOSED PROXY IS REQUESTED. A               
SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.         

                            JAMES M. HENNESSY, Secretary

June 28, 2000                                                                   
40 North Central Avenue                                                         
Suite 1200                                                                      
Phoenix, Arizona 85004                                                          
(800) 992-0180                                                                  

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APPENDICES

Appendix A          Form of Investment Management Agreement for Pilgrim Advisory
                  Funds, Inc. (Pilgrim Asia-Pacific Equity, LargeCap Leaders
and MidCap Value Funds)                 

Appendix B          Form of Investment Management Agreement for Pilgrim Bank and
Thrift Fund, Inc.                       

Appendix C          Form of Investment Management Agreement for Pilgrim Equity  
 Trust (Pilgrim MidCap Opportunities Fund)

Appendix D          Form of Investment Management Agreement for Pilgrim         
Government Securities Income Fund, Inc. 

Appendix E          Form of Investment Management Agreement for Pilgrim         
        Investment Funds, Inc. (Pilgrim High Yield Fund)

Appendix F          Form of Investment Management Agreement for Pilgrim         
      Investment Funds, Inc. (Pilgrim MagnaCap Fund)

Appendix G          Form of Investment Management Agreement for Pilgrim         
                 Mayflower Trust (Pilgrim Emerging Markets Value, Growth +
                    Value, High Total Return, HighTotal Return II, International
Value and Research Enhanced Index Funds)

Appendix H          Form of Investment Management Agreement for Pilgrim Mutual  
                 Funds (Pilgrim Balanced, Convertible, Emerging Countries,
               High Yield II, International Core Growth, International
              SmallCap Growth, LargeCap Growth, MidCap Growth, Money
               Market, SmallCap Growth, Strategic Income and Worldwide
Growth Funds)                           

Appendix I          Sub-Advisory Agreement with Brandes Investment Partners,    
  L.P. (Pilgrim Emerging Markets Value Fund)

Appendix J          Sub-Advisory Agreement with Brandes Investment Partners,    
L.P. (Pilgrim International Value Fund) 

Appendix K          Sub-Advisory Agreement with HSBC Asset Management           
             (Americans), Inc., HSBC Asset Management (Hong Kong),
          Limited (Pilgrim Asia-Pacific Fund) and HSBC Asset
Management (Europe) Limited             

Appendix L          Sub-Advisory Agreement with J. P. Morgan Investment         
              Management Inc. (Pilgrim Research Enhanced Index Fund)

Appendix M          Sub-Advisory Agreement with Navellier Fund Management, Inc. 
(Pilgrim Growth + Value Fund)           

Appendix N          Sub-Advisory Agreement with Nicholas-Applegate Capital      
            Management (Pilgrim Convertible, Emerging Countries,
                 International Core Growth, International SmallCap Growth,
   LargeCap Growth and Worldwide Growth Funds)

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APPENDICES

Appendix O          Advisory Fees                                               

Appendix P          Directors and Principal Executive Officers of Pilgrim       
Investments, Inc.                       

Appendix Q          Fees Paid to Pilgrim Investments, Inc., Pilgrim Group, Inc  
and Pilgrim Securities, Inc.            

Appendix R          Annual Sub-Advisory Fees for the Sub-Advised Funds.         

Appendix S          Beneficial Ownership.                                       

Appendix T          Principal Executive Officers of Each of the Companies.      

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APPENDIX A

FORM OF INVESTMENT MANAGEMENT AGREEMENT FOR PILGRIM ADVISORY FUNDS, INC.
(PILGRIM ASIA-PACIFIC EQUITY, LARGECAP LEADERS AND MIDCAP VALUE FUNDS)

 INVESTMENT MANAGEMENT AGREEMENT

         THIS INVESTMENT MANAGEMENT AGREEMENT made as of the ___ day of _______,
2000, between Pilgrim Advisory Funds, Inc., a Maryland corporation, (hereinafter
called the "Fund"), and Pilgrim Investments, Inc. a Delaware corporation        
(hereinafter called the "Manager").                                             

WITNESSETH

WHEREAS, the Fund is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940      
Act");                                                                          

        WHEREAS, the Fund is authorized to issue shares of beneficial interest
in separate series with each such series representing interests in a separate   
portfolio of securities and other assets;                                       

       WHEREAS, the Fund currently proposes to offer shares in three series,
may offer shares of additional series in the future, and currently intends to   
offer shares of additional series in the future;                                

  WHEREAS, the Fund desires to avail itself of the services of the
Manager for the provision of advisory, management, administrative, and other    
services for the Fund; and                                                      

      WHEREAS, the Manager is willing to render such services to the Fund;

    NOW, THEREFORE, in consideration of the premises, the promises and
mutual covenants herein contained, it is agreed between the parties as follows: 

1. APPOINTMENT. The Fund hereby appoints the Manager, subject to the  
direction of the Board of Directors, for the period and on the terms set forth  
in this Agreement, to provide advisory, management, administrative, and other   
services, as described herein, with respect to each series of the Fund          
(individually and collectively referred to herein as "Series"). The Manager     
accepts such appointment and agrees to render the services herein set forth for 
the compensation herein provided.                                               

In the event the Fund establishes and designates additional series with respect 
to which it desires to retain the Manager to render advisory services hereunder,
it shall notify the Manager in writing. If the Manager is willing to render such
services, it shall notify the Fund in writing, whereupon such additional series 
shall become a Series hereunder.                                                

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    2. SERVICES OF THE MANAGER. The Manager represents and warrants that it is
registered as an investment adviser under the Investment Advisers Act of 1940   
and will maintain such registration for so long as required by applicable law.  
Subject to the general supervision of the Board of Directors of the Fund, the   
Manager shall provide the following advisory, management, administrative, and   
other services with respect to the Series:                                      

      (a) Provide general, overall advice and guidance with respect to the
Series and provide advice and guidance to the Fund's Directors, and oversee the 
management of the investments of the Series and the composition of each Series' 
portfolio of securities and investments, including cash, and the purchase,      
retention and disposition thereof, in accordance with each Series' investment   
objective or objectives and policies as stated in the Fund's current            
registration statement, which management shall be provided by others selected by
the Manager and approved by the Board of Directors as provided below or directly
by the Manager as provided in Section 3 of this Agreement;                      

     (b) In the event that the Manager wishes to select others to render
investment management services, the Manager shall analyze, select and recommend 
for consideration by the Fund's Board of Directors investment advisory firms    
(however organized) to provide investment advice to one or more of the Series,  
and, at the expense of the Manager, engage (which engagement may also be by the 
Fund) such investment advisory firms to render investment advice and manage the 
investments of such Series and the composition of each such Series' portfolio of
securities and investments, including cash, and the purchase, retention and     
disposition thereof, in accordance with the Series' investment objective or     
objectives and policies as stated in the Fund's current registration statement  
(any such firms approved by the Board of Directors and engaged by the Fund      
and/or the Manager are referred to herein as "Portfolio Managers");             

        (c) Periodically monitor and evaluate the performance of the Portfolio
Managers with respect to the investment objectives and policies of the Series;  

       (d) Monitor the Portfolio Managers for compliance with the investment
objective or objectives, policies and restrictions of each Series, the 1940 Act,
Subchapter M of the Internal Revenue Code, and if applicable, regulations under 
such provisions, and other applicable law;                                      

    (e) If appropriate, analyze and recommend for consideration by the
Fund's Board of Directors termination of a contract with a Portfolio Manager    
under which the Portfolio Manager provided investment advisory services to one  
or more of the Series;                                                          

         (f) Supervise Portfolio Managers with respect to the services that such
Portfolio Managers provide under respective sub-advisory agreements ("I         
Agreements"), although the Manager is not authorized, except as provided in     
Section 3 of the Agreement, directly to make determinations with respect to the 
investment of a Series' assets or the purchase or sale of portfolio securities  
or other investments for a Series;                                              

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      (g) Provide all supervisory, management, and administrative services
reasonably necessary for the operation of the Series other than the investment  
advisory services performed by the Portfolio Managers, including, but not       
limited to, (i) coordinating all matters relating to the operation of the       
Series, including any necessary coordination among the Portfolio Managers,      
custodian, transfer agent, dividend disbursing agent, and portfolio accounting  
agent (including pricing and valuation of the Series' portfolios), accountants, 
attorneys, and other parties performing services or operational functions for   
the Fund; (ii) maintaining or supervising the maintenance by third parties      
selected by the Manager of such books and records of the Fund and the Series as 
may be required by applicable federal or state law; (iii) preparing or          
supervising the preparation by third parties selected by the Manager of all     
federal, state, and local tax returns and reports relating to the Series        
required by applicable law; (iv) preparing and filing and arranging for the     
distribution of proxy materials and periodic reports to shareholders of the     
Series as required by applicable law; (v) preparing and arranging for the filing
of registration statements and other documents with the Securities and Exchange 
Commission (the "SEC") and other federal and state regulatory authorities as may
be required by applicable law; (vi) taking such other action with respect to the
Fund as may be required by applicable law in connection with the Series,        
including without limitation the rules and regulations of the SEC and other     
regulatory agencies; and (vii) providing the Fund, at the Manager's expense,    
with adequate personnel, office space, communications facilities, and other     
facilities necessary for operation of the Series as contemplated in this        
Agreement.                                                                      

    (h) Render to the Board of Directors of the Fund such periodic and
special reports as the Board may reasonably request; and                        

         (i) Make available its officers and employees to the Board of Directors
and officers of the Fund for consultation and discussions regarding the         
administration and management of the Series and services provided to the Fund   
under this Agreement.                                                           

3. INVESTMENT MANAGEMENT AUTHORITY. In the event the Manager wishes to
render investment management services directly to a Series, then with respect to
any such Series, the Manager, subject to the supervision of the Fund's Board of 
Directors, will provide a continuous investment program for the Series'         
portfolio and determine the composition of the assets of the Series' portfolio, 
including determination of the purchase, retention, or sale of the securities,  
cash, and other investments contained in the portfolio. The Manager will provide
investment research and conduct a continuous program of evaluation, investment, 
sales, and reinvestment of the Series' assets by determining the securities and 
other investments that shall be purchased, entered into, sold, closed, or       
exchanged for the Series, when these transactions should be executed, and what  
portion of the assets of the Series should be held in the various securities and
other investments in which it may invest, and the Manager is hereby authorized  
to execute and perform such services on behalf of the Series. To the extent     
permitted by the investment policies of the Series, the Manager shall make      
decisions for the Series as to foreign currency matters and make determinations 
as to, and execute and perform, foreign currency exchange contracts on behalf of
the Series. The Manager will provide the services under this Agreement in       
accordance with the Series' investment objective or objectives, policies, and   
restrictions as stated in the Fund's Registration Statement filed with the SEC, 
as amended. Furthermore:                                                        

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       (a) The Manager will manage the Series so that each will qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code. In
managing the Series in accordance with these requirements, the Manager shall be 
entitled to receive and act upon advice of counsel to the Fund or counsel to the
Manager.                                                                        

  (b) The Manager will conform with the 1940 Act and all rules and
regulations thereunder, all other applicable federal and state laws and         
regulations, with any applicable procedures adopted by the Fund's Board of      
Directors, and the provisions of the Registration Statement of the Fund under   
the Securities Act of 1933 and the 1940 Act, as supplemented or amended.        

   (c) On occasions when the Manager deems the purchase or sale of a
security to be in the best interest of the Series as well as any other          
investment advisory clients, the Manager may, to the extent permitted by        
applicable laws and regulations, but shall not be obligated to, aggregate the   
securities to be so sold or purchased with those of its other clients where such
aggregation is not inconsistent with the policies set forth in the Registration 
Statement. In such event, allocation of the securities so purchased or sold, as 
well as the expenses incurred in the transaction, will be made by the Manager in
a manner that is fair and equitable in the judgment of the Manager in the       
exercise of its fiduciary obligations to the Fund and to such other clients.    

   (d) In connection with the purchase and sale of securities of the
Series, the Manager will arrange for the transmission to the custodian for the  
Fund on a daily basis, of such confirmation, trade tickets, and other documents 
and information, including, but not limited to, Cusip, Cedel, or other numbers  
that identify securities to be purchased or sold on behalf of the Series, as may
be reasonably necessary to enable the custodian to perform its administrative   
and recordkeeping responsibilities with respect to the Series. With respect to  
portfolio securities to be purchased or sold through the Depository Trust       
Company, the Manager will arrange for the prompt transmission of the            
confirmation of such trades to the Fund's custodian.                            

         (e) The Manager will assist the custodian or portfolio accounting agent
for the Fund in determining, consistent with the procedures and policies stated 
in the Registration Statement for the Fund, the value of any portfolio          
securities or other assets of the Series for which the custodian or portfolio   
accounting agent seeks assistance or review from the Manager. The Manager will  
monitor on a daily basis the determination by the custodian or portfolio        
accounting agent for the Fund of the value of portfolio securities and other    
assets of the Series and the determination of net asset value of the Series;    
provided, however, that the Manager shall, in the absence of bad faith, have no 
liability whatsoever for any mistakes or errors of judgment in providing the    
foregoing valuation-related services.                                           

         (f) The Manager will make available to the Fund, promptly upon request,
all of the Series' investment records and ledgers as are necessary to assist the
Fund to comply with requirements of the 1940 Act and the Investment Advisers Act

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of 1940, as well as other applicable laws. The Manager will furnish to          
regulatory authorities having the requisite authority any information or reports
in connection with such services which may be requested in order to ascertain   
whether the operations of the Fund are being conducted in a manner consistent   
with applicable laws and regulations.                                           

        (g) The Manager will regularly report to the Fund's Board of Directors
on the investment program for the Series and the issuers and securities         
represented in the Series' portfolio, and will furnish the Fund's Board of      
Directors with respect to the Series such periodic and special reports as the   
Directors may reasonably request.                                               

       (h) In connection with its responsibilities under this Section 3, the
Manager is responsible for decisions to buy and sell securities and other       
investments for the Series' portfolio, broker-dealer selection, and negotiation 
of brokerage commission rates. The Manager's primary consideration in effecting 
a security transaction will be to obtain the best execution for the Series,     
taking into account the factors specified in the Prospectus and/or Statement of 
Additional Information for the Fund, which include price (including the         
applicable brokerage commission or dollar spread), the size of the order, the   
nature of the market for the security, the timing of the transaction, the       
reputation, experience and financial stability of the broker-dealer involved,   
the quality of the service, the difficulty of execution, execution capabilities 
and operational facilities of the firms involved, and the firm's risk in        
positioning a block of securities. Accordingly, the price to the Series in any  
transaction may be less favorable than that available from another broker-dealer
if the difference is reasonably justified, in the judgment of the Manager in the
exercise of its fiduciary obligations to the Fund, by other aspects of the      
portfolio execution services offered. Subject to such policies as the Board of  
Directors may determine and consistent with Section 28(e) of the Securities     
Exchange Act of 1934, the Manager shall not be deemed to have acted unlawfully  
or to have breached any duty created by this Agreement or otherwise solely by   
reason of its having caused the Series to pay a broker-dealer for effecting a   
portfolio investment transaction in excess of the amount of commission another  
broker-dealer would have charged for effecting that transaction, if the Manager 
determines in good faith that such amount of commission was reasonable in       
relation to the value of the brokerage and research services provided by such   
broker-dealer, viewed in terms of either that particular transaction or the     
Manager's overall responsibilities with respect to the Series and to its other  
clients as to which it exercises investment discretion. To the extent consistent
with these standards and in accordance with Section 11(a) of the Securities and 
Exchange Act of 1934 and Rule 11a2-2(T) thereunder, the Manager is further      
authorized to allocate the orders placed by it on behalf of the Series to the   
Manager if it is registered as a broker-dealer with the SEC, to an affiliated   
broker-dealer, or to such brokers and dealers who also provide research or      
statistical material or other services to the Series, the Manager or an         
affiliate of the Manager. Such allocation shall be in such amounts and          
proportions as the Manager shall determine consistent with the above standards, 
and the Manager will report on said allocation regularly to the Board of        
Directors of the Fund indicating the broker-dealers to which such allocations   
have been made and the basis therefor.                                          

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   4. CONFORMITY WITH APPLICABLE LAW. The Manager, in the performance of its
duties and obligations under this Agreement, shall act in conformity with the   
Registration Statement of the Fund and with the instructions and directions of  
the Board of Directors of the Fund and will conform to, and comply with, the    
requirements of the 1940 Act and all other applicable federal and state laws and
regulations.                                                                    

5. EXCLUSIVITY. The services of the Manager to the Fund under this    
Agreement are not to be deemed exclusive, and the Manager, or any affiliate     
thereof, shall be free to render similar services to other investment companies 
and other clients (whether or not their investment objectives and policies are  
similar to those of any of the Series) and to engage in other activities, so    
long as its services hereunder are not impaired thereby.                        

  6. DOCUMENTS. The Fund has delivered properly certified or authenticated
copies of each of the following documents to the Manager and will deliver to it 
all future amendments and supplements thereto, if any:                          

(a) certified resolution of the Board of Directors of the Fund
authorizing the appointment of the Manager and approving the form of this       
Agreement;                                                                      

         (b) the Registration Statement as filed with the SEC and any amendments
thereto; and                                                                    

      (c) exhibits, powers of attorney, certificates and any and all other
documents relating to or filed in connection with the Registration Statement    
described above.                                                                

    7. RECORDS. The Manager agrees to maintain and to preserve for the periods
prescribed under the 1940 Act any such records as are required to be maintained 
by the Manager with respect to the Series by the 1940 Act. The Manager further  
agrees that all records which it maintains for the Series are the property of   
the Fund and it will promptly surrender any of such records upon request.       

  8. EXPENSES. During the term of this Agreement, the Manager will pay all
expenses incurred by it in connection with its activities under this Agreement, 
except such expenses as are assumed by the Fund under this Agreement and such   
expenses as are assumed by a Sub-Adviser under its Sub-Advisory Agreement. The  
Manager further agrees to pay all fees payable to the Portfolio Managers,       
executive salaries and expenses of the Directors and officers of the Fund who   
are employees of the Manager or its affiliates, and office rent of the Fund. The
Fund shall be responsible for all of the other expenses of its operations,      
including, without limitation, the management fee payable hereunder; brokerage  
commissions; interest; legal fees and expenses of attorneys; fees of auditors,  
transfer agents and dividend disbursing agents, and custodians; the expense of  
obtaining quotations for calculating each Fund's net asset value; taxes, if any,
and the preparation of the Fund's tax returns; cost of stock certificates and   
any other expenses (including clerical expenses) of issue, sale, repurchase or  
redemption of shares; expenses of registering and qualifying shares of the Fund 
under federal and state laws and regulations (including the salary of employees 
of the Manager engaged in the registering and qualifying of shares of the Fund  

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under federal and state laws and regulations or a pro-rata portion of the salary
of employees to the extent so engaged); expenses of printing and distributing   
reports, notices and proxy materials to existing shareholders; expenses of      
printing and filing reports and other documents filed with governmental         
agencies; expenses of annual and special shareholder meetings; expenses of      
printing and distributing prospectuses and statements of additional information 
to existing shareholders; fees and expenses of Directors of the Fund who are not
employees of the Manager or any Portfolio Manager, or their affiliates;         
membership dues in the Investment Company Institute; insurance premiums; and    
extraordinary expenses such as litigation expenses. To the extent the Manager   
incurs any costs or performs any services which are an obligation of the Fund,  
as set forth herein, the Fund shall promptly reimburse the Manager for such     
costs and expenses. To the extent the services for which the Fund is obligated  
to pay are performed by the Manager, the Manager shall be entitled to recover   
from the Fund only to the extent of its costs for such services.                

    9. COMPENSATION. For the services provided by the Manager pursuant to this
Agreement, the Fund will pay to the Manager a monthly fee, in arrears, equal to 
1/12th of the corresponding percentage of the average daily net assets of each  
Series during the month. For purposes of the immediately preceding sentence, the
corresponding percentages are as follows:                                       

Pilgrim MidCap Value fund            1.00%                  
Pilgrim LargeCap Leaders Fund        1.00%                  
Pilgrim Asia-Pacific Equity Fund     1.25%                  

Payment of the fee will be due by the 10th day of the following month. Payment  
of the above fees shall be in addition to any amount paid to the Manager for the
salary of its employees engaged in registering and qualifying shares of the Fund
under federal and state law as provided in Section 8. The fee will be           
appropriately pro-rated to reflect any portion of a calendar month that this    
Agreement is not in effect between us.                                          

10. LIABILITY OF THE MANAGER. The Manager may rely on information     
reasonably believed by it to be accurate and reliable. Except as may otherwise  
be required by the 1940 Act or the rules thereunder, neither the Manager nor its
stockholders, officers, directors, employees, or agents shall be subject to, and
the Fund will indemnify such persons from and against, any liability for, or any
damages, expenses, or losses incurred in connection with, any act or omission   
connected with or arising out of any services rendered under this Agreement,    
except by reason of willful misfeasance, bad faith, or gross negligence in the  
performance of the Manager's duties, or by reason of reckless disregard of the  
Manager's obligations and duties under this Agreement. Except as may otherwise  
be required by the 1940 Act or the rules thereunder, neither the Manager nor its
stockholders, officers, directors, employees, or agents shall be subject to, and
the Fund will indemnify such persons from and against, any liability for, or any
damages, expenses, or losses incurred in connection with, any act or omission by
a Portfolio Manager or any of the Portfolio Manager's stockholders or partners, 
officers, directors, employees, or agents connected with or arising out of any  
services rendered under a Sub-Advisory Agreement, except by reason of willful   
misfeasance, bad faith, or gross negligence in the performance of the Manager's 
duties under this Agreement, or by reason of reckless disregard of the Manager's
obligations and duties under this Agreement.                                    

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    11. CONTINUATION AND TERMINATION. This Agreement shall become effective on
the date first written above, subject to the condition that the Fund's Board of 
Directors, including a majority of those Directors who are not interested       
persons (as such term is defined in the 1940 Act) of the Manager, and the       
shareholders of each Series, shall have approved this Agreement. Unless         
terminated as provided herein, the Agreement shall continue in full force and   
effect for two (2) years from the effective date of this Agreement, and shall   
continue from year to year thereafter with respect to each Series so long as    
such continuance is specifically approved at least annually (i) by the vote of a
majority of the Board of Directors of the Fund, or (ii) by vote of a majority of
the outstanding voting shares of the Fund (as defined in the 1940 Act), and     
provided continuance is also approved by the vote of a majority of the Board of 
Directors of the Fund who are not parties to this Agreement or "interested      
persons" (as defined in the 1940 Act) of the Fund or the Manager, cast in person
at a meeting called for the purpose of voting on such approval. This Agreement  
may not be amended in any material respect without a majority vote of the       
outstanding voting shares (as defined in the 1940 Act).                         

         However, any approval of this Agreement by the holders of a majority of
the outstanding shares (as defined in the 1940 Act) of a Series shall be        
effective to continue this Agreement with respect to such Series notwithstanding
(i) that this Agreement has not been approved by the holders of a majority of   
the outstanding shares of any other Series or (ii) that this Agreement has not  
been approved by the vote of a majority of the outstanding shares of the Fund,  
unless such approval shall be required by any other applicable law or otherwise.
This Agreement may be terminated by the Fund at any time, without the payment of
any penalty, by vote of a majority of the entire Board of Directors of the Fund 
or by a vote of a majority of the outstanding voting shares of the Fund, or with
respect to a Series, by vote of a majority of the outstanding voting shares of  
such Series, on sixty (60) days' written notice to the Manager, or by the       
Manager at any time, without the payment of any penalty, on sixty (60) days'    
written notice to the Fund. This Agreement will automatically and immediately   
terminate in the event of its "assignment" (as described in the 1940 Act).      

     12. USE OF NAME. It is understood that the name "Pilgrim Investments, Inc."
or any derivative thereof (including the name "Pilgrim") or logo associated with
that name is the valuable property of the Manager and its affiliates, and that  
the Fund and/or the Series have the right to use such name (or derivative or    
logo) only so long as this Agreement shall continue with respect to such Fund   
and/or Series. Upon termination of this Agreement, the Fund (or Series) shall   
forthwith cease to use such name (or derivative or logo) and, in the case of the
Fund, shall promptly amend its Articles of Incorporation to change its name (if 
such name is included therein).                                                 

13. COUNTERPARTS. This Agreement may be executed in one or more       
counterparts, each of which shall be deemed to be an original.                  

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14. APPLICABLE LAW.                                                   

  (a) This Agreement shall be governed by the laws of the State of
Arizona, provided that nothing herein shall be construed in a manner            
inconsistent with the 1940 Act, the Investment Advisers Act of 1940, or any     
rules or order of the SEC thereunder.                                           

         (b) If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of this Agreement   
shall not be affected thereby and, to this extent, the provisions of this       
Agreement shall be deemed to be severable.                                      

      (c) The captions of this Agreement are included for convenience only
and in no way define or limit any of the provisions hereof or otherwise affect  
their construction or effect.                                                   

       IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first     
above written.                                                                  

                            PILGRIM ADVISORY FUNDS, INC.

   By:
                                           -------------------------------------

                                        ----------------------------------------
     Title

                         PILGRIM INVESTMENTS, INC.

   By:
                                           -------------------------------------

                                        ----------------------------------------
     Title

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APPENDIX B

FORM OF INVESTMENT MANAGEMENT AGREEMENT FOR PILGRIM BANK AND THRIFT FUND, INC.

 INVESTMENT MANAGEMENT AGREEMENT

    THIS INVESTMENT MANAGEMENT AGREEMENT is made as of the __th day of
_______, 2000, by and between PILGRIM BANK AND THRIFT FUND, INC., a Maryland    
corporation (the "Fund"), and PILGRIM INVESTMENTS, INC., a Delaware corporation 
(the "Manager"), with respect to the following recital of fact.                 

W I T N E S S E T H:

        WHEREAS, the Fund is registered as a open-end, diversified, management
investment company, under the Investment Company Act of 1940, as amended; and   

       WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended and is engaged in the business of   
supplying investment advice, investment management and administrative services, 
as an independent contractor; and                                               

      WHEREAS, the Fund desires to retain the Manager to render advice and
services to the Fund pursuant to the terms and provisions of this Agreement, and
the Manager is interested in furnishing said advice and services.               

  NOW, THEREFORE, in consideration of the covenants and the mutual
promises hereinafter set forth, the parties hereto, intending to be legally     
bound hereby, mutually agree as follows:                                        

   1. INVESTMENT MANAGEMENT. The Manager shall manage the Fund's affairs and
shall supervise all aspects of the Fund's operations, including the investment  
and reinvestment of the cash, securities or other properties comprising the     
Fund's assets, subject at all times to the policies and control of the Fund's   
Board of Directors. The Manager shall give the Fund the benefit of its best     
judgment, efforts and facilities in rendering its services as Manager.          

   2. DUTIES OF THE INVESTMENT MANAGER. In carrying out its obligation under
paragraph 1 hereof, the Manager shall:                                          

(a) supervise and manage all aspects of the Fund's operations;

       (b) provide the Fund with such executive, administrative and clerical
services as are deemed advisable by the Fund's Board of Directors;              

   (c) arrange, but not pay for, the periodic updating and filing of
prospectuses and supplements thereto, proxy material, tax returns, reports to   
the Fund's shareholders and reports to and filings with the Securities and      
Exchange Commission and state Blue Sky authorities;                             

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        (d) provide the Fund with, or obtain for it, adequate office space and
all necessary office equipment and service, including telephone service, heat,  
utilities, stationery supplies and similar items for the Fund's principal       
office;                                                                         

        (e) provide the Board of Directors of the Fund on a regular basis with
financial reports and analyses on the Fund's operations and the operations of   
comparable investment companies;                                                

 (f) obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic, foreign and
otherwise, whether affecting the economy generally or the portfolio of the Fund,
and whether concerning the individual issuers whose securities are included in  
the Fund's portfolio or the activities in which they engage, or with respect to 
securities which the Manager considers desirable for inclusion in the Fund's    
portfolio;                                                                      

       (g) determine what issuers and securities shall be represented in the
Fund's portfolio and regularly report them to the Fund's Board of Directors;    

       (h) formulate and implement continuing programs for the purchases and
sales of the securities of such issuers and regularly report thereon to the     
Fund's Board of Directors; and                                                  

        (i) take, on behalf of the Fund, all actions which appear necessary to
carry into effect such purchase and sale programs and supervisory functions as  
aforesaid, including the placing of orders for the purchase and sale of         
portfolio securities, it being understood that the Fund shall reimburse the     
Manager for the costs of such actions upon proper accounting.                   

     3. BROKER-DEALER RELATIONSHIPS. The Manager is responsible for decisions to
buy and sell securities for the Fund, broker-dealer selection, and negotiation  
of its brokerage commission rates. The Manager's primary consideration in       
effecting a security transaction will be execution at the most favorable price. 

      In selecting a broker-dealer to execute each particular transaction,
the Manager will take the following into consideration: the best net price      
available; the reliability, integrity and financial condition of the            
broker-dealer; the size of and difficulty in executing the order; the value of  
the expected contribution of the broker-dealer to the investment performance of 
the Fund on a continuing basis; and other factors such as the broker-dealer's   
ability to engage in transactions in shares of issuers which are typically not  
listed on an organized stock exchange. Accordingly, the price to the Fund in any
transaction may be less favorable than that available from another broker-dealer
if the difference is reasonably justified by other aspects of the portfolio     
execution services offered. Subject to such policies as the Board of Directors  
may determine, the Manager shall not be deemed to have acted unlawfully or to   
have breached any duty created by this Agreement or otherwise solely by reason  

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of its having caused the Fund to pay a broker or dealer that provides brokerage 
and research services to the Manager an amount of commission for effecting a    
portfolio investment transaction in excess of the amount of commission another  
broker or dealer would have charged for effecting that transaction, if the      
Manager determines in good faith that such amount of commission was reasonable  
in relation to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular transaction or the  
Manager's overall responsibilities with respect to the Fund.                    

       The Manager is further authorized to allocate the orders placed by it
on behalf of the Fund to such brokers and dealers who also provide research or  
statistical material, or other services to the Fund or the Manager. Such        
allocations shall be in such amounts and proportions as the Manager shall       
determine and the Manager will report on said allocations regularly to the Board
of Directors of the Fund indicating the brokers to whom such allocations have   
been made and the basis therefor.                                               

    4. CONTROL BY BOARD OF DIRECTORS. Any management or supervisory activities
undertaken by the Manager pursuant to this Agreement, as well as other          
activities undertaken by the Manager on behalf of the Fund pursuant thereto,    
shall at all times be subject to any directives of the Board of Directors of the
Fund.                                                                           

    5. COMPLIANCE WITH APPLICABLE REQUIREMENTS. In carrying out is obligations
under this Agreement, the Manager shall at all times conform to:                

         (a) all applicable provisions of the Investment Company Act of 1940 and
any rules and regulations adopted thereunder, as amended; and                   

        (b) the provisions of the Registration Statement of the Fund under the
Securities Act of 1933 and the Investment Company Act of 1940, as amended; and  

     (c) the provisions of the Articles of Incorporation of the Fund, as
amended; and                                                                    

(d) the provisions of the By-laws of the Fund, as amended; and

(e) any other applicable provisions of state and Federal law. 

6. EXPENSES. The expenses connected with the Fund shall be allocable  
between the Fund and the Manager as follows:                                    

      (a) The Manager shall furnish at its expense and without cost to the
Fund, the services of a President, Secretary and one or more Vice Presidents of 
the Fund, to the extent that such additional officers may be required by the    
Fund for the proper conduct of its affairs;                                     

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      (b) Nothing in Subparagraph (a) hereof shall be construed to require
the Manager to bear the portion allocable to the Fund of the salary of the      
Manager's portfolio trader and the compensation paid to personnel working under 
his or her direction to the extent such salary and compensation does not exceed 
$15,000 per annum. Notwithstanding the obligation of the Fund to bear the       
expense of the items referred to above, the Manager may pay the salaries,       
including any applicable employment or payroll taxes and other salary costs, of 
the personnel carrying out such functions and the Fund shall reimburse the      
Manager therefor upon proper accounting;                                        

     (c) The Manager shall bear the cost of the portion allocable to the
Fund of the salary of the Manager's portfolio trader and the compensation paid  
to personnel working under his or her direction to the extent such salary and   
compensation exceeds $15,000 per annum;                                         

      (d) The Fund shall pay or cause to be paid all expenses of the stock
transfer or dividend agent or agents appointed by the Fund;                     

  (e) The Fund assumes and shall pay or cause to be paid all other
expenses of the Fund, including, without limitation: the charges and expenses of
the registrar, any custodian or depository appointed by the Fund for the        
safekeeping of its cash, portfolio securities and other property, and any       
accounting agent appointed by the Fund; broker's commissions chargeable to the  
Fund in connection with portfolio securities transactions to which the Fund is a
party; all taxes, including securities issuance and transfer taxes, and         
corporate fees payable by the Fund to Federal, state or other governmental      
agencies; the cost and expense of engraving or printing of stock certificates   
representing shares of the Fund; all costs and expenses in connection with the  
registration and maintenance of registration of the Fund and its shares with the
Securities and Exchange Commission and various states and other jurisdictions   
(including filing fees and legal fees and disbursements of counsel); the costs  
and expenses in connection with the listing, and maintenance of such listing, of
the Fund's shares on any securities exchange; the costs and expenses of         
preparing (including typesetting) prospectuses (including supplements thereto)  
of the Fund, proxy statements and reports to shareholders; and of printing and  
distributing such items to the Fund's shareholders, all expenses of             
shareholders' and directors' meetings; fees and travel expenses of directors or 
members of any advisory board or committee; all expenses incident to the payment
of any dividend, distribution, withdrawal or redemption, whether in shares or in
cash; charges and expenses of any outside service used for pricing of the Fund's
shares; charges and expenses of legal counsel, including counsel to the         
directors of the Fund who are not interested persons (as defined in the         
Investment Company Act of 1940, as amended) of the Fund, and of independent     
accountants, in connection with any matter relating to the Fund; membership dues
of industry associations; interest payable on Fund borrowings; postage;         
insurance premiums on property or personnel (including officers and directors)  
of the Fund which inure to its benefit; extraordinary expenses (including, but  
not limited to, legal claims and liabilities and litigation costs and any       
indemnification related thereto); and all other charges and costs of the Fund's 
operation unless otherwise explicitly provided therein.                         

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    7. DELEGATION OF RESPONSIBILITIES. The Manager may, but should be under no
duty to, perform services on behalf of the Fund which are not required by this  
Agreement upon the request of the Fund's Board of Directors. Such services will 
be performed on behalf of the Fund and the Manager's charge in rendering such   
services may be billed monthly to the Fund, subject to examination by the Fund's
independent accountants. Payment or assumption by the Manager of any Fund       
expense that the Manager is not required to pay or assume under this Agreement  
shall not relieve the Manager of any of its obligations to the Fund nor obligate
the Manager to pay or assume any similar Fund expense on any subsequent         
occasions.                                                                      

   8. COMPENSATION. For the services to be rendered and the expenses assumed
by the Manager, the Fund shall pay to the Manager monthly compensation of the   
sum of the amounts determined by applying the following annual rates to the     
Fund's average daily net assets: 1.0% of the first $30 million of the Fund's    
average daily net assets, .75% of the Fund's average daily net assets of the    
next $95 million of average daily net assets, and .70% of the average daily net 
assets in excess of $125 million. Except as hereinafter set forth, compensation 
under this Agreement shall be calculated and accrued daily and the amounts of   
daily accruals shall be paid monthly. If this Agreement becomes effective       
subsequent to the first day of a month or shall terminate before the last day of
a month, compensation for that part of the month this Agreement is in effect    
shall be prorated in a manner consistent with the calculation of fees set forth 
above. Payment of the Manager's compensation for the preceding month shall be   
made as promptly as possible after completion of the computations contemplated  
above.                                                                          

   9. NON-EXCLUSIVITY. The services of the Manager to the Fund are not to be
deemed to be exclusive, and the Manager shall be free to render investment      
management and corporate administrative or other services to others (including  
other investment companies) and to engage in other activities, so long as its   
services under this Agreement are not impaired thereby. It is understood and    
agreed that officers and directors of the Manager may serve as officers or      
directors of the Manager to the extent permitted by law; and that the officers  
and directors of the Manager are not prohibited from engaging in any other      
business activity or from rendering services to any other person, or from       
serving as partners, officers or directors of any other firm or corporation,    
including other investment companies.                                           

  10. TERM AND APPROVAL. This Agreement shall become effective on the date
first written above, subject to the condition that the Fund's Board of          
Directors, including a majority of those Directors who are not interested       
persons (as such term is defined in the 1940 Act) of the Manager, and the       
shareholders of the Fund, shall have approved this Agreement. Unless terminated 
as provided herein, the Agreement shall continue in full force and effect for   
two (2) years from the effective date of this Agreement, and shall continue from
year to year thereafter, provided that such continuance is specifically approved
at least annually:                                                              

   (a) (i) by the Fund's Board of Directors or (ii) by the vote of a
majority of the Fund's outstanding voting securities (as defined in Section     
2(a)(42) of the Investment Company Act of 1940, as amended), and                

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        (b) by the affirmative vote of a majority of the directors who are not
parties to this Agreement or interested persons of a party to this Agreement    
(other than as Fund directors), by votes cast in person at a meeting            
specifically called for such purpose.                                           

    11. TERMINATION. This Agreement may be terminated at any time, without the
payment of any penalty, by vote of the Fund's Board of Directors or by vote of a
majority of the Fund's outstanding securities (as defined in Section 2(a)(42) of
the Investment Company Act of 1940, as amended), or by the Manager, on sixty    
(60) days' written notice to the other party. This Agreement shall automatically
terminate in the event of its assignment, the term "assignment" having the      
meaning defined in Section 2(a)(4) of the Investment Company Act of 1940, as    
amended.                                                                        

  12. LIABILITY OF THE MANAGER. In the absence of willful misfeasance, bad
faith or gross negligence on the part of the Manager or any of its officers,    
directors or employees or reckless disregard by the Manager of its duties under 
this Agreement, the Manager shall not be liable to the Fund or to any           
shareholder of the Fund for any act or omission in the course, or connected     
with, rendering services hereunder or for any losses that may be sustained in   
the purchase, holding or sale of any security.                                  

13. NOTICES. Any notices under this Agreement shall be in writing,    
addressed and delivered or mailed postage paid to the other party at such       
address as such other party may designate for the receipt of such notice. Until 
further notice to the other party, it is agreed that the address of the Manager 
and that of the Fund for this purpose shall be 40 N. Central Avenue, Suite 1200,
Phoenix, Arizona 85004.                                                         

     14. QUESTIONS OF INTERPRETATION. Any question of interpretation of any term
or provision of this Agreement having a counterpart in or otherwise derived from
a term or provision of the Investment Company Act of 1940, as amended, shall be 
resolved by reference to such term or provision of the Act and to               
interpretations thereof, if any, by the United States Courts or in the absence  
of any controlling decision of any such court, by rules, regulations or orders  
of the Securities and Exchange Commission issued pursuant to said Act. In       
addition, where the effect of a requirement of the Investment Company Act of    
1940, as amended, reflected in any provision of this Agreement is revised by    
rule, regulation or order of the Securities and Exchange Commissions, such      
provisions shall be deemed to incorporate the effect of such rule, regulation or
order.                                                                          

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         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers on the day and year first above written.  

         PILGRIM
                            BANK AND THRIFT FUND, INC.

Attest:                                  By:                                    
        -----------------------------        -----------------------------------

Title:                                   Title:                                 
       ------------------------------           --------------------------------

                           PILGRIM INVESTMENTS, INC.

Attest:                                  By:                                    
        -----------------------------        -----------------------------------

Title:                                   Title:                                 
       ------------------------------           --------------------------------

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APPENDIX C

FORM OF INVESTMENT MANAGEMENT AGREEMENT FOR PILGRIM EQUITY TRUST
 (PILGRIM MIDCAP OPPORTUNITIES FUND)

 INVESTMENT MANAGEMENT AGREEMENT

   AGREEMENT made the _____ day of ___________, 2000, by and between
PILGRIM EQUITY TRUST, a Massachusetts business trust, (the "Trust") and PILGRIM 
INVESTMENTS, INC., a Delaware business corporation (the "Adviser").             

         The Trust is an open-end management investment company registered under
the Investment Company Act of 1940, as amended (the "Investment Company Act"),  
consisting of the series named on schedule 1 hereto ( the "Fund" ), as such     
schedule may be revised from time to time.                                      

       The Trust desires to retain the Adviser to render investment advisory
services to the Fund, and the Adviser is willing to render such investment      
advisory on the terms set forth below.                                          

The parties agree as follows:                                                   

  1. The Trust hereby appoints the Adviser to act as investment adviser to
the Trust and the Fund for the period and on the terms set forth in this        
Agreement. The Adviser accepts such appointment and agrees to render the        
services described, for the compensation provided, in this Agreement.           

     2. Subject to the supervision of the Trustees, the Adviser shall manage the
investment operations of the Fund and the composition of the Fund's portfolio,  
including the purchase and retention and disposition of portfolio securities, in
accordance with the Fund's investment objectives, policies and restrictions as  
stated in the Trust's Prospectus and Statement of Additional Information (as    
defined below) subject to the following understandings:                         

         (a) The Adviser shall provide supervision of the Fund's investments and
determine from time to time what investments will be made, held or disposed of  
or what securities will be purchased and retained, sold or loaned by the Fund,  
and what portion of the assets will be invested or held uninvested as cash.     

       (b) The Adviser shall use its best judgment in the performance of its
duties under this Agreement.                                                    

         (c) The Adviser, in the performance of its duties and obligations under
this Agreement, shall (i) act in conformity with the Declaration of Trust, By-  
Laws, Prospectus and Statement of Additional Information of the Trust, with the 

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instructions and directions of the Trustees and (ii) conform to and comply with 
the requirements of the Investment Company Act and all other applicable federal 
and state laws and regulations.                                                 

       (d) (i) The Adviser shall determine the securities to be purchased or
sold by the Fund and will place orders pursuant to its determinations with or   
through such persons, brokers or dealers to carry out the policy with respect to
brokerage as set forth in the Trust's Prospectus and Statement of Additional    
Information or as the Trustees may direct from time to time. In providing the   
Fund with investment supervision, the Adviser will give primary consideration to
securing the most favorable price and efficient execution. The Adviser may also 
consider the financial responsibility, research and investment information and  
other services and research related products provided by brokers or dealers who 
may effect or be a party to any such transactions or other transactions to which
other clients of the Adviser may be a party. The Fund recognize that the        
services and research related products provided by such brokers may be useful to
the Adviser in connection with its services to other clients.                   

           (ii) When the Adviser deems the purchase or sale of a security to
be in the best interest of the Fund as well as other clients, the Adviser, to   
the extent permitted by applicable laws and regulations, may aggregate the      
securities to be sold or purchased in order to obtain the most favorable price  
or lower brokerage commissions and efficient execution. In such event,          
allocation of the securities so purchased or sold, as well as the expenses      
incurred in the transactions, will be made by the Adviser in the manner it      
considers to be the most equitable and consistent with its fiduciary obligations
to the Fund and to such other clients.                                          

      (e) The Adviser shall maintain, or cause to be maintained, all books
and records required under the Investment Company Act to the extent not         
maintained by the custodian of the Trust. The Adviser shall render to the       
Trustees such periodic and special reports as the Trustees may reasonably       
request.                                                                        

      (f) The Adviser shall provide the Trust's custodian on each business
day information relating to all transactions concerning the Fund's assets.      

        (g) The investment management services of the Adviser to the Trust and
to the Fund under this Agreement are not to be deemed exclusive, and the Adviser
shall be free to render similar services to others.                             

   3. The Trust has delivered to the Adviser copies of each of the following
documents and will deliver to it all future amendments and supplements, if any: 

      (a) Declaration of Trust, as amended, as filed with the Secretary of
the Commonwealth of Massachusetts (such Declaration of Trust, as in effect on   
the date hereof and as further amended from time to time, is herein called the  
"Declaration of Trust");                                                        

         (b) By-Laws of the Trust (such By-Laws, as in effect on the date hereof
and as amended from time to time, are herein called the "By-Laws");             

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       (c) Certified resolutions of the Trustees authorizing the appointment
of the Adviser and approving this Agreement on behalf of the Trust and the Fund;

      (d) Registration Statement on Form N-lA under the Investment Company
Act and the Securities Act of 1933, as amended from time to time (the           
"Registration Statement"), as filed with the Securities and Exchange Commission 
(the "Commission"), relating to the Trust and shares of beneficial interest of  
the Fund and all amendments thereto.                                            

    (e) Notification of Registration of the Trust under the Investment
Company Act on Form N-8A as filed with the Commission and all amendments        
thereto;                                                                        

        (f) Prospectus and Statement of Additional Information included in the
Registration Statement, as amended from time to time. All references to this    
Agreement, the Prospectus and the Statement of Additional Information shall be  
to such documents as most recently amended or supplemented and in effect.       

  4. The Adviser shall authorize and permit any of its directors, officers
and employees who may be elected as Trustees or officers of the Trust and/ or   
the Fund to serve in the capacities in which they are elected. All services to  
be furnished by the Adviser under this Agreement may be furnished through such  
directors, officers or employees of the Adviser.                                

 5. The Adviser agrees that all records which it maintains for the Trust
and/or the Fund are property of the Trust and/or the Fund. The Adviser will     
surrender promptly to the Trust and/or the Fund any such records upon either the
Trust's or the Fund's request. The Adviser further agrees to preserve such      
records for the periods prescribed in Rule 3la-2 of the Commission under the    
Investment Company Act.                                                         

6. In connection with the services rendered by the Adviser under this 
Agreement, the Adviser will pay all of the following expenses:                  

       (a) the salaries and expenses of all personnel of the Trust, the Fund
and the Adviser required to perform the services to be provided pursuant to this
Agreement, except the fees of the Trustees who are not affiliated persons of the
Adviser, and                                                                    

       (b) all expenses incurred by the Adviser, the Trust or by the Fund in
connection the performance of the Adviser's responsibilities hereunder, other   
than brokers' commissions and any issue or transfer taxes chargeable to Fund in 
connection with its securities transactions.                                    

7. For the services provided and the expenses assumed pursuant to this
Agreement, the Fund will pay to the Adviser as compensation a at the rate set   
forth opposite Fund's name on Schedule 1 hereto, such fee to be accrued daily   
and paid monthly.                                                               

8. The Adviser may rely on information reasonably believed by it to be
accurate and reliable. Neither the Adviser nor its officers, directors,         
employees or agents or controlling persons shall be liable for any error or     

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judgment or mistake of law, or for any loss suffered by the Trust and/or the    
Fund in connection with or arising out of the matters to which this Agreement   
relates, except a loss resulting from willful misfeasance, bad faith or gross   
negligence on the part of the Adviser in the performance of its duties or from  
reckless disregard by it of its obligations and duties under this Agreement.    

   9. As to the Fund, this Agreement shall continue until the date set forth
opposite such Fund's name on Schedule 1 hereto (the "Reapproval Date") and shall
continue automatically for successive annual periods ending on the day of each  
year set forth opposite the Fund's name on Schedule 1 hereto (the "Reapproval   
Day"), provided that such continuance is specifically approved at least annually
by the affirmative vote of (i) a majority of the Trustees of the Trust acting on
behalf of Fund, who are not interested persons of the Trust, cast in person at a
meeting called for the purpose of voting on such approval, and (ii) a majority  
of the Trustees of the Trust or the holders of a majority of the outstanding    
voting securities of the Fund; provided however, that this Agreement may be     
terminated by the Trust, on behalf of the Fund at any time, without the payment 
of any penalty, by the Trustees acting on behalf of the Fund or by vote of a    
majority of the outstanding voting securities (as defined in the Investment     
Company Act) of the Fund, or by the Adviser 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 party. This Agreement shall terminate automatically in the event of   
its assignment provided that a transaction which does not, under the Investment 
Company Act, result in a change of actual control or management of the Adviser's
business shall not be deemed to be an assignment for the purposes of this       
Agreement.                                                                      

10. This agreement shall terminate automatically in the event of its  
assignment; the term "assignment" for this purpose shall have the meaning       
defined in Section 2(a)(4) of the Investment Company Act of 1940.               

11. Nothing in this Agreement shall limit or restrict the right of any
director, officer or employee of the Adviser who may also be a Trustee, officer 
or employee of the Trust and/or the Fund to engage in any other business or to  
devote his time and attention in part to the management or other aspect of any  
business, whether of a similar or dissimilar nature, nor limit or restrict the  
right of the Adviser to engage in any other business or to render services of   
any kind to any other person or entity.                                         

 12. During the term of this Agreement, the Trust and the Fund agrees to
furnish the Adviser at its principal office all prospectuses, proxy statements, 
reports to shareholders, sales literature, or other material prepared for       
distribution to shareholders of the Fund or the public, which refer in any way  
to the Adviser, prior to use thereof and not to use such material if the Adviser
reasonably objects in writing within five business days (or such other time as  
may be mutually agreed) after receipt. In the event of termination of the       
Agreement, the Trust and/or the Fund will continue to furnish to the Adviser    
such other information relating to the business affairs of the Trust and/or the 
Fund as the Adviser at any time, or from time to time, reasonably requests in   
order to discharge its obligations hereunder.                                   

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13. This Agreement may be amended by mutual agreement, but only after 
authorization of such amendments by the affirmative vote of (i) the holders of  
the majority of the outstanding voting securities of the Fund and (ii) a        
majority of the members of the Trustees who are not interested persons of the   
Trust or the Adviser, cast in person at a meeting called for the purpose of     
voting on such approval.                                                        

    14. The Adviser, the Trust and the Fund each agree that the name "Pilgrim"
is proprietary to, and a property right of, the Adviser. The Trust and the Fund 
agree and consent that (i) each will only use the name "Pilgrim" as part of its 
name and for no other purpose, (ii) each will not purport to grant any third    
party the right to use the name "Pilgrim" and (iii) upon the termination of this
Agreement, the Trust and the Fund shall, upon the request of the Adviser, cease 
to use the name "Pilgrim", and shall use its best efforts to cause its officers,
Trustees and shareholders to take any and all actions which the Adviser may     
request to effect the foregoing.                                                

 15. Any notice or other communications required to be given pursuant to
this Agreement shall be deemed to be given if delivered or mailed by registered 
mail, postage paid, (1) to the Adviser at 40 N. Central Avenue, Suite 1200,     
Phoenix, Arizona 85004, Attention: Secretary; or (2) to the Trust and/or the    
Fund, 40 N. Central Avenue, Suite 1200, Phoenix, Arizona 85004, Attention:      
Secretary.                                                                      

  16. This Agreement shall be governed by and construed in accordance with
the laws of the State of Arizona. The terms "interested person", "assignment",  
and "vote of the majority of the outstanding securities" shall have the meaning 
set forth in the Investment Company Act.                                        

    17. The Declaration of Trust, establishing the Trust, dated June 12, 1998,
a copy of which, together with all amendments thereto (the "Declaration"), is on
file in the office of the Secretary of the Commonwealth of Massachusetts,       
provides that the name "Pilgrim Equity Trust" refers to the Trustees under the  
Declaration collectively as trustees, but not individually or personally; and no
Trustee, shareholder, officer, employee or agent of the Trust and/or the Fund   
may be held to any personal liability, nor may resort be had to their private   
property for the satisfaction of any obligation or claim or otherwise in        
connection with the affairs of the Trust, but the Trust property only shall be  
liable.                                                                         

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       IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first     
written above.                                                                  

                      PILGRIM EQUITY TRUST

     By:
                                            ------------------------------------

                           PILGRIM INVESTMENTS, INC.

     By:
                                            ------------------------------------

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SCHEDULE 1

Annual Fee as a                     
Percentage of Avg.     Last Continued/
Name of Fund         Daily Net Assets      Approved by Board    Re-approval Day 
------------         ----------------      -----------------    --------------- 
PILGRIM MIDCAP            1.00%              June 13, 2000       _________, 2002
OPPORTUNITIES                                                                   
FUND                                                                            

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APPENDIX D

 FORM OF INVESTMENT MANAGEMENT AGREEMENT FOR PILGRIM GOVERNMENT SECURITIES
 INCOME FUND, INC.

 INVESTMENT MANAGEMENT AGREEMENT

THIS INVESTMENT MANAGEMENT AGREEMENT made as of the __th day of __________,     
2000, by and between PILGRIM GOVERNMENT SECURITIES INCOME FUND, INC., a         
corporation organized and existing under the laws of the State of California    
(hereinafter called the "Fund") and PILGRIM INVESTMENTS, INC., a corporation    
organized and existing under the laws of the State of Delaware (hereinafter     
called the "Manager").                                                          

W I T N E S S E T H:

 WHEREAS, the Fund is an open-end management investment company,
registered as such under the Investment Company Act of 1940; and                

       WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, and is engaged in the business of supplying    
investment advice, investment management and administrative services, as an     
independent contractor; and                                                     

      WHEREAS, the Fund desires to retain the Manager to render advice and
services to the Fund pursuant to the terms and provisions of this Agreement, and
the Manager is interested in furnishing said advice and services.               

  NOW, THEREFORE, in consideration of the covenants and the mutual
promises hereinafter set forth, the parties hereto, intending to be legally     
bound hereby, mutually agree as follows:                                        

    1. The Fund hereby employs the Manager and the Manager hereby accepts such
employment, to render investment advice and investment services with respect to 
the assets of the Fund, subject to the supervision and direction of the Fund's  
Board of Directors. The Manager shall, except as otherwise provided for herein, 
render or make available all administrative services needed for the management  
and operation of the Fund, and shall, as part of its duties hereunder, (i)      
furnish the Fund with advice and recommendations with respect to the investment 
of the Fund's assets and the purchase and sale of its portfolio securities,     
including the taking of such other steps a may be necessary to implement such   
advice and recommendations, (ii) furnish the Fund with reports, statements and  
other data on securities, economic conditions and other pertinent subjects which
the Board of Directors may request, (iii) furnish such office space and         
personnel as is needed by the Fund, and (iv) in general superintend and manage  
the investments of the Fund, subject to the ultimate supervision and direction  
of the Board of Directors.                                                      

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 2. The Manager shall use its best judgment and efforts in rendering the
advice and services to the Fund as contemplated by this Agreement.              

3. The Manager shall, for all purposes herein, be deemed to be an     
independent contractor, and shall, unless otherwise expressly provided and      
authorized, have no authority to act for or represent the Fund in any way, or in
any way be deemed an agent for the Fund. It is expressly understood and agreed  
that the services to be rendered by the Manager to the Fund under the provisions
of this Agreement are not to be deemed exclusive, and the Manager shall be free 
to render similar or different services to others so long as its ability to     
render the services provided for in this Agreement shall not be impaired        
thereby.                                                                        

 4. The Manager agrees to use its best efforts in the furnishing of such
advice and recommendations to the Fund, in the preparation of reports and       
information, and in the management of the Fund's assets, all pursuant to this   
Agreement, and for this purpose the Manager shall, at its own expense, maintain 
such staff and employ or retain such personnel and consult with such other      
persons as it shall from time to time determine to be necessary to the          
performance of its obligations under this Agreement. Without limiting the       
generality of the foregoing, the staff and personnel of the Manager shall be    
deemed to include persons employed or retained by the Manager to furnish        
statistical, research, and other factual information, advice regarding economic 
factors and trends, information with respect to technical and scientific        
developments, and such other information, advice and assistance as the Manager  
may desire and request.                                                         

5. The Fund will from time to time furnish to the Manager detailed    
statements of the investments and assets of the Fund and information as to its  
investment objectives and needs, and will make available to the Manager such    
financial reports, proxy statements, legal and other information relating to its
investments as may be in the possession of the Fund or available to it and such 
other information as the Manager may reasonably request.                        

6. Whenever the Manager has determined that the Fund should tender    
securities pursuant to a "tender offer solicitation", the Manager shall         
designate an affiliate as the "tendering dealer" so long as it is legally       
permitted to act in such capacity under the Federal securities laws and rules   
thereunder and the rules of any securities exchange or association of which such
affiliate may be a member. Such affiliated dealer shall not be obligated to make
any additional commitments of capital, expense or personnel beyond that already 
committed (other than normal periodic fees or payments necessary to maintain its
corporate existence and membership in the National Association of Securities    
Dealers, Inc.) as of the date of this Agreement. This Agreement shall not       
obligate the Manager or such affiliate (i) to act pursuant to the foregoing     
requirement under any circumstances in which they might reasonably believe that 
liability might be imposed upon them as a result of so acting, or (ii) to       
institute legal or other proceedings to collect fees which may be considered to 
be due from others to it as a result of such a tender, unless the Fund shall    
enter into an agreement with such affiliate to reimburse it for all expenses    
connected with attempting to collect such fees, including legal fees and        
expenses and that portion of the compensation due to their employees which is   
attributable to the time involved in attempting to collect such fees.           

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     7. The Manager shall bear and pay the costs of rendering the services to be
performed by it under this Agreement. The Fund shall bear and pay for all other 
expenses of its operation, including, but not limited to, expenses incurred in  
connection with the issuance, registration and transfer of its shares; fees of  
its custodian, transfer and shareholder servicing agent; costs and expenses of  
pricing and calculating its daily net asset value and of maintaining its books  
of account required by the Investment Company Act of 1940; expenditures in      
connection with meetings of the shareholders and directors, except those called 
solely to accommodate the Manager; salaries of officers and fees and expenses of
directors or members of any advisory board or committee who are not members of, 
affiliated with or interested persons of the Manager; salaries of personnel     
involved in placing orders for the execution of the Fund's portfolio            
transactions or in maintaining registration of its shares under state securities
laws; insurance premiums on property or personnel of the Fund which inure to its
benefit; the cost of preparing and printing reports, proxy statements and       
prospectuses of the Fund or other communications for distribution to its        
shareholders; legal, auditing and accounting fees; trade association dues; fees 
and expenses of registering and maintaining registration of its shares for sale 
under Federal and applicable state securities laws; and all other charges and   
costs of its operation plus any extraordinary and non-recurring expenses, except
as herein otherwise prescribed. To the extent the Manager incurs any costs or   
performs any services which are an obligation of the Fund, as set forth herein, 
the Fund shall promptly reimburse the Manager for such costs and expenses. To   
the extent the services for which the Fund is obligated to pay are performed by 
the Manager, the Manager shall be entitled to recover from the Fund only to the 
extent of its costs for such services.                                          

 8. (a) The Fund agrees to pay to the Manager, and the Manager agrees to
accept, as full compensation for all administrative and investment management   
services furnished or provided to the Fund and as a full reimbursement for all  
expenses assumed by the Manager, a management fee computed at the following     
annual percentage of the average daily net assets of the Fund:                  

.50% on the first $500 million of net assets; plus          
.45% on the net assets from $500 million to $1 billion; plus
.40% on net assets in excess of $1 billion                  

        (a) The management fees shall be accrued daily by the Fund and paid to
the Manager at the end of each calendar month.                                  

      (b) To the extent that the gross operating costs and expenses of the
Fund (excluding any interest taxes, brokerage commissions, amortization of      
organization expenses, and, with the prior written approval of any state        
securities commission requiring same, any extraordinary expenses, such as       
litigation) exceed one and one-half percent (1.5%) of the Fund's average net    
asset value on the first $40 million of net assets and one percent (1%) on      
average net assets in excess of $40 million for any one fiscal year, the Manager
shall reimburse the Fund for the amount of such excess expenses.                

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       (c) The management fee payable by the Fund hereunder shall be reduced
to the extent that an affiliate of the Manager has actually received cash       
payments of tender offer solicitation fees less certain costs and expenses      
incurred in connection therewith, as referred to in Paragraph 6 herein.         

    9. The Manager agrees that neither it nor any of its officers or employees
shall take any short position in the capital stock of the Fund. This prohibition
shall not prevent the purchase of such shares by any of the officers and        
directors or bona fide employees of the Manager or any trust, pension,          
profit-sharing or other benefit plan for such persons or affiliates thereof, at 
a price not less than the net asset value thereof at the time of purchase, as   
allowed pursuant to rules promulgated under the Investment Company Act of 1940, 
as amended.                                                                     

  10. Nothing herein contained shall be deemed to require the Fund to take
any action contrary to its Articles of Incorporation or any applicable statute  
or regulation, or to relieve or deprive the Board of Directors of the Fund of   
its responsibility for and control of the conduct of the affairs of the Fund.   

     11. (a) In the absence of willful misfeasance, bad faith, gross negligence,
or reckless disregard of obligations or duties hereunder on the part of the     
Manager, the Manager shall not be subject to liability to the Fund, or to any   
shareholder of the Fund, for any act or omission in the course of, or connected 
with, rendering services hereunder or for any losses that may be sustained in   
the purchase, holding or sale of any security by the Fund.                      

        (a) Notwithstanding the foregoing, the Manager agrees to reimburse the
Fund for any and all costs, expenses, and counsel and Directors' fees reasonably
incurred by the Fund in the preparation, printing and distribution of proxy     
statements, amendments to its Registration Statement, the holding of meetings of
its shareholders or Directors, the conduct of factual investigations, any legal 
or administrative proceedings (including any applications for exemptions or     
determinations by the Securities and Exchange Commission) which the Fund incurs 
as a result of action or inaction of the Manager or any of its shareholders     
where the action or inaction necessitating such expenditures (i) is directly or 
indirectly related to any transactions or proposed transaction in the shares or 
control of the Manager or its affiliates (or litigation related to any pending  
or proposed future transaction in such shares or control) which shall have been 
undertaken without the prior, express approval of the Fund's Board of Directors;
or (ii) is within the sole control of the Manager or any of its affiliates or   
any of their officers, directors, employees or shareholders. The Manager shall  
not be obligated pursuant to the provisions of this Subparagraph 11(b), to      
reimburse the Fund for any expenditures related to the institution of an        
administrative proceeding or civil litigation by the Fund or by a Fund          
shareholder seeking to recover all or a portion of the proceeds derived by any  
shareholder of the Manager or any of its affiliates from the sale of his shares 
of the Manager, or similar matters. So long as this Agreement is in effect, the 
Manager shall pay to the Fund the amount due for expenses subject to this       
Subparagraph 11(b) within thirty (30) days after a bill or statement has been   
received by the Fund therefor. This provision shall not be deemed to be a waiver

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of any claim the Fund may have or may assert against the Manager or others or   
costs, expenses, or damages heretofore incurred by the Fund for costs, expenses,
or damages the Fund may hereafter incur which are not reimbursable to it        
hereunder.                                                                      

      (b) No provision of this Agreement shall be construed to protect any
director or officer of the Fund, or of the Manager, from liability in violation 
of Section 17(h) and (i) of the Investment Company Act of 1940, as amended.     

    12. This Agreement shall become effective on the date first written above,
subject to the condition that the Fund's Board of Directors, including a        
majority of those Directors who are not interested persons (as such term is     
defined in the 1940 Act) of the Manager, and the shareholders of the Fund, shall
have approved this Agreement. Unless terminated as provided herein, the         
Agreement shall continue in full force and effect for two (2) years from the    
effective date of this Agreement, and shall continue from year to year          
thereafter so long as such continuation is approved at least annually by (i) the
Board of Directors of the Fund or by the vote of a majority of the outstanding  
voting securities of the Fund, and (ii) the vote of a majority of the directors 
of the Fund who are not parties to this Agreement or interested persons thereof,
cast in person at a meeting called for the purpose of voting on such approval.  

  13. This Agreement may be terminated at any time, without payment of any
penalty, by the Board of Directors of the Fund or by vote of a majority of the  
outstanding voting securities of the Fund, upon sixty (60) days written notice  
to the Manager, and by the Manager upon sixty (60) days written notice to the   
Fund.                                                                           

14. This Agreement shall terminate automatically in the event of any  
transfer or assignment thereof, as defined in the Investment Company Act of     
1940, as amended.                                                               

    15. This Agreement may not be transferred, assigned, sold or in any manner
hypothecated or pledged without the affirmative vote or written consent of the  
holders of a majority of the outstanding voting securities of the Fund.         

   16. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule, or otherwise, the remainder of this Agreement    
shall not be affected thereby.                                                  

  17. The term "majority of the outstanding voting securities" of the Fund
shall have the meaning as set forth in the Investment Company Act of 1940, as   
amended.                                                                        

     18. In consideration of the execution of this Agreement, the Manager hereby
grants to the Fund the right to use the name "Pilgrim" as part of its corporate 
name. The Fund agrees that in the event this Agreement is terminated, the Fund  
shall immediately take such steps as are necessary to amend its corporate name  
to remove the reference to "Pilgrim".                                           

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         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested by their duly authorized officers, all on the day and
year first above written.                                                       

                               PILGRIM GOVERNMENT SECURITIES
                   INCOME FUND, INC.

Attest:                                  By:                                    
        -----------------------------        -----------------------------------

Title:                                   Title:                                 
       ------------------------------           --------------------------------

                           PILGRIM INVESTMENTS, INC.

Attest:                                  By:                                    
        -----------------------------        -----------------------------------

Title:                                   Title:                                 
       ------------------------------           --------------------------------

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APPENDIX E

FORM OF INVESTMENT MANAGEMENT AGREEMENT FOR PILGRIM INVESTMENT FUNDS, INC.
 (PILGRIM HIGH YIELD FUND)

 INVESTMENT MANAGEMENT AGREEMENT

THIS INVESTMENT MANAGEMENT AGREEMENT made as of the ___ day of _____, 2000, by  
and between PILGRIM INVESTMENT FUNDS, INC., a corporation organized and existing
under the laws of the State of Maryland (hereinafter called the "Company") on   
behalf of its PILGRIM HIGH YIELD FUND series (the "Fund"), and PILGRIM          
INVESTMENTS, INC., a corporation organized and existing under the laws of the   
State of Delaware (hereinafter called the "Manager").                           

W I T N E S S E T H:

      WHEREAS, the Fund is a series of the Company, an open-end management
investment company, registered as such under the Investment Company Act of 1940;
and                                                                             

       WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, and is engaged in the business of supplying    
investment advice, investment management and administrative services, as an     
independent contractor; and                                                     

  WHEREAS, the Company on behalf of the Fund desires to retain the
Manager to render advice and services to the Fund pursuant to the terms and     
provisions of this Agreement, and the Manager is interested in furnishing said  
advice and services.                                                            

  NOW, THEREFORE, in consideration of the covenants and the mutual
promises hereinafter set forth, the parties hereto, intending to be legally     
bound hereby, mutually agree as follows:                                        

 1. The Company on behalf of the Fund hereby employs the Manager and the
Manager hereby accepts such employment, to render investment advice and         
investment services with respect to the assets of the Fund, subject to the      
supervision and direction of the Board of Directors of the Company. The Manager 
shall, except as otherwise provided for herein, render or make available all    
administrative services needed for the management and operation of the Fund, and
shall, as part of its duties hereunder, (i) furnish the Fund with advice and    
recommendations with respect to the investment of the Fund's assets and the     
purchase and sale of its portfolio securities, including the taking of such     
other steps a may be necessary to implement such advice and recommendations,    
(ii) furnish the Fund with reports, statements and other data on securities,    
economic conditions and other pertinent subjects which the Board of Directors   
may request, (iii) furnish such office space and personnel as is needed by the  
Fund, and (iv) in general superintend and manage the investments of the Fund,   
subject to the ultimate supervision and direction of the Board of Directors.    

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 2. The Manager shall use its best judgment and efforts in rendering the
advice and services to the Fund as contemplated by this Agreement.              

3. The Manager shall, for all purposes herein, be deemed to be an     
independent contractor, and shall, unless otherwise expressly provided and      
authorized, have no authority to act for or represent the Fund in any way, or in
any way be deemed an agent for the Fund. It is expressly understood and agreed  
that the services to be rendered by the Manager to the Fund under the provisions
of this Agreement are not to be deemed exclusive, and the Manager shall be free 
to render similar or different services to others so long as its ability to     
render the services provided for in this Agreement shall not be impaired        
thereby.                                                                        

 4. The Manager agrees to use its best efforts in the furnishing of such
advice and recommendations to the Fund, in the preparation of reports and       
information, and in the management of the Fund's assets, all pursuant to this   
Agreement, and for this purpose the Manager shall, at its own expense, maintain 
such staff and employ or retain such personnel and consult with such other      
persons as it shall from time to time determine to be necessary to the          
performance of its obligations under this Agreement. Without limiting the       
generality of the foregoing, the staff and personnel of the Manager shall be    
deemed to include persons employed or retained by the Manager to furnish        
statistical, research, and other factual information, advice regarding economic 
factors and trends, information with respect to technical and scientific        
developments, and such other information, advice and assistance as the Manager  
may desire and request.                                                         

5. The Fund will from time to time furnish to the Manager detailed    
statements of the investments and assets of the Fund and information as to its  
investment objectives and needs, and will make available to the Manager such    
financial reports, proxy statements, legal and other information relating to its
investments as may be in the possession of the Fund or available to it and such 
other information as the Manager may reasonably request.                        

6. Whenever the Manager has determined that the Fund should tender    
securities pursuant to a "tender offer solicitation", the Manager shall         
designate an affiliate as the "tendering dealer" so long as it is legally       
permitted to act in such capacity under the Federal securities laws and rules   
thereunder and the rules of any securities exchange or association of which such
affiliate may be a member. Such affiliated dealer shall not be obligated to make
any additional commitments of capital, expense or personnel beyond that already 
committed (other than normal periodic fees or payments necessary to maintain its
corporate existence and membership in the National Association of Securities    
Dealers, Inc.) as of the date of this Agreement. This Agreement shall not       
obligate the Manager or such affiliate (i) to act pursuant to the foregoing     
requirement under any circumstances in which they might reasonably believe that 
liability might be imposed upon them as a result of so acting, or (ii) to       
institute legal or other proceedings to collect fees which may be considered to 
be due from others to it as a result of such a tender, unless the Fund shall    
enter into an agreement with such affiliate to reimburse it for all expenses    
connected with attempting to collect such fees, including legal fees and        
expenses and that portion of the compensation due to their employees which is   
attributable to the time involved in attempting to collect such fees.           

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     7. The Manager shall bear and pay the costs of rendering the services to be
performed by it under this Agreement. The Fund shall bear and pay for all other 
expenses of its operation, including, but not limited to, expenses incurred in  
connection with the issuance, registration and transfer of its shares; fees of  
its custodian, transfer and shareholder servicing agent; costs and expenses of  
pricing and calculating its daily net asset value and of maintaining its books  
of account required by the Investment Company Act of 1940; expenditures in      
connection with meetings of the shareholders and directors, except those called 
solely to accommodate the Manager; salaries of officers and fees and expenses of
directors or members of any advisory board or committee who are not members of, 
affiliated with or interested persons of the Manager; salaries of personnel     
involved in placing orders for the execution of the Fund's portfolio            
transactions or in maintaining registration of its shares under state securities
laws; insurance premiums on property or personnel of the Fund which inure to its
benefit; the cost of preparing and printing reports, proxy statements and       
prospectuses of the Fund or other communications for distribution to its        
shareholders; legal, auditing and accounting fees; trade association dues; fees 
and expenses of registering and maintaining registration of its shares for sale 
under Federal and applicable state securities laws; and all other charges and   
costs of its operation plus any extraordinary and non-recurring expenses, except
as herein otherwise prescribed. To the extent the Manager incurs any costs or   
performs any services which are an obligation of the Fund, as set forth herein, 
the Fund shall promptly reimburse the Manager for such costs and expenses. To   
the extent the services for which the Fund is obligated to pay are performed by 
the Manager, the Manager shall be entitled to recover from the Fund only to the 
extent of its costs for such services.                                          

  8.  (a) The Fund agrees to pay to the Manager, and the Manager agrees to
accept, as full compensation for all administrative and investment management   
services furnished or provided to the Fund and as full reimbursement for all    
expenses assumed by the Manager, a management fee computed at an annual         
percentage rate of .60% of the average daily net assets of the Fund.            

        (b) The management fees shall be accrued daily by the Fund and paid to
the Manager at the end of each calendar month.                                  

      (c) To the extent that the gross operating costs and expenses of the
Fund (excluding any interest taxes, brokerage commissions, and, with the prior  
written approval of any state securities commission requiring same, any         
extraordinary expenses, such as litigation) exceed the allowable expense        
limitations of the state in which shares of the Fund are registered for sale    
having the most stringent expense reimbursement provisions, the Manager shall   
reimburse the Fund for the amount of such excess.                               

       (d) The management fee payable by the Fund hereunder shall be reduced
to the extent that an affiliate of the Manager has actually received cash       
payments of tender offer solicitation fees less certain costs and expenses      
incurred in connection therewith, as referred to in Paragraph 6 herein.         

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    9. The Manager agrees that neither it nor any of its officers or employees
shall take any short position in the capital stock of the Fund. This prohibition
shall not prevent the purchase of such shares by any of the officers and        
directors or bona fide employees of the Manager or any trust, pension,          
profit-sharing or other benefit plan for such persons or affiliates thereof, at 
a price not less than the net asset value thereof at the time of purchase, as   
allowed pursuant to rules promulgated under the Investment Company Act of 1940, 
as amended.                                                                     

  10. Nothing herein contained shall be deemed to require the Fund to take
any action contrary to the Articles of Incorporation or By-Laws of the Company, 
or any applicable statute or regulation, or to relieve or deprive the Board of  
Directors of the Company of its responsibility for and control of the conduct of
the affairs of the Fund.                                                        

     11. (a) In the absence of willful misfeasance, bad faith, gross negligence,
or reckless disregard of obligations or duties hereunder on the part of the     
Manager, the Manager shall not be subject to liability to the Fund, or to any   
shareholder of the Fund, for any act or omission in the course of, or connected 
with, rendering services hereunder or for any losses that may be sustained in   
the purchase, holding or sale of any security by the Fund.                      

        (b) Notwithstanding the foregoing, the Manager agrees to reimburse the
Fund for any and all costs, expenses, and counsel and Directors' fees reasonably
incurred by the Company in the preparation, printing and distribution of proxy  
statements, amendments to its Registration Statement, the holding of meetings of
its shareholders or Directors, the conduct of factual investigations, any legal 
or administrative proceedings (including any applications for exemptions or     
determinations by the Securities and Exchange Commission) which the Fund incurs 
as a result of action or inaction of the Manager or any of its shareholders     
where the action or inaction necessitating such expenditures (i) is directly or 
indirectly related to any transactions or proposed transaction in the shares or 
control of the Manager or its affiliates (or litigation related to any pending  
or proposed future transaction in such shares or control) which shall have been 
undertaken without the prior, express approval of the Company's Board of        
Directors; or (ii) is within the sole control of the Manager or any of its      
affiliates or any of their officers, directors, employees or shareholders. The  
Manager shall not be obligated pursuant to the provisions of this Subparagraph  
11(b), to reimburse the Fund for any expenditures related to the institution of 
an administrative proceeding or civil litigation by the Fund or by a Fund       
shareholder seeking to recover all or a portion of the proceeds derived by any  
shareholder of the Manager or any of its affiliates from the sale of his shares 
of the Manager, or similar matters. So long as this Agreement is in effect, the 
Manager shall pay to the Fund the amount due for expenses subject to this       
Subparagraph 11(b) within thirty (30) days after a bill or statement has been   
received by the Fund therefor. This provision shall not be deemed to be a waiver
of any claim the Fund may have or may assert against the Manager or others or   
costs, expenses, or damages heretofore incurred by the Fund for costs, expenses,
or damages the Fund may hereafter incur which are not reimbursable to it        
hereunder.                                                                      

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      (c) No provision of this Agreement shall be construed to protect any
director or officer of the Fund, or of the Manager, from liability in violation 
of Section 17(h) and (i) of the Investment Company Act of 1940, as amended.     

    12. This Agreement shall become effective on the date first written above,
subject to the condition that the Company's Board of Directors, including a     
majority of those Directors who are not interested persons (as such term is     
defined in the 1940 Act) of the Manager, and the shareholders of the Fund, shall
have approved this Agreement. Unless terminated as provided herein, the         
Agreement shall continue in full force and effect for two (2) years from the    
effective date of this Agreement, and shall continue from year to year          
thereafter so long as such continuation is approved at least annually by (i) the
Board of Directors of the Company or by the vote of a majority of the           
outstanding voting securities of the Fund, and (ii) the vote of a majority of   
the directors of the Company who are not parties to this Agreement or interested
persons thereof, cast in person at a meeting called for the purpose of voting on
such approval.                                                                  

  13. This Agreement may be terminated at any time, without payment of any
penalty, by the Board of Directors of the Company or by vote of a majority of   
the outstanding voting securities of the Company, upon sixty (60) days written  
notice to the Manager, and by the Manager upon sixty (60) days written notice to
the Fund.                                                                       

14. This Agreement shall terminate automatically in the event of any  
transfer or assignment thereof, as defined in the Investment Company Act of     
1940, as amended.                                                               

    15. This Agreement may not be transferred, assigned, sold or in any manner
hypothecated or pledged without the affirmative vote or written consent of the  
holders of a majority of the outstanding voting securities of the Fund.         

   16. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule, or otherwise, the remainder of this Agreement    
shall not be affected thereby.                                                  

  17. The term "majority of the outstanding voting securities" of the Fund
shall have the meaning as set forth in the Investment Company Act of 1940, as   
amended.                                                                        

     18. In consideration of the execution of this Agreement, the Manager hereby
grants to the Company and the Fund the right to use the name "Pilgrim" as part  
of their corporate names. The Company and Fund agree that in the event this     
Agreement is terminated, the Company and the Fund shall immediately take such   
steps as are necessary to amend their corporate names to remove the reference to
"Pilgrim".                                                                      

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         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested by their duly authorized officers, on the day and    
year first above written.                                                       

                                 PILGRIM INVESTMENTS FUNDS, INC.
                                      (on behalf of its Pilgrim High Yield
              Fund Series)

Attest:                                  By:                                    
        -----------------------------        -----------------------------------

Title:                                   Title:                                 
       ------------------------------           --------------------------------

                           PILGRIM INVESTMENTS, INC.

Attest:                                  By:                                    
        -----------------------------        -----------------------------------

Title:                                   Title:                                 
       ------------------------------           --------------------------------

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APPENDIX F

FORM OF INVESTMENT MANAGEMENT AGREEMENT FOR PILGRIM INVESTMENT FUNDS, INC.
 (PILGRIM MAGNACAP FUND)

 INVESTMENT MANAGEMENT AGREEMENT

THIS INVESTMENT MANAGEMENT AGREEMENT made as of the ___ day of
__________, 2000, by and between PILGRIM INVESTMENT FUNDS, INC., a corporation  
organized and existing under the laws of the State of Maryland (hereinafter     
called the "Company") on behalf of its PILGRIM MAGNACAP FUND series (the        
"Fund"), and PILGRIM INVESTMENTS, INC., a corporation organized and existing    
under the laws of the State of Delaware (hereinafter called the "Manager").     

W I T N E S S E T H:

      WHEREAS, the Fund is a series of the Company, an open-end management
investment company, registered as such under the Investment Company Act of 1940;
and                                                                             

       WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, and is engaged in the business of supplying    
investment advice, investment management and administrative services, as an     
independent contractor; and                                                     

  WHEREAS, the Company on behalf of the Fund desires to retain the
Manager to render advice and services to the Fund pursuant to the terms and     
provisions of this Agreement, and the Manager is interested in furnishing said  
advice and services.                                                            

  NOW, THEREFORE, in consideration of the covenants and the mutual
promises hereinafter set forth, the parties hereto, intending to be legally     
bound hereby, mutually agree as follows:                                        

 1. The Company on behalf of the Fund hereby employs the Manager and the
Manager hereby accepts such employment, to render investment advice and         
investment services with respect to the assets of the Fund, subject to the      
supervision and direction of the Board of Directors of the Company. The Manager 
shall, except as otherwise provided for herein, render or make available all    
administrative services needed for the management and operation of the Fund, and
shall, as part of its duties hereunder, (i) furnish the Fund with advice and    
recommendations with respect to the investment of the Fund's assets and the     
purchase and sale of its portfolio securities, including the taking of such     
other steps a may be necessary to implement such advice and recommendations,    
(ii) furnish the Fund with reports, statements and other data on securities,    
economic conditions and other pertinent subjects which the Board of Directors   
may request, (iii) furnish such office space and personnel as is needed by the  
Fund, and (iv) in general superintend and manage the investments of the Fund,   
subject to the ultimate supervision and direction of the Board of Directors.    

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 2. The Manager shall use its best judgment and efforts in rendering the
advice and services to the Fund as contemplated by this Agreement.              

3. The Manager shall, for all purposes herein, be deemed to be an     
independent contractor, and shall, unless otherwise expressly provided and      
authorized, have no authority to act for or represent the Fund in any way, or in
any way be deemed an agent for the Fund. It is expressly understood and agreed  
that the services to be rendered by the Manager to the Fund under the provisions
of this Agreement are not to be deemed exclusive, and the Manager shall be free 
to render similar or different services to others so long as its ability to     
render the services provided for in this Agreement shall not be impaired        
thereby.                                                                        

 4. The Manager agrees to use its best efforts in the furnishing of such
advice and recommendations to the Fund, in the preparation of reports and       
information, and in the management of the Fund's assets, all pursuant to this   
Agreement, and for this purpose the Manager shall, at its own expense, maintain 
such staff and employ or retain such personnel and consult with such other      
persons as it shall from time to time determine to be necessary to the          
performance of its obligations under this Agreement. Without limiting the       
generality of the foregoing, the staff and personnel of the Manager shall be    
deemed to include persons employed or retained by the Manager to furnish        
statistical, research, and other factual information, advice regarding economic 
factors and trends, information with respect to technical and scientific        
developments, and such other information, advice and assistance as the Manager  
may desire and request.                                                         

5. The Fund will from time to time furnish to the Manager detailed    
statements of the investments and assets of the Fund and information as to its  
investment objectives and needs, and will make available to the Manager such    
financial reports, proxy statements, legal and other information relating to its
investments as may be in the possession of the Fund or available to it and such 
other information as the Manager may reasonably request.                        

6. Whenever the Manager has determined that the Fund should tender    
securities pursuant to a "tender offer solicitation", the Manager shall         
designate an affiliate as the "tendering dealer" so long as it is legally       
permitted to act in such capacity under the Federal securities laws and rules   
thereunder and the rules of any securities exchange or association of which such
affiliate may be a member. Such affiliated dealer shall not be obligated to make
any additional commitments of capital, expense or personnel beyond that already 
committed (other than normal periodic fees or payments necessary to maintain its
corporate existence and membership in the National Association of Securities    
Dealers, Inc.) as of the date of this Agreement. This Agreement shall not       
obligate the Manager or such affiliate (i) to act pursuant to the foregoing     
requirement under any circumstances in which they might reasonably believe that 
liability might be imposed upon them as a result of so acting, or (ii) to       
institute legal or other proceedings to collect fees which may be considered to 
be due from others to it as a result of such a tender, unless the Fund shall    
enter into an agreement with such affiliate to reimburse it for all expenses    
connected with attempting to collect such fees, including legal fees and        
expenses and that portion of the compensation due to their employees which is   
attributable to the time involved in attempting to collect such fees.           

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     7. The Manager shall bear and pay the costs of rendering the services to be
performed by it under this Agreement. The Fund shall bear and pay for all other 
expenses of its operation, including, but not limited to, expenses incurred in  
connection with the issuance, registration and transfer of its shares; fees of  
its custodian, transfer and shareholder servicing agent; costs and expenses of  
pricing and calculating its daily net asset value and of maintaining its books  
of account required by the Investment Company Act of 1940; expenditures in      
connection with meetings of the shareholders and directors, except those called 
solely to accommodate the Manager; salaries of officers and fees and expenses of
directors or members of any advisory board or committee who are not members of, 
affiliated with or interested persons of the Manager; salaries of personnel     
involved in placing orders for the execution of the Fund's portfolio            
transactions or in maintaining registration of its shares under state securities
laws; insurance premiums on property or personnel of the Fund which inure to its
benefit; the cost of preparing and printing reports, proxy statements and       
prospectuses of the Fund or other communications for distribution to its        
shareholders; legal, auditing and accounting fees; trade association dues; fees 
and expenses of registering and maintaining registration of its shares for sale 
under Federal and applicable state securities laws; and all other charges and   
costs of its operation plus any extraordinary and non-recurring expenses, except
as herein otherwise prescribed. To the extent the Manager incurs any costs or   
performs any services which are an obligation of the Fund, as set forth herein, 
the Fund shall promptly reimburse the Manager for such costs and expenses. To   
the extent the services for which the Fund is obligated to pay are performed by 
the Manager, the Manager shall be entitled to recover from the Fund only to the 
extent of its costs for such services.                                          

  8.  (a) The Fund agrees to pay to the Manager, and the Manager agrees to
accept, as full compensation for all administrative and investment management   
services furnished or provided to the Fund and as full reimbursement for all    
expenses assumed by the Manager, a management fee computed at the following     
annual percentage of the average daily net assets of the Fund:                  

1.00% on the first $30 million of net assets; plus          
 .75% on the net assets from $30 million to $250 million; plus
.625% on net assets from $250 million to $500 million; plus 
.50% on net assets in excess of $500 million                

        (b) The management fees shall be accrued daily by the Fund and paid to
the Manager at the end of each calendar month.                                  

      (c) To the extent that the gross operating costs and expenses of the
Fund (excluding any interest taxes, brokerage commissions, and, with the prior  
written approval of any state securities commission requiring same, any         
extraordinary expenses, such as litigation) exceed the allowable expense        
limitations of the state in which shares of the Fund are registered for sale    
having the most stringent expense reimbursement provisions, the Manager shall   
reimburse the Fund for the amount of such excess.                               

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       (d) The management fee payable by the Fund hereunder shall be reduced
to the extent that an affiliate of the Manager has actually received cash       
payments of tender offer solicitation fees less certain costs and expenses      
incurred in connection therewith, as referred to in Paragraph 6 herein.         

    9. The Manager agrees that neither it nor any of its officers or employees
shall take any short position in the capital stock of the Fund. This prohibition
shall not prevent the purchase of such shares by any of the officers and        
directors or bona fide employees of the Manager or any trust, pension,          
profit-sharing or other benefit plan for such persons or affiliates thereof, at 
a price not less than the net asset value thereof at the time of purchase, as   
allowed pursuant to rules promulgated under the Investment Company Act of 1940, 
as amended.                                                                     

  10. Nothing herein contained shall be deemed to require the Fund to take
any action contrary to the Articles of Incorporation or By-Laws of the Company, 
or any applicable statute or regulation, or to relieve or deprive the Board of  
Directors of the Company of its responsibility for and control of the conduct of
the affairs of the Fund.                                                        

     11. (a) In the absence of willful misfeasance, bad faith, gross negligence,
or reckless disregard of obligations or duties hereunder on the part of the     
Manager, the Manager shall not be subject to liability to the Fund, or to any   
shareholder of the Fund, for any act or omission in the course of, or connected 
with, rendering services hereunder or for any losses that may be sustained in   
the purchase, holding or sale of any security by the Fund.                      

        (b) Notwithstanding the foregoing, the Manager agrees to reimburse the
Fund for any and all costs, expenses, and counsel and Directors' fees reasonably
incurred by the Company in the preparation, printing and distribution of proxy  
statements, amendments to its Registration Statement, the holding of meetings of
its shareholders or Directors, the conduct of factual investigations, any legal 
or administrative proceedings (including any applications for exemptions or     
determinations by the Securities and Exchange Commission) which the Fund incurs 
as a result of action or inaction of the Manager or any of its shareholders     
where the action or inaction necessitating such expenditures (i) is directly or 
indirectly related to any transactions or proposed transaction in the shares or 
control of the Manager or its affiliates (or litigation related to any pending  
or proposed future transaction in such shares or control) which shall have been 
undertaken without the prior, express approval of the Company's Board of        
Directors; or (ii) is within the sole control of the Manager or any of its      
affiliates or any of their officers, directors, employees or shareholders. The  
Manager shall not be obligated pursuant to the provisions of this Subparagraph  
11(b), to reimburse the Fund for any expenditures related to the institution of 
an administrative proceeding or civil litigation by the Fund or by a Fund       
shareholder seeking to recover all or a portion of the proceeds derived by any  
shareholder of the Manager or any of its affiliates from the sale of his shares 
of the Manager, or similar matters. So long as this Agreement is in effect, the 
Manager shall pay to the Fund the amount due for expenses subject to this       
Subparagraph 11(b) within thirty (30) days after a bill or statement has been   

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received by the Fund therefor. This provision shall not be deemed to be a waiver
of any claim the Fund may have or may assert against the Manager or others or   
costs, expenses, or damages heretofore incurred by the Fund for costs, expenses,
or damages the Fund may hereafter incur which are not reimbursable to it        
hereunder.                                                                      

      (c) No provision of this Agreement shall be construed to protect any
director or officer of the Fund, or of the Manager, from liability in violation 
of Section 17(h) and (i) of the Investment Company Act of 1940, as amended.     

    12. This Agreement shall become effective on the date first written above,
subject to the condition that the Company's Board of Directors, including a     
majority of those Directors who are not interested persons (as such term is     
defined in the 1940 Act) of the Manager, and the shareholders of the Fund, shall
have approved this Agreement. Unless terminated as provided herein, the         
Agreement shall continue in full force and effect for two (2) years from the    
effective date of this Agreement, and shall continue from year to year          
thereafter so long as such continuation is approved at least annually by (i) the
Board of Directors of the Company or by the vote of a majority of the           
outstanding voting securities of the Fund, and (ii) the vote of a majority of   
the directors of the Company who are not parties to this Agreement or interested
persons thereof, cast in person at a meeting called for the purpose of voting on
such approval.                                                                  

  13. This Agreement may be terminated at any time, without payment of any
penalty, by the Board of Directors of the Company or by vote of a majority of   
the outstanding voting securities of the Company, upon sixty (60) days written  
notice to the Manager, and by the Manager upon sixty (60) days written notice to
the Fund.                                                                       

14. This Agreement shall terminate automatically in the event of any  
transfer or assignment thereof, as defined in the Investment Company Act of     
1940, as amended.                                                               

    15. This Agreement may not be transferred, assigned, sold or in any manner
hypothecated or pledged without the affirmative vote or written consent of the  
holders of a majority of the outstanding voting securities of the Fund.         

   16. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule, or otherwise, the remainder of this Agreement    
shall not be affected thereby.                                                  

  17. The term "majority of the outstanding voting securities" of the Fund
shall have the meaning as set forth in the Investment Company Act of 1940, as   
amended.                                                                        

     18. In consideration of the execution of this Agreement, the Manager hereby
grants to the Company and the Fund the right to use the name "Pilgrim" as part  
of their corporate names. The Company and Fund agree that in the event this     
Agreement is terminated, the Company and the Fund shall immediately take such   
steps as are necessary to amend their corporate names to remove the reference to
"Pilgrim".                                                                      

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         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested by their duly authorized officers, on the day and    
year first above written.                                                       

                                PILGRIM INVESTMENT FUNDS, INC.
                                    (on behalf of its Pilgrim MagnaCap
              Fund Series)

Attest:                                  By:                                    
        -----------------------------        -----------------------------------

Title:                                   Title:                                 
       ------------------------------           --------------------------------

                           PILGRIM INVESTMENTS, INC.

Attest:                                  By:                                    
        -----------------------------        -----------------------------------

Title:                                   Title:                                 
       ------------------------------           --------------------------------

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APPENDIX G

 FORM OF INVESTMENT MANAGEMENT AGREEMENT FOR PILGRIM MAYFLOWER TRUST
 (PILGRIM EMERGING MARKETS VALUE, GROWTH + VALUE, HIGH TOTAL RETURN,
HIGH TOTAL RETURN II, INTERNATIONAL VALUE AND RESEARCH ENHANCED INDEX FUNDS)

 INVESTMENT MANAGEMENT AGREEMENT

  AGREEMENT made the ______ day of _________, 2000, by and between
PILGRIM MAYFLOWER TRUST, a Massachusetts business trust, (the "Trust") and      
PILGRIM INVESTMENTS, INC., a Delaware business corporation (the "Adviser").     

         The Trust is an open-end management investment company registered under
the Investment Company Act of 1940, as amended (the "Investment Company Act"),  
consisting of the series named on schedule 1 hereto (each "Fund" and            
collectively the "Funds"), as such schedule may be revised from time to time.   

       The Trust desires to retain the Adviser to render investment advisory
services to the Funds, and the Adviser is willing to render such investment     
advisory on the terms set forth below.                                          

The parties agree as follows:                                 

  1. The Trust hereby appoints the Adviser to act as investment adviser to
the Trust and the Funds for the period and on the terms set forth in this       
Agreement. The Adviser accepts such appointment and agrees to render the        
services described, for the compensation provided, in this Agreement.           

     2. Subject to the supervision of the Trustees, the Adviser shall manage the
investment operations of the Funds and the composition of each Fund's portfolio,
including the purchase and retention and disposition of portfolio securities, in
accordance with each Fund's investment objectives, policies and restrictions as 
stated in the Trust's Prospectus and Statement of Additional Information (as    
defined below) subject to the following understandings:                         

      (a) The Adviser shall provide supervision of each Fund's investments
and determine from time to time what investments will be made, held or disposed 
of or what securities will be purchased and retained, sold or loaned by each    
Fund, and what portion of the assets will be invested or held uninvested as     
cash.                                                                           

       (b) The Adviser shall use its best judgment in the performance of its
duties under this Agreement.                                                    

         (c) The Adviser, in the performance of its duties and obligations under
this Agreement, shall (i) act in conformity with the Declaration of Trust, By-  
Laws, Prospectus and Statement of Additional Information of the Trust, with the 
instructions and directions of the Trustees and (ii) conform to and comply with 
the requirements of the Investment Company Act and all other applicable federal 
and state laws and regulations.                                                 

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       (d) (i) The Adviser shall determine the securities to be purchased or
sold by each Fund and will place orders pursuant to its determinations with or  
through such persons, brokers or dealers to carry out the policy with respect to
brokerage as set forth in the Trust's Prospectus and Statement of Additional    
Information or as the Trustees may direct from time to time. In providing each  
Fund with investment supervision, the Adviser will give primary consideration to
securing the most favorable price and efficient execution. The Adviser may also 
consider the financial responsibility, research and investment information and  
other services and research related products provided by brokers or dealers who 
may effect or be a party to any such transactions or other transactions to which
other clients of the Adviser may be a party. The Funds recognize that the       
services and research related products provided by such brokers may be useful to
the Adviser in connection with its services to other clients.                   

           (ii) When the Adviser deems the purchase or sale of a security to
be in the best interest of a Fund as well as other clients, the Adviser, to the 
extent permitted by applicable laws and regulations, may aggregate the          
securities to be sold or purchased in order to obtain the most favorable price  
or lower brokerage commissions and efficient execution. In such event,          
allocation of the securities so purchased or sold, as well as the expenses      
incurred in the transactions, will be made by the Adviser in the manner it      
considers to be the most equitable and consistent with its fiduciary obligations
to each Fund and to such other clients.                                         

      (e) The Adviser shall maintain, or cause to be maintained, all books
and records required under the Investment Company Act to the extent not         
maintained by the custodian of the Trust. The Adviser shall render to the       
Trustees such periodic and special reports as the Trustees may reasonably       
request.                                                                        

      (f) The Adviser shall provide the Trust's custodian on each business
day information relating to all transactions concerning each Fund's assets.     

        (g) The investment management services of the Adviser to the Trust and
to each Fund under this Agreement are not to be deemed exclusive, and the       
Adviser shall be free to render similar services to others.                     

   3. The Trust has delivered to the Adviser copies of each of the following
documents and will deliver to it all future amendments and supplements, if any: 

      (a) Declaration of Trust, as amended, as filed with the Secretary of
the Commonwealth of Massachusetts (such Declaration of Trust, as in effect on   
the date hereof and as further amended from time to time, is herein called the  
"Declaration of Trust");                                                        

         (b) By-Laws of the Trust (such By-Laws, as in effect on the date hereof
and as amended from time to time, are herein called the "By-Laws");             

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       (c) Certified resolutions of the Trustees authorizing the appointment
of the Adviser and approving this Agreement on behalf of the Trust and each     
Fund;                                                                           

      (d) Registration Statement on Form N-lA under the Investment Company
Act and the Securities Act of 1933, as amended from time to time (the           
"Registration Statement"), as filed with the Securities and Exchange Commission 
(the "Commission"), relating to the Trust and shares of beneficial interest of  
each Fund and all amendments thereto.                                           

    (e) Notification of Registration of the Trust under the Investment
Company Act on Form N-8A as filed with the Commission and all amendments        
thereto;                                                                        

        (f) Prospectus and Statement of Additional Information included in the
Registration Statement, as amended from time to time. All references to this    
Agreement, the Prospectus and the Statement of Additional Information shall be  
to such documents as most recently amended or supplemented and in effect.       

  4. The Adviser shall authorize and permit any of its directors, officers
and employees who may be elected as Trustees or officers of the Trust and/ or   
the Funds to serve in the capacities in which they are elected. All services to 
be furnished by the Adviser under this Agreement may be furnished through such  
directors, officers or employees of the Adviser.                                

 5. The Adviser agrees that all records which it maintains for the Trust
and/or the Funds are property of the Trust and/or the Funds. The Adviser will   
surrender promptly to the Trust and/or the Funds any such records upon either   
the Trust's or the Fund's request. The Adviser further agrees to preserve such  
records for the periods prescribed in Rule 3la-2 of the Commission under the    
Investment Company Act.                                                         

    6.  (i) In connection with the services rendered by the Adviser under this
Agreement, the Adviser will pay all of the following expenses:                  

        (a) the salaries and expenses of all personnel of the Trust, the Funds
and the Adviser required to perform the services to be provided pursuant to this
Agreement, except the fees of the Trustees who are not affiliated persons of the
Adviser, and                                                                    

        (b) all expenses incurred by the Adviser, the Trust or by the Funds in
connection the performance of the Adviser's responsibilities hereunder, other   
than brokers' commissions and any issue or transfer taxes chargeable to each    
respective Fund in connection with its securities transactions.                 

  7. In the event the expenses of each Fund for any fiscal year (including
the fees payable to the Adviser but excluding interest, taxes, brokerage        
commissions, distribution fees and litigation and indemnification expenses and  
other extraordinary expenses not incurred in the ordinary course of the Fund's  
business) exceed the lowest applicable annual expense limitation established    
pursuant to the statutes or regulations of any jurisdictions in which shares of 
each respective Fund are then qualified for offer and sale, the compensation due
the Adviser will be reduced by the amount of such excess, or, if such reduction 

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exceeds the compensation payable to the Adviser, the Adviser will pay each Fund,
whose expenses exceed such expense limitation, the amount of such reduction     
which exceeds the amount of such compensation.                                  

8. For the services provided and the expenses assumed pursuant to this
Agreement, each Fund will pay to the Adviser as compensation a at the rate set  
forth opposite each Funds' name on Schedule 1 hereto, such fee to be accrued    
daily and paid monthly.                                                         

9. The Adviser may rely on information reasonably believed by it to be
accurate and reliable. Neither the Adviser nor its officers, directors,         
employees or agents or controlling persons shall be liable for any error or     
judgment or mistake of law, or for any loss suffered by the Trust and/or a Fund 
in connection with or arising out of the matters to which this Agreement        
relates, except a loss resulting from willful misfeasance, bad faith or gross   
negligence on the part of the Adviser in the performance of its duties or from  
reckless disregard by it of its obligations and duties under this Agreement.    

     10. As to each Fund, this Agreement shall continue until the date set forth
opposite such Fund's name on Schedule 1 hereto (the "Reapproval Date") and shall
continue automatically for successive annual periods ending on the day of each  
year set forth opposite the Fund's name on Schedule 1 hereto (the "Reapproval   
Day"), provided that such continuance is specifically approved at least annually
by the affirmative vote of (i) a majority of the Trustees of the Trust acting   
separately on behalf of each Fund, who are not interested persons of the Trust, 
cast in person at a meeting called for the purpose of voting on such approval,  
and (ii) a majority of the Trustees of the Trust or the holders of a majority of
the outstanding voting securities of each respective Fund; provided however,    
that this Agreement may be terminated by the Trust, on behalf of a Fund at any  
time, without the payment of any penalty, by the Trustees acting on behalf of a 
Fund or by vote of a majority of the outstanding voting securities (as defined  
in the Investment Company Act) of a Fund, or by the Adviser 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 party. This Agreement shall terminate automatically 
in the event of its assignment provided that a transaction which does not, under
the Investment Company Act, result in a change of actual control or management  
of the Adviser's business shall not be deemed to be an assignment for the       
purposes of this Agreement.                                                     

11. This agreement shall terminate automatically in the event of its  
assignment; the term "assignment" for this purpose shall have the meaning       
defined in Section 2(a)(4) of the Investment Company Act of 1940.               

12. Nothing in this Agreement shall limit or restrict the right of any
director, officer or employee of the Adviser who may also be a Trustee, officer 
or employee of the Trust and/or the Funds to engage in any other business or to 
devote his time and attention in part to the management or other aspect of any  
business, whether of a similar or dissimilar nature, nor limit or restrict the  
right of the Adviser to engage in any other business or to render services of   
any kind to any other person or entity.                                         

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  13. During the term of this Agreement, the Trust and each Fund agrees to
furnish the Adviser at its principal office all prospectuses, proxy statements, 
reports to shareholders, sales literature, or other material prepared for       
distribution to shareholders of each Fund or the public, which refer in any way 
to the Adviser, prior to use thereof and not to use such material if the Adviser
reasonably objects in writing within five business days (or such other time as  
may be mutually agreed) after receipt. In the event of termination of the       
Agreement, the Trust and/or each Fund will continue to furnish to the Adviser   
such other information relating to the business affairs of the Trust and/or each
Fund as the Adviser at any time, or from time to time, reasonably requests in   
order to discharge its obligations hereunder.                                   

14. This Agreement may be amended by mutual agreement, but only after 
authorization of such amendments by the affirmative vote of (i) the holders of  
the majority of the outstanding voting securities of each Fund and ( ii) a      
majority of the members of the Trustees who are not interested persons of the   
Trust or the Adviser, cast in person at a meeting called for the purpose of     
voting on such approval.                                                        

     15. The Adviser, the Trust and the Funds each agree that the name "Pilgrim"
is proprietary to, and a property right of, the Adviser. The Trust and the Funds
agree and consent that (i) each will only use the name "Pilgrim" as part of its 
name and for no other purpose, (ii) each will not purport to grant any third    
party the right to use the name "Pilgrim" and (iii) upon the termination of this
Agreement, the Trust and the Funds shall, upon the request of the Adviser, cease
to use the name "Pilgrim", and shall use its best efforts to cause its officers,
trustees and shareholders to take any and all actions which the Adviser may     
request to effect the foregoing.                                                

 16. Any notice or other communications required to be given pursuant to
this Agreement shall be deemed to be given if delivered or mailed by registered 
mail, postage paid, (1) to the Adviser at 40 N. Central Avenue, Suite 1200,     
Phoenix, Arizona 85004, Attention: Secretary; or (2) to the Trust and/or the    
Funds, 40 N. Central Avenue, Suite 1200, Phoenix, Arizona 85004, Attention:     
Secretary.                                                                      

  17. This Agreement shall be governed by and construed in accordance with
the laws of the State of Arizona. The terms "interested person", "assignment",  
and "vote of the majority of the outstanding securities" shall have the meaning 
set forth in the Investment Company Act.                                        

    The Declaration of Trust, establishing the Trust, dated August 18,
1993, a copy of which, together with all amendments thereto (the "Declaration"),
is on file in the office of the Secretary of the Commonwealth of Massachusetts, 
provides that the name "Pilgrim Mayflower Trust" refers to the Trustees under   
the Declaration collectively as trustees, but not individually or personally;   
and no Trustee, shareholder, officer, employee or agent of the Trust and/or the 
Funds may be held to any personal liability, nor may resort be had to their     
private property for the satisfaction of any obligation or claim or otherwise in
connection with the affairs of the Trust, but the Trust property only shall be  
liable..                                                                        

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       IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first     
written above.                                                                  

                       PILGRIM MAYFLOWER TRUST

   By:
                                           -------------------------------------

                         PILGRIM INVESTMENTS, INC.

   By:
                                           -------------------------------------

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SCHEDULE 1

                                                        [Enlarge/Download Table]

                         Annual Fee as a                                              
                        Percentage of Avg.           Last Approved/                   
Name of Fund            Daily Net Assets           Continued by Board  Re-approval Day
------------            ----------------           ------------------  ---------------
                                                                                      
Pilgrim High Total     0.75 of 1% on first $250      June 13, 2000     ________, 2002 
Return Fund            million; 0.70% on the next                                     
                       $250 million; 0.65% on the                                     
                       next $250 million; 0.60%                                       
                       on the next $250 million;                                      
                       and 0.55% on assets in                                         
                       excess of $1 billion.                                          

Pilgrim Growth +                                                                      
Value Fund                      1.00%                June 13, 2000     ________, 2002 

Pilgrim High Total                                                                    
Return Fund II                  0.75%                June 13, 2000     ________, 2002 

Pilgrim International                                                                 
Value Fund                      1.00%                June 13, 2000     ________, 2002 

Pilgrim Emerging                                                                      
Markets Value Fund              1.00%                June 13, 2000     ________, 2002 

Pilgrim Research                                                                      
Enhanced Index Fund             0.70%                June 13, 2000     ________, 2002 

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APPENDIX H

FORM OF INVESTMENT MANAGEMENT AGREEMENT FOR PILGRIM MUTUAL FUNDS
(PILGRIM BALANCED, CONVERTIBLE, EMERGING COUNTRIES, HIGH YIELD II, INTERNATIONAL
 CORE GROWTH, INTERNATIONAL SMALLCAP GROWTH, LARGECAP GROWTH, MIDCAP GROWTH,
 MONEY MARKET, SMALLCAP GROWTH, STRATEGIC INCOME AND WORLDWIDE GROWTH FUNDS)

 INVESTMENT MANAGEMENT AGREEMENT

         AGREEMENT made this ____ day of ____, 2000 between Pilgrim Mutual Funds
(the "Fund"), a Delaware business trust and Pilgrim Investments, Inc. (the      
"Manager"), a Delaware corporation (the "Agreement").                           

WHEREAS, the Fund is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940      
Act");                                                                          

        WHEREAS, the Fund is authorized to issue shares of beneficial interest
in separate series with each such series representing interests in a separate   
portfolio of securities and other assets;                                       

        WHEREAS, the Fund may offer shares of additional series in the future,
and currently intends to offer shares of additional series in the future;       

  WHEREAS, the Fund desires to avail itself of the services of the
Manager for the provision of advisory and management services for the Fund; and 

      WHEREAS, the Manager is willing to render such services to the Fund;

    NOW, THEREFORE, in consideration of the premises, the promises and
mutual covenants herein contained, it is agreed between the parties as follows: 

1. APPOINTMENT. The Fund hereby appoints the Manager, subject to the  
direction of the Board of Trustees, for the period and on the terms set forth in
this Agreement, to provide advisory, management, and other services, as         
described herein, with respect to each series of the Fund (individually and     
collectively referred to herein as "Series"). The Manager accepts such          
appointment and agrees to render the services herein set forth for the          
compensation herein provided.                                                   

         In the event the Fund establishes and designates additional series with
respect to which it desires to retain the Manager to render advisory services   
hereunder, it shall notify the Manager in writing. If the Manager is willing to 
render such services, it shall notify the Fund in writing, whereupon such       
additional series shall become a Series hereunder.                              

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    2. SERVICES OF THE MANAGER. The Manager represents and warrants that it is
registered as an investment adviser under the Investment Advisers Act of 1940   
and will maintain such registration for so long as required by applicable law.  
Subject to the general supervision of the Board of Trustees of the Fund, the    
Manager shall provide the following advisory, management, and other services    
with respect to the Series:                                                     

      (a) Provide general, overall advice and guidance with respect to the
Series and provide advice and guidance to the Fund's Trustees, and oversee the  
management of the investments of the Series and the composition of each Series' 
portfolio of securities and investments, including cash, and the purchase,      
retention and disposition thereof, in accordance with each Series' investment   
objective or objectives and policies as stated in the Fund's current            
registration statement, which management may be provided by others selected by  
the Manager and approved by the Board of Trustees as provided below or directly 
by the Manager as provided in Section 3 of this Agreement;                      

     (b) In the event that the Manager wishes to select others to render
investment management services, the Manager shall analyze, select and recommend 
for consideration and approval by the Fund's Board of Trustees investment       
advisory firms (however organized) to provide investment advice to one or more  
of the Series, and, at the expense of the Manager, engage (which engagement may 
also be by the Fund) such investment advisory firms to render investment advice 
and manage the investments of such Series and the composition of each such      
Series' portfolio of securities and investments, including cash, and the        
purchase, retention and disposition thereof, in accordance with the Series'     
investment objective or objectives and policies as stated in the Fund's current 
registration statement (any such firms approved by the Board of Trustees and    
engaged by the Fund and/or the Manager are referred to herein as "Portfolio     
Managers");                                                                     

        (c) Periodically monitor and evaluate the performance of the Portfolio
Managers with respect to the investment objectives and policies of the Series;  

       (d) Monitor the Portfolio Managers for compliance with the investment
objective or objectives, policies and restrictions of each Series, the 1940 Act,
Subchapter M of the Internal Revenue Code, and if applicable, regulations under 
such provisions, and other applicable law;                                      

    (e) If appropriate, analyze and recommend for consideration by the
Fund's Board of Trustees termination of a contract with a Portfolio Manager     
under which the Portfolio Manager provides investment advisory services to one  
or more of the Series;                                                          

         (f) Supervise Portfolio Managers with respect to the services that such
Portfolio Managers provide under respective sub-advisory agreements             
("Sub-Advisory Agreements");                                                    

   (g) Render to the Board of Trustees of the Fund such periodic and
special reports as the Board may reasonably request; and                        

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        (h) Make available its officers and employees to the Board of Trustees
and officers of the Fund for consultation and discussions regarding the         
administration and management of the Series and services provided to the Fund   
under this Agreement.                                                           

3. INVESTMENT MANAGEMENT AUTHORITY. In the event the Manager wishes to
render investment management services directly to a Series, then with respect to
any such Series, the Manager, subject to the supervision of the Fund's Board of 
Trustees, will provide a continuous investment program for the Series' portfolio
and determine the composition of the assets of the Series' portfolio, including 
determination of the purchase, retention, or sale of the securities, cash, and  
other investments contained in the portfolio. The Manager will provide          
investment research and conduct a continuous program of evaluation, investment, 
sales, and reinvestment of the Series' assets by determining the securities and 
other investments that shall be purchased, entered into, sold, closed, or       
exchanged for the Series, when these transactions should be executed, and what  
portion of the assets of the Series should be held in the various securities and
other investments in which it may invest, and the Manager is hereby authorized  
to execute and perform such services on behalf of the Series. To the extent     
permitted by the investment policies of the Series, the Manager shall make      
decisions for the Series as to foreign currency matters and make determinations 
as to, and execute and perform, foreign currency exchange contracts on behalf of
the Series. The Manager will provide the services under this Agreement in       
accordance with the Series' investment objective or objectives, policies, and   
restrictions as stated in the Fund's Registration Statement filed with the      
Securities and Exchange Commission (the "SEC"), as amended. Furthermore:        

       (a) The Manager will manage the Series so that each will qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code. In
managing the Series in accordance with these requirements, the Manager shall be 
entitled to receive and act upon advice of counsel to the Fund or counsel to the
Manager.                                                                        

  (b) The Manager will conform with the 1940 Act and all rules and
regulations thereunder, all other applicable federal and state laws and         
regulations, with any applicable procedures adopted by the Fund's Board of      
Trustees, and the provisions of the Registration Statement of the Fund under the
Securities Act of 1933 and the 1940 Act, as supplemented or amended.            

   (c) On occasions when the Manager deems the purchase or sale of a
security to be in the best interest of the Series as well as any other          
investment advisory clients, the Manager may, to the extent permitted by        
applicable laws and regulations, but shall not be obligated to, aggregate the   
securities to be so sold or purchased with those of its other clients where such
aggregation is not inconsistent with the policies set forth in the Registration 
Statement. In such event, allocation of the securities so purchased or sold, as 
well as the expenses incurred in the transaction, will be made by the Manager in
a manner that is fair and equitable in the judgment of the Manager in the       
exercise of its fiduciary obligations to the Fund and to such other clients.    

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   (d) In connection with the purchase and sale of securities of the
Series, the Manager will arrange for the transmission to the custodian for the  
Fund on a daily basis, of such confirmation, trade tickets, and other documents 
and information, including, but not limited to, Cusip, Cedel, or other numbers  
that identify securities to be purchased or sold on behalf of the Series, as may
be reasonably necessary to enable the custodian to perform its administrative   
and recordkeeping responsibilities with respect to the Series. With respect to  
portfolio securities to be purchased or sold through the Depository Trust       
Company, the Manager will arrange for the prompt transmission of the            
confirmation of such trades to the Fund's custodian.                            

         (e) The Manager will assist the custodian or portfolio accounting agent
for the Fund in determining, consistent with the procedures and policies stated 
in the Registration Statement for the Fund, the value of any portfolio          
securities or other assets of the Series for which the custodian or portfolio   
accounting agent seeks assistance or review from the Manager.                   

         (f) The Manager will make available to the Fund, promptly upon request,
any of the Series' investment records and ledgers as are necessary to assist the
Fund to comply with requirements of the 1940 Act, as well as other applicable   
laws. The Manager will furnish to regulatory authorities having the requisite   
authority any information or reports in connection with its services which may  
be requested in order to ascertain whether the operations of the Fund are being 
conducted in a manner consistent with applicable laws and regulations.          

       (g) The Manager will regularly report to the Fund's Board of Trustees
on the investment program for the Series and the issuers and securities         
represented in the Series' portfolio, and will furnish the Fund's Board of      
Trustees with respect to the Series such periodic and special reports as the    
Trustees may reasonably request.                                                

       (h) In connection with its responsibilities under this Section 3, the
Manager is responsible for decisions to buy and sell securities and other       
investments for the Series' portfolio, broker-dealer selection, and negotiation 
of brokerage commission rates. The Manager's primary consideration in effecting 
a security transaction will be to obtain the best execution for the Series,     
taking into account the factors specified in the Prospectus and/or Statement of 
Additional Information for the Fund, which include price (including the         
applicable brokerage commission or dollar spread), the size of the order, the   
nature of the market for the security, the timing of the transaction, the       
reputation, experience and financial stability of the broker-dealer involved,   
the quality of the service, the difficulty of execution, execution capabilities 
and operational facilities of the firms involved, and the firm's risk in        
positioning a block of securities. Accordingly, the price to the Series in any  
transaction may be less favorable than that available from another broker-dealer
if the difference is reasonably justified, in the judgment of the Manager in the
exercise of its fiduciary obligations to the Fund, by other aspects of the      
portfolio execution services offered. Subject to such policies as the Board of  
Trustees may determine and consistent with Section 28(e) of the Securities      
Exchange Act of 1934, as amended, the Manager shall not be deemed to have acted 
unlawfully or to have breached any duty created by this Agreement or otherwise  
solely by reason of its having caused the Series to pay a broker-dealer for     
effecting a portfolio investment transaction in excess of the amount of         
commission another broker-dealer would have charged for effecting that          

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transaction, if the Manager determines in good faith that such amount of        
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker-dealer, viewed in terms of either that         
particular transaction or the Manager's overall responsibilities with respect to
the Series and to its other clients as to which it exercises investment         
discretion. To the extent consistent with these standards and in accordance with
Section 11(a) of the Securities Exchange Act of 1934 and Rule 11a2-2(T)         
thereunder, the Manager is further authorized to allocate the orders placed by  
it on behalf of the Series to the Manager if it is registered as a broker-dealer
with the SEC, to an affiliated broker-dealer, or to such brokers and dealers who
also provide research or statistical material or other services to the Series,  
the Manager or an affiliate of the Manager. Such allocation shall be in such    
amounts and proportions as the Manager shall determine consistent with the above
standards, and the Manager will report on said allocation regularly to the Board
of Trustees of the Fund indicating the broker-dealers to which such allocations 
have been made and the basis therefor.                                          

   4. CONFORMITY WITH APPLICABLE LAW. The Manager, in the performance of its
duties and obligations under this Agreement, shall act in conformity with the   
Registration Statement of the Fund and with the instructions and directions of  
the Board of Trustees of the Fund and will conform to, and comply with, the     
requirements of the 1940 Act and all other applicable federal and state laws and
regulations.                                                                    

5. EXCLUSIVITY. The services of the Manager to the Fund under this    
Agreement are not to be deemed exclusive, and the Manager, or any affiliate     
thereof, shall be free to render similar services to other investment companies 
and other clients (whether or not their investment objectives and policies are  
similar to those of any of the Series) and to engage in other activities, so    
long as its services hereunder are not impaired thereby.                        

  6. DOCUMENTS. The Fund has delivered properly certified or authenticated
copies of each of the following documents to the Manager and will deliver to it 
all future amendments and supplements thereto, if any:                          

(a) certified resolution of the Board of Trustees of the Fund 
authorizing the appointment of the Manager and approving the form of this       
Agreement;                                                                      

         (b) the Registration Statement as filed with the SEC and any amendments
thereto; and                                                                    

      (c) exhibits, powers of attorney, certificates and any and all other
documents relating to or filed in connection with the Registration Statement    
described above.                                                                

    7. RECORDS. The Manager agrees to maintain and to preserve for the periods
prescribed under the 1940 Act any such records as are required to be maintained 
by the Manager with respect to the Series by the 1940 Act. The Manager further  
agrees that all records which it maintains for each Series are the property of  
the Fund and it will promptly surrender any of such records upon request.       

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  8. EXPENSES. During the term of this Agreement, the Manager will pay all
expenses incurred by it in connection with its activities under this Agreement, 
except such expenses as are assumed by the Fund under this Agreement and such   
expenses as are assumed by a Portfolio Manager under its Sub-Advisory Agreement.
The Manager further agrees to pay all fees payable to the Portfolio Managers,   
executive salaries and expenses of the Trustees of the Fund who are employees of
the Manager or its affiliates, and office rent of the Fund. The Fund shall be   
responsible for all of the other expenses of its operations, including, without 
limitation, the management fee payable hereunder; brokerage commissions;        
interest; legal fees and expenses of attorneys; fees of auditors, transfer      
agents and dividend disbursing agents, custodians and shareholder servicing     
agents; the expense of obtaining quotations for calculating each Fund's net     
asset value; taxes, if any, and the preparation of the Fund's tax returns; cost 
of stock certificates and any other expenses (including clerical expenses) of   
issue, sale, repurchase or redemption of shares; expenses of registering and    
qualifying shares of the Fund under federal and state laws and regulations      
(including the salary of employees of the Manager engaged in the registering and
qualifying of shares of the Fund under federal and state laws and regulations or
a pro-rata portion of the salary of employees to the extent so engaged);        
salaries of personnel involved in placing orders for the execution of the Fund's
portfolio transactions; expenses of printing and distributing reports, notices  
and proxy materials to existing shareholders; expenses of printing and filing   
reports and other documents filed with governmental agencies; expenses in       
connection with shareholder and trustee meetings; expenses of printing and      
distributing prospectuses and statements of additional information to existing  
shareholders; fees and expenses of Trustees of the Fund who are not employees of
the Manager or any Portfolio Manager, or their affiliates; trade association    
dues; insurance premiums; extraordinary expenses such as litigation expenses. To
the extent the Manager incurs any costs or performs any services which are an   
obligation of the Fund, as set forth herein, the Fund shall promptly reimburse  
the Manager for such costs and expenses. To the extent the services for which   
the Fund is obligated to pay are performed by the Manager, the Manager shall be 
entitled to recover from the Fund only to the extent of its costs for such      
services.                                                                       

  9. COMPENSATION. For the services provided by the Manager to each Series
pursuant to this Agreement, the Fund will pay to the Manager an annual fee equal
to the amount specified for such Series in Schedule A hereto, payable monthly in
arrears. Payment of the above fees shall be in addition to any amount paid to   
the Manager for the salary of its employees for performing services which are an
obligation of the Fund as provided in Section 8. The fee will be appropriately  
pro-rated to reflect any portion of a calendar month that this Agreement is not 
in effect between us.                                                           

10. LIABILITY OF THE MANAGER. The Manager may rely on information     
reasonably believed by it to be accurate and reliable. Except as may otherwise  
be required by the 1940 Act or the rules thereunder, neither the Manager nor its
stockholders, officers, directors, employees, or agents shall be subject to, and
the Fund will indemnify such persons from and against, any liability for, or any
damages, expenses, or losses incurred in connection with, any act or omission   
connected with or arising out of any services rendered under this Agreement,    
except by reason of willful misfeasance, bad faith, or gross negligence in the  
performance of the Manager's duties, or by reason of reckless disregard of the  

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Manager's obligations and duties under this Agreement. Except as may otherwise  
be required by the 1940 Act or the rules thereunder, neither the Manager nor its
stockholders, officers, directors, employees, or agents shall be subject to, and
the Fund will indemnify such persons from and against, any liability for, or any
damages, expenses, or losses incurred in connection with, any act or omission by
a Portfolio Manager or any of the Portfolio Manager's stockholders or partners, 
officers, directors, employees, or agents connected with or arising out of any  
services rendered under a Sub-Advisory Agreement, except by reason of willful   
misfeasance, bad faith, or gross negligence in the performance of the Manager's 
duties under this Agreement, or by reason of reckless disregard of the Manager's
obligations and duties under this Agreement. No trustee, officer, employee or   
agent of the Fund shall be subject to any personal liability whatsoever, in his 
or her official capacity, to any person, including the Portfolio Manager, other 
than to the Fund or its shareholders, in connection with Fund property or the   
affairs of the Fund, save only that arising from his or her bad faith, willful  
misfeasance, gross negligence or reckless disregard of his or her duty to such  
person; and all such persons shall look solely to the Fund property for         
satisfaction of claims of any nature against a trustee, officer, employee or    
agent of the Fund arising in connection with the affairs of the Fund. Moreover, 
the debts, liabilities, obligations and expenses incurred, contracted for or    
otherwise existing with respect to a Series shall be enforceable against the    
assets and property of that Series only, and not against the assets or property 
of any other series of the Fund.                                                

    11. CONTINUATION AND TERMINATION. This Agreement shall become effective on
the date first written above, subject to the condition that the Fund's Board of 
Trustees, including a majority of those Trustees who are not interested persons 
(as such term is defined in the 1940 Act) of the Manager, and the shareholders  
of each Series, shall have approved this Agreement. Unless terminated as        
provided herein, the Agreement shall continue in full force and effect for two  
(2) years from the effective date of this Agreement, and shall continue from    
year to year thereafter with respect to each Series so long as such continuance 
is specifically approved at least annually (i) by the vote of a majority of the 
Board of Trustees of the Fund, or (ii) by vote of a majority of the outstanding 
voting shares of the Series (as defined in the 1940 Act), and provided          
continuance is also approved by the vote of a majority of the Board of Trustees 
of the Fund who are not parties to this Agreement or "interested persons" (as   
defined in the 1940 Act) of the Fund or the Manager, cast in person at a meeting
called for the purpose of voting on such approval. This Agreement may not be    
amended in any material respect without a majority vote of the outstanding      
voting shares (as defined in the 1940 Act).                                     

         However, any approval of this Agreement by the holders of a majority of
the outstanding shares (as defined in the 1940 Act) of a Series shall be        
effective to continue this Agreement with respect to such Series notwithstanding
(i) that this Agreement has not been approved by the holders of a majority of   
the outstanding shares of any other Series or (ii) that this Agreement has not  
been approved by the vote of a majority of the outstanding shares of the Fund,  
unless such approval shall be required by any other applicable law or otherwise.
This Agreement may be terminated by the Fund at any time, without the payment of
any penalty, by vote of a majority of the Board of Trustees of the Fund or by a 
vote of a majority of the outstanding voting shares of the Fund, or with respect
to a Series, by vote of a majority of the outstanding voting shares of such     

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Series, on sixty (60) days' written notice to the Manager, or by the Manager at 
any time, without the payment of any penalty, on sixty (60) days' written notice
to the Fund. This Agreement will automatically and immediately terminate in the 
event of its "assignment" (as described in the 1940 Act).                       

     12. USE OF NAME. It is understood that the name "Pilgrim Investments, Inc."
or any derivative thereof (including the name "Pilgrim") or logo associated with
that name is the valuable property of the Manager and its affiliates, and that  
the Fund and/or the Series have the right to use such name (or derivative or    
logo) only so long as this Agreement shall continue with respect to such Fund   
and/or Series. Upon termination of this Agreement, the Fund (or Series) shall   
forthwith cease to use such name (or derivative or logo) and, in the case of the
Fund, shall promptly amend its Declaration of Trust to change its name (if such 
name is included therein).                                                      

13. COUNTERPARTS. This Agreement may be executed in one or more       
counterparts, each of which shall be deemed to be an original.                  

14. Applicable Law.                                                   

  (a) This Agreement shall be governed by the laws of the State of
Arizona, provided that nothing herein shall be construed in a manner            
inconsistent with the 1940 Act, the Investment Advisers Act of 1940, or any     
rules or order of the SEC thereunder.                                           

         (b) If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of this Agreement   
shall not be affected thereby and, to this extent, the provisions of this       
Agreement shall be deemed to be severable.                                      

      (c) The captions of this Agreement are included for convenience only
and in no way define or limit any of the provisions hereof or otherwise affect  
their construction or effect.                                                   

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       IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first     
above written.                                                                  

                    PILGRIM MUTUAL FUNDS

   By:
                                           -------------------------------------

                                        ----------------------------------------
     Title

                         PILGRIM INVESTMENTS, INC.

   By:
                                           -------------------------------------

                                        ----------------------------------------
     Title

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Schedule A

SERIES                        ANNUAL INVESTMENT MANAGEMENT FEE                  

Pilgrim SmallCap              1.00% of the Series' average net assets           
Growth Fund                                                                     

Pilgrim MidCap                0.75% of the first $500 million of the Series'    
Growth Fund                   average net assets, 0.67% of the next $500 million
                           of average net assets, and 0.65% of the average
              net assets in excess of $1 billion

Pilgrim Large Cap             0.75% of the first $500 million of the Series'    
Growth Fund                   average net assets, 0.675% of the next $500       
                           million of average net assets, and 0.65% of the
                      average net assets in excess of $1 billion

Pilgrim Convertible Fund      0.75% of the first $500 million of the Series'    
                       average net assets, 0.675% of the next $500
                           million of average net assets, and 0.65% of the
                      average net assets in excess of $1 billion

Pilgrim Balanced              0.75% of the first $500 million of the Series'    
Growth Fund                   average net assets, 0.675% of the next $500       
                           million of average net assets, and 0.65% of the
                      average net assets in excess of $1 billion

Pilgrim High Quality          0.45% of the first $500 million of the Series'    
Bond Fund                     average net assets, 0.40% of the next $250        
                           million of average net assets, and 0.35% of the
                        average net assets in excess of $750 million

Pilgrim Emerging              1.25% of the Series' average net assets           
Countries Fund                                                                  

Pilgrim Worldwide             1.00% of the first $500 million of the Series'    
Growth Fund                   average net assets, 0.90% of the next $500        
                           million of average net assets, and 0.85% of the
                      average net assets in excess of $1 billion

Pilgrim International         $500 million of the 1.00% of the first Series'    
Small Cap Growth Fund         average net assets, 0.90% of the next $500        
                           million of average net assets, and 0.85% of the
                      average net assets in excess of $1 billion

Pilgrim International         1.00% of the first $500 million of the Series'    
Core Growth Fund              average net assets, 0.90% of the next $500        
                           million of average net assets, and 0.85% of the
                      average net assets in excess of $1 billion

Pilgrim High Yield Fund II    0.60% of the Series' average net assets           

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APPENDIX I

 SUB-ADVISORY AGREEMENT WITH BRANDES INVESTMENT PARTNERS, L.P.
 (PILGRIM EMERGING MARKETS VALUE FUND)

SUB-ADVISORY AGREEMENT

         AGREEMENT made this _____ day of September, 2000 by and between Pilgrim
Investments, Inc., a Delaware Corporation (hereinafter the "Adviser"),          
investment adviser for the Pilgrim Emerging Markets Value Fund (hereinafter the 
"Fund"), a series of the Pilgrim Mayflower Trust (the "Trust"), and Brandes     
Investment Partners, L.P., a California limited partnership (hereinafter the    
"Subadviser").                                                                  

      WHEREAS, the Adviser has been retained by the Trust on behalf of the
Fund to provide investment advisory services to the Fund pursuant to an         
Investment Management Agreement made on ___________, 2000 (the "Investment      
Management Agreement"); and                                                     

        WHEREAS, the Fund's Trustees, including a majority of the Trustees who
are not "interested persons," as defined in the Investment Company Act of 1940, 
as amended (the "1940 Act"), and the Fund's shareholders have approved the      
appointment of the Subadviser to perform certain investment advisory services   
for the Fund pursuant to this Subadvisory Agreement with the Adviser and the    
Subadviser is willing to perform such services for the Fund;                    

      WHEREAS, the Subadviser is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended ("Advisers Act");               

       NOW THEREFORE, in consideration of the promises and mutual convenants
herein contained, it is agreed between the Adviser and the Subadviser as        
follows:                                                                        

1. APPOINTMENT. The Adviser hereby appoints the Subadviser to perform 
advisory services to the Fund for the periods and on the terms set forth in this
Subadvisory Agreement. The Subadviser accepts such appointment and agrees to    
furnish the services herein set forth, for the compensation herein provided.    

     2. DUTIES OF SUBADVISER. The Adviser hereby authorizes Subadviser to manage
the investment and reinvestment of cash and investments comprising those assets 
of the Fund with power on behalf of and in the name of the Fund at Subadviser's 
discretion, subject at all times to the supervision of the Adviser and the      
Trustees of the Fund:                                                           

        (a) to direct the purchase, subscription or other acquisition, and the
sale, redemption, and exchange of investments, subject to the duty to render to 
the Trustees of the Fund and the Adviser written reports of the composition of  
the portfolio of the Fund as often as the Adviser or the Trustees of the Fund   
shall reasonably require;                                                       

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         (b) to make all decisions relating to the manner, method, and timing of
investment transactions, to select brokers, dealers and other intermediaries by 
or through whom such transactions will be effected, and to engage such          
consultants, analysts and experts in connection therewith as may be considered  
necessary or appropriate;                                                       

        (c) to direct banks, brokers or custodians to disburse funds or assets
solely in order to execute investment transactions for the Fund, provided the   
Subadviser shall have no authority to direct the transfer of the Fund's funds or
assets to itself or other affiliated persons and shall have no authority over   
the disbursement (as opposed to investment decisions) of funds or assets nor any
custody of any of the Fund's funds or assets; and                               

      (d) to take all such other actions as may be considered necessary or
appropriate to discharge its duties hereunder; PROVIDED THAT any specific or    
general directions which the Trustees of the Fund or the Adviser may give in    
writing to the Subadviser with regard to any of the foregoing powers shall,     
unless the contrary is expressly stated herein, override the general authority  
given by this provision to the extent that the Trustees of the Fund may, at any 
time and from time to time, direct, either generally or to a limited extent and 
either alone or in concert with the Adviser or the Subadviser (provided that    
such directions would not cause the Subadviser to violate any fiduciary duties  
or any laws with regard to the Subadviser's duties and responsibilities), all or
any of the same as they shall think fit and, in particular, the Adviser shall   
have the right to direct the Subadviser to place trades through brokers and     
other agents of the Adviser's choice, subject to such brokers or agents         
executing such trades on a "best execution basis", i.e. at the best price and/or
with research or other services which render that broker's services the most    
appropriate for the Subadviser's needs, and further that the Subadviser is      
satisfied that the dealing and execution quality of such brokers are            
satisfactory to the Subadviser; and PROVIDED FURTHER that nothing herein shall  
be construed as giving the Subadviser power to manage the aforesaid cash and    
investments in such a manner as would cause the Fund to be considered a "dealer"
in stocks, securities or commodities for U.S. federal income tax purposes.      

The Adviser shall monitor and review the performance of the Subadviser
under this Agreement, including but not limited to the Subadviser's performance 
of the duties delineated in subparagraphs (a)-(d) above.                        

    The Subadviser further agrees that, in performing its duties hereunder, it
will:                                                                           

    (a) comply with the 1940 Act and all rules and regulations thereunder, the
Advisers Act, the Internal Revenue Code of 1986, as amended, (the "Code") and   
all other applicable federal and state laws and regulations, the Prospectus and 
Statement of Additional Information for the Fund, and with any applicable       
procedures adopted by the Trustees in writing and made available to Subadviser; 
(ii) manage the Fund in accordance with the investment requirements for         
regulated investment companies under Subchapter M of the Code and regulations   
issued thereunder, and (iii) direct the placement of orders pursuant to its     
investment determinations for the Fund directly with the issuer, or with any    
broker or dealer, in accordance with applicable policies expressed in the Fund's
Prospectus and/or Statement of Additional Information and in accordance with    
applicable legal requirements;                                                  

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(b) furnish to the Fund whatever non-proprietary reports the Fund may 
reasonably request with respect to the Fund's assets or contemplated            
investments. In addition, the Subadviser will keep the Fund and the Trustees    
informed of developments materially affecting the Fund's portfolio and shall, on
the Subadviser's own initiative, furnish to the Fund from time to time whatever 
information the Subadviser believes appropriate for this purpose;               

  (c) make available to the Fund's administrator, Northstar Administrators
Corporation (the "Administrator"), the Adviser, and the Fund, promptly upon     
their request, such copies of its investment records and ledgers with respect to
the Fund as may be required to assist the Adviser, the Administrator and the    
Fund in their compliance with applicable laws and regulations. The Subadviser   
will furnish the Trustees with such periodic and special reports regarding the  
Fund as they may reasonably request;                                            

(d) immediately notify the Adviser and the Fund in the event that the 
Subadviser or any of its affiliates (i) becomes aware that it is subject to a   
statutory disqualification that prevents the Subadviser from serving as an      
investment adviser pursuant to this Subadvisory Agreement; or (ii) becomes aware
that it is the subject of an administrative proceeding or enforcement action by 
the Securities and Exchange Commission ("SEC") or other regulatory authority.   
The Subadviser further agrees to notify the Fund and the Adviser immediately of 
any material fact known to the Subadviser respecting or relating to the         
Subadviser that is not contained in the Funds Registration Statement, or any    
amendment or supplement thereto, but that is required to be disclosed therein,  
and of any statement contained therein respecting or relating to the Subadviser 
that becomes untrue in any material respect. The Adviser shall likewise         
immediately notify the Subadviser if it becomes aware of any regulatory action  
of the type described in this subparagraph 2(d) respecting or relating to the   
Fund, the Adviser, or any Affiliates of the Adviser.                            

3. ALLOCATION OF CHARGES AND EXPENSES. The Subadviser shall pay all   
expenses associated with the management of its business operations in performing
its responsibilities hereunder, including the cost of its own overhead,         
research, compensation and expenses of its partners, officers and employees, and
other internal operating costs. The Fund shall bear its own overhead and other  
internal operating costs (whether incurred directly or by the Adviser or the    
Subadviser) including, without limitation:                                      

       (a) the costs incurred by the Fund in the preparation and printing of
its Prospectus or any offering literature (including any form of advertisement  
or other solicitation materials calculated to lead to investors subscribing for 
shares);                                                                        

       (b) all fees and expenses on behalf of the Fund to the Transfer Agent
and the Custodian;                                                              

        (c) the reasonable fees and expenses of accountants, auditors, lawyers
and other professional advisors to the Fund;                                    

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 (d) any interest, fee or charge payable on or on account of any
borrowing by the Fund;                                                          

(e) fiscal and governmental charges and duties relating to the
purchase, sale, issue or redemption of shares and increases in authorized share 
capital of the Fund;                                                            

        (f) the fees of any stock exchange or over-the-counter market on which
the shares may from time to time be listed, quoted or dealt in and the expenses 
of obtaining any such listing, quotation or permission to deal;                 

(g) the fees and expenses (if any) payable to Trustees;       

       (h) brokerage, fiscal or governmental charges or duties in respect of
or in connection with the acquisition, holding or disposal of any of the assets 
of the Fund or otherwise in connection with its business;                       

(i) the expenses of publishing details and prices of shares in
newspapers and other publications;                                              

        (j) all expenses incurred in the convening of meetings of shareholders
or in the preparation of agreements or other documents relating to the Fund or  
in relation to the safe custody of the documents of title of any investments;   

(k) all Trustees communication costs; and                     

    (l) all premiums and costs for Fund insurance and blanket fidelity
bonds.                                                                          

 4. COMPENSATION. The Adviser will pay the Subadviser at the end of each
calendar month an advisory fee computed daily at an annual rate equal to fifty  
(50) percent of the management fee that the Fund pays the Adviser.              

5. BOOKS AND RECORDS. The Subadviser agrees to maintain such books and
records with respect to its services to the Fund as are required by Section 31  
under the 1940 Act, and rules adopted thereunder, and by other applicable legal 
provisions, and to preserve such records for the periods and in the manner      
required by applicable laws or regulations. The Subadviser also agrees that     
records it maintains and preserves pursuant to Rules 31a-2 under the 1940 Act   
(excluding trade secrets or intellectual property rights) in connection with its
services hereunder are the property of the Fund and will be surrendered promptly
to the Fund upon its request and the Subadviser further agrees that it will     
furnish to regulatory authorities having the requisite authority any information
or reports in connection with its services hereunder which may be requested in  
order to determine whether the operations of the Fund are being conducted in    
accordance with applicable laws and regulations.                                

6. STANDARD OF CARE AND LIMITATION OF LIABILITY. The Subadviser shall 
exercise its best business judgment and reasonable care in rendering the        
services provided by it under this Subadvisory Agreement. The Subadviser shall  

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not be liable for any error of judgment or mistake of law or for any loss       
suffered by the Fund or the holders of the Fund's shares or by the Adviser in   
connection with the matters to which this Subadvisory Agreement relates,        
provided that nothing in this Subadvisory Agreement shall be deemed to protect  
or purport to protect the Subadviser against liability to the Fund or to holders
of the Fund's shares or to the Adviser to which the Subadviser would otherwise  
be subject by reason of willful misfeasance, bad faith or negligence on its part
in the performance of its duties or by reason of the Subadviser's reckless      
disregard of its obligations and duties under this Subadvisory Agreement. As    
used in this Section 6, the term "Subadviser" shall include any officers,       
directors, employees or other affiliates of the Subadviser performing services  
for the Fund.                                                                   

   7. SERVICES NOT EXCLUSIVE. It is understood that, except as may otherwise
be agreed by the Adviser and the Subadviser, the services of the Subadviser are 
not exclusive. The Subadviser is not required to recommend to the Fund the same 
investments it recommends to its other clients. In connection with purchases or 
sales of portfolio securities for the account of the Fund, neither the          
Subadviser nor any of its partners officers or employees shall act as principal 
or agent or receive any commission. If the Subadviser provides any advice to its
clients concerning the shares of the Fund, the Subadviser shall act solely as   
investment counsel for such clients and not in any way on behalf of the Fund.   

   8. DURATION AND TERMINATION. This Subadvisory Agreement shall continue in
effect for a period of two years unless sooner terminated as provided herein and
shall continue automatically for successive annual periods provided that such   
continuance is specifically approved at least annually by the affirmative vote  
of (i) a majority of the Trustees of the Trust who are not interested persons of
the Trust (as defined in the 1940 Act), cast in person at a meeting called for  
the purpose of voting on such approval, and (ii) a majority of the Trustees of  
the Trust or the holders of a majority of the outstanding voting securities of  
the Fund (as defined in the 1940 Act). Notwithstanding the foregoing, this      
Subadvisory Agreement may be terminated: (a) at any time without penalty by the 
Fund or Adviser upon the vote of a majority of the Trustees or by vote of the   
majority of the Fund's outstanding voting securities (as defined in the 1940    
Act), upon sixty (60) days' written notice to the Subadviser, or (b) by the     
Subadviser at any time without penalty, upon (60) days' written notice to the   
Fund or Adviser. This Subadvisory Agreement will also terminate automatically in
the event of its assignment (as defined in the 1940 Act) or the assignment or   
termination of the Investment Advisory Agreement.                               

   9. AMENDMENTS. No provision of this Subadvisory Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing   
signed by both parties, and no material amendment of this Subadvisory Agreement 
shall be effective until approved by an affirmative vote of (i) a majority of   
the outstanding voting securities of the Fund, and (ii) a majority of the       
Trustees of the Fund, including a majority of Trustees who are not interested   
persons of any party to this Subadvisory Agreement, cast in person at a meeting 
called for the purpose of voting on such approval, if such approval is required 
by applicable law.                                                              

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10. INDEMNIFICATION. (a) The Adviser hereby agrees to indemnify the   
Subadviser from and against all liabilities, losses, expenses, reasonable       
attorneys' fees and costs or damages (other than liabilities, losses, expenses, 
attorneys fees and costs or damages arising from the Subadviser failing to meet 
the standard of care required hereunder in the performance by the Subadviser of,
or its failure to perform, the services required hereunder), arising from: (i)  
the Advisees (or its affiliates' and their respective agents' and employees')   
failure to perform its duties or assume its obligations hereunder, or from its  
wrongful actions or omissions, including, but not limited to claims asserted or 
threatened by any shareholder of the Fund, governmental or regulatory agency, or
any other person; (ii) claims arising from any wrongful act by the Fund or any  
of the Fund's trustees, officers, employees, or representatives, or by the      
Adviser, its officers, employees or representatives, or from any actions by the 
Fund's distributors or any representative of the Fund; (iii) any action or claim
against the Subadviser based on any alleged untrue statement or misstatement of 
material fact in any registration statement, prospectus, shareholder report or  
other information or materials relating to the Fund or shares issued by the Fund
or any amendment thereof or supplement thereto, or the failure or alleged       
failure to state therein a material fact required to be stated in order that the
statements therein are not misleading, provided that such claim is not based    
upon information provided to the Adviser by the Subadviser or which facts or    
information the Subadviser failed to provide or disclose. With respect to any   
claim for which the Subadviser shall be entitled to indemnity hereunder, the    
Adviser shall assume the reasonable expenses and costs (including any reasonable
attorneys' fees and costs) of the Subadviser of investigating and/or defending  
any claim asserted or threatened by any party, subject always to the Adviser    
first receiving a written undertaking from the Subadviser to repay any amounts  
paid on its behalf in the event and to the extent of any subsequent final       
determination by a court that the Subadviser was not entitled to indemnification
hereunder in respect of such claim.                                             

(a) The Subadviser hereby agrees to indemnify the Adviser, its
affiliates and the Fund from and against all liabilities, losses, expenses,     
reasonable attorneys' fees and costs or damages (other than liabilities, losses,
expenses, attorneys fees and costs or damages arising from the Adviser's failure
to perform its responsibilities hereunder or claims arising from its acts or    
failure to act in performing this Agreement) arising from Subadviser's or its   
agents' and employees' failure to perform its duties and assume its obligations 
hereunder, or from any failure of Subadviser to meet the standard of care set   
forth in Section 6 of this Agreement, including any action or claim against the 
Adviser based on any alleged untrue statement or misstatement of a material fact
made or provided by the Subadviser contained in any registration statement,     
prospectus, shareholder report or other information or materials relating to the
Fund or shares issued by the Fund, or the failure or alleged failure to state a 
material fact therein required to be stated in order that the statements therein
are not misleading, which fact should have been made or provided by the         
Subadviser to the Adviser. With respect to any claim for which the Adviser is   
entitled to indemnity hereunder, the Subadviser shall assume the reasonable     
expenses and costs (including any reasonable attorneys' fees and costs) of the  
Adviser of investigating and/or defending any claim asserted or threatened by   
any party, subject always to the Subadviser first receiving a written           
undertaking from the Adviser to repay any amounts paid on its behalf in the     

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event and to the extent of any subsequent final determination by a court that   
the Adviser was not entitled to indemnification hereunder in respect of such    
claim.                                                                          

       (b) In the event that the Subadviser or Adviser is or becomes a party
to any action or proceedings in respect of which indemnification may be sought  
hereunder, the party seeking indemnification (the "Indemnitee") shall promptly  
notify the other party thereof. After becoming notified of the same, the party  
from whom indemnification is sought (the "Indemnitor") shall be entitled to     
participate in any such action or proceeding and shall assume any payment for   
the full defense of the Indemnitee therein with counsel reasonably satisfactory 
to the party seeking indemnification. The Indemnitor shall not, in connection   
with any action or proceeding or separate but similar or related actions or     
proceedings in the same jurisdiction arising out of the same general allegation 
or circumstances, be liable for the fees or expenses of more than one separate  
firm of attorneys at any time for Indemnitees. After properly assuming the      
defense thereof, the Indemnitor shall not be liable hereunder to the Indemnitee 
for any legal or other expenses subsequently incurred by the Indemnitee in      
connection with the defense thereof, other than damages, if any, by way of      
judgment, settlement, or otherwise pursuant to this provision. The Indemnitor   
shall not be liable hereunder for any settlement of any action or claim effected
without its written consent, which consent shall not be unreasonably withheld.  
The Indemnitee shall fully cooperate with the Indemnitor in the defense of any  
claim and any litigation or other legal proceedings resulting from the claim.   
The Indemnitee may participate in the defense of the claim and any litigation or
other legal proceedings resulting from the claim. The Indemnitee may employ     
separate counsel to participate in such defense, and the fees and expenses of   
such counsel shall not be at the expense of the Indemnitee, but only if the     
employment thereof (a) has been specifically authorized in writing by the       
Indemnitor, which authorization shall not be unreasonably withheld and (b)      
relates to the defense of any claim or any litigation or other legal proceedings
resulting from the claim to the extent the claim or any litigation or other     
legal proceedings resulting from the claim seeks injunctive, specific           
performance or other nonmonetary relief involving or affecting the business,    
operations or assets of the Indemnitee (or an Affiliate of the Indemnitee). The 
provisions of this Section 10 shall survive the termination of this Agreement.  

11. INDEPENDENT CONTRACTOR. Subadviser shall for all purposes of this 
Agreement be deemed to be an independent contractor and, except as otherwise    
expressly provided herein, shall have no authority to act for, bind or represent
the Fund in any way or otherwise be deemed to be an agent of the Fund. Likewise,
the Fund, the Adviser and their respective affiliates, agents and employees     
shall not be deemed agents of the Subadviser and shall have no authority to bind
Subadviser.                                                                     

  12. USE OF NAMES. (a) The Fund may, subject to sub-clause (b) below, use
the name, "Brandes Investment Partners, L.P." ("Brandes") or the name of any    
principal of Brandes, or any component, abbreviation or other name derived      
therefrom for promotional purposes only for so long as this Subadvisory         
Agreement (or any extension, renewal or amendment thereof) continues in force,  
unless the Subadviser or such principal shall specifically consent in writing to
such continued use thereafter. Any permitted use by the Fund during the term    
hereof of the name of the Subadviser or any of its principals, or any derivative

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thereof, shall in no way prevent the Subadviser or any of it shareholders or any
of their successors, from using or permitting the use of such name (whether     
singly or in any combination with any other words) for, by or in connection with
an entity or enterprise other than the Fund. At the conclusion of this          
Subadvisory Agreement or in the event of any termination of this Subadvisory    
Agreement for any reason, each of the authorized parties and their respective   
employees, representatives, affiliates, and associates agree that they shall    
immediately cease using each such name and any derivatives of said names for any
purpose whatsoever.                                                             

       (a) The Adviser and its affiliates on one hand, and the Subadviser on
the other, shall not publish or distribute, and the Adviser shall cause the Fund
not to publish or distribute to Fund shareholders, prospective investors, sales 
agents or members of the public, any disclosure document, offering literature   
(including any form of advertisement or other solicitation materials calculated 
to lead investors to subscribe for and purchase shares of the Fund) or other    
document referring by name to the Subadviser or its affiliates on one hand and  
the Adviser or its affiliates on the other, unless the other party shall have   
consented in writing to such references in the form and context in which they   
appear.                                                                         

13. CHANGE IN IDENTITY. The Subadviser shall notify the Adviser of any
change in the identity or control of its general or limited partners promptly   
after such change occurs.                                                       

14. MISCELLANEOUS.                                                    

     (a) This Subadvisory Agreement shall be governed by the laws of the
State of Massachusetts (without regard to principles of conflicts of law),      
provided that nothing herein shall be construed in a manner inconsistent with   
the 1940 Act, the Advisers Act, or rules or orders of the SEC thereunder.       

 (b) The captions of this Subadvisory Agreement are included for
convenience only and in no way define or limit any of the provisions hereof or  
otherwise affect their construction or effect.                                  

        (c) This Agreement may be executed in one or more counterparts, all of
which taken together shall be deemed to constitute one and the same instrument. 

15. NOTICES. Any notice, instruction or other instrument required or  
permitted to be given hereunder may be delivered in person to the offices of the
parties as set forth therein during normal business hours, or delivered or sent 
by prepaid registered mail, express mail or by facsimile to the parties at such 
offices or such other address as may be notified by either party from time to   
time addressed to its President. Such notice, instruction or other instrument   
shall be deemed to have been served, in the case of a registered letter at the  
expiration of seventy-two (72) hours after posting; in the case of express mail,
within twenty-four (24) hours after dispatch; and in the case of facsimile,     
immediately on dispatch; and if delivered outside normal business hours it shall
be deemed to have been received at the next time after delivery or transmission 
when normal business hours commence. Evidence that the notice, instruction or   
other instrument was properly addressed, stamped and put into the post shall be 
conclusive evidence of posting.                                                 

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     16. ATTORNEYS' FEES. In the event of a material breach of this Agreement by
any party hereto, the prevailing party, as determined by the trier of fact,     
shall be entitled to reasonable attorneys' fees and costs as determined by the  
court in such action, in addition to any other damages awarded.                 

  IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year set forth    
above.                                                                          

                         Pilgrim Investments, Inc.

   By:
                                           -------------------------------------

                                 Brandes Investment Partners, L.P.

   By:
                                           -------------------------------------

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APPENDIX J

 SUB-ADVISORY AGREEMENT WITH BRANDES INVESTMENT PARTNERS, L.P.
(PILGRIM INTERNATIONAL VALUE FUND)

SUB-ADVISORY AGREEMENT

         AGREEMENT made this _____ day of September, 2000 by and between Pilgrim
Investments, Inc., a Delaware Corporation (hereinafter the "Adviser"),          
investment adviser for the Pilgrim International Value Fund (hereinafter the    
"Fund"), a series of Pilgrim Mayflower Trust (the "Trust") and Brandes          
Investment Partners, L.P., a California limited partnership (hereinafter the    
"Subadviser").                                                                  

      WHEREAS, the Adviser has been retained by the Trust on behalf of the
Fund to provide investment advisory services to the Fund pursuant to an         
Investment Advisory Agreement made on _______________, 2000 (the "Investment    
Management Agreement"); and                                                     

        WHEREAS, the Fund's Trustees, including a majority of the Trustees who
are not "interested persons," as defined in the Investment Company Act of 1940, 
as amended (the "1940 Act"), and the Fund's shareholders have approved the      
appointment of the Subadviser to perform certain investment advisory services   
for the Fund pursuant to this Subadvisory Agreement with the Adviser and the    
Subadviser is willing to perform such services for the Fund;                    

      WHEREAS, the Subadviser is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended ("Advisers Act");               

      NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the Adviser and the Subadviser as        
follows:                                                                        

1. APPOINTMENT. The Adviser hereby appoints the Subadviser to perform 
advisory services to the Fund for the periods and on the terms set forth in this
Subadvisory Agreement. 'Me Subadviser accepts such appointment and agrees to    
furnish the services herein set forth, for the compensation herein provided     

     2. DUTIES OF SUBADVISER. The Adviser hereby authorizes Subadviser to manage
the investment and reinvestment of cash and investments comprising those assets 
of the Fund with power on behalf of and in the name of the Fund at Subadviser's 
discretion, subject at all times to the supervision of the Adviser and the      
Trustees of the Fund:                                                           

        (a) to direct the purchase, subscription or other acquisition, and the
sale, redemption, and exchange of investments, subject to the duty -to render to
the Trustees of the Fund and the Adviser written reports of the composition of  
the portfolio of the Fund as often as the Adviser or the Trustees of the Fund   
shall reasonably require;                                                       

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         (b) to make all decisions relating to the manner, method, and timing of
investment transactions, to select brokers, dealers and other intermediaries by 
or through whom such transactions will be effected, and to engage such          
consultants, analysts and experts in connection therewith as may be considered  
necessary or appropriate;                                                       

        (c) to direct banks, brokers or custodians to disburse funds or assets
solely in order to execute investment transactions for the Fund, provided the   
Subadviser shall have no authority to direct the transfer of the Fund's funds or
assets to itself or other affiliated persons and shall have no authority over   
the disbursement (as opposed to investment decisions) of funds or assets nor any
custody of any of the Fund's funds or assets; and                               

      (d) to take all such other actions as may be considered necessary or
appropriate to discharge its duties hereunder; PROVIDED THAT any specific or    
general directions which the Trustees of the Fund or the Adviser may give in    
writing to the Subadviser with regard to any of the foregoing powers shall,     
unless the contrary is expressly stated herein, override the general authority  
given by this provision to the extent that the Trustees of the Fund may, at any 
time and from time to time, direct, either generally or to a limited extent and 
either alone or in concert with the Adviser or the Subadviser (provided that    
such directions would not cause the Subadviser to violate any fiduciary duties  
or any laws with regard to the Subadviser's duties and responsibilities), all or
any of the same as they shall think fit and, in particular, the Adviser shall   
have the right to direct the Subadviser to place trades through brokers and     
other agents of the Adviser's choice, subject to such brokers or agents         
executing such trades on a "best execution basis", i.e. at the best price and/or
with research or other services which render that broker's services the most    
appropriate for the Subadviser's needs, and further that the Subadviser is      
satisfied that the dealing and execution quality of such brokers are            
satisfactory to the Subadviser; and PROVIDED FURTHER that nothing herein shall  
be construed as giving the Subadviser power to manage the aforesaid cash and    
investments in such a manner as would cause the Fund to be considered a "dealer"
in stocks, securities or commodities for U.S. federal income tax purposes.      

        The Adviser shall monitor and review the performance of the Subadviser
under this Agreement, including but not limited to the Subadviser's performance 
of the duties delineated in subparagraphs (a)-(d) above.                        

         The Subadviser further agrees that, in performing its duties hereunder,
it will:                                                                        

(a) (i) comply with the 1940 Act and all rules and regulations
thereunder, the Advisers Act, the Internal Revenue Code of 1986, as amended,    
(the "Code") and all other applicable federal and state laws and regulations,   
the Prospectus and Statement of Additional Information for the Fund, and with   
any applicable procedures adopted by the Trustees in writing and made available 
to Subadviser; (ii) manage the Fund in accordance with the investment           
requirements for regulated investment companies under Subchapter M of the Code  
and regulations issued thereunder, and (iii) direct the placement of orders     
pursuant to its investment determinations for the Fund directly with the issuer,
or with any broker or dealer, in accordance with applicable policies expressed  
in the Fund's Prospectus and/or Statement of Additional Information and in      
accordance with applicable legal requirements;                                  

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       (b) furnish to the Fund whatever non-proprietary reports the Fund may
reasonably request with respect to the Fund's assets or contemplated            
investments. In addition, the Subadviser will keep the Fund and the Trustees    
informed of developments materially affecting the Fund's portfolio and shall, on
the Subadviser's own initiative, furnish to the Fund from time to time whatever 
information the Subadviser believes appropriate for this purpose;               

(c) make available to the Fund's administrator, Northstar     
Administrators Corporation (the "Administrator"), the Adviser, and the Fund,    
promptly upon their request, such copies of its investment records and ledgers  
with respect to the Fund as may be required to assist the Adviser, the          
Administrator and the Fund in their compliance with applicable laws and         
regulations. The Subadviser will furnish the Trustees with such periodic and    
special reports regarding the Fund as they may reasonably request;              

       (d) immediately notify the Adviser and the Fund in the event that the
Subadviser or any of its affiliates (i) becomes aware that it is subject to a   
statutory disqualification that prevents the Subadviser from serving as an      
investment adviser pursuant to this Subadvisory Agreement; or (ii) becomes aware
that it is the subject of an administrative proceeding or enforcement action by 
the Securities and Exchange Commission ("SEC") or other regulatory authority.   
The Subadviser further agrees to notify the Fund and the Adviser immediately of 
any material fact known to the Subadviser respecting or relating to the         
Subadviser that is not contained in the Fund's Registration Statement, or any   
amendment or supplement thereto, but that is required to be disclosed therein,  
and of any statement contained therein respecting or relating to the Subadviser 
that becomes untrue in any material respect. The Adviser shall likewise         
immediately notify the Subadviser if it becomes aware of any regulatory action  
of the type described in this subparagraph 2(d) respecting or relating to the   
Fund, the Adviser, or any Affiliates of the Adviser.                            

3. ALLOCATION OF CHARGES AND EXPENSES. The Subadviser shall pay all   
expenses associated with the management of its business operations in performing
its responsibilities hereunder, including the cost of its own overhead,         
research, compensation and expenses of its partners, officers and employees, and
other internal operating costs. The Fund shall bear its own overhead and other  
internal operating costs (whether incurred directly or by the Adviser or the    
Subadviser) including, without limitation:                                      

       (a) the costs incurred by the Fund in the preparation and printing of
its Prospectus or any offering literature (including any form of advertisement  
or other solicitation materials calculated to lead to investors subscribing for 
shares);                                                                        

       (b) all fees and expenses on behalf of the Fund to the Transfer Agent
and the Custodian;                                                              

        (c) the reasonable fees and expenses of accountants, auditors, lawyers
and other professional advisors to the Fund;                                    

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 (d) any interest, fee or charge payable on or on account of any
borrowing by the Fund;                                                          

(e) fiscal and governmental charges and duties relating to the
purchase, sale, issue or redemption of shares and increases in authorized share 
capital of the Fund;                                                            

        (f) the fees of any stock exchange or over-the-counter market on which
the shares may from time to time be listed, quoted or dealt in and the expenses 
of obtaining any such listing, quotation or permission to deal;                 

(g) the fees and expenses (if any) payable to Trustees;       

       (h) brokerage, fiscal or governmental charges or duties in respect of
or in connection with the acquisition, holding or disposal of any of the assets 
of the Fund or otherwise in connection with its business;                       

(i) the expenses of publishing details and prices of shares in
newspapers and other publications;                                              

        (j) all expenses incurred in the convening of meetings of shareholders
or in the preparation of agreements or other documents relating to the Fund or  
in relation to the safe custody of the documents of title of any investments;   

(k) all Trustees communication costs; and                     

    (l) all premiums and costs for Fund insurance and blanket fidelity
bonds.                                                                          

    4. COMPENSATION. The Subadviser agrees to waive all compensation until the
Fund's net assets exceed $50 million. After the Fund's net assets exceed $50    
million, the Adviser will pay the Subadviser at the end of each calendar month  
an advisory fee computed daily at an annual rate equal to fifty (50) percent of 
the management fee that the Fund pays the Adviser.                              

5. BOOKS AND RECORDS. The Subadviser agrees to maintain such books and
records with respect to its services to the Fund as are required by Section 31  
under the 1940 Act, and rules adopted thereunder, and by other applicable legal 
provisions, and to preserve such records for the periods and in the manner      
required by applicable laws or regulations. The Subadviser also agrees that     
records it maintains and preserves pursuant to Rules 3 1 a-2 under the 1940 Act 
(excluding trade secrets or intellectual property rights) in connection with its
services hereunder are the property of the Fund and will be surrendered promptly
to the Fund upon its request and the Subadviser further agrees that it will     
furnish to regulatory authorities having the requisite authority any information
or reports in connection with its services hereunder which may be requested in  
order to determine whether the operations of the Fund are being conducted in    
accordance with applicable laws and regulations.                                

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6. STANDARD OF CARE AND LIMITATION OF LIABILITY. The Subadviser shall 
exercise its best business judgment and reasonable care in rendering the        
services provided by it under this Subadvisory Agreement. The Subadviser shall  
not be liable for any error of judgment or mistake of law or for any loss       
suffered by the Fund or the holders of the Fund's shares or by the Adviser in   
connection with the matters to which this Subadvisory Agreement relates,        
provided that nothing in this Subadvisory Agreement shall be deemed to protect  
or purport to protect the Subadviser against liability to the Fund or to holders
of the Fund's shares or to the Adviser to which the Subadviser would otherwise  
be subject by reason of willful misfeasance, bad faith or negligence on its part
in the performance of its duties or by reason of the Subadviser's reckless      
disregard of its obligations and duties under this Subadvisory Agreement. As    
used in this Section 6, the term "Subadviser" shall include any officers,       
directors, employees or other affiliates of the Subadviser performing services  
for the Fund.                                                                   

   7. SERVICES NOT EXCLUSIVE. It is understood that, except as may otherwise
be agreed by the Adviser and the Subadviser, the services of the Subadviser are 
not exclusive. The Subadviser is not required to recommend to the Fund the same 
investments it recommends to its other clients. In connection with purchases or 
sales of portfolio securities for the account of the Fund, neither the          
Subadviser nor any of its partners officers or employees shall act as principal 
or agent or receive any commission. If the Subadviser provides any advice to its
clients concerning the shares of the Fund, the Subadviser shall act solely as   
investment counsel for such clients and not in any way on behalf of the Fund.   

   8. DURATION AND TERMINATION. This Subadvisory Agreement shall continue in
effect for a period of two years unless sooner terminated as provided herein and
shall continue automatically for successive annual periods provided that such   
continuance is specifically approved at least annually by the affirmative vote  
of (i) a majority of the Trustees of the Trust who are not interested persons of
the Trust (as defined in the 1940 Act), cast in person at a meeting called for  
the purpose of voting on such approval, and (ii) a majority of the Trustees of  
the Trust or the holders of a majority of the outstanding voting securities of  
the Fund (as defined in the 1940 Act). Notwithstanding the foregoing, this      
Subadvisory Agreement may be terminated: (a) at any time without penalty by the.
Fund or Adviser upon the vote of a majority of the Trustees or by vote of the   
majority of the Fund's outstanding voting securities (as defined in the 1940    
Act), upon sixty (60) days' written notice to the Subadviser, or (b) by the     
Subadviser at any time without penalty, upon (60) days' written notice to the   
Fund or Adviser. This Subadvisory Agreement will also terminate automatically in
the event of its assignment (as defined in the 1940 Act) or the assignment or   
termination of the Investment Advisory Agreement.                               

   9. AMENDMENTS. No provision of this Subadvisory Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing   
signed by both parties, and no material amendment of this Subadvisory Agreement 
shall be effective until approved by an affirmative vote of (i) a majority of   
the outstanding voting securities of the Fund, and (ii) a majority of the       
Trustees of the Fund, including a majority of Trustees who are not              

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interested persons of any party to this Subadvisory Agreement, cast in person at
a meeting called for the purpose of voting on such approval, if such approval is
required by applicable law.                                                     

10. INDEMNIFICATION. (a) The Adviser hereby agrees to indemnify the   
Subadviser from and against all liabilities, losses, expenses, reasonable       
attorneys' fees and costs or damages (other than liabilities, losses, expenses, 
attorneys fees and costs or damages arising from the Subadviser failing to meet 
the standard of care required hereunder in the performance by the Subadviser of,
or its failure to perform, the services required hereunder), arising from: (i)  
the Adviser's (or its affiliates' and their respective agents' and employees')  
failure to perform its duties or assume its obligations hereunder, or from its  
wrongful actions or omissions, including, but not limited to claims asserted or 
threatened by any shareholder of the Fund, governmental or regulatory agency, or
any other person; (ii) claims arising from any wrongful act by the Fund or any  
of the Fund's trustees, officers, employees, or representatives, or by the      
Adviser, its officers, employees or representatives, or from any actions by the 
Funds distributors or any representative of the Fund; (iii) any action or claim 
against the Subadviser based on any alleged untrue statement or misstatement of 
material fact in any registration statement, prospectus, shareholder report or  
other information or materials relating to the Fund or shares issued by the Fund
or any amendment thereof or supplement thereto, or the failure or alleged       
failure to state therein a material fact required to be stated in order that the
statements therein are not misleading, provided that such claim is not based    
upon information provided to the Adviser by the Subadviser or which facts or    
information the Subadviser failed to provide or disclose. With respect to any   
claim for which the Subadviser shall be entitled to indemnity hereunder, the    
Adviser shall assume the reasonable expenses and costs (including any reasonable
attorneys' fees and costs) of the Subadviser of investigating and/or defending  
any claim asserted or threatened by any party, subject always to the Adviser    
first receiving a written undertaking from the Subadviser to repay any amounts  
paid on its behalf in the event and to the extent of any subsequent final       
determination by a court that the Subadviser was not entitled to indemnification
hereunder in respect of such claim.                                             

(b) The Subadviser hereby agrees to indemnify the Adviser, its
affiliates and the Fund from and against all liabilities, losses, expenses,     
reasonable attorneys' fees and costs or damages (other than liabilities, losses,
expenses, attorneys fees and costs or damages arising from the Adviser's failure
to perform its responsibilities hereunder or claims arising from its acts or    
failure to act in performing this Agreement) arising from Subadviser's or its   
agents' and employees' failure to perform its duties and assume its obligations 
hereunder, or from any failure of Subadviser to meet the standard of care set   
forth in Section 6 of this Agreement, including any action or claim against the 
Adviser based on any alleged untrue statement or misstatement of a material fact
made or provided by the Subadviser contained in any registration statement,     
prospectus, shareholder report or other information or materials relating to the
Fund or shares issued by the Fund, or the failure or alleged failure to state a 
material fact therein required to be stated in order that the statements therein
are not misleading, which fact should have been made or provided by the         
Subadviser to the Adviser. With respect to any claim for which the Adviser is   
entitled to indemnity hereunder, the Subadviser shall assume the reasonable     
expenses and costs (including any reasonable attorneys' fees and costs) of the  
Adviser of investigating and/or defending any claim asserted or threatened by   

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any party, subject always to the Subadviser first receiving a written           
undertaking from the Adviser to repay any amounts paid on its behalf in the     
event and to the extent of any subsequent final determination by a court that   
the Adviser was not entitled to indemnification hereunder in respect of such    
claim.                                                                          

       (c) In the event that the Subadviser or Adviser is or becomes a party
to any action or proceedings in respect of which indemnification may be sought  
hereunder, the party seeking indemnification (the "Indemnitee") shall promptly  
notify the other party thereof. After becoming notified of the same, the party  
from whom indemnification is sought (the "Indemnitor") shall be entitled to     
participate in any such action or proceeding and shall assume any payment for   
the full defense of the Indemnitee therein with counsel reasonably satisfactory 
to the party seeking indemnification. The Indemnitor shall not in connection    
with any action or proceeding or separate but similar or related actions or     
proceedings in the same jurisdiction arising out of the same general allegation 
or circumstances, be liable for the fees or expenses of more than one separate  
firm of attorneys at any time for Indemnitees. After properly assuming the      
defense thereof, the Indemnitor shall not be liable hereunder to the Indemnitee 
for any legal or other expenses subsequently incurred by the Indemnitee in      
connection with the defense thereof, other than damages, if any, by way of      
judgment, settlement, or otherwise pursuant to this provision. The Indemnitor   
shall not be liable hereunder for any settlement of any action or claim effected
without its written consent, which consent shall not be unreasonably withheld.  
The Indemnitee shall fully cooperate with the Indemnitor in the defense of any  
claim and any litigation or other legal proceedings resulting from the claim.   
The Indemnitee may participate in the defense of the claim and any litigation or
other legal proceedings resulting from the claim. The Indemnitee may employ     
separate counsel to participate in such defense, and the fees and expenses of   
such counsel shall not be at the expense of the Indemnitee, but only if the     
employment thereof (a) has been specifically authorized in writing by the       
Indemnitor, which authorization shall not be unreasonably withheld and (b)      
relates to the defense of any claim or any litigation or other legal proceedings
resulting from the claim to the extent the claim or any litigation or other     
legal proceedings resulting from the claim seeks injunctive, specific           
performance or other nonmonetary relief involving or affecting the business,    
operations or assets of the Indemnitee (or an Affiliate of the Indemnitee). The 
provisions of this Section 10 shall survive the termination of this Agreement.  

11. INDEPENDENT CONTRACTOR. Subadviser shall for all purposes of this 
Agreement be deemed to be an independent contractor and, except as otherwise    
expressly provided herein, shall have no authority to act for, bind or represent
the Fund in any way or otherwise be deemed to be an agent of the Fund. Likewise,
the Fund, the Adviser and their respective affiliates, agents and employees     
shall not be deemed agents of the Subadviser and shall have no authority to bind
Subadviser.                                                                     

  12. USE OF NAMES. (a) The Fund may, subject to sub-clause (b) below, use
the name, "Brandes Investment Partners, L.P." ("Brandes") or the name of any    
principal of Brandes, or any component, abbreviation or other name derived      
therefrom for promotional purposes only for so long as this Subadvisory         
Agreement (or any extension, renewal or amendment thereof) continues in force,  

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unless the Subadviser or such principal shall specifically consent in writing to
such continued use thereafter. Any permitted use by the Fund during the term    
hereof of the name of the Subadviser or any of its principals, or any derivative
thereof, shall in no way prevent the Subadviser or any of it shareholders or any
of their successors, from using or permitting the use of such name (whether     
singly or in any combination with any other words) for, by or in connection with
an entity or enterprise other than the Fund. At the conclusion of this          
Subadvisory Agreement or in the event of any termination of this Subadvisory    
Agreement for any reason, each of the authorized parties and their respective   
employees, representatives, affiliates, and associates agree that they shall    
immediately cease using each such name and any derivatives of said names for any
purpose whatsoever.                                                             

       (b) The Adviser and its affiliates on one hand, and the Subadviser on
the other, shall not publish or distribute, and the Adviser shall cause the Fund
not to publish or distribute to Fund shareholders, prospective investors, sales 
agents or members of the public, any disclosure document, offering literature   
(including any form of advertisement or other solicitation materials calculated 
to lead investors to subscribe for and purchase shares of the Fund) or other    
document referring by name to the Subadviser or its affiliates on one hand and  
the Adviser or its affiliates on the other, unless the other party shall have   
consented in writing to such references in the form and context in which they   
appear.                                                                         

13. CHANGE IN IDENTITY. The Subadviser shall notify the Adviser of any
change in the identity or control of its general or limited partners promptly   
after such change occurs.                                                       

14. MISCELLANEOUS.                                                    

     (c) This Subadvisory Agreement shall be governed by the laws of the
State of Massachusetts (without regard to principles of conflicts of law),      
provided that nothing herein shall be construed in a manner inconsistent with   
the 1940 Act, the Advisers Act, or rules or orders of the SEC thereunder.       

 (d) The captions of this Subadvisory Agreement are included for
convenience only and in no way define or limit any of the provisions hereof or  
otherwise affect their construction or effect.                                  

        (e) This Agreement may be executed in one or more counterparts, all of
which taken together shall be deemed to constitute one and the same instrument. 

15. NOTICES. Any notice, instruction or other instrument required or  
permitted to be given hereunder may be delivered in person to the offices of the
parties as set forth therein during normal business hours, or delivered or sent 
by prepaid registered mail, express mail or by facsimile to the parties at such 
offices or such other address as may be notified by either party from time to   
time addressed to its President. Such notice, instruction or other instrument   
shall be deemed to have been served, in the case of a registered letter at the  
expiration of seventy-two (72) hours after posting; in the case of express mail,
within twenty-four (24) hours after dispatch; and in the case of facsimile,     
immediately on dispatch; and if delivered outside normal business hours it shall
be deemed to have been received at the next time after delivery or transmission 
when normal business hours commence. Evidence that the notice, instruction or   

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other instrument was properly addressed, stamped and put into the post shall be 
conclusive evidence of posting.                                                 

     16. ATTORNEYS' FEES. In the event of a material breach of this Agreement by
any party hereto, the prevailing party, as determined by the trier of fact,     
shall be entitled to reasonable attorneys' fees and costs as determined by the  
court in such action, in addition to any other damages awarded.                 

       IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year set forth 
above.                                                                          

                         Pilgrim Investments, Inc.

   By:
                                           -------------------------------------

                                 Brandes Investment Partners, L.P.

   By:
                                           -------------------------------------

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APPENDIX K

 SUB-ADVISORY AGREEMENT WITH HSBC ASSET MANAGEMENT AMERICAS, INC. AND HSBC ASSET
 MANAGEMENT HONG KONG, LIMITED
 (PILGRIM ASIA-PACIFIC FUND)

SUB-ADVISORY AGREEMENT

AGREEMENT made this ___th day of ____, 2000 between Pilgrim   
Investments, Inc., a Delaware corporation (the "Manager"), and HSBC Asset       
Management (Americas) Inc., a New York corporation ("HSBC Americas"), HSBC Asset
Management (Hong Kong) Limited, a Hong Kong corporation ("HSBC Hong Kong") and  
HSBC Asset Management (Europe) Limited (a ___________ corporation) ("HSBC       
Europe"), (HSBC Americas, HSBC Hong Kong and HSBC Europe being collectively     
referred to herein as the "Sub-Adviser").                                       

        WHEREAS, Pilgrim Advisory Funds, Inc. (the "Fund") is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end,
management investment company;                                                  

         WHEREAS, the Fund is authorized to issue separate series, each of which
will offer a separate class of shares of common stock, each series having its   
own investment objective or objectives, policies, and limitations;              

        WHEREAS, the Fund may offer shares of additional series in the future;

         WHEREAS, pursuant to a Management Agreement, dated the date hereof (the
"Management Agreement"), a copy of which has been provided to the Portfolio     
Manager, the Fund has retained the Manager to render advisory, management, and  
administrative services with respect to each of the Fund's series; and          

         WHEREAS, pursuant to authority granted to the Manager in the Management
Agreement, the Manager wishes to retain the Portfolio Manager to furnish        
investment advisory services to one or more of the series of the Fund, and the  
Portfolio Manager is willing to furnish such services to the Fund and the       
Manager;                                                                        

       NOW, THEREFORE, in consideration of the premises and the promises and
mutual covenants herein contained, it is agreed between the Manager and the     
Portfolio Manager as follows:                                                   

     1. APPOINTMENT. The Manager hereby appoints the Portfolio Manager to act as
the investment adviser and manager to the Pilgrim Asia-Pacific Equity Fund      
series of the Fund (the "Series") for the periods and on the terms set forth in 
this Agreement. The Portfolio Manager accepts such appointment and agrees to    
furnish the services herein set forth for the compensation herein provided.     

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     In the event the Fund designates one or more series (other than the Series)
with respect to which the Manager wishes to retain the Portfolio Manager to     
render investment advisory services hereunder, it shall notify the Portfolio    
Manager in writing. If the Portfolio Manager is willing to render such services,
it shall notify the Manager in writing, whereupon such series shall become a    
Series hereunder, and be subject to this Agreement.                             

  2. SUB-ADVISER DUTIES. Subject to the supervision of the Fund's Board of
Directors and the Manager, the Portfolio Manager will provide a continuous      
investment program for the Series' portfolio and determine in its discretion the
composition of the assets of the Series' portfolio, including determination of  
the purchase, retention, or sale of the securities, cash, and other investments 
contained in the portfolio. The Portfolio Manager will provide investment       
research and conduct a continuous program of evaluation, investment, sales, and 
reinvestment of the Series' assets by determining the securities and other      
investments that shall be purchased, entered into, sold, closed, or exchanged   
for the Series, when these transactions should be executed, and what portion of 
the assets of the Series should be held in the various securities and other     
investments in which it may invest. To the extent permitted by the investment   
policies of the Series, the Portfolio Manager shall make decisions for the      
Series as to foreign currency matters and make determinations as to and execute 
and perform foreign currency exchange contracts on behalf of the Series. The    
Portfolio Manager will provide the services under this Agreement in accordance  
with the Series' investment objective or objectives, policies, and restrictions 
as stated in the Fund's Registration Statement filed with the Securities and    
Exchange Commission ("SEC"), as amended, copies of which shall be sent to the   
Portfolio Manager by the Manager. The Portfolio Manager further agrees as       
follows:                                                                        

         (a) The Portfolio Manager will not take any action that would cause the
Series to fail to qualify as a regulated investment company under Subchapter M  
of the Internal Revenue Code.                                                   

        (b) The Portfolio Manager will conform with the 1940 Act and all rules
and regulations thereunder, all other applicable federal and state laws and     
regulations, with any applicable procedures adopted by the Fund's Board of      
Directors of which the Portfolio Manager has been sent a copy, and the          
provisions of the Registration Statement of the Fund filed under the Securities 
Act of 1933 (the "1933 Act") and the 1940 Act, as supplemented or amended, of   
which the Portfolio Manager has received a copy.                                

      (c) The Portfolio Manager will vote all proxies solicited by or with
respect to the issuers of securities in which assets of the Series are invested.
The Portfolio Manager will maintain appropriate records detailing its voting of 
proxies on behalf of the Fund and will provide to the Fund at least annually a  
report setting forth the proposals voted on and how the Series' shares were     
voted since the prior report, including the name of the corresponding issuers.  

        (d) On occasions when the Portfolio Manager deems the purchase or sale
of a security to be in the best interest of the Series as well as of other      
investment advisory clients of the Portfolio Manager or any of its affiliates,  

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the Portfolio Manager may, to the extent permitted by applicable laws and       
regulations, but shall not be obligated to, aggregate the securities to be so   
sold or purchased with those of its other clients where such aggregation is not 
inconsistent with the policies set forth in the Registration Statement. In such 
event, allocation of the securities so purchased or sold, as well as the        
expenses incurred in the transaction, will be made by the Portfolio Manager in a
manner that is fair and equitable in the judgment of the Portfolio Manager in   
the exercise of its fiduciary obligations to the Fund and to such other clients,
subject to review by the Manager and the Fund's Board of Directors.             

    (e) In connection with the purchase and sale of securities for the
Series, the Portfolio Manager will arrange for the transmission to the custodian
and portfolio accounting agent for the Series on a daily basis, such            
confirmation, trade tickets, and other documents and information, including, but
not limited to, Cusip, Cedel, or other numbers that identify securities to be   
purchased or sold on behalf of the Series, as may be reasonably necessary to    
enable the custodian and portfolio accounting agent to perform its              
administrative and recordkeeping responsibilities with respect to the Series.   
With respect to portfolio securities to be settled through the Depository Trust 
Company, the Portfolio Manager will arrange for the prompt transmission of the  
confirmation of such trades to the Fund's custodian and portfolio accounting    
agent.                                                                          

   (f) The Portfolio Manager will assist the custodian and portfolio
accounting agent for the Fund in determining or confirming, consistent with the 
procedures and policies stated in the Registration Statement for the Fund, the  
value of any portfolio securities or other assets of the Series for which the   
custodian and portfolio accounting agent seeks assistance from or identifies for
review by the Portfolio Manager. The parties acknowledge that the Portfolio     
Manager is not a custodian of Series' assets and will not take possession or    
custody of such assets.                                                         

   (g) The Portfolio Manager will make available to the Fund and the
Manager, promptly upon request, all of the Series' investment records and       
ledgers maintained by the Portfolio Manager (which shall not include the records
and ledgers maintained by the custodian or portfolio accounting agent for the   
Fund) as are necessary to assist the Fund and the Manager to comply with        
requirements of the 1940 Act and the Investment Advisers Act of 1940 (the       
"Advisers Act"), as well as other applicable laws. The Portfolio Manager will   
furnish to regulatory authorities having the requisite authority any information
or reports in connection with such services in respect to the Series which may  
be requested in order to ascertain whether the operations of the Fund are being 
conducted in a manner consistent with applicable laws and regulations.          

       (h) The Portfolio Manager will provide reports to the Fund's Board of
Directors for consideration at meetings of the Board on the investment program  
for the Series and the issuers and securities represented in the Series'        
portfolio, and will furnish the Fund's Board of Directors with respect to the   
Series such periodic and special reports as the Directors and the Manager may   
reasonably request. The Portfolio Manager will provide the Manager, no later    

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than the 20th day following the end of each of the first three fiscal quarters  
of the Series and the 45th day following the end of the Series' fiscal year, a  
letter to shareholders (to be subject to review and editing by the Manager)     
containing a discussion of those factors referred to in Item 5A(a) of 1940 Act  
Form N-1A in respect of both the prior quarter and the fiscal year to date.     

 3. BROKER-DEALER SELECTION. The Portfolio Manager is authorized to make
decisions to buy and sell securities and other investments for the Series'      
portfolio, broker-dealer selection, and negotiation of brokerage commission     
rates. The Portfolio Manager's primary consideration in effecting a security    
transaction will be to obtain the best execution for the Series, taking into    
account the factors specified in the prospectus and/or statement of additional  
information for the Fund, and determined in consultation with the Manager, which
include price (including the applicable brokerage commission or dollar spread), 
the size of the order, the nature of the market for the security, the timing of 
the transaction, the reputation, the experience and financial stability of the  
broker-dealer involved, the quality of the service, the difficulty of execution,
and the execution capabilities and operational facilities of the firm involved, 
and the firm's risk in positioning a block of securities. Accordingly, the price
to the Series in any transaction may be less favorable than that available from 
another broker-dealer if the difference is reasonably justified, in the judgment
of the Portfolio Manager in the exercise of its fiduciary obligations to the    
Fund, by other aspects of the portfolio execution services offered. Subject to  
such policies as the Fund's Board of Directors may determine and consistent with
Section 28(e) of the Securities Exchange Act of 1934, the Portfolio Manager     
shall not be deemed to have acted unlawfully or to have breached any duty       
created by this Agreement or otherwise solely by reason of its having caused the
Series to pay a broker-dealer for effecting a portfolio investment transaction  
in excess of the amount of commission another broker-dealer would have charged  
for effecting that transaction, if the Portfolio Manager determines in good     
faith that such amount of commission was reasonable in relation to the value of 
the brokerage and research services provided by such broker-dealer, viewed in   
terms of either that particular transaction or the Portfolio Manager's or the   
Manager's overall responsibilities with respect to the Series and to their      
respective other clients as to which they exercise investment discretion. The   
Portfolio Manager will consult with the Manager to the end that portfolio       
transactions on behalf of the Series are directed to broker-dealers on the basis
of criteria reasonably considered appropriate by the Manager. To the extent     
consistent with these standards, the Portfolio Manager is further authorized to 
allocate the orders placed by it on behalf of the Series to the Portfolio       
Manager if it is registered as a broker-dealer with the SEC, to an affiliated   
broker-dealer, or to such brokers and dealers who also provide research or      
statistical material, or other services to the Series, the Portfolio Manager, or
an affiliate of the Portfolio Manager. Such allocation shall be in such amounts 
and proportions as the Portfolio Manager shall determine consistent with the    
above standards, and the Portfolio Manager will report on said allocation       
regularly to the Fund's Board of Directors indicating the broker-dealers to     
which such allocations have been made and the basis therefor.                   

   4. DISCLOSURE ABOUT PORTFOLIO MANAGER. The Portfolio Manager has reviewed
the Registration Statement for the Fund filed with the SEC that contains        
disclosure about the Portfolio Manager, and represents and warrants that, with  
respect to the disclosure about the Portfolio Manager or information relating,  
directly or indirectly, to the Portfolio Manager, such Registration             

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Statement contains, as of the date hereof, no untrue statement of any material  
fact and does not omit any statement of a material fact which was required to be
stated therein or necessary to make the statements contained therein not        
misleading. Each of HSBC Americas and HSBC Hong Kong further represents and     
warrants that it is a duly registered investment adviser under the Advisers Act.
The Manager acknowledges that it has received from HSBC Americas and HSBC Hong  
Kong, not less than 48 hours prior to the execution and delivery of this        
Agreement, a copy of each such party's Form ADV, Part II.                       

    5. EXPENSES. During the term of this Agreement, the Portfolio Manager will
pay all expenses incurred by it and its staff and for their activities in       
connection with its sub-advisory duties under this Agreement, except as provided
in Section 11. The Manager or the Fund shall be responsible for all the expenses
of the Fund's operations.                                                       

6. COMPENSATION. For the services provided, the Manager will pay the  
Portfolio Manager a monthly fee, in arrears, equal to 1/12 of .50% of the       
Series' average daily net assets during the month. Payment of the fee will be   
due on the 10th day of the following month. The fee will be appropriately       
prorated to reflect any portion of a calendar month that this Agreement is not  
in effect among the parties. In accordance with the provisions of the Management
Agreement, the Manager is solely responsible for the payment of fees to the     
Portfolio Manager, and the Portfolio Manager agrees to seek payment of its fees 
solely from the Manager; provided, however, that if the Fund fails to pay the   
Manager all or a portion of the management fee under said Management Agreement  
when due, and the amount that was paid is insufficient to cover the Portfolio   
Manager's fee under this Agreement for the period in question, then the         
Portfolio Manager may enforce against the Fund any rights it may have as a      
third-party beneficiary under the Management Agreement and the Manager will (i) 
not be obligated to pay to the Portfolio Manager the deficiency until actually  
collected from the Fund and (ii) take all steps appropriate under the           
circumstances to collect the amount due from the Fund.                          

7. COMPLIANCE.                                                        

       (a) The Portfolio Manager agrees that it shall immediately notify the
Manager and the Fund (1) in the event that the SEC has censured the Portfolio   
Manager; placed limitations upon its activities, functions or operations;       
suspended or revoked its registration as an investment adviser; or has commenced
proceedings or an investigation that may result in any of these actions, or (2) 
upon having a reasonable basis for believing that the Series has ceased to      
qualify or might not qualify as a regulated investment company under Subchapter 
M of the Internal Revenue Code. The Portfolio Manager further agrees to notify  
the Manager and the Fund immediately of any material fact known to the Portfolio
Manager respecting or relating to the Portfolio Manager that is not contained in
the Registration Statement or prospectus for the Fund (which describes the      
Series), or any amendment or supplement thereto, or of any statement contained  
therein that becomes untrue in any material respect.                            

       (b) The Manager agrees that it shall immediately notify the Portfolio
Manager (1) in the event that the SEC has censured the Manager or the Fund;     
placed limitations upon either of their activities, functions, or operations;   
suspended or revoked the Manager's registration as an investment                

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adviser; or has commenced proceedings or an investigation that may result in any
of these actions, or (2) upon having a reasonable basis for believing that the  
Series has ceased to qualify or might not qualify as a regulated investment     
company under Subchapter M of the Internal Revenue Code.                        

 8. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Portfolio Manager hereby agrees that all records which  
it maintains for the Series are the property of the Fund and further agrees to  
surrender promptly to the Fund any of such records upon the Fund's or the       
Manager's request, although the Portfolio Manager may, at its own expense, make 
and retain a copy of such records. The Portfolio Manager further agrees to      
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records
required to be maintained by Rule 31a-l under the 1940 Act and to preserve the  
records required by Rule 204-2 under the Advisers Act for the period specified  
in the Rule.                                                                    

 9. COOPERATION; CONFIDENTIALITY. Each party to this Agreement agrees to
cooperate with the other party and with all appropriate governmental authorities
having the requisite jurisdiction (including, but not limited to, the SEC) in   
connection with any investigation or inquiry relating to this Agreement or the  
Fund. Subject to the foregoing, the Portfolio Manager shall treat as            
confidential all information pertaining to the Fund and actions of the Fund, the
Manager and the Portfolio Manager, and the Manager shall treat as confidential  
and use only in connection with the Series all information furnished to the Fund
or the Manager by the Portfolio Manager, in connection with its duties under the
agreement except that the aforesaid information need not be treated as          
confidential if required to be disclosed under applicable law, if generally     
available to the public through means other than by disclosure by the Portfolio 
Manager or the Manager, or if available from a source other than the Manager,   
Portfolio Manager or this Fund.                                                 

   10. REPRESENTATIONS RESPECTING PORTFOLIO MANAGER. The Manager agrees that
neither the Manager, nor affiliated persons of the Manager, shall give any      
information or make any representations or statements in connection with the    
sale of shares of the Series concerning the Portfolio Manager or the Series     
other than the information or representations contained in the Registration     
Statement, prospectus, or statement of additional information for the Fund's    
shares, as they may be amended or supplemented from time to time, or in reports 
or proxy statements for the Fund, or in sales literature or other promotional   
material approved in advance by the Portfolio Manager, except with the prior    
permission of the Portfolio Manager. The parties agree that in the event that   
the Manager or an affiliated person of the Manager sends sales literature or    
other promotional material to the Portfolio Manager for its approval and the    
Portfolio Manager has not commented within 10 days, the Manager and its         
affiliated persons may use and distribute such sales literature or other        
promotional material.                                                           

11. ADDITIONAL COVENANTS OF THE PORTFOLIO MANAGER.                    

     (a) During the first year following the effectiveness of the Fund's
initial registration statement, the Portfolio Manager will make available       
Fredric Lutcher III or Ian Burden to accompany representatives of the Fund's    
distributor on six (6) days of "road show" marketing/due diligence presentations
to dealers and potential dealers in the Fund's shares, the timing and location  

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(within the United States) of such six presentations to be chosen by the Manager
following consultation with the Portfolio Manager. The Portfolio Manager may    
substitute a senior member of its firm for Mr. Lutcher or Mr. Burden, if such   
individual is reasonably acceptable to the Manager. The Manager will reimburse  
the Portfolio Manager, or cause the Fund's distributor to reimburse the         
Portfolio Manager, for the reasonable out-of-pocket expenses incurred by the    
Portfolio Manager in assisting in such presentations.                           

       (b) During the term of this Agreement and during the six-month period
beginning the date that this Agreement terminates, neither the Portfolio Manager
nor any of the Portfolio Manager's affiliates will serve or act as an investment
adviser or sub-investment adviser to any other SEC-registered open-end          
investment company or series thereof having investment objectives similar to    
those of the Series. The Portfolio Manager shall not be bound by this covenant  
in the event that the termination is not voluntarily effected by the Portfolio  
Manager, and shall not be bound by this covenant for any period in the event    
that the Portfolio Manager does not receive compensation for its services from  
the Manager or the Fund as required by the terms of this agreement. Furthermore,
the Portfolio Manager shall not be bound by this covenant with respect to any   
SEC registered open-end investment company or series thereof to which the       
Portfolio Manager is appointed as investment adviser or subadviser pursuant to  
any merger, acquisition or any other corporate action to which HSBC Holdings    
p.l.c, or any of its subsidiaries is a party and which involves the change in   
ownership of an investment advisory business or company.                        

  12. CONTROL. Notwithstanding any other provision of the Agreement, it is
understood and agreed that the Fund shall at all times retain the ultimate      
responsibility for and control of all functions performed pursuant to this      
Agreement and has reserved the right to reasonably direct any action hereunder  
taken on its behalf by the Portfolio Manager.                                   

   13. LIABILITY. Except as may otherwise be required by the 1940 Act or the
rules thereunder or other applicable law, and subject to the applicable         
provisions of Paragraph 2(f) of this Agreement (which deal with non-investment  
advisory services), the Manager agrees that the Portfolio Manager, any          
affiliated person of the Portfolio Manager, and each person, if any, who, within
the meaning of Section 15 of the 1933 Act controls the Portfolio Manager (1)    
shall bear no responsibility and shall not be subject to any liability for any  
act or omission respecting any series of the Fund that is not a Series          
hereunder, and (2) shall not be liable for, or subject to any damages, expenses,
or losses in connection with, any act or omission connected with or arising out 
of any services rendered under this Agreement, except by reason of willful      
misfeasance, bad faith, or gross negligence in the performance of the Portfolio 
Manager's duties, or by reason of reckless disregard of the Portfolio Manager's 
obligations and duties under this Agreement.                                    

14. DURATION AND TERMINATION.                                         

     (a) This Agreement shall become effective on the date first written
above, subject to the condition that the Fund's Board of Directors, including a 
majority of those Directors who are not interested persons (as such term is     
defined in the 1940 Act) of the Manager, and the shareholders of the Series,    
shall have approved this Agreement. Unless terminated as provided herein, the   

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Agreement shall continue in full force and effect for two (2) years from the    
effective date of this Agreement, and shall continue from year to year          
thereafter with respect to each Series covered by this Agreement; provided that 
such annual continuance is specifically approved each year by (a) the Board of  
Directors of the Fund, or by the vote of a majority of the outstanding voting   
securities (as defined in the 1940 Act) of each Series, and (b) the vote of a   
majority of those Directors who are not parties to this Agreement or interested 
persons (as such term is defined in the 1940 Act) of any such party to this     
Agreement cast in person at a meeting called for the purpose of voting on such  
approval. However, any approval of this Agreement by the holders of a majority  
of the outstanding shares (as defined in the 1940 Act) of a Series shall be     
effective to continue this Agreement with respect to such Series notwithstanding
(i) that this Agreement has not been approved by the holders of a majority of   
the outstanding shares of any other Series or (ii) that this agreement has not  
been approved by the vote of a majority of the outstanding shares of the Fund,  
unless such approval shall be required by any other applicable law or otherwise.
Notwithstanding the foregoing, this Agreement may be terminated with respect to 
any Series covered by this Agreement: (a) by the Manager at any time without    
penalty, upon sixty (60) days' written notice to the Portfolio Manager and the  
Fund, (b) at any time without payment of any penalty by the Fund, by the Fund's 
Board of Directors or a majority of the outstanding voting securities of each   
Series, upon sixty (60) days' written notice to the Manager and the Portfolio   
Manager, or (c) by the Portfolio Manager upon requisite notice, as provided     
below, at any time after two years from the date of this agreement; and         
requisite notice for these purposes shall be three (3) months written notice    
unless the Fund or the Manager requests additional time to find a replacement   
for the Portfolio Manager, in which case the Portfolio Manager shall allow the  
additional time requested by the Fund or Manager not to exceed three (3)        
additional months beyond the initial three-month notice period; provided        
further, however, that the Portfolio Manager may terminate this Agreement at any
time without penalty, effective upon written notice to the Manager and the Fund,
in the event either the Portfolio Manager (acting in good faith) or the Manager 
ceases to be registered as an investment adviser under the Advisers Act or      
otherwise becomes legally incapable of providing investment management services 
pursuant to its respective contract with the Fund, or in the event the Manager  
becomes bankrupt or otherwise incapable of carrying out its obligations under   
this Agreement, or in the event that the Portfolio Manager does not receive     
compensation for its services from the Manager or the Fund as required by the   
terms of this agreement. In the event of termination for any reason, all records
of each Series for which the Agreement is terminated shall promptly be returned 
to the Manager or the Fund, free from any claim or retention of rights in such  
record by the Portfolio Manager, although the Portfolio Manager may, at its own 
expense, make and retain a copy of such records. This Agreement shall           
automatically terminate in the event of its assignment (as such term is         
described in the 1940 Act). In the event this Agreement is terminated or is not 
approved in the manner described above, the Sections or Paragraphs numbered     
2(g), 8, 9, 10, 11(b), 12, 13 and 16 of this Agreement shall remain in effect,  
as well as any applicable provision of this Section numbered 14 and, to the     
extent that only amounts are owed to the Portfolio Manager as compensation for  
services rendered while the agreement was in effect, Section 6.                 

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(b) NOTICES.                                                  

        Any notice must be in writing and shall be sufficiently given (1) when
delivered in person, (2) when dispatched by telegram or electronic facsimile    
transfer (confirmed in writing by postage prepaid first class air mail          
simultaneously dispatched), (3) when sent by internationally recognized         
overnight courier service (with receipt confirmed by such overnight courier     
service), or (4) when sent by registered or certified mail, to the other party  
at the address of such party set forth below or at such other address as such   
party may from time to time specify in writing to the other party.              

If to the Fund:                                                       

Pilgrim Advisory Funds, Inc.                                
40 North Central Avenue                                     
Phoenix, AZ  85004-4424                                     
Attention: James M. Hennessy                                

If to the Portfolio Manager:                                          

HSBC Asset Management (Americas), Inc.                      
250 Park Avenue                                             
New York, NY  10177-0012                                    
Attention: Fredric M. Lutcher, III                          

15. AMENDMENTS. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by 
the party against which enforcement of the change, waiver, discharge or         
termination is sought, and no amendment of this Agreement shall be effective    
until approved by an affirmative vote of (i) the holders of a majority of the   
outstanding voting securities of the Series, and (ii) the Directors of the Fund,
including a majority of the Directors of the Fund who are not interested persons
of any party to this Agreement, cast in person at a meeting called for the      
purpose of voting on such approval, if such approval is required by applicable  
law.                                                                            

16. USE OF NAME.                                                      

       (a) It is understood that the name "Pilgrim Investments, Inc." or any
derivative thereof (including the name or phrase "Pilgrim") or logo associated  
with that name is the valuable property of the Manager and/or its affiliates,   
and that the Portfolio Manager has the right to use such name (or derivative or 
logo) only with the approval of the Manager and only so long as the Manager is  
Manager to the Fund and/or the Series. Upon termination of the Management       
Agreement between the Fund and the Manager, the Portfolio Manager shall         
forthwith cease to use such name (or derivative or logo).                       

       (b) It is understood that the names "HSBC Asset Management (Americas)
Inc.", "HSBC Asset Management (Hong Kong) Ltd." and "HSBC Asset Management      
(Europe) Limited" or any derivative thereof or logo associated with             

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that name is the valuable property of the Portfolio Manager and its affiliates  
and that the Fund and/or the Series have the right to use such name (or         
derivative or logo) in offering materials of the Fund with the approval of the  
Portfolio Manager and for so long as the Portfolio Manager is a portfolio       
manager to the Fund and/or the Series. Upon termination of this Agreement, the  
Manager shall forthwith cause the Fund to cease to use such name (or derivative 
or logo).                                                                       

17. MISCELLANEOUS.                                                    

      (a) This Agreement shall be governed by the laws of the State of New
York, provided that nothing herein shall be construed in a manner inconsistent  
with the 1940 Act, the Advisers Act or rules or orders of the SEC thereunder,   
and without regard for the conflicts of laws principle thereof. The term        
"affiliate" or "affiliated person" as used in this Agreement shall mean         
"affiliated person" as defined in Section 2(a)(3) of the 1940 Act.              

     (b) The Manager and the Portfolio Manager acknowledge that the Fund
enjoys the rights of a third-party beneficiary under this Agreement, and the    
Manager acknowledges that the Portfolio Manager enjoys the rights of a third    
party beneficiary under the Management Agreement.                               

      (c) The captions of this Agreement are included for convenience only
and in no way define or limit any of the provisions hereof or otherwise affect  
their construction or effect.                                                   

      (d) To the extent permitted under Section 14 of this Agreement, this
Agreement may only be assigned by any party with the prior written consent of   
the other parties.                                                              

         (e) If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of this Agreement   
shall not be affected thereby, and to this extent, the provisions of this       
Agreement shall be deemed to be severable.                                      

     (f) Nothing herein shall be construed as constituting the Portfolio
Manager as an agent or co-partner of the Manager, or constituting the Manager as
an agent or co-partner of the Sub-Adviser. Nothing herein shall be construed as 
constituting HSBC Americas, HSBC Hong Kong or HSBC Europe as an agent or        
co-partner of one another, it being understood that references in this Agreement
to such parties as the Portfolio Manager are made for convenience only.         

(g) This agreement may be executed in counterparts.           

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       IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed as of the day and year first above written.                         

                       PILGRIM INVESTMENTS, INC.

 By:
                                          --------------------------------------

                                       -----------------------------------------
   Title

                                   HSBC ASSET MANAGEMENT (AMERICAS) INC.

 By:
                                          --------------------------------------

                                       -----------------------------------------
   Title

                                       HSBC ASSET MANAGEMENT (HONG KONG) LIMITED

 By:
                                          --------------------------------------

                                       -----------------------------------------
   Title

                                    HSBC ASSET MANAGEMENT (EUROPE) LIMITED

 By:
                                          --------------------------------------

                                       -----------------------------------------
   Title

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APPENDIX L

SUB-ADVISORY AGREEMENT WITH J.P. MORGAN INVESTMENT MANAGEMENT INC.
(PILGRIM RESEARCH ENHANCED INDEX FUND)

SUB-ADVISORY AGREEMENT

        AGREEMENT made this ____ day of September, 2000 by and between Pilgrim
Investments, Inc., a Delaware Corporation (hereinafter the "Adviser"),          
investment adviser for the Pilgrim Research Enhanced Index Fund (hereinafter the
"Fund"), and J.P. Morgan Investment Management Inc., a Delaware corporation     
(hereinafter the "Subadviser").                                                 

 WHEREAS, the Adviser has been retained by the Fund, an open-end
diversified management investment company registered under the Investment       
Company Act of 1940, as amended (the "1940 Act"), to provide investment advisory
services to the Fund pursuant to an Investment Advisory Agreement dated         
____________, 2000 (the "Investment Management Agreement"); and                 

        WHEREAS, the Fund's Trustees, including a majority of the Trustees who
are not "interested persons," as defined in the 1940 Act, and the Fund's        
shareholders have approved the appointment of the Subadviser to perform certain 
investment advisory services for the Fund pursuant to this Subadvisory Agreement
with the Adviser and the Subadviser is willing to perform such services for the 
Fund;                                                                           

   WHEREAS, the Subadviser is or will be registered as an investment
adviser under the Investment Advisers Act of 1940, as amended ("Advisers Act")  
prior to performing its services for the Fund under this Agreement;             

       NOW THEREFORE, in consideration of the promises and mutual convenants
herein contained, it is agreed between the Adviser and the Subadviser as        
follows:                                                                        

1. APPOINTMENT. The Adviser hereby appoints the Subadviser to perform 
advisory services to the Fund for the periods and on the terms set forth in this
Subadvisory Agreement. The Subadviser accepts such appointment and agrees to    
furnish the services herein set forth, for the compensation herein provided.    

     2. DUTIES OF SUBADVISER. The Adviser hereby authorizes Subadviser to manage
the investment and reinvestment of cash and investments comprising the assets of
the Fund with power on behalf of and in the name of the Fund at Subadviser's    
discretion; subject at all times to the supervision of the Adviser and the      
Trustees of the Fund:                                                           

  (a) to direct the purchase, subscription or other acquisition of
investments and to direct the sale, redemption, and exchange of investments,    
subject to the duty to render to the Trustees of the Fund, the Adviser and the  
Custodian written reports of the composition of the portfolio of the Fund as    
often as the Trustees of the Fund shall reasonably require;                     

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        (b) to make all decisions relating to the manner, method and timing of
investment transactions, to select brokers, dealers and other intermediaries by 
or through whom such transactions will be effected, and to engage such          
consultants, analysts and experts in connection therewith as may be considered  
necessary or appropriate;                                                       

        (c) to direct banks, brokers or custodians to disburse funds or assets
solely in order to execute investment transactions for the Fund, provided that  
the Subadviser shall have no other authority to direct the transfer of the      
Fund's funds or assets to itself or other persons and shall have no other       
authority over the disbursement (as opposed to investment decisions) of funds or
assets nor any custody of any of the Fund's funds or assets; and                

      (d) to take all such other actions as may be considered necessary or
appropriate to discharge its duties hereunder; PROVIDED THAT any specific or    
general directions which the Trustees of the Fund, or the Adviser may give to   
the Subadviser with regard to any of the foregoing powers shall, unless the     
contrary is expressly stated therein, override the general authority given by   
this provision to the extent that the Trustees of the Fund may, at any time and 
from time to time, direct, either generally or to a limited extent and either   
alone or in concert with the Adviser or the Subadviser (provided that such      
directions would not cause the Subadviser to violate any fiduciary duties or any
laws with regard to the Subadviser's duties and responsibilities), all or any of
the same as they shall think fit and, in particular, the Adviser shall have the 
right to request the Subadviser to place trades through brokers and other agents
of the Adviser's choice, subject to the Subadviser's judgment that such brokers 
or agents will execute such trades on the best overall terms available, taking  
into consideration factors the Subadviser deems relevant including, without     
limitation, the price of the security, research or other services which render  
that broker's services the most appropriate for the Subadviser's needs, the     
financial condition and dealing and execution capability of the broker or dealer
and the reasonableness of the commission, if any, for the specific transaction  
and on a continuing basis; and provided further that nothing herein shall be    
construed as giving the Subadviser power to manage the aforesaid cash and       
investments in such a manner as would cause the Fund to be considered a "dealer"
in stocks, securities or commodities for U.S. federal income tax purposes.      

The Adviser shall monitor and review the performance of the Subadviser
under this Agreement, including but not limited to the Subadviser's performance 
of the duties delineated in subparagraphs (a)-(d) of this provision.            

    The Subadviser further agrees that, in performing its duties hereunder, it
will                                                                            

(a) (i) comply with the 1940 Act and all rules and regulations
thereunder, the Advisers Act the Internal Revenue Code (the "Code") and all     
other applicable federal and state laws and regulations, the current Prospectus 
and Statement of Additional Information for the Fund supplied to the Subadviser 
by the Adviser, and with any applicable procedures adopted by the Trustees in   
writing supplied to the Subadviser by the Adviser; (ii) manage the Fund in      
accordance with the investment requirements for regulated investment companies  
under Subchapter M of the Code and regulations issued thereunder; (iii) direct  
the placement of orders pursuant to its investment determinations for the Fund  
directly with the issuer, or with any broker or dealer, in accordance with      
applicable policies expressed in the Fund's Prospectus and/or Statement of      
Additional Information and in accordance with applicable legal requirements.    

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       (e) furnish to the Fund whatever non-proprietary reports the Fund may
reasonably request with respect to the Fund's assets or contemplated strategies.
In addition, the Subadviser will keep the Fund and the Trustees informed of     
developments materially affecting the Fund's portfolio and shall, on the        
Subadviser's own initiative, furnish to the Fund from time to time whatever     
information the Subadviser believes appropriate for this purpose;               

(f) make available to the Fund's administrator, Northstar     
Administrators Corp. (the "Administrator"), the Adviser, and the Fund, promptly 
upon their request, such copies of its investment records and ledgers with      
respect to the Fund as may be required to assist the Adviser, the Administrator 
and the Fund in their compliance with applicable laws and regulations. The      
Subadviser will furnish the Trustees with such periodic and special reports     
regarding the Fund as they may reasonably request;                              

       (g) immediately notify the Adviser and the Fund in the event that the
Subadviser or any of its affiliates: (i) becomes aware that it is subject to a  
statutory disqualification that prevents the Subadviser from serving as an      
investment adviser pursuant to this Subadvisory Agreement; or (ii) becomes aware
that it is the subject of an administrative proceeding or enforcement action by 
the Securities and Exchange Commission ("SEC") or other regulatory authority.   
The Subadviser further agrees to notify the Fund and the Adviser immediately of 
any material fact known to the Subadviser respecting or relating to the         
Subadviser that is not contained in the Fund's Registration Statement, or any   
amendment or supplement thereto, but that is required to be disclosed therein,  
and of any statement contained therein that becomes untrue in any material      
respect. The Fund, Adviser, Administrator, and their Affiliates shall likewise  
immediately notify the Subadviser if any of them becomes aware of any regulatory
action of the type described in this subparagraph 2(d).                         

3. ALLOCATION OF CHARGES AND EXPENSES. The Subadviser shall pay all   
expenses associated with the management of its business operations in performing
its responsibilities hereunder, including the cost of its own overhead,         
research, compensation and expenses of its directors, officers and employees,   
and other internal operating costs; provided, however, that the Subadviser shall
be entitled to reimbursement on a monthly basis by the Adviser of all reasonable
out-of-pocket expenses properly incurred by it in connection with serving as    
subadviser to the Fund. For the avoidance of doubt, the Fund shall bear its own 
overhead and other internal operating costs (whether incurred directly or by the
Adviser or the Subadviser) including, without limitation:                       

       (a) the costs incurred by the Fund in the preparation and printing of
the Prospectus or any offering literature (including any form of advertisement  
or other solicitation materials calculated to lead to investors subscribing for 
shares);                                                                        

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       (b) all fees and expenses on behalf of the Fund to the Transfer Agent
and the Custodian;                                                              

        (c) the reasonable fees and expenses of accountants, auditors, lawyers
and other professional advisors to the Fund;                                    

 (d) any interest, fee or charge payable on or on account of any
borrowing by the Fund;                                                          

(e) fiscal and governmental charges and duties relating to the
purchase, sale, issue or redemption of shares and increases in authorized share 
capital of the Fund;                                                            

        (f) the fees of any stock exchange or over-the-counter market on which
shares of the Fund may from time to time be listed, quoted or dealt in and the  
expenses of obtaining any such listing, quotation or permission to deal;        

(g) the fees and expenses (if any) payable to Trustees;       

       (h) brokerage, fiscal or governmental charges or duties in respect of
or in connection with the acquisition, holding or disposal of any of the assets 
of the Fund or otherwise in connection with its business;                       

         (i) the expenses of publishing details and prices of shares of the Fund
in newspapers and other publications;                                           

        (j) all expenses incurred in the convening of meetings of shareholders
or in the preparation of agreements or other documents relating to the Fund or  
in relation to the safe custody of the documents of title of any investments;   

(k) all Trustees communication costs; and                     

    (l) all premiums and costs for Fund insurance and blanket fidelity
bonds.                                                                          

4. COMPENSATION. As compensation for the services provided by the     
Subadviser under this Agreement, the Adviser will pay the Subadviser at the end 
of each calendar month an advisory fee computed daily at an annual rate equal to
0.20 of 1% of the Fund's average daily net assets. The "average daily net       
assets" of the Fund shall mean the average of the values placed on the Fund's   
net assets as of 4:00 p.m. (New York time) on each day on which the net asset   
value of the Fund is determined consistent with the provisions of Rule 22c-1    
under the 1940 Act or, if the Fund lawfully determines the value of its net     
assets as of some other time on each business day, as of such other time. The   
value of net assets of the Fund shall always be determined pursuant to the      
applicable provisions of the Funds Declaration of Trust and the Registration    
Statement. If, pursuant to such provisions, the determination of net asset value
is suspended for any particular business day, then for the purposes of this     

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Section 4, the value of the net assets of the Fund as last determined shall be  
deemed to be the value of its net assets as of the close of regular trading on  
the New York Stock Exchange, or as of such other time as the value of the net   
assets of the Fund's portfolio may lawfully be determined, on that day. If the  
determination of the net asset value of the shares of the Fund has been so      
suspended for a period including any month end when the Subadviser's            
compensation is payable pursuant to this Section, the Subadviser's compensation 
payable at the end of such month shall be computed on the basis of the value of 
the net assets of the Fund as last determined (whether during or prior to such  
month). If the Fund determines the value of the net assets of its portfolio more
than once on any day, then the last such determination thereof on that day shall
be deemed to be the sole determination thereof on that day for the purposes of  
this Section 4.                                                                 

5. BOOKS AND RECORDS. The Subadviser agrees to maintain such books and
records with respect to its services to the Fund as are required by Section 31  
under the 1940 Act, and rules adopted thereunder, and by other applicable legal 
provisions, and to preserve such records for the periods and in the manner      
required by applicable laws or regulations. The Subadviser also agrees that     
records it maintains and preserves pursuant to Rules 31a-2 under the 1940 Act   
(excluding trade secrets or intellectual property rights) in connection with its
services hereunder are the property of the Fund and will be surrendered promptly
to the Fund upon its request and the Subadviser further agrees that it will     
furnish to regulatory authorities having the requisite authority any information
or reports in connection with its services hereunder which may be requested in  
order to determine whether the operations of the Fund are being conducted in    
accordance with applicable laws and regulations.                                

6. STANDARD OF CARE AND LIMITATION OF LIABILITY. The Subadviser shall 
exercise its best judgment in rendering the services provided by it under this  
Subadvisory Agreement. The Subadviser shall not be liable for any error of      
judgment or mistake of law or for any loss suffered by the Fund or the holders  
of the Fund's shares or by the Adviser in connection with the matters to which  
this Subadvisory Agreement relates, provided that nothing in this Subadvisory   
Agreement shall be deemed to protect or purport to protect the Subadviser       
against liability to the Fund or to holders of the Fund's shares or to the      
Adviser to which the Subadviser would otherwise be subject by reason of willful 
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or by reason of the Subadviser's reckless disregard of its obligations   
and duties under this Subadvisory Agreement. As used in this Section 6, the term
"Subadviser" shall include any officers, directors, employees or other          
affiliates of the Subadviser performing services for the Fund.                  

    7. SERVICES NOT EXCLUSIVE. The Advisor understands that the Subadviser now
acts, will continue to act and may act in the future as investment advisor to   
fiduciary and other managed accounts and as investment advisor to other         
investment companies, and, except as may be separately agreed to from time to   
time between the Advisor and the Subadviser, the Trust has no objection to the  
Subadviser so acting, provided that whenever the Fund and one or more other     
accounts or investment companies advised by the Subadviser have available funds 
for investment, investments suitable and appropriate for each will be allocated 
in accordance with a methodology believed to be equitable to each entity. The   

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Subadviser agrees to allocate similar opportunities to sell securities. The     
Advisor recognizes that, in some cases, this procedure may limit the size of the
position that may be acquired or sold for the Fund. In addition, the Adviser    
understands that the persons employed by the Subadviser to assist in the        
performance of the Shareholder's duties hereunder will not devote their full    
time to such service and nothing contained herein shall be deemed to limit or   
restrict the right of the Subadviser or any affiliate of the Subadviser to      
engage in and devote time and attention to other business or to render services 
of whatever kind or nature.                                                     

  8. DURATION AND TERMINATION. This Agreement shall become effective as of
the date of its execution and shall continue in effect for a period of two years
from the date of execution. Thereafter, this Agreement shall continue           
automatically for successive annual periods, provided such continuance is       
specifically approved at least annually by (i) the Fund's Trustees or (ii) a    
vote of a "majority" (as defined in the 1940 Act) of the Fund's outstanding     
voting securities, provided that in either event the continuance also is        
approved by a majority of the Fund's Trustees who are not "interested persons"  
(as defined in the 1940 Act) of any party to this Agreement, by vote cast in    
person at a meeting called for the purpose of voting on such approval. This     
Agreement is terminable, without penalty, on 60 days written notice, by the     
Adviser, by the Fund's Trustees, or by vote of holders of a majority of the     
Fund's shares. For a period of eighteen months from the date of execution of    
this Agreement, the Subadviser may terminate this Agreement, without penalty, on
six months written notice. Thereafter, the Subadviser may terminate this        
Agreement, without penalty, on 60 days written notice. This Agreement will      
terminate automatically five business days after the Subadviser receives written
notice of the termination of the advisory agreement between the Fund and the    
Adviser. This Agreement also will terminate automatically in the event of its   
assignment (as defined in the 1940 Act).                                        

   9. AMENDMENTS. No provision of this Subadvisory Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing   
signed by both parties, and no material amendment of this Subadvisory Agreement 
shall be effective until approved by an affirmative vote of (i) a majority of   
the outstanding voting securities of the Fund, and (ii) a majority of the       
Trustees of the Fund, including a majority of Trustees who are not interested   
persons of any party to this Subadvisory Agreement, cast in person at a meeting 
called for the purpose of voting on such approval, if such approval is required 
by applicable law.                                                              

10. INDEMNIFICATION. (a) The Adviser hereby agrees to indemnify the   
Subadviser and its affiliates from and against all liabilities, losses,         
expenses, reasonable attorneys' fees and costs (other than attorneys' fees and  
costs in relation to the preparation of this Agreement; each party bearing      
responsibility for its own such costs and fees) or damages (other than          
liabilities, losses, expenses, attorneys fees and costs or damages arising from 
the Subadviser failing to meet the standard of care required in Section 6 of    
this Subadvisory Agreement in the performance by the Subadviser of, or its      
failure to perform, the services required hereunder), arising from the Adviser's
(its affiliates and their respective agents and employees) failure to perform   
its duties or assume its obligations hereunder, or from its wrongful actions or 
omissions, including, but not limited to, any claims for non-payment of advisory
fees; claims asserted or threatened by any shareholder of the Fund, governmental

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or regulatory agency, or any other person; claims arising from any wrongful act 
by the Fund or any of the Fund's trustees, officers, employees, or              
representatives, or by the Adviser, its officers, employees or representatives, 
or from any actions by the Fund's distributors or any representative of the     
Fund; any action or claim against the Subadviser based on any alleged untrue    
statement or misstatement of material fact in any registration statement,       
prospectus, shareholder report or other information or materials covering shares
filed or made public by the Fund or any amendment thereof or supplement thereto,
or the failure or alleged failure to state therein a material fact required to  
be stated in order that the statements therein are not misleading, provided that
such claim is not based upon information provided to the Adviser by the         
Subadviser or approved by the Subadviser in the manner provided in paragraph    
12(b) of this Agreement, or which facts or information the Subadviser failed to 
provide or disclose. With respect to any claim for which the Subadviser shall be
entitled to indemnity hereunder, the Adviser shall assume the reasonable        
expenses and costs (including any reasonable attorneys' fees and costs) of the  
Subadviser of investigating and/or defending any claim asserted or threatened by
any party, subject always to the Adviser first receiving a written under-taking 
from the Subadviser to repay any amounts paid on its behalf in the event and to 
the extent of any subsequent determination that the Subadviser was not entitled 
to indemnification hereunder in respect of such claim.                          

(b) The Subadviser hereby agrees to indemnify the Adviser, its
affiliates and the Fund from and against all liabilities, losses, expenses,     
reasonable attorneys' fees and costs (other than attorneys' fees and costs in   
relation, to the preparation of this Agreement; each party bearing              
responsibility for its own such costs and fees) or damages (other than          
liabilities, losses, expenses, attorneys fees and costs or damages arising from 
the Adviser's failure to perform its responsibilities hereunder or claims       
arising from its acts or failure to act in performing this Agreement) arising   
from Subadviser's (its affiliates and their respective agents and employees)    
willful misfeasance, bad faith or gross negligence in the performance of its    
duties or by reason of the Subadviser's reckless disregard of its obligations   
and duties under this Subadvisory Agreement, or arising from failure to act in  
any action or claim against the Adviser based on any alleged untrue statement or
misstatement of a material fact made or provided by or with the consent of      
Subadviser contained in any registration statement, prospectus, shareholder     
report or other information or materials relating to the Fund and shares issued 
by the Fund, or the failure or alleged failure to state a material fact therein 
required to be stated in order that the statements therein are not misleading,  
which fact should have been made or provided by the Subadviser to the Adviser.  
With respect to any claim for which the Adviser is entitled to indemnity        
hereunder, the Subadviser shall assume the reasonable expenses and costs        
(including any reasonable attorneys' fees and costs) of the Adviser of          
investigating and/or defending any claim asserted or threatened by any party,   
subject always to the Subadviser first receiving a written undertaking from the 
Adviser to repay any amounts paid on its behalf in the event and to the extent  
of any subsequent determination that the Adviser was not entitled to            
indemnification hereunder in respect of such claim.                             

       (c) In the event that the Subadviser or Adviser is or becomes a party
to any action or proceedings in respect of which indemnification may be sought  
hereunder, the party seeking indemnification shall promptly notify the other    

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party thereof. After becoming notified of the same, the party from whom         
indemnification is sought shall be entitled to participate in any such action or
proceeding and shall assume any payment for the full defense thereof with       
counsel reasonably satisfactory to the party seeking indemnification. After     
properly assuming the defense thereof, the party from whom indemnification is   
sought shall not be liable hereunder to the other party for any legal or other  
expenses subsequently incurred by such party in connection with the defense     
thereof, other than damages, if any, by way of judgment, settlement, or         
otherwise pursuant to this provision. The party from whom indemnification is    
sought shall not be liable hereunder for any settlement of any action or claim  
effected without its written consent, which consent shall not be unreasonably   
withheld.                                                                       

11. INDEPENDENT CONTRACTOR. Subadviser shall for all purposes of this 
Agreement be deemed to be an independent contractor and, except as otherwise    
expressly provided herein, shall have no authority to act for, bind or represent
the Fund in any way or otherwise be deemed to be an agent of the Fund. Likewise,
the Fund, the Adviser and their respective affiliates, agents and employees     
shall not be deemed agents of the Subadviser and shall have not authority to    
bind Subadviser.                                                                

     12. USE OF NAME. (a) The Fund may, subject to sub-clause (b) below, use the
name, "J.P. Morgan Investment Management Inc. or "J.P. Morgan" for promotional  
purposes only for so long as this Agreement (or any extension, renewal or       
amendment thereof) continues in force, unless the Subadviser shall specifically 
consent in writing to such continued use thereafter. Any permitted use by the   
Fund during the term hereof of the name of the Subadviser or J.P. Morgan shall  
in no way prevent the Subadviser or any of it shareholders or any of their      
successors, from using or permitting the use of such name (whether singly or in 
any combination with any other words) for, by or in connection with an entity or
enterprise other than the Fund. The name and right to the name J.P. Morgan      
Investment Management Inc. or any derivation of the name J.P. Morgan shall at   
all times be owned and be the sole and exclusive property of J.P. Morgan and its
affiliated entities. J.P. Morgan Investment Management Inc., by entering into   
this Agreement, is allowing the Fund to use the name J.P. Morgan Investment     
Management Inc. and/or J.P. Morgan solely by or on behalf of the Fund. At the   
conclusion of this Agreement or in the event of any termination of this         
Agreement or if the Subadviser's services are terminated for any reason, each of
the authorized parties and their respective employees, representatives,         
affiliates, and associates agree that they shall immediately cease using the    
name J.P. Morgan Investment Management Inc. and/or J.P. Morgan of said name for 
any purpose whatsoever.                                                         

         (b) The Adviser and its affiliates shall not publish or distribute, and
shall cause the Fund not to publish or distribute to Fund shareholders,         
prospective investors, sales agents or members of the public any disclosure     
document, offering literature (including any form of advertisement or other     
solicitation materials calculated to lead investors to subscribe for and        
purchase shares of the Fund) or other document referring by name to the         
Subadviser or any of its affiliates, unless the Subadviser shall have consented 
in writing to such references in the form and context in which they appear;     
provided however, that where the Fund timely seeks to obtain approval of        
disclosure contained in any documents required to be filed by the Fund, and such

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approval is not forthcoming on or before the date on which such documents are   
required by law to be filed, the Subadviser shall be deemed to have consented to
such disclosure.                                                                

13. MISCELLANEOUS.                                                    

     (a) This Subadvisory Agreement shall be governed by the laws of the
State of New York, provided that nothing herein shall be construed in a manner  
inconsistent with the 1940 Act, the Advisers Act, or rules or orders of the SEC 
thereunder. In the event of any litigation in which the Adviser and the         
Subadviser are adverse parties and there are no other parties to such           
litigation, such action shall be brought in the United States District Court for
the State of New York, located in New York, New York.                           

 (b) The captions of this Subadvisory Agreement are included for
convenience only and in no way define or limit any of the provisions hereof or  
otherwise affect their construction or effect.                                  

        (c) This Agreement may be executed in one or more counterparts, all of
which taken together shall be deemed to constitute one and the same instrument. 

14. NOTICES. Any notice, instruction or other instrument required or  
permitted to be given hereunder may be delivered in person to the offices of the
parties as set forth therein during normal business hours, or delivered or sent 
by prepaid registered mail, express mail or by facsimile to the parties at such 
offices or such other address as may be notified by either party from time to   
time. Such notice, instruction or other instrument shall be deemed to have been 
served, in the case of a registered letter at the expiration of seventy-two (72)
hours after posting; in the case of express mail, within twenty-four (24) hours 
after dispatch; and in the case of facsimile, immediately on dispatch, and if   
delivered outside normal business hours it shall be deemed to have been received
at the next time after delivery or transmission when normal business hours      
commence. Evidence that the notice, instruction or other instrument was properly
addressed, stamped and put into the post shall be conclusive evidence of        
posting.                                                                        

   15. NON-SOLICITATION. Adviser, its affiliates and their respective agents
(including brokers engaged in marketing and selling shares of the Fund), and    
each of their employees and affiliates agree not to knowingly solicit to invest,
or accept or retain as investors, in the Fund any persons or entities who are   
clients of or investors in any fund or investment vehicle managed by any entity 
owned or affiliated with J.P. Morgan Investment Management Inc.                 

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       IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of ____________, 2000.        

                         Pilgrim Investments, Inc.

   By:
                                           -------------------------------------

                                      J.P. Morgan Investment Management Inc.

   By:
                                           -------------------------------------

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APPENDIX M

 SUB-ADVISORY AGREEMENT WITH NAVELLIER FUND MANAGEMENT, INC.
 (PILGRIM GROWTH + VALUE FUND)

SUB-ADVISORY AGREEMENT

       AGREEMENT made this ___ day of September, 2000 by and between Pilgrim
Investments, Inc., a Delaware Corporation (hereinafter the "Adviser"),          
investment adviser for the Pilgrim Growth +Value Fund (hereinafter the "Fund"), 
and Navellier Fund Management, Inc., a Delaware corporation (hereinafter the    
"Subadviser").                                                                  

 WHEREAS, the Adviser has been retained by the Fund, an open-end
diversified management investment company registered under the Investment       
Company Act of 1940, as amended (the "1940 Act"), to provide investment advisory
services to the Fund pursuant to an amended Investment Advisory Agreement dated 
__________, 2000 (the "Investment Management Agreement"); and                   

        WHEREAS, the Fund's Trustees, including a majority of the Trustees who
are not "interested persons," as defined in the 1940 Act, and the Fund's        
shareholders have approved the appointment of the Subadviser to perform certain 
investment advisory services for the Fund pursuant to this Subadviser Agreement 
with the Adviser and the Subadviser is willing to perform such services for the 
Fund;                                                                           

   WHEREAS, the Subadviser is or will be registered as an investment
adviser under the Investment Advisers Act of 1940, as amended ("Advisers Act")  
prior to performing its services for the Fund under this Agreement;             

      NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the Adviser and the Subadviser as        
follows:                                                                        

1. APPOINTMENT. The Adviser hereby appoints the Subadviser to perform 
advisory services to the Fund for the periods and on the terms set forth in this
Subadvisory Agreement. The Subadviser accepts such appointment and agrees to    
furnish the services herein set forth, for the compensation herein provided.    

     2. DUTIES OF SUBADVISER. The Adviser hereby authorizes Subadviser to manage
the investment and reinvestment of cash and investments comprising the assets of
the Fund with power on behalf of and in the name of the Fund at Subadviser's    
discretion; subject at all times to the supervision of the Adviser and the      
Trustees of the Fund:                                                           

  (a) to direct the purchase, subscription or other acquisition of
investments and to direct the sale, redemption, and exchange of investments,    
subject to the duty to render to the Trustees of the Fund, the Adviser and the  
Custodian written reports of the composition of the portfolio of the Fund as    
often as the Trustees of the Fund shall reasonably require;                     

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        (b) to make all decisions relating to the manner, method and timing of
investment transactions, to select brokers, dealers and other intermediaries by 
or through whom such transactions will be effected, and to engage such          
consultants, analysts and experts in connection therewith as may be considered  
necessary or appropriate;                                                       

        (c) to direct banks, brokers or custodians to disburse funds or assets
solely in order to execute investment transactions for the Fund, provided that  
the Subadviser shall have no authority to direct the transfer of the Fund's     
funds or assets to itself or other persons and shall have no authority over the 
disbursement (as opposed to investment decisions) of funds or assets nor any    
custody of any of the Fund's funds or assets; and                               

      (d) to take all such other actions as may be considered necessary or
appropriate to discharge its duties hereunder; PROVIDED THAT any specific or    
general directions which the Trustees of the Fund, or the Adviser may give to   
the Subadviser with regard to any of the foregoing powers shall, unless the     
contrary is expressly stated therein, override the general authority given by   
this provision to the extent that the Trustees of the Fund may, at any time and 
from time to time, direct, either generally or to a limited extent and either   
alone or in concert with the Adviser or the Subadviser (provided that such      
directions would not cause the Subadviser to violate any fiduciary duties or any
laws with regard to the Subadviser's duties and responsibilities), all or any of
the same as they shall think fit and, in particular the Adviser shall have the  
right to direct the Subadviser to place trades through brokers \and other agents
of the Adviser's choice, subject to such brokers or agents executing such trades
on a "best execution basis", i.e. at the best price and/or with research or     
other services which render that broker's services the most appropriate for the 
Subadviser's needs, and further that the Subadviser is satisfied that the       
dealing and execution quality of such brokers are satisfactory to the           
Subadviser, and PROVIDED FURTHER that nothing herein shall be construed as      
giving the Subadviser power to manage the aforesaid cash and investments in such
a manner as would cause the Fund to be considered a "dealer" in stocks,         
securities or commodities for U.S. federal income tax purposes.                 

The Adviser shall monitor and review the performance of the Subadviser
under this Agreement, including but not limited to the Subadviser's performance 
of the duties delineated in subparagraphs (a)-(d) of this provision.            

    The Subadviser further agrees that, in performing its duties hereunder, it
will:                                                                           

(a) (i) comply with the 1940 Act and all rules and regulations
thereunder, the Advisers Act, the Internal Revenue Code (the "Code") and all    
other applicable federal and state laws and regulations, the Prospectus and     
Statement of Additional Information for the Fund, and with any applicable       
procedures adopted by the Trustees in writing and made available to Subadviser, 
(ii) manage the Fund in accordance with the investment requirements for         
regulated investment companies under Subchapter M of the Code and regulations   
issued thereunder; (iii) direct the placement of orders pursuant to its         
investment determinations for the Fund directly with the issuer, or with any    

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broker or dealer, in accordance with applicable policies expressed in the Fund's
Prospectus and/or Statement of Additional Information and in accordance with    
applicable legal requirements.                                                  

       (b) furnish to the Fund whatever non-proprietary reports the Fund may
reasonably request with respect to the Fund's assets or contemplated            
investments. In addition, the Subadviser will keep the Fund and the Trustees    
informed of developments materially affecting the Fund's portfolio and shall, on
the Subadviser's own initiative, furnish to the Fund from time to time whatever 
information the Subadviser believes appropriate for this purpose;               

(c) make available to the Fund's administrator, Northstar     
Administrators Corp. (the "Administrator"), the Adviser, and the Fund, promptly 
upon their request, such copies of its investment records and ledgers with      
respect to the Fund as may be required to assist the Adviser, the Administrator 
and the Fund in their compliance with applicable laws and regulations. The      
Subadviser will furnish the Trustees with such periodic and special reports     
regarding the Fund as they may reasonably request;                              

       (d) immediately notify the Adviser and the Fund in the event that the
Subadviser or any of its affiliates: (i) becomes aware that it is subject to a  
statutory disqualification that prevents the Subadviser from serving as an      
investment adviser pursuant to this Subadvisory Agreement; or (ii) becomes aware
that it is the subject of an administrative proceeding or enforcement action by 
the Securities and Exchange Commission ("SEC") or other regulatory authority.   
The Subadviser further agrees to notify the Fund and the Adviser immediately of 
any material fact known to the Subadviser respecting or relating to the         
Subadviser that is not contained in the Fund's Registration Statement, or any   
amendment or supplement thereto, but that is required to be disclosed therein,  
and of any statement contained therein that becomes untrue in any material      
respect. The Fund, Adviser, Administrator, and their Affiliates shall likewise  
immediately notify the Subadviser if any of them becomes aware of any regulatory
action of the type described in this subparagraph 2(d).                         

3. ALLOCATION OF CHARGES AND EXPENSES. The Subadviser shall pay all   
expenses associated with the management of its business operations in performing
its responsibilities hereunder, including the cost of its own overhead,         
research, compensation and expenses of its directors, officers and employees,   
and other internal operating costs; provided, however, that the Subadviser shall
be entitled to reimbursement on a monthly basis by the Adviser of all reasonable
out-of-pocket expenses properly incurred by it in connection with serving as    
subadviser to the Fund. For the avoidance of doubt, the Fund shall bear its own 
overhead and other internal operating costs (whether incurred directly or by the
Adviser or the Subadviser) including, without limitation:                       

       (a) the costs incurred by the Fund in the preparation and printing of
the Prospectus or any offering literature (including any form of advertisement  
or other solicitation materials calculated to lead to investors subscribing for 
shares);                                                                        

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       (b) all fees and expenses on behalf of the Fund to the Transfer Agent
and the Custodian;                                                              

        (c) the reasonable fees and expenses of accountants, auditors, lawyers
and other professional any interest, fee or charge payable on or on account of  
any borrowing by the Fund;                                                      

 (d) any interest, fee or charge payable on or on account of any
borrowing by the Fund;                                                          

(e) fiscal and governmental charges and duties relating to the
purchase, sale, issue or redemption of shares and increases in authorized share 
capital of the Fund;                                                            

        (f) the fees of any stock exchange or over-the-counter market on which
the shares may from time to time be listed, quoted or dealt in and the expenses 
of obtaining any such listing, quotation or permission to deal;                 

(g) the fees and expenses (if any) payable to Trustees;       

       (h) brokerage, fiscal or governmental charges or duties in respect of
or in connection with the acquisition, holding or disposal of any of the assets 
of the Fund or otherwise in connection with its business;                       

(i) the expenses of publishing details and prices of shares in
newspapers and other publications;                                              

        (j) all expenses incurred in the convening of meetings of shareholders
or in the preparation of agreements or other documents relating to the Fund or  
in relation to the safe custody of the documents of title of any investments;   

(k) all Trustees communication costs; and                     

    (l) all premiums and costs for Fund insurance and blanket fidelity
bonds.                                                                          

4. COMPENSATION. As compensation for the services provided by the     
Subadviser under this Agreement, the Adviser will pay the Subadviser at the end 
of each calendar month an advisory fee computed daily at an annual rate equal to
0.50 of 1% of the Fund's average daily net assets. The "average daily net       
assets" of the Fund shall mean the average of the values placed on the Fund's   
net assets as of 4:00 p.m. (New York time) on each day on which the net asset   
value of the Fund is determined consistent with the provisions of Rule 22c-1    
under the 1940 Act or, if the Fund lawfully determines the value of its net     
assets as of some other time on each business day, as of such other time. The   
value of net assets of the Fund shall always be determined pursuant to the      
applicable provisions of the Fund's Declaration of Trust and the Registration   
Statement. If, pursuant to such provisions, the determination of net asset value
is suspended for any particular business day, then for the purposes of this     
Section 4, the value of the net assets of the Fund as last determined shall be  

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deemed to be the value of its net assets as of the close of regular trading on  
the New York Stock Exchange, or as of such other time as the value of the net   
assets of the Fund's portfolio may lawfully be determined, on that day. If the  
determination of the net asset value of the shares of the Fund has been so      
suspended for a period including any month end when the Subadviser's            
compensation is payable pursuant to this Section, the Subadviser's compensation 
payable at the end of such month shall be computed on the basis of the value of 
the net assets of the Fund as last determined (whether during or prior to such  
month). If the Fund determines the value of the net assets of its portfolio more
than once on any day, then the last such determination thereof on that day shall
be deemed to be the sole determination thereof on that day for the purposes of  
this Section 4.                                                                 

5. BOOKS AND RECORDS. The Subadviser agrees to maintain such books and
records with respect to its services to the Fund as are required by Section 31  
under the 1940 Act, and rules adopted thereunder, and by other applicable legal 
provisions, and to preserve such records for the periods and in the manner      
required by applicable laws or regulations. The Subadviser also agrees that     
records it maintains and preserves pursuant to Rules 3 1a-2 under the 1940 Act  
(excluding trade secrets or intellectual property rights) in connection with its
services hereunder are the property of the Fund and will be surrendered promptly
to the Fund upon its request and the Subadviser further agrees that it will     
furnish to regulatory authorities having the requisite authority any information
or reports in connection with its services hereunder which may be requested in  
order to determine whether the operations of the Fund are being conducted in    
accordance with applicable laws and regulations.                                

6. STANDARD OF CARE AND LIMITATION OF LIABILITY. The Subadviser shall 
exercise its best judgment in rendering the services provided by it under this  
Subadvisory Agreement. The Subadviser shall not be liable for any error of      
judgment or mistake of law or for any loss suffered by the Fund or the holder's 
of the Fund's shares or by the Adviser in connection with the matters to which  
this Subadvisory Agreement relates, provided that nothing in this Subadvisory   
Agreement shall be deemed to protect or purport to protect the Subadviser       
against liability to the Fund or to holders of the Fund's shares or to the      
Adviser to which the Subadviser would otherwise be subject by reason of willful 
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or by reason of the Subadviser's reckless disregard of its obligations   
and duties under this Subadvisory Agreement. As used in this Section 6, the term
"Subadvisor" shall include any officers, directors, employees or other          
affiliates of the Subadviser performing services for the Fund.                  

7. SERVICES NOT EXCLUSIVE. It is understood that the services of the  
Subadviser are not exclusive, and that nothing in this Subadvisory Agreement    
shall prevent the Subadviser, its affiliates or its or their officers, directors
and employees from providing similar services to other investment companies     
(whether or not their investment objectives and policies are similar to those of
the Fund) or from engaging in other investment advisory activities. When the    
Subadviser recommends the purchase or sale of a security for other investment   
companies and other clients, and at the same time the Subadviser recommends the 
purchase or sale of the same security for the Fund, it is understood that in    
light of its fiduciary duty to the Fund, such transactions will be executed on a

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basis that is fair and equitable to the Fund; provided, however, that the       
Subadviser is not required to recommend to the Fund the same investments it     
recommends to its other clients. In connection with purchases or sales of       
portfolio securities for the account of the Fund, neither the Subadviser nor any
of its directors, officers or employees shall act as a principal or agent or    
receive any commission. If the Subadviser provides any advice to its clients    
concerning the shares of the Fund, the Subadviser shall act solely as investment
counsel for such clients and not in any way on behalf of the Fund.              

   8. DURATION AND TERMINATION. This Subadvisory Agreement shall continue in
effect for a period of two years unless sooner terminated as provided herein.   
Notwithstanding the foregoing, this Subadvisory Agreement may be terminated: (a)
at any time without penalty by the Fund or Adviser upon the vote of a majority  
of the Trustees or by vote of the majority of the Fund's outstanding voting     
securities, upon sixty (60) days' written notice to the Subadviser, or (b) by   
the Subadviser without cause at any time without penalty, upon (60) days'       
written notice to the Fund or Adviser. This Subadvisory Agreement will also     
terminate automatically in the event of its assignment (as defined in the 1940  
Act) or the assignment or termination of the Investment Advisory Agreement.     

   9. AMENDMENTS. No provision of this Subadvisory Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing   
signed by both par-ties, and no material amendment of this Subadvisory Agreement
shall be effective until approved by an affirmative vote of (i) a majority of   
the outstanding voting securities of the Fund, and (ii) a majority of the       
Trustees of the Fund, including a majority of Trustees who are not interested   
persons of any party to this Subadvisory Agreement, cast in person at a meeting 
called for the purpose of voting on such approval, if such approval is required 
by applicable law.                                                              

10. INDEMNIFICATION. (a) The Adviser hereby agrees to indemnify the   
Subadviser from and against all liabilities, losses, expenses, reasonable       
attorneys' fees and costs (other than attorneys' fees and costs in relation to  
the preparation of this Agreement; each party bearing responsibility for its own
such costs and fees) or damages (other than liabilities, losses, expenses,      
attorneys fees and costs or damages arising from the Subadviser failing to meet 
the standard of care required hereunder in the performance by the Subadviser of,
or its failure to perform, the services required hereunder), arising from the   
Adviser's (its affiliates and their respective agents and employees) failure to 
perform its duties or assume its obligations hereunder, or from its wrongful    
actions or omissions, including, but not limited to, any claims for non-payment 
of advisory fees; claims asserted or threatened by any shareholder of the Fund, 
governmental or regulatory agency, or any other person; claims arising from any 
wrongful act by the Fund or any of the Fund's trustees, officers, employees, or 
representatives, or by the Adviser, its officers, employees or representatives, 
or from any actions by the Fund's distributors or any representative of the     
Fund; any action or claim against the Subadviser based on any alleged untrue    
statement or misstatement of material fact in any registration statement,       
prospectus, shareholder report or other information or materials covering shares
filed or made public by the Fund or any amendment thereof or supplement thereto,
or the failure or alleged failure to state therein a material fact required to  
be stated in order that the statements therein are not misleading, provided that

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such claim is not based upon information provided to the Adviser by the         
Subadviser or approved by the Subadviser in the manner provided in paragraph    
12(b) of this Agreement, or which facts or information the Subadviser failed to 
provide or disclose. With respect to any claim for which the Subadviser shall be
entitled to indemnity hereunder, the Adviser shall assume the reasonable        
expenses and costs (including any reasonable attorneys' fees and costs) of the  
Subadviser of investigating and/or defending any claim asserted or threatened by
any party, subject always to the Adviser first receiving a written undertaking  
from the Subadviser to repay any amounts paid on its behalf in the event and to 
the extent of any subsequent determination that the Subadviser was not entitled 
to indemnification hereunder in respect of such claim.                          

(b) The Subadviser hereby agrees to indemnify the Adviser, its
affiliates and the Fund from and against all liabilities, losses, expenses,     
reasonable attorneys' fees and costs (other than attorneys' fees and costs in   
relation to the preparation of this Agreement; each party bearing responsibility
for its own such costs and fees) or damages (other than liabilities, losses,    
expenses, attorneys fees and costs or damages arising from the Adviser's failure
to perform its responsibilities hereunder or claims arising from its acts or    
failure to act in performing this Agreement) arising from Subadviser's (its     
affiliates and their respective agents and employees) failure to perform its    
duties and assume its obligations hereunder, or from any wrongful act of        
Subadviser or its failure to act in performing this Agreement, including any    
action or claim against the Adviser based on any alleged untrue statement or    
misstatement of a material fact made or provided by or with the consent of      
Subadviser contained in any registration statement, prospectus, shareholder     
report or other information or materials relating to the Fund and shares issued 
by the Fund, or the failure or alleged failure to state a material fact therein 
required to be stated in order that the statements therein are not misleading,  
which fact should have been made or provided by the Subadviser to the Adviser.  
With respect to any claim for which the Adviser is entitled to indemnity        
hereunder, the Subadviser shall assume the reasonable expenses and costs        
(including any reasonable attorneys' fees and costs) of the Adviser of          
investigating and/or defending any claim asserted or threatened by any party,   
subject always to the Subadviser first receiving a written undertaking from the 
Adviser to repay any amounts paid on its behalf in the event and to the extent  
of any subsequent determination that the Adviser was not entitled to            
indemnification hereunder in respect of such claim.                             

       (c) In the event that the Subadviser or Adviser is or becomes a party
to any action or proceedings in respect of which indemnification may be sought  
hereunder, the party seeking indemnification shall promptly notify the other    
party thereof. After becoming notified of the same, the party from whom         
indemnification is sought shall be entitled to participate in any such action or
proceeding and shall assume any payment for the full defense thereof with       
counsel reasonably satisfactory to the party seeking indemnification. After     
properly assuming the defense thereof, the party from whom indemnification is   
sought shall not be liable hereunder to the other party for any legal or other  
expenses subsequently incurred by such party in connection with the defense     
thereof, other than damages, if any, by way of judgment, settlement, or         
otherwise pursuant to this provision. The party from whom indemnification is    
sought shall not be liable hereunder for any settlement of any action or claim  
effected without its written consent, which consent shall not be unreasonably   
withheld.                                                                       

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11. INDEPENDENT CONTRACTOR. Subadviser shall for all purposes of this 
Agreement be deemed to be an independent contractor and, except as otherwise    
expressly provided herein, shall have no authority to act for, bind or represent
the Fund in any way or otherwise be deemed to be an agent of the Fund. Likewise,
the Fund, the Adviser and their respective affiliates, agents and employees     
shall not be deemed agents of the Subadviser and shall have not authority to    
bind Subadviser.                                                                

     12. USE OF NAME. (a) The Fund may, subject to sub-clause (b) below, use the
name, "Navellier Fund Management, Inc." or any component, abbreviation or other 
name derived therefrom for promotional purposes only for so long as this        
Agreement (or any extension, renewal or amendment thereof) continues in force,  
unless the Subadviser shall specifically consent in writing to such continued   
use thereafter. Any permitted use by the Fund during the term hereof of the name
of the Subadviser, Navellier, or any derivative thereof, shall in no way prevent
the Subadviser or any of it shareholders or any of their successors, from using 
or permitting the use of such name (whether singly or in any combination with   
any other words) for, by or in connection with an entity or enterprise other    
than the Fund. The name and right to the name Navellier Fund Management, Inc. or
any derivation of the name Navellier shall at all times be owned and be the sole
and exclusive property of Louis Navellier and his affiliated entities. Navellier
Fund Management Inc., by entering into this Agreement, is allowing the Fund to  
use the name Navellier and/or derivatives thereof solely by or on behalf of the 
Fund. At the conclusion of this Agreement or in the event of any termination of 
this Agreement or if the Subadviser's services are terminated for any reason,   
each of the authorized parties and their respective employees, representatives, 
affiliates, and associates agree that they shall immediately cease using the    
name Navellier and/or any derivatives of said name for any purpose whatsoever.  

         (b) The Adviser and its affiliates shall not publish or distribute, and
shall cause the Fund not to publish or distribute to Fund shareholders,         
prospective investors, sales agents or members of the public any disclosure     
document, offering literature (including any form of advertisement or other     
solicitation materials calculated to lead investors to subscribe for and        
purchase shares of the Fund) or other document referring by name to the         
Subadviser, unless the Subadviser shall have consented in writing to such       
references in the form and context in which they appear; provided however, that 
where the Fund timely seeks to obtain approval of disclosure contained in any   
documents required to be filed by the Fund, and such approval is not forthcoming
on or before the date on which such documents are required by law to be filed,  
the Subadviser shall be deemed to have consented to such disclosure.            

13. MISCELLANEOUS.                                                    

     (a) This Subadvisory Agreement shall be governed by the laws of the
State of Nevada, provided that nothing herein shall be construed in a manner    
inconsistent with the 1940 Act, the Advisers Act, or rules or orders of the SEC 
thereunder. In the event of any litigation in which the Adviser and the         

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Subadviser are adverse parties and there are no other parties to such           
litigation, such action shall be brought in the United States District Court for
the State of Nevada, located in Reno, Nevada.                                   

 (b) The captions of this Subadvisory Agreement are included for
convenience only and in no way define or limit any of the provisions hereof or  
otherwise affect their construction or effect.                                  

        (c) This Agreement may be executed in one or more counterparts, all of
which taken together shall be deemed to constitute one and the same instrument. 

14. NOTICES. Any notice, instruction or other instrument required or  
permitted to be given hereunder may be delivered in person to the offices of the
parties as set forth therein during normal business hours, or delivered or sent 
by prepaid registered mail, express mail or by facsimile to the parties at such 
offices or such other address as may be notified by either party from time to   
time. Such notice, instruction or other instrument shall be deemed to have been 
served, in the case of a registered letter at the expiration of seventy-two (72)
hours after posting; in the case of express mail, within twenty-four (24) hours 
after dispatch; and in the case of facsimile, immediately on dispatch, and if   
delivered outside normal business hours it shall be deemed to have been received
at the next time after delivery or transmission when normal business hours      
commence. Evidence that the notice, instruction or other instrument was properly
addressed, stamped and put into the post shall be conclusive evidence of        
posting.                                                                        

     15. ATTORNEYS' FEES. In the event of a material breach of this Agreement by
any party hereto, the prevailing party, as determined by the trier of fact,     
shall be entitled to reasonable attorneys' fees and costs as determined by the  
court in such action, in addition to any other damages awarded.                 

   16. NON-SOLICITATION. Adviser, its affiliates and their respective agents
(including brokers engaged in marketing and selling shares of the Fund), and    
each of their employees and affiliates agree not to knowingly solicit to invest,
or accept or retain as investors, in the Fund any persons or entities who are   
clients of or investors in any fund or investment vehicle managed by any entity 
owned by Louis Navellier.                                                       

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       IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of ____________, 2000.        

                         Pilgrim Investments, Inc.

   By:
                                           -------------------------------------

                               Navellier Fund Management, Inc.

   By:
                                           -------------------------------------

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APPENDIX N

 SUB-ADVISORY AGREEMENT WITH NICHOLAS-APPLEGATE CAPITAL MANAGEMENT
(PILGRIM CONVERTIBLE, EMERGING COUNTRIES, INTERNATIONAL CORE GROWTH,
INTERNATIONAL SMALLCAP GROWTH, LARGECAP 
GROWTH AND WORLDWIDE GROWTH FUNDS)

SUB-ADVISORY AGREEMENT

AGREEMENT made this ____ day of ________, 2000 between Pilgrim
Investments, Inc., a Delaware corporation (the "Manager"), and                  
Nicholas-Applegate Capital Management, a California limited partnership (the    
"Portfolio Manager").                                                           

    WHEREAS, Pilgrim Mutual Funds (the "Fund") is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end,    
management investment company;                                                  

       WHEREAS, the Fund is authorized to issue separate series, each series
having its own investment objective or objectives, policies, and limitations;   

        WHEREAS, the Fund may offer shares of additional series in the future,
and currently intends to offer shares of additional series in the future;       

         WHEREAS, pursuant to a Management Agreement, dated the date hereof (the
"Management Agreement"), a copy of which has been provided to the Portfolio     
Manager, the Fund has retained the Manager to render advisory and management    
services with respect to each of the Fund's series; and                         

         WHEREAS, pursuant to authority granted to the Manager in the Management
Agreement, the Manager wishes to retain the Portfolio Manager to furnish        
investment advisory services to one or more of the series of the Fund, and the  
Portfolio Manager is willing to furnish such services to the Fund and the       
Manager;                                                                        

       NOW, THEREFORE, in consideration of the premises and the promises and
mutual covenants herein contained, it is agreed between the Manager and the     
Portfolio Manager as follows:                                                   

     1. APPOINTMENT. The Manager hereby appoints the Portfolio Manager to act as
the investment adviser and manager to the series of the Fund set forth on       
Schedule A hereto (the "Series") for the periods and on the terms set forth in  
this Agreement The Portfolio Manager accepts such appointment and agrees to     
furnish the services herein set forth for the compensation herein provided.     

     In the event the Fund designates one or more series (other than the
Series) with respect to which the Manager wishes to retain the Portfolio Manager
to render investment advisory services hereunder, it shall notify the Portfolio 

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Manager in writing. If the Portfolio Manager is willing to render such services,
it shall notify the Manager in writing, whereupon such series shall become a    
Series hereunder, and be subject to this Agreement.                             

  2. SUB-ADVISER DUTIES. Subject to the supervision of the Fund's Board of
Trustees and the Manager, the Portfolio Manager will provide a continuous       
investment program for each Series' portfolio and determine in its discretion   
the composition of the assets of each Series' portfolio, including determination
of the purchase, retention, or sale of the securities, cash, and other          
investments contained in the portfolio. The Portfolio Manager will provide      
investment research and conduct a continuous program of evaluation, investment, 
sales, and reinvestment of each Series' assets by determining the securities and
other investments that shall be purchased, entered into, sold, closed, or       
exchanged for the Series, when these transactions should be executed, and what  
portion of the assets of the Series should be held in the various securities and
other investments in which it may invest. To the extent permitted by the        
investment policies of each Series, the Portfolio Manager shall make decisions  
for the Series as to foreign currency matters and make determinations as to and 
execute and perform foreign currency exchange contracts on behalf of the Series.
The Portfolio Manager will provide the services under this Agreement in         
accordance with each Series' investment objective or objectives, policies, and  
restrictions as stated in the Fund's Registration Statement filed with the      
Securities and Exchange Commission ("SEC"), as amended, copies of which shall be
sent to the Portfolio Manager by the Manager prior to the commencement of this  
Agreement and promptly following any such amendment. The Portfolio Manager      
further agrees as follows:                                                      

        (a) The Portfolio Manager will conform with the 1940 Act and all rules
and regulations thereunder, all other applicable federal and state laws and     
regulations, with any applicable procedures adopted by the Fund's Board of      
Trustees of which the Portfolio Manager has been sent a copy, and the provisions
of the Registration Statement of the Fund filed under the Securities Act of 1933
(the "1933 Act") and the 1940 Act, as supplemented or amended, of which the     
Portfolio Manager has received a copy, and with the Manager's portfolio manager 
operating policies and procedures as in effect on the date hereof, as such      
policies and procedures may be revised or amended by the Manager and agreed to  
by the Portfolio Manager.                                                       

     (b) In connection with the purchase and sale of securities for each
Series, the Portfolio Manager will arrange for the transmission to the custodian
and portfolio accounting agent for the Series on a daily basis, such            
confirmation, trade tickets, and other documents and information, including, but
not limited to, Cusip, Cedel, or other numbers that identify securities to be   
purchased or sold on behalf of the Series, as may be reasonably necessary to    
enable the custodian and portfolio accounting agent to perform its              
administrative and recordkeeping responsibilities with respect to the Series.   
With respect to portfolio securities to be settled through the Depository Trust 
Company, the Portfolio Manager will arrange for the prompt transmission of the  
confirmation of such trades to the Fund's custodian and portfolio accounting    
agent.                                                                          

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   (c) The Portfolio Manager will make available to the Fund and the
Manager, promptly upon request, any of the Series' investment records and       
ledgers maintained by the Portfolio Manager (which shall not include the records
and ledgers maintained by the custodian or portfolio accounting agent for the   
Fund) as are necessary to assist the Fund and the Manager to comply with        
requirements of the 1940 Act and the Investment Advisers Act of 1940 (the       
"Advisers Act"), as well as other applicable laws. The Portfolio Manager will   
furnish to regulatory authorities having the requisite authority any information
or reports in connection with such services in respect to the Series which may  
be requested in order to ascertain whether the operations of the Fund are being 
conducted in a manner consistent with applicable laws and regulations.          

       (d) The Portfolio Manager will provide reports to the Fund's Board of
Trustees for consideration at meetings of the Board on the investment program   
for each Series and the issuers and securities represented in each Series'      
portfolio, and will furnish the Fund's Board of Trustees with respect to each   
Series such periodic and special reports as the Trustees and the Manager may    
reasonably request.                                                             

 3. BROKER-DEALER SELECTION. The Portfolio Manager is authorized to make
decisions to buy and sell securities and other investments for each Series'     
portfolio, broker-dealer selection, and negotiation of brokerage commission     
rates in effecting a security transaction. The Portfolio Manager's primary      
consideration in effecting a security transaction will be to obtain the best    
execution for the Series, taking into account the factors specified in the      
prospectus and/or statement of additional information for the Fund, and         
determined in consultation with the Manager, which include price (including the 
applicable brokerage commission or dollar spread), the size of the order, the   
nature of the market for the security, the timing of the transaction, the       
reputation, the experience and financial stability of the broker-dealer         
involved, the quality of the service, the difficulty of execution, and the      
execution capabilities and operational facilities of the firm involved, and the 
firm's risk in positioning a block of securities. Accordingly, the price to a   
Series in any transaction may be less favorable than that available from another
broker-dealer if the difference is reasonably justified, in the judgment of the 
Portfolio Manager in the exercise of its fiduciary obligations to the Fund, by  
other aspects of the portfolio execution services offered. Subject to such      
policies as the Fund's Board of Trustees or Manager may determine and consistent
with Section 28(e) of the Securities Exchange Act of 1934, the Portfolio Manager
shall not be deemed to have acted unlawfully or to have breached any duty       
created by this Agreement or otherwise solely by reason of its having caused a  
Series to pay a broker-dealer for effecting a portfolio investment transaction  
in excess of the amount of commission another broker-dealer would have charged  
for effecting that transaction, if the Portfolio Manager determines in good     
faith that such amount of commission was reasonable in relation to the value of 
the brokerage and research services provided by such broker-dealer, viewed in   
terms of either that particular transaction or the Portfolio Manager's or the   
Manager's overall responsibilities with respect to the Series and to their      
respective other clients as to which they exercise investment discretion. The   
Portfolio Manager will consult with the Manager to the end that portfolio       
transactions on behalf of a Series are directed to broker-dealers on the basis  
of criteria reasonably considered appropriate by the Manager. To the extent     
consistent with these standards, the Portfolio Manager is further authorized to 

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allocate the orders placed by it on behalf of a Series to the Portfolio Manager 
if it is registered as a broker-dealer with the SEC, to an affiliated           
broker-dealer, or to such brokers and dealers who also provide research or      
statistical material, or other services to the Series, the Portfolio Manager, or
an affiliate of the Portfolio Manager. Such allocation shall be in such amounts 
and proportions as the Portfolio Manager shall determine consistent with the    
above standards, and the Portfolio Manager will report on said allocation       
regularly to the Fund's Board of Trustees indicating the broker-dealers to which
such allocations have been made and the basis therefor.                         

   4. DISCLOSURE ABOUT PORTFOLIO MANAGER. The Portfolio Manager has reviewed
Post-Effective Amendment No. [67] to the Registration Statement for the Fund    
filed with the SEC that contains disclosure about the Portfolio Manager, and    
represents and warrants that, with respect to the disclosure about the Portfolio
Manager or information relating, directly or indirectly, to the Portfolio       
Manager, such Registration Statement contains, as of the date hereof, no untrue 
statement of any material fact and does not omit any statement of a material    
fact which was required to be stated therein or necessary to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading. The Portfolio Manager further represents and warrants that it is a  
duly registered investment adviser under the Advisers Act and will maintain such
registration so long as this Agreement remains in effect. The Portfolio Manager 
will provide the Manager with a copy of the Portfolio Manager's Form ADV, Part  
II at the time the Form ADV is filed with the SEC.                              

    5. EXPENSES. During the term of this Agreement, the Portfolio Manager will
pay all expenses incurred by it and its staff and for their activities in       
connection with its sub-advisory duties under this Agreement. The Manager or the
Fund shall be responsible for all the expenses of the Fund's operations.        

     6. COMPENSATION. For the services provided to each Series, the Manager will
pay the Portfolio Manager an annual fee equal to the amount specified for such  
Series in Schedule A hereto, payable monthly in arrears. The fee will be        
appropriately prorated to reflect any portion of a calendar month that this     
Agreement is not in effect among the parties. In accordance with the provisions 
of the Management Agreement, the Manager is solely responsible for the payment  
of fees to the Portfolio Manager, and the Portfolio Manager agrees to seek      
payment of its fees solely from the Manager; provided, however, that if the Fund
fails to pay the Manager all or a portion of the management fee under said      
Management Agreement when due, and the amount that was paid is insufficient to  
cover the Portfolio Manager's fee under this Agreement for the period in        
question, then the Portfolio Manager may enforce against the Fund any rights it 
may have as a third-party beneficiary under the Management Agreement and the    
Manager will take all steps appropriate under the circumstances to collect the  
amount due from the Fund.                                                       

7. COMPLIANCE.                                                        

(a) The Portfolio Manager agrees to use reasonable compliance 
techniques as the Manager or the Board of Trustees may adopt, including any     
written compliance procedures.                                                  

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    (b) The Portfolio Manager agrees that it shall promptly notify the
Manager and the Fund (1) in the event that the SEC has censured the Portfolio   
Manager; placed limitations upon its activities, functions or operations;       
suspended or revoked its registration as an investment adviser; or has commenced
proceedings or an investigation that may result in any of these actions, or (2) 
upon having a reasonable basis for believing that the Series has ceased to      
qualify or might not qualify as a regulated investment company under Subchapter 
M of the Internal Revenue Code. The Portfolio Manager further agrees to notify  
the Manager and the Fund promptly of any material fact known to the Portfolio   
Manager respecting or relating to the Portfolio Manager that is not contained in
the Registration Statement or prospectus for the Fund (which describes the      
Series), or any amendment or supplement thereto, or if any statement contained  
therein that becomes untrue in any material respect.                            

    (c) The Manager agrees that it shall promptly notify the Portfolio
Manager (1) in the event that the SEC has censured the Manager or the Fund;     
placed limitations upon either of their activities, functions, or operations;   
suspended or revoked the Manager's registration as an investment adviser; or has
commenced proceedings or an investigation that may result in any of these       
actions, or (2) upon having a reasonable basis for believing that the Series has
ceased to qualify or might not qualify as a regulated investment company under  
Subchapter M of the Internal Revenue Code.                                      

    8. BOOKS AND RECORDS. The Portfolio Manager hereby agrees that all records
which it maintains for the Series are the property of the Fund and further      
agrees to surrender promptly to the Fund any of such records upon the Fund's or 
the Manager's request in compliance with the requirements of Rule 31a-3 under   
the 1940 Act, although the Portfolio Manager may, at its own expense, make and  
retain a copy of such records. The Portfolio Manager further agrees to preserve 
for the periods prescribed by Rule 31a-2 under the 1940 Act the records required
to be maintained by Rule 31a-l under the 1940 Act.                              

 9. COOPERATION; CONFIDENTIALITY. Each party to this Agreement agrees to
cooperate with the other party and with all appropriate governmental authorities
having the requisite jurisdiction (including, but not limited to, the SEC) in   
connection with any investigation or inquiry relating to this Agreement or the  
Fund. Subject to the foregoing, the Portfolio Manager shall treat as            
confidential all information pertaining to the Fund and actions of the Fund, the
Manager and the Portfolio Manager, and the Manager shall treat as confidential  
and use only in connection with the Series all information furnished to the Fund
or the Manager by the Portfolio Manager, in connection with its duties under the
agreement except that the aforesaid information need not be treated as          
confidential if required to be disclosed under applicable law, if generally     
available to the public through means other than by disclosure by the Portfolio 
Manager or the Manager, or if available from a source other than the Manager,   
Portfolio Manager or this Fund.                                                 

   10. REPRESENTATIONS RESPECTING PORTFOLIO MANAGER. The Manager agrees that
neither the Manager, nor affiliated persons of the Manager, shall give any      
information or make any representations or statements in connection with the    
sale of shares of the Series concerning the Portfolio Manager or the Series     
other than the information or representations contained in the Registration     

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Statement, prospectus, or statement of additional information for the Fund's    
shares, as they may be amended or supplemented from time to time, or in reports 
or proxy statements for the Fund, or in sales literature or other promotional   
material approved in advance by the Portfolio Manager, except with the prior    
permission of the Portfolio Manager.                                            

11. [Intentionally Omitted]                                           

  12. CONTROL. Notwithstanding any other provision of the Agreement, it is
understood and agreed that the Fund shall at all times retain the ultimate      
responsibility for and control of all functions performed pursuant to this      
Agreement and has reserved the right to reasonably direct any action hereunder  
taken on its behalf by the Portfolio Manager.                                   

   13. LIABILITY. Except as may otherwise be required by the 1940 Act or the
rules thereunder or other applicable law, the Manager agrees that the Portfolio 
Manager, any affiliated person of the Portfolio Manager, and each person, if    
any, who, within the meaning of Section 15 of the 1933 Act controls the         
Portfolio Manager (1) shall bear no responsibility and shall not be subject to  
any liability for any act or omission respecting any series of the Fund that is 
not a Series hereunder, and (2) shall not be liable for, or subject to any      
damages, expenses, or losses in connection with, any act or omission connected  
with or arising out of any services rendered under this Agreement, except by    
reason of willful misfeasance, bad faith, or gross negligence in the performance
of the Portfolio Manager's duties, or by reason of reckless disregard of the    
Portfolio Manager's obligations and duties under this Agreement.                

14. INDEMNIFICATION.                                                  

     (a) The Manager agrees to indemnify and hold harmless the Portfolio
Manager, any affiliated person of the Portfolio Manager, and each person, if    
any, who, within the meaning of Section 15 of the 1933 Act controls             
("controlling person") the Portfolio Manager (all of such persons being referred
to as "Portfolio Manager Indemnified Persons") against any and all losses,      
claims, damages, liabilities, or litigation (including legal and other expenses)
to which a Portfolio Manager Indemnified Person may become subject under the    
1933 Act, the 1940 Act, the Advisers Act, under any other statute, at common law
or otherwise, arising out of the Manager's responsibilities to the Trust which  
(1) may be based upon the Manager's willful misfeasance, bad faith, or          
negligence in the performance of its duties (which could include a negligent    
action or a negligent omission to act), or by reason of the Manager's reckless  
disregard of its obligations and duties under this Agreement or (2) may be based
upon any untrue statement or alleged untrue statement of a material fact        
contained in the Registration Statement or prospectus covering shares of the    
Trust or any Series, or any amendment thereof or any supplement thereto, or the 
omission or alleged omission to state therein a material fact required to be    
stated therein or necessary to make the statements therein not misleading,      
unless such statement or omission was made in reliance upon information         
furnished to the Manager or the Trust or to any affiliated person of the Manager
by a Portfolio Manager Indemnified Person; provided however, that in no case    
shall the indemnity in favor of the Portfolio Manager Indemnified Person be     
deemed to protect such person against any liability to which any such person    
would otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of its duties, or by reason of its reckless       
disregard of obligations and duties under this Agreement.                       

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         (b) Notwithstanding Section 13 of this Agreement, the Portfolio Manager
agrees to indemnify and hold harmless the Manager, any affiliated person of the 
Manager, and any controlling person of the Manager (all of such persons being   
referred to as "Manager Indemnified Persons") against any and all losses,       
claims, damages, liabilities, or litigation (including legal and other expenses)
to which a Manager Indemnified Person may become subject under the 1933 Act,    
1940 Act, the Advisers Act, under any other statute, at common law or otherwise,
arising out of the Portfolio Manager's responsibilities as Portfolio Manager of 
the Series which (1) may be based upon the Portfolio Manager's willful          
misfeasance, bad faith, or negligence in the performance of its duties (which   
could include a negligent action or a negligent omission to act), or by reason  
of the Portfolio Manager's reckless disregard of its obligations and duties     
under this Agreement, or (2) may be based upon any untrue statement or alleged  
untrue statement of a material fact contained in the Registration Statement or  
prospectus covering the shares of the Trust or any Series, or any amendment or  
supplement thereto, or the omission or alleged omission to state therein a      
material fact known or which should have been known to the Portfolio Manager and
was required to be stated therein or necessary to make the statements therein   
not misleading, if such a statement or omission was made in reliance upon       
information furnished to the Manager, the Trust, or any affiliated person of the
Manager or Trust by the Portfolio Manager or any affiliated person of the       
Portfolio Manager; provided, however, that in no case shall the indemnity in    
favor of a Manager Indemnified Person be deemed to protect such person against  
any liability to which any such person would otherwise be subject by reason of  
willful misfeasance, bad faith, gross negligence in the performance of its      
duties, or by reason of its reckless disregard of its obligations and duties    
under this Agreement.                                                           

         (c) The Manager shall not be liable under Paragraph (a) of this Section
14 with respect to any claim made against a Portfolio Manager Indemnified Person
unless such Portfolio Manager Indemnified Person shall have notified the Manager
in writing within a reasonable time after the summons or other first legal      
process giving information of the nature of the claim shall have been served    
upon such Portfolio Manager Indemnified Person (or after such Portfolio Manager 
Indemnified Person shall have received notice of such service on any designated 
agent), but failure to notify the Manager of any such claim shall not relieve   
the Manager from any liability which it may have to the Portfolio Manager       
Indemnified Person against whom such action is brought except to the extent the 
Manager is prejudiced by the failure or delay in giving such notice. In case any
such action is brought against the Portfolio Manager Indemnified Person, the    
Manager will be entitled to participate, at its own expense, in the defense     
thereof or, after notice to the Portfolio Manager Indemnified Person, to assume 
the defense thereof, with counsel satisfactory to the Portfolio Manager         
Indemnified Person. If the Manager assumes the defense of any such action and   
the selection of counsel by the Manager to represent the Manager and the        
Portfolio Manager Indemnified Person would result in a conflict of interests and
therefore, would not, in the reasonable judgment of the Portfolio Manager       
Indemnified Person, adequately represent the interests of the Portfolio Manager 
Indemnified Person, the Manager will, at its own expense, assume the defense    
with counsel to the Manager and, also at its own expense, with separate counsel 

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to the Portfolio Manager Indemnified Person, which counsel shall be satisfactory
to the Manager and to the Portfolio Manager Indemnified Person. The Portfolio   
Manager Indemnified Person shall bear the fees and expenses of any additional   
counsel retained by it, and the Manager shall not be liable to the Portfolio    
Manager Indemnified Person under this Agreement for any legal or other expenses 
subsequently incurred by the Portfolio Manager Indemnified Person independently 
in connection with the defense thereof other than reasonable costs of           
investigation. The Manager shall not have the right to compromise on or settle  
the litigation without the prior written consent of the Portfolio Manager       
Indemnified Person if the compromise or settlement results, or may result in a  
finding of wrongdoing on the part of the Portfolio Manager Indemnified Person.  

      (d) The Portfolio Manager shall not be liable under Paragraph (b) of
this Section 14 with respect to any claim made against a Manager Indemnified    
Person unless such Manager Indemnified Person shall have notified the Portfolio 
Manager in writing within a reasonable time after the summons or other first    
legal process giving information of the nature of the claim shall have been     
served upon such Manager Indemnified Person (or after such Manager Indemnified  
Person shall have received notice of such service on any designated agent), but 
failure to notify the Portfolio Manager of any such claim shall not relieve the 
Portfolio Manager from any liability which it may have to the Manager           
Indemnified Person against whom such action is brought except to the extent the 
Portfolio Manager is prejudiced by the failure or delay in giving such notice.  
In case any such action is brought against the Manager Indemnified Person, the  
Portfolio Manager will be entitled to participate, at its own expense, in the   
defense thereof or, after notice to the Manager Indemnified Person, to assume   
the defense thereof, with counsel satisfactory to the Manager Indemnified       
Person. If the Portfolio Manager assumes the defense of any such action and the 
selection of counsel by the Portfolio Manager to represent both the Portfolio   
Manager and the Manager Indemnified Person would result in a conflict of        
interests and therefore, would not, in the reasonable judgment of the Manager   
Indemnified Person, adequately represent the interests of the Manager           
Indemnified Person, the Portfolio Manager will, at its own expense, assume the  
defense with counsel to the Portfolio Manager and, also at its own expense, with
separate counsel to the Manager Indemnified Person, which counsel shall be      
satisfactory to the Portfolio Manager and to the Manager Indemnified Person. The
Manager Indemnified Person shall bear the fees and expenses of any additional   
counsel retained by it, and the Portfolio Manager shall not be liable to the    
Manager Indemnified Person under this Agreement for any legal or other expenses 
subsequently incurred by the Manager Indemnified Person independently in        
connection with the defense thereof other than reasonable costs of              
investigation. The Portfolio Manager shall not have the right to compromise on  
or settle the litigation without the prior written consent of the Manager       
Indemnified Person if the compromise or settlement results, or may result in a  
finding of wrongdoing on the part of the Manager Indemnified Person.            

15. DURATION AND TERMINATION.                                         

       (a) This Agreement shall become effective on the date first indicated
above, subject to the condition that the Fund's Board of Trustees, including a  
majority of those Trustees who are not interested persons (as such term is      

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defined in the 1940 Act) of the Manager or the Portfolio Manager, and the       
shareholders of each Series, shall have approved this Agreement. Unless         
terminated as provided herein, this Agreement shall remain in full force and    
effect for two years from such date and continue on an annual basis thereafter  
with respect to each Series covered by this Agreement; provided that such annual
continuance is specifically approved each year by (a) the Board of Trustees of  
the Fund, or by the vote of a majority of the outstanding voting securities (as 
defined in the 1940 Act) of each Series, and (b) the vote of a majority of those
Trustees who are not parties to this Agreement or interested persons (as such   
term is defined in the 1940 Act) of any such party to this Agreement cast in    
person at a meeting called for the purpose of voting on such approval. However, 
any approval of this Agreement by the holders of a majority of the outstanding  
shares (as defined in the 1940 Act) of a Series shall be effective to continue  
this Agreement with respect to such Series notwithstanding (i) that this        
Agreement has not been approved by the holders of a majority of the outstanding 
shares of any other Series or (ii) that this agreement has not been approved by 
the vote of a majority of the outstanding shares of the Fund, unless such       
approval shall be required by any other applicable law or otherwise.            
Notwithstanding the foregoing, this Agreement may be terminated with respect to 
any Series covered by this Agreement: (a) by the Manager at any time, upon sixty
(60) days' written notice to the Portfolio Manager and the Fund, (b) at any time
without payment of any penalty by the Fund, by the Fund's Board of Trustees or a
majority of the outstanding voting securities of each Series, upon sixty (60)   
days' written notice to the Manager and the Portfolio Manager, or (c) by the    
Portfolio Manager upon three (3) months written notice unless the Fund or the   
Manager requests additional time to find a replacement for the Portfolio        
Manager, in which case the Portfolio Manager shall allow the additional time    
requested by the Fund or Manager not to exceed three (3) additional months      
beyond the initial three-month notice period; provided, however, that the       
Portfolio Manager may terminate this Agreement at any time without penalty,     
effective upon written notice to the Manager and the Fund, in the event either  
the Portfolio Manager (acting in good faith) or the Manager ceases to be        
registered as an investment adviser under the Advisers Act or otherwise becomes 
legally incapable of providing investment management services pursuant to its   
respective contract with the Fund, or in the event the Manager becomes bankrupt 
or otherwise incapable of carrying out its obligations under this Agreement, or 
in the event that the Portfolio Manager does not receive compensation for its   
services from the Manager or the Fund as required by the terms of this          
agreement.                                                                      

        In the event of termination for any reason, all records of each Series
for which the Agreement is terminated shall promptly be returned to the Manager 
or the Fund, free from any claim or retention of rights in such record by the   
Portfolio Manager, although the Portfolio Manager may, at its own expense, make 
and retain a copy of such records. This Agreement shall automatically terminate 
in the event of its assignment (as such term is described in the 1940 Act). In  
the event this Agreement is terminated or is not approved in the manner         
described above, the Sections or Paragraphs numbered 2(g), 8, 9, 10, 12, 13 and 
14 of this Agreement shall remain in effect, as well as any applicable provision
of this Section numbered 15 and, to the extent that only amounts are owed to the
Portfolio Manager as compensation for services rendered while the agreement was 
in effect, Section 6.                                                           

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(b) NOTICES.                                                  

        Any notice must be in writing and shall be sufficiently given (1) when
delivered in person, (2) when dispatched by telegram or electronic facsimile    
transfer (confirmed in writing by postage prepaid first class air mail          
simultaneously dispatched), (3) when sent by internationally recognized         
overnight courier service (with receipt confirmed by such overnight courier     
service), or (4) when sent by registered or certified mail, to the other party  
at the address of such party set forth below or at such other address as such   
party may from time to time specify in writing to the other party.              

If to the Fund:                                             

Pilgrim Mutual Funds                              
40 North Central Avenue, Suite 1200               
Phoenix, AZ  85004                                
Attention: James M. Hennessy                      

If to the Portfolio Manager:                                  

Nicholas-Applegate Capital Management             
600 West Broadway                                 
San Diego, CA  92101                              
Attention: E. Blake Moore                         

16. AMENDMENTS. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by 
the party against which enforcement of the change, waiver, discharge or         
termination is sought, and no amendment of this Agreement shall be effective    
until approved by an affirmative vote of (i) the holders of a majority of the   
outstanding voting securities of the Series, and (ii) the Trustees of the Fund, 
including a majority of the Trustees of the Fund who are not interested persons 
of any party to this Agreement, cast in person at a meeting called for the      
purpose of voting on such approval, if such approval is required by applicable  
law.                                                                            

17. MISCELLANEOUS.                                                    

  (a) This Agreement shall be governed by the laws of the State of
California, provided that nothing herein shall be construed in a manner         
inconsistent with the 1940 Act, the Advisers Act or rules or orders of the SEC  
thereunder, and without regard for the conflicts of laws principle thereof. The 
term "affiliate" or "affiliated person" as used in this Agreement shall mean    
"affiliated person" as defined in Section 2(a)(3) of the 1940 Act.              

     (b) The Manager and the Portfolio Manager acknowledge that the Fund
enjoys the rights of a third-party beneficiary under this Agreement, and the    
Manager acknowledges that the Portfolio Manager enjoys the rights of a third    
party beneficiary under the Management Agreement.                               

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      (c) The captions of this Agreement are included for convenience only
and in no way define or limit any of the provisions hereof or otherwise affect  
their construction or effect.                                                   

      (d) To the extent permitted under Section 15 of this Agreement, this
Agreement may only be assigned by any party with the prior written consent of   
the other parties.                                                              

         (e) If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of this Agreement   
shall not be affected thereby, and to this extent, the provisions of this       
Agreement shall be deemed to be severable.                                      

     (f) Nothing herein shall be construed as constituting the Portfolio
Manager as an agent or co-partner of the Manager, or constituting the Manager as
an agent or co-partner of the Portfolio Manager.                                

(g) This agreement may be executed in counterparts.           

       IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed as of the day and year first above written.                         

                         PILGRIM INVESTMENTS, INC.

   By:
                                           -------------------------------------

                                        ----------------------------------------
     Title

                                     NICHOLAS-APPLEGATE CAPITAL MANAGEMENT

   By:
                                           -------------------------------------

                                        ----------------------------------------
     Title

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Schedule A

Series                                  Annual Sub-advisory Fee                 
------                                  -----------------------                 

Pilgrim Large Cap Growth Fund           0.375% of the first $500 million of the 
                                      Series' average net assets, 0.3375% of
                                    the next $500 million of average net
                                     assets, and 0.325% of the average net
                              assets in excess of $1 billion

Pilgrim Emerging Countries Fund         0.625% of the Series' average net assets

Pilgrim Worldwide Growth Fund           0.50% of the first $500 million of the  
                                        Series' average net assets, 0.45% of the
                                        next $500 million of average net assets,
                                       and 0.425% of the average net assets in
                    excess of $1 billion

Pilgrim International Small             0.50% of the first $500 million of the  
Cap Growth Fund                         Series' average net assets, 0.45% of the
                                        next $500 million of average net assets,
                                       and 0.425% of the average net assets in
                    excess of $1 billion

Pilgrim Convertible Fund                0.375% of the first $500 million of the 
                                      Series' average net assets, 0.3375% of
                                    the next $500 million of average net
                                     assets, and 0.325% of the average net
                              assets in excess of $1 billion

Pilgrim International Core              0.50% of the first $500 million of the  
Growth Fund                             Series' average net assets, 0.45% of the
                                        next $500 million of average net assets,
                                       and 0.425% of the average net assets in
                    excess of $1 billion

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 PILGRIM INVESTMENTS, INC.
TWO RENAISSANCE SQUARE
 PHOENIX, ARIZONA 85004-4424

Nicholas-Applegate Capital Management                                           
600 West Broadway                                                               
San Diego, California 92101                                                     

Ladies and Gentlemen:                                                           

        Reference is hereby made to Section 2(a) of the Sub-Advisory Agreement
dated as of May 21, 1999 between you and us in respect of Pilgrim Mutual Funds  
which provides that in carrying out your duties under such Agreement you will   
comply with our portfolio manager operating policies and procedures in effect on
the date of such Agreement. Attached hereto as Annex I is a list of such        
policies and procedures. Please sign below to acknowledge your receipt and      
acceptance of these policies and procedures.                                    

                 Very truly yours,

                         PILGRIM INVESTMENTS, INC.

   By:
                                           -------------------------------------

Acknowledged and Agreed:                                                        

NICHOLAS-APPLEGATE CAPITAL MANAGEMENT                                           

By:                                                                             
----------------------------------                                        

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                                                                         Annex I

PORTFOLIO MANAGER OPERATING POLICIES AND PROCEDURES                             

        In carrying its duties under the Sub-Advisory Agreement, the Portfolio
Manager will comply with the following policies and procedures (capitalized     
terms used herein shall have the meaning given such terms in the Sub-Advisory   
Agreement):                                                                     

        (a) The Portfolio Manager will manage each Series so that it meets the
income and asset diversification requirements of Section 851 of the Internal    
Revenue Code.                                                                   

      (b) The Portfolio Manager will vote all proxies solicited by or with
respect to the issuers of securities which assets of the Series are invested    
consistent with any procedures or guidelines promulgated by the Board or the    
Manager, or if none, in the discretion of the Portfolio Manager based upon the  
best interests of the Series. The Portfolio Manager will maintain appropriate   
records detailing its voting of proxies on behalf of the Fund and will provide  
to the Fund at least quarterly a report setting forth the proposals voted on and
how the Series' shares were voted since the prior report, including the name of 
the corresponding issuers.                                                      

     (c) In connection with the purchase and sale of securities for each
Series, the Portfolio Manager will arrange for the transmission to the custodian
and portfolio accounting agent for the Series on a daily basis, such            
confirmation, trade tickets, and other documents and information, including, but
not limited to, Cusip, Sedol, or other numbers that identify securities to be   
purchased or sold on behalf of the Series, as may be reasonably necessary to    
enable the custodian and portfolio accounting agent to perform its              
administrative and recordkeeping responsibilities with respect to the Series.   
With respect to portfolio securities to be settled through the Depository Trust 
Company, the Portfolio Manager will arrange for the prompt transmission of the  
confirmation of such trades to the Fund's custodian and portfolio accounting    
agent.                                                                          

   (d) The Portfolio Manager will assist the custodian and portfolio
accounting agent for the Fund in determining or confirming, consistent with the 
procedures and policies stated in the Registration Statement for the Fund or    
adopted by the Board of Trustees, the value of any portfolio securities or other
assets of the Series for which the custodian and portfolio accounting agent     
seeks assistance from or identifies for review by the Portfolio Manager. The    
parties acknowledge that the Portfolio Manager is not a custodian of the Series'
assets and will not take possession or custody of such assets.                  

       (e) The Portfolio Manager will provide the Manager, no later than the
20th day following the end of each of the first three fiscal quarters of each   
Series and the 45th day following the end of each Series' fiscal year, a letter 
to shareholders (to be subject to review and editing by the Manager) containing 
a discussion of those factors referred to in Item 5(a) of 1940 Act Form N-1A in 
respect of both the prior quarter and the fiscal year to date.                  

      (f) The Portfolio Manager will complete and deliver to the Manager a
written compliance checklist in a form provided by the Manager for each month by
the 10th day of the following month.                                            

(g) The parties agree that in the event that the Manager or an
affiliated person of the Manager sends sales literature or other promotional    
material to the Portfolio Manager for its approval and the Portfolio Manager has
not commented within 10 days, the Manager and its affiliated persons may use and
distribute such sales literature or other promotional material.                 

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APPENDIX O

 ADVISORY FEES

  The annual advisory fees under the New Agreements for each Fund,
expressed as a percentage of the Fund's average daily net assets, are as        
follows:                                                                        

Fund                                    Annual Investment Advisory Fee          
----                                    ------------------------------          

Asia-Pacific Equity Fund                1/12 of 1.25% of the Fund's average     
                                 daily net assets during the month
                                        (approximately 1.25% on an annual basis)

Balanced Fund                           0.75% of the first $500 million of the  
                                        Fund's average net assets, 0.675% of the
                                        next $500 million of average net assets,
                                      and 0.65% of the average net assets in
                    excess of $1 billion

Bank and Thrift Fund                    1.00% of the first $30 million of the   
                                      Fund's average daily net assets; 0.75%
                                        of the next $95 million of average daily
                                      net assets; and 0.70% of average daily
                                     net assets in excess of $125 million.
                                       The fees are computed and accrued daily
                 and paid monthly.

Convertible Fund                        0.75% of the first $500 million of the  
                                        Fund's average net assets, 0.675% of the
                                        next $500 million of average net assets,
                                      and 0.65% of the average net assets in
                    excess of $1 billion

Emerging Countries Fund                 1.25% of the Fund's average net assets  

Emerging Markets Value Fund             1.00% of the Fund's average daily net   
      assets

Government Securities Income Fund       0.50% of the first $500 million of the  
                                      Fund's average daily net assets; 0.45%
                                   of the next $500 million of average
                                        daily net assets and 0.40% on net assets
                        in excess of $1 billion.

Growth + Value Fund                     1.00% of the Fund's average daily net   
      assets

High Total Return Fund                  0.75% on the first $250 million of      
                                   aggregate average daily net assets,
                                        0.70% on the next $250 million, 0.65% on
                                        the next $250 million; 0.60% on the next
                                        $250 million, and 0.55% on the remaining
                                       aggregate daily net assets in excess of
           $1 billion.

High Total Return Fund II               0.75% of the Fund's average daily net   
      assets

High Yield Fund                         0.60% of the Fund's average daily net   
      assets

High Yield Fund II                      0.60% of the Fund's average net assets  

International Core Growth Fund          1.00% of the first $500 million of the  
                                       Fund's average net assets, 0.90% of the
                                        next $500 million of average net assets,
                                      and 0.85% of the average net assets in
                    excess of $1 billion

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Fund                                    Annual Investment Advisory Fee          
----                                    ------------------------------          
International SmallCap Growth           1.00% of the first $500 million of the  
                                       Fund's average net assets, 0.90% of the
                                        next $500 million of average net assets,
                                      and 0.85% of the average net assets in
                         excess of Fund $1 billion

International Value Fund                1.00% of the Fund's average daily net   
      assets

LargeCap Growth Fund                    0.75% of the first $500 million         
                                        of the Fund's average net assets, 0.675%
                                       of the next $500 million of average net
                                    assets, and 0.65% of the average net
                              assets in excess of $1 billion

LargeCap Leaders Fund                   1/12 of 1.00% of the Fund's average     
                                 daily net assets during the month
                                        (approximately 1.00% on an annual basis)

MagnaCap Fund                           1.00% of the first $30 million of the   
                                      Fund's average daily net assets; 0.75%
                                   of the next $220 million of average
                                    daily net assets; 0.625% of the next
                                 $250 million of average daily net
                                      assets; and 0.50% of the average daily
                            net assets over $500 million

MidCap Growth Fund                      0.75% of the first $500 million of the  
                                        Fund's average net assets, 0.675% of the
                                        next $500 million of average net assets,
                                      and 0.65% of the average net assets in
                    excess of $1 billion

MidCap Opportunities Fund               1.00% of the Fund's average daily net   
      assets

MidCap Value Fund                       1/12 of 1.00% of the Fund's average     
                                 daily net assets during the month
                                        (approximately 1.00% on an annual basis)

Money Market Fund                       0.50% of average net assets if the Fund 
                                     has not invested substantially all of
                                its assets in another investment
                                      company, 0.15% if substantially all of
                                  its assets are invested in another
                  investment company

Research Enhanced Index Fund            0.70% of the Fund's average daily net   
     asset

SmallCap Growth Fund                    1.00% of the Fund's average net assets  

Strategic Income Fund                   0.45% of the first $500 million of the  
                                       Fund's average net assets, 0.40% of the
                                        next $250 million of average net assets,
                                      and 0.35% of the average net assets in
                      excess of $750 million

Worldwide Growth Fund                   1.00% of the first $500 million of the  
                                       Fund's average net assets, 0.90% of the
                                        next $500 million of average net assets,
                                      and 0.85% of the average net assets in
                    excess of $1 billion

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 APPENDIX P (NEED TO UPDATE)

 DIRECTORS AND PRINCIPAL EXECUTIVE OFFICERS OF PILGRIM INVESTMENTS, INC.

       Set forth below is the name and principal occupation of the principal
executive officer and each director of Pilgrim Investments, Inc. The business   
address of each such person is 40 North Central Avenue, Suite 1200, Phoenix,    
Arizona 85004.                                                                  

                                                        [Enlarge/Download Table]

                  Position With Pilgrim                                                                    
Name and Age      Investments             Principal Occupation During the Last Five Years                  
------------      -----------             -----------------------------------------------                  
                                                                                                           
Robert W.         Chairman of the Board   Chairman, Chief Executive Office and President of Pilgrim Group, 
Stallings (50)    of Directors            Inc. (since December 1994); Director, Pilgrim Securities, Inc.   
                                          (since December 1994); Chairman, Chief Executive Officer and     
                                          President of Pilgrim Bank and Thrift Fund, Inc., Pilgrim         
                                          Government Securities Income Fund, Inc., Pilgrim Advisory Funds, 
                                          Inc., and Pilgrim Investment Funds, Inc. (since April 1995) and  
                                          Pilgrim Mutual Funds (since May 1999). Chairman and Chief        
                                          Executive Officer of Pilgrim Prime Rate Trust (since April 1995) 
                                          Chairman and Chief Executive Officer of Pilgrim Capital          
                                          Corporation (since August 1990). Presently serves or has served  
                                          as an officer or director of other affiliates of Pilgrim Capital 
                                          Corporation.                                                     

James R. Reis     Director, Vice          Director, Vice Chairman (since December 1994); Executive Vice    
(41)              Chairman, Executive     President (since April 1995) and Director of Structured Finance  
                  Vice President and      (since April 1998), Pilgrim Group, Inc.; Director (since December
                  Director of Structured  1994) and Vice Chairman (since November 1995) of Pilgrim         
                  Finance                 Securities; Executive Vice President, Assistant Secretary and    
                                          Chief Credit Officer of Pilgrim Prime Rate Trust; Executive Vice 
                                          President and Assistant Secretary of each of the other Pilgrim   
                                          Funds. Chief Financial Officer (since December 1993), Vice       
                                          Chairman and Assistant Secretary (since April 1993) and former   
                                          President (May 1991 -  December 1993), Pilgrim                   
                                          Capital Corporation. Presently serves or has served as an officer
                                          or director of other affiliates of Pilgrim Capital Corporation.  

Stanley D. Vyner  President and Chief     Executive Vice President of most of the Pilgrim Funds (since July
(49)              Executive Officer       1996). Formerly Chief Executive Officer (November 1993 - December
                                          1995) HSBC Asset Management Americas, Inc., and Chief Executive  
                                          Officer, and Actuary (May 1986 - October 1993) HSBC Life         
                                          Assurance Co.                                                    

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APPENDIX Q

FEES PAID TO PILGRIM INVESTMENTS, INC., PILGRIM GROUP, INC. 
AND PILGRIM SECURITIES, INC.

                                                                [Download Table]

                                      AGGREGATE       SHAREHOLDER                   
                                      ADVISORY         SERVICING     DISTRIBUTION   
                                     FEES PAID TO      FEES PAID      FEES PAID     
                                       PILGRIM         TO PILGRIM     TO PILGRIM    
FUND                               INVESTMENTS, INC.  GROUP, INC.,  SECURITIES, INC.
----                               -----------------  ------------  ----------------
                                                                                    
Asia-Pacific Equity (2)              $  303,920                                     
Balanced (2)                         $   30,774 (1)                                 
Bank and Thrift (2)                  $5,893,806                                     
Convertible (2)                      $  203,808 (1)                                 
Emerging Countries (2)               $  233,889 (1)                                 
Emerging Markets Value (4)           $  145,031         $ 20,184                    
Government Securities Income. (2)    $  189,816                                     
Growth + Value (4)                   $2,711,399         $358,875                    
High Total Return (4)                $4,228,374         $726,605                    
High Total Return II (4)             $1,877,964         $308,067                    
High Yield (2)                       $2,176,246                                     
High Yield II (2)                    $   54,304 (1)                                 
International Core Growth (2)        $   49,617 (1)                                 
International SmallCap Growth (2)    $  116,699 (1)                                 
International Value (4)              $7,164,823         $931,067                    
LargeCap Growth (2)                  $   66,437 (1)                                 
LargeCap Leaders (2)                 $  300,494                                     
MagnaCap (2)                         $3,200,909                                     
MidCap Opportunities (3)             $  483,746         $ 48,903                    
MidCap Growth (2)                    $  216,282 (1)                                 
MidCap Value (2)                     $  670,780                                     
Money Market (2)                     $        0 (1)                                 
Research Enhanced Index (4)          $  690,257         $122,493                    
SmallCap Growth (2)                  $  317,266                                     
Strategic Income (2)                 $    9,028 (1)                                 
Worldwide Growth (2)                 $  221,635 (1)                                 

----------                                                                      
(1)  For the period from May 24, 1999 through June 30, 1999. Pilgrim Investments
   became investment adviser to each Fund that is a series of Pilgrim Mutual
Funds on May 24, 1999.                                                

(2)  For the fiscal year ended June 30, 1999.                                   

(3)  For the fiscal year ended October 31, 1999.                                

(4)  For the fiscal year ended December 31, 1999.                               

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APPENDIX R

      The annual sub-advisory fees for the Sub-Advised Funds, expressed as
percentages of the value of the average daily net assets of the Fund, are as    
follows:                                                                        

                                                        [Enlarge/Download Table]

SUB-ADVISER               FUND                            RATE                                    
-----------               ----                            ----                                    
                                                                                                  
Brandes Investment        Emerging Markets Value Fund     0.50% of the Fund's average daily net   
Partners, L.P.            International Value Fund        assets                                  

HSBC Asset Management     Asia-Pacific Equity Fund        1/12 of 0.50% of the Fund's average     
Americas, Inc., and HSBC                                  daily net assets                        
Asset Management Hong                                                                             
Kong, Limited                                                                                     

J.P. Morgan Investment    Research Enhanced Index         0.20% of the Fund's average daily net   
Management Inc.           Fund                            assets                                  

Navellier Fund            Growth + Value Fund             0.50% of the Fund's average daily net   
Management, Inc.                                          assets                                  

Nicholas-Applegate        LargeCap Growth Fund            0.375% of the first $500 million of the 
Capital Management                                        Fund's average net assets, 0.3375% of   
                                                          the next $500 million of average net    
                                                          assets, and 0.325% of the average net   
                                                          assets in excess of $1 billion          

                          Convertible Fund                0.375% of the first $500 million of the 
                                                          Fund's average net assets, 0.3375% of   
                                                          the next $500 million of average net    
                                                          assets, and 0.325% of the average net   
                                                          assets in excess of $1 billion          

                          Emerging Countries Fund         0.625% of the Fund's average net assets 

                          Worldwide Growth Fund           0.50% of the first $500 million of the  
                                                          Fund's average net assets, 0.45% of the 
                                                          next $500 million of average net assets,
                                                          and 0.425% of the average net assets in 
                                                          excess of $1 billion                    

                          International SmallCap          0.50% of the first $500 million of the  
                          Growth Fund                     Fund's average net assets, 0.45% of the 
                                                          next $500 million of average net assets,
                                                          and 0.425% of the average net assets in 
                                                          excess of $1 billion                    

                          International Core Growth Fund  0.50% of the first $500 million of the  
                                                          Fund's average net assets, 0.45% of the 
                                                          next $500 million of average net assets,
                                                          and 0.425% of the average net assets in 
                                                          excess of $1 billion                    

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APPENDIX S

     As of April 5, 2000, the Directors/Trustees and officers as a group
owned less than 1% of any class of each Fund's outstanding shares. As of that   
date, to the knowledge of management, no person owned beneficially or of record 
more than 5% of the outstanding shares of any class of the Funds, except as     
follows:                                                                        

[TO BE PROVIDED]

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APPENDIX T

     The following persons currently are principal executive officers of each of
the Companies (unless otherwise noted, the mailing address of the officers is 40
North Central Avenue, Suite 1200, Phoenix, Arizona 85004):                      

   James R. Reis, EXECUTIVE VICE PRESIDENT AND ASSISTANT SECRETARY. (Age 42)
 Director, Vice Chairman (since December 1994), Executive Vice President
    (since April 1995), and Director of Structured Finance (since April 1998),
     Pilgrim Group, Inc. and Pilgrim Investments; Director (since December 1994)
  and Vice Chairman (since November 1995) of Pilgrim Securities; Executive
 Vice President, Assistant Secretary and Chief Credit Officer of Pilgrim
    Prime Rate Trust; Executive Vice President and Assistant Secretary of each
    of the other Pilgrim Funds. Chief Financial Officer (since December 1993),
Vice Chairman and Assistant Secretary (since April 1993) and former   
 President (May 1991 - December 1993), Pilgrim Capital (formerly Express
     America Holdings Corporation). Presently serves or has served as an officer
or director of other affiliates of Pilgrim Capital.                   

  Stanley D. Vyner, EXECUTIVE VICE PRESIDENT. (Age 49) President and Chief
    Executive Officer (since August 1996), Pilgrim Investments; Executive Vice
  President of most of the other Pilgrim Funds (since July 1996). Formerly
Chief Executive Officer (November 1993 - December 1995) HSBC Asset    
  Management Americas, Inc., and Chief Executive Officer, and Actuary (May
1986 - October 1993) HSBC Life Assurance Co.                          

James M. Hennessy, EXECUTIVE VICE PRESIDENT AND SECRETARY. (Age 50)   
    Executive Vice President and Secretary (since April 1998), Pilgrim Capital
 (formerly Express America Holdings Corporation), Pilgrim Group, Pilgrim
    Securities and Pilgrim Investments; Executive Vice President and Secretary
     of each of the other Pilgrim Funds. Formerly Senior Vice President, Pilgrim
   Capital (April 1995 - April 1998); Senior Vice President, Express America
     Mortgage Corporation (June 1992 - August 1994) and President, Beverly Hills
Securities Corp. (January 1990 - June 1992).                          

   Michael J. Roland, SENIOR VICE PRESIDENT AND PRINCIPAL FINANCIAL OFFICER.
    (Age 41) Senior Vice President and Chief Financial Officer, Pilgrim Group,
   Pilgrim Investments and Pilgrim Securities (since June 1998); Senior Vice
President and Principal Financial Officer of each of the other Pilgrim
Funds. He served in same capacity from January, 1995 - April, 1997.   
 Formerly, Chief Financial Officer of Endeaver Group (April 1997 to June
1998).                                                                

 Robert S. Naka, SENIOR VICE PRESIDENT AND ASSISTANT SECRETARY. (Age 36)
Senior Vice President, Pilgrim Investments (since November 1999) and  
Pilgrim Group, Inc. (since August 1999). Senior Vice President and    
Assistant Secretary of each of the other Pilgrim Funds. Formerly Vice 
    President, Pilgrim Investments (April 1997 - October 1999), Pilgrim Group,
Inc. (February 1997 - August 1999). Formerly Assistant Vice President,
Pilgrim Group, Inc. (August 1995 - February 1997). Formerly Operations
Manager, Pilgrim Group, Inc. (April 1992 - April 1995).               

  Robyn L. Ichilov, VICE PRESIDENT AND TREASURER. (Age 32) Vice President,
     Pilgrim Investments (since August 1997), Accounting Manager (since November

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 1995). Vice President and Treasurer of most of the other Pilgrim Funds.
     Formerly Assistant Vice President and Accounting Supervisor for PaineWebber
(June 1993 - April 1995).                                             

  In addition to the above listed officers, the following individuals also
serve as officers for the indicated Fund:                                       

PILGRIM ADVISORY FUNDS                                                

  G. David Underwood, VICE PRESIDENT AND SENIOR SUB-ADVISER. (Age 50) Vice
    President, Pilgrim Investments (since December 1996). Formerly Director of
Funds Management, First Interstate Capital Management (January 1995 - 
November 1996); Vice President, Director of Research and Manager of   
Investment Products, Integra Trust Company (1993 - January 1995).     

PILGRIM INVESTMENT FUNDS                                              

  Howard N. Kornblue, SENIOR VICE PRESIDENT AND SENIOR PORTFOLIO MANAGER .
  (Age 58) Senior Vice President, Pilgrim Investments (since August 1995).
    Formerly Senior Vice President, Pilgrim Group, Inc. (November 1986 - April
1995).                                                                

    Kevin G. Mathews, SENIOR VICE PRESIDENT AND SENIOR PORTFOLIO MANAGER. (Age
    40) Senior Vice President, Pilgrim Investments (since July 1998). Formerly
Vice President, Pilgrim Investments (August 1995 - July 1998); Vice   
President, Van Kampen America Capital (May 1987 - April 1995).        

PILGRIM MUTUAL FUNDS                                                  

     Kevin G. Mathews, SENIOR VICE PRESIDENT AND SENIOR PORTFOLIO MANAGER . (Age
    40) Senior Vice President, Pilgrim Investments (since July 1998). Formerly
Vice President, Pilgrim Investments (August 1995 - July 1998); Vice   
President, Van Kampen America Capital (May 1987 - April 1995).        

 G. David Underwood, Senior VICE PRESIDENT AND SENIOR PORTFOLIO MANAGER.
(Age 50) Vice President, Pilgrim Investments (since December 1996).   
    Formerly Director of Funds Management, First Interstate Capital Management
  (January 1995 - November 1996); Vice President, Director of Research and
Manager of Investment Products, Integra Trust Company (1993 - January 
1995).                                                                

Robert K. Kinsey, VICE PRESIDENT AND PORTFOLIO MANAGER . (Age 42) Vice
    President, Pilgrim Investments (since March 1999). Formerly Vice President
 and Fixed Income Sub-Adviser, Federated Investors (January 1995 - March
     1999); Principal and Sub-Adviser, Harris Investment Management (July 1992 -
January 1995).                                                        

BANK AND THRIFT FUND                                                  

  Carl Dorf, SENIOR VICE PRESIDENT AND SENIOR PORTFOLIO MANAGER . (Age 59)
Senior Vice President (since February 1997), Pilgrim Investments, Inc.
    Formerly Vice President, Pilgrim Investments, Inc. (August 1995 - February
     1997). Formerly Vice President, Pilgrim Bank and Thrift Fund, Inc. (January
   1996 - May 1997). Formerly Vice President, Pilgrim Management Corporation
(January 1991 - April 1995).                                          

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GOVERNMENT SECURITIES INCOME FUND                                     

  Robert K. Kinsey, VICE PRESIDENT AND SENIOR PORTFOLIO MANAGER . (Age 42)
Vice President, Pilgrim Investments (since March 1999). Formerly Vice 
     President and Fixed Income Sub-Adviser, Federated Investors (January 1995 -
    March 1999); Principal and Sub-Adviser, Harris Investment Management (July
1992 - January 1995).                                                 

MAYFLOWER TRUST                                                       

    Kevin G. Mathews, SENIOR VICE PRESIDENT AND SENIOR PORTFOLIO MANAGER. (Age
    40) Senior Vice President, Pilgrim Investments (since July 1998). Formerly
Vice President, Pilgrim Investments (August 1995 - July 1998); Vice   
President, Van Kampen America Capital (May 1987 - April 1995).        

 Mary Lisanti, EXECUTIVE VICE PRESIDENT AND PORTFOLIO MANAGER . (Age 43)
 Executive Vice President and Chief Investment Adviser-Equities, Pilgrim
 Investments (since November 1999). Formerly Sub-Adviser, Strong Capital
    Management (September 1996 - May 1998); Managing Director and Sub-Adviser,
Banker Trust Corporation (March 1993 - August 1996).                  

EQUITY TRUST                                                          

 Mary Lisanti, EXECUTIVE VICE PRESIDENT AND PORTFOLIO MANAGER . (Age 43)
 Executive Vice President and Chief Investment Adviser-Equities, Pilgrim
 Investments (since November 1999). Formerly Sub-Adviser, Strong Capital
    Management (September 1996 - May 1998); Managing Director and Sub-Adviser,
Banker Trust Corporation (March 1993 - August 1996).                  

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PILGRIM FUNDS.

The undersigned hereby instructs Robert W. Stallings or James M. Hennessy       
(Proxies) to vote the shares held by him at the Special Meeting of Shareholders 
of the Pilgrim Funds to be held at ____ a.m., local time, on August 18, 2000 at 
40 North Central Avenue, Suite 1200, Phoenix, Arizona 85004 and at any          
adjournment thereof, in the manner directed below with respect to the matters   
referred to in the Proxy Statement for the Meeting, receipt of which is hereby  
acknowledged, and in the Proxies' discretion, upon such other matters as may    
properly come before the meeting or any adjournment thereof.                    

Please vote, sign and date this voting instruction and return it in the enclosed
envelope.                                                                       

These voting instructions will be voted as specified. If no specification is    
made, this voting instruction will be voted FOR all proposals.                  

IN ORDER TO AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION, WE STRONGLY   
URGE YOU TO REVIEW, COMPLETE AND RETURN YOUR BALLOT AS SOON AS POSSIBLE. YOUR   
VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN.                   

Please indicate your vote by an "x" in the appropriate box below.               

 THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED

THE BOARD OF DIRECTORS/TRUSTEES RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSALS.  

1.     For shareholders of Pilgrim MidCap         For All         Against All   
Opportunities, Emerging Markets Value,       [ ]               [ ]
Growth + Value, High Total Return, High                           
  Total Return II, International Value,    For all Except      Abstain
and Research Enhanced Index Funds) to        [ ]               [ ]
elect eleven Trustees.                                            

Nominees:   Al Burton                Walter H. May, Jr.      John R. Smith      
            Paul S. Doherty          Jock Patton             Robert W. Stallings
       Robert B. Goode, Jr.     David W. C. Putnam      John G. Turner
         Alan L. Gosule                                   David W. Wallace

To withhold  authority  to vote for any  individual  nominee,  mark the "For All
Except" box and strike through that Nominee's name.                             

2.     For shareholders of all Funds, to          For       Against      Abstain
     approve new Investment Management          [ ]         [ ]          [ ]
Agreements between the Funds and                                  
Pilgrim Investments, Inc. ("Pilgrim                               
Investments").                                                    

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3(a).  For shareholders of the Pilgrim            For       Against      Abstain
     Asia-Pacific Equity Fund, to approve a     [ ]         [ ]          [ ]
new Sub-Advisory Agreement among HSBC                             
Asset Management (Americas) Inc., HSBC                            
Asset Management (Hong Kong) Limited                              
and HSBC Asset Management (Europe)                                
Limited and Pilgrim Investments.                                  

3(b).  For shareholders of the Pilgrim            For       Against      Abstain
     Convertible, Emerging Countries,           [ ]         [ ]          [ ]
International Core Growth,                                        
International SmallCap Growth,                                    
LargeCap Growth, and Worldwide Growth                             
Funds, to approve a new Sub-Advisory                              
Agreement between Nicholas-Applegate                              
Capital Management and Pilgrim                                    
Investments.                                                      

3(c).  For shareholders of the Pilgrim            For       Against      Abstain
     Emerging Markets Value and                 [ ]         [ ]          [ ]
International Value Funds, to approve                             
a new Sub-Advisory Agreement between                              
Brandes Investment Partners, L.P. and                             
Pilgrim Investments.                                              

3(d).  For shareholders of the Pilgrim Growth     For       Against      Abstain
     + Value Fund, to approve a new             [ ]         [ ]          [ ]
Sub-Advisory Agreement between                                    
Navellier Fund Management, Inc. and                               
Pilgrim Investments.                                              

3(e).  For shareholders of the Pilgrim            For       Against      Abstain
     Research Enhanced Index Fund, to           [ ]         [ ]          [ ]
approve a new Sub-Advisory Agreement                              
between J.P. Morgan Investment                                    
Management Inc. and Pilgrim                                       
Investments                                                       

4.     For shareholders of Pilgrim Emerging       For       Against      Abstain
     Markets Value, Growth + Value, High        [ ]         [ ]          [ ]
Total Return, High Total Return II,                               
International Value, Research Enhanced                            
Index and MidCap Opportunities Funds,                             
to ratify the appointment of                                      
PricewaterhouseCoopers LLP as                                     
independent auditors for the fiscal                               
year ending October 31, 2000 or                                   
December 31, 2000.                                                

5.     To transact such other business as may     For       Against      Abstain
     properly come before the Meeting of        [ ]         [ ]          [ ]
Shareholders or any adjournments                                  
thereof                                                           

This  proxy must be signed  exactly as your  name(s)  appears  hereon.  If as an
attorney, executor, guardian or in some representative capacity or as an officer
of a corporation, please add titles as such. Joint owners must each sign.       

-------------------------------                              -------------------
Signature                                                           Date        

-------------------------------                              -------------------
Signature (if held jointly)                                         Date        

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘PRE 14A’ Filing		Date		First		Last			Other Filings
		10/31/01		17		18			24F-2NT,  485BPOS,  N-30D,  NSAR-B
		12/31/00		4		164			24F-2NT,  N-30D,  NSAR-A,  NSAR-B,  NT-NSAR
		10/31/00		4		164			24F-2NT,  N-30D,  NSAR-B,  NSAR-BT,  NTFNSAR
For Period End:		8/18/00		2		163			DEFS14A
		8/17/00		2
Filed as of:		6/21/00
Filed on:		6/20/00
		6/19/00		4		26
		6/13/00		15		80
		5/31/00		16
		5/1/00		17
		4/30/00		8		16			N-30D,  NSAR-A
		4/27/00		15		24
		4/18/00		11
		4/5/00		159
		1/27/00		12		25
		12/31/99		8		157			24F-2NT,  N-30D,  NSAR-A,  NSAR-B
		11/1/99		12		14
		10/31/99		13		157			24F-2NT,  N-30D,  NSAR-B
		10/26/99		15		23			DEFS14A
		8/2/99		15		24
		6/30/99		22		157			24F-2NT,  N-30D,  N-30D/A,  NSAR-A,  NSAR-B,  NTFNSAR
		5/24/99		23		157			485BPOS
		5/21/99		152					24F-2NT,  DEFS14A,  NSAR-B,  PRES14A
		12/31/98		25					24F-2NT,  485APOS,  N-30D,  NSAR-A,  NSAR-B
		12/21/98		22
		7/1/98		23
		6/12/98		53					N-8A
		11/8/97		22
		10/31/97		25					24F-2NT,  24F-2NT/A,  497,  N-30D,  NSAR-B
		1/23/97		22
		4/27/95		22
		8/18/93		78
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