Frequently Asked Questions (F.A.Q.)

1. What is the total dollar amount of this settlement?

The total dollar amount of this settlement is $250 million. Pilgrim Baxter & Associates, Ltd. (PBA) was ordered to pay $40 million in disgorgement and $50 million in a civil penalty for distribution to affected accountholders. Gary L. Pilgrim and Harold J. Baxter each were ordered to pay $60 million in disgorgement and $20 million in a civil penalty for distribution to affected accountholders.

2. Who is paying for this settlement?

The money for this settlement ($250 million) came entirely from Pilgrim Baxter & Associates, Ltd., Gary L. Pilgrim and Harold J. Baxter. All costs associated with this settlement are borne proportionally by Liberty Ridge Capital ("LRC"), Mr. Pilgrim and Mr. Baxter, and not by the PBHG Funds or fund accountholders.

3. What is "market timing"?

Market timing includes (a) frequent buying and selling of shares of the same mutual fund or (b) buying or selling mutual fund shares in order to exploit inefficiencies in mutual fund pricing. Market timing, while not illegal per se, can harm other mutual fund accountholders because it can dilute the value of their shares if the market timer is exploiting pricing inefficiencies, or disrupt the management of the mutual fund's investment portfolio and can cause the targeted mutual fund to incur costs borne by other accountholders to accommodate frequent buying and selling of shares by the market timer.

4. The former PBHG Funds (now Old Mutual Funds) are currently advised by Liberty Ridge Capital Management. Does this change affect the terms of the settlement?

No, this change had no effect on the implementation of the terms of this settlement.

5. What was the Pilgrim Baxter & Associates response to the settlement?

Throughout the settlement process, the priority of PBA has been to work in close cooperation with the regulators to ensure that the interests of the accountholders were protected. They believe that these agreements, along with other measures that have been taken by the advisor in recent months, bring significant long-term benefits to accountholders of the PBHG Funds. For additional information regarding this question, please refer to the following websites:

https://investors.oldmutualfunds.com/utilities/legal/regulatory-updates.aspx
http://www.omfunds.com/inside/Settlement_QA.pdf

6. What has Pilgrim Baxter & Associates (Liberty Ridge Capital) done to ensure this does not happen in the future?

Strict protocols to combat market timing in the PBHG Funds are now fully disclosed in the prospectuses governing the funds, and the implementation of new redemption fees, effective on June 1, 2004; serve as an additional and highly effective deterrent against the short term trading of funds. These policies were designed and implemented to serve the interests of long-term investors by seeking to eliminate opportunities for market timers to profit from the rapid short-term trading of the funds.

In addition to the requirements of the settlements, significant reforms have been introduced under the new leadership of the firm, all of which provide additional protections to benefit accountholders:

• To deter market timers, 2% redemption fees are being applied as outlined in the prospectus effective June 1, 2004 for PBHG Funds sold within 10 days of purchase, with all fees paid directly into the funds;
• Prospectuses for the PBHG Funds have been amended to include detailed disclosure of the firm's stringent anti-market timing protocols and practices to combat market timing;
• An enhanced code of ethics governing all employees at Liberty Ridge Capital has been adopted to prohibit any investments by employees that could create conflicts of interest with fund accountholders, including mandatory minimum holding periods for investments in certain PBHG Funds;
• The capacity of the advisors legal and compliance staff has been expanded to ensure that sufficient resources are dedicated to oversight of employee investments and overall compliance monitoring;
• A new uniform policy on the disclosure of fund holdings has been adopted, with full portfolio holdings for the for the PBHG Funds made publicly available on the PBHG Funds website 15 days after each quarter end; and
• An independent audit of the company's internal controls and procedures has been conducted to ensure that the firm's practices comply with new reforms.

7. What determines if I am eligible for this settlement?

PBHG Core Growth Fund PBHG Emerging Growth Fund PBHG Focused Fund PBHG Global Technology & Comm. Fund PBHG Growth Fund PBHG International Fund PBHG Large Cap Fund PBHG Large Cap Growth Concentrated Fund

PBHG Large Cap Growth Fund PBHG Limited Fund PBHG Mid-Cap Fund PBHG New Opportunities Fund PBHG Select Growth Fund PBHG Small Cap Fund PBHG Strategic Small Company Fund PBHG Technology & Comm. Fund

Payments to eligible accountholders distributed by the Administrator of the Distribution Plan will be in the form of a check.

8. How are each of the settlement payments calculated?

The methodology for developing the plan for calculating and distributing the settlement proceeds to affected accountholders was set forth by the Independent Distribution Consultant (IDC) and approved by the Securities and Exchange Commission (SEC).

Individual accountholders of certain PBHG funds may be entitled to a prorated share of their fund's daily settlement proceeds, as determined by the plan.

For further, in-depth information regarding the methodology used to calculate these payments, please view the approved Distribution Plan at the link below: http://www.sec.gov/litigation/admin/2006/34-54812-dp.pdf

9. What if the amount of a particular distribution is very small - will it be paid?

Only accountholders with a final calculated payment amount of at least $10 across all funds are eligible to receive a distribution from the Fair Fund. This decision is based on the conclusion that it is not cost effective to attempt to distribute payments of less than $10 to accountholders.

10. Will the accountholders who engaged in market timing receive any portion of the settlement?

Accountholders who engaged in market timing will not be eligible for a distribution unless the losses they incurred from market timing by other accountholders exceed the losses other accountholders incurred from their market timing.

For example, suppose an accountholder engaged in market timing activity, and that activity resulted in $1 million of losses for other accountholders. Also, this accountholder incurred $1.5 million of losses from market timing activity conducted by other market timers. Because his net losses from other market timers ($1.5 million) were greater than the net losses he created from his market timing ($1 million) this accountholder will receive $500,000 from this settlement.

If the amounts were switched in the above example ($1 million in losses from other market timing activity and $1.5 million in losses created from his market timing activity), this accountholder would not receive a payment from this settlement.

11. What controls were in place to ensure that all accountholders received the amount of the distribution to which they are entitled?

At each step in the calculation process, in-depth reviews and formal validations were conducted under the supervision of the Independent Distribution Consultant.

12. Do I have any other options besides receiving a check?

No. Eligible accountholders will receive their portion of the distribution in the form of a check, which will be mailed to the last known address of record.

13. There are special circumstances surrounding the distribution I received. What can I do to resolve the issue?

The Administrator of the Distribution Plan will review special circumstances on a case-by-case basis. Please call the Administrator of the Distribution Plan at (800) 920-5408 to determine what actions you may need to take to resolve these issues.

14. How will this settlement affect my tax reporting?

For tax information related to this settlement, please refer to the "Tax Information" section of this Website.

As always, you should consult your financial advisor or tax professional to determine the potential tax consequences and appropriate tax treatment for your situation.

15. I received a check from my IRA account. What are my options with this check?

You have 3 options with this check:

1. If your retirement account is still with the custodian listed on the check, all you need to do is to forward this check to your current custodian with a letter of instruction explaining that the check is a "return of capital" and you want the funds deposited into your retirement account.

2. If your retirement account is with another custodian, return the check to us with void written across the front of the check and include a letter of instruction providing us with the following information:
   1. Your new custodian,
   2. Your current account number.
   We will return the check to you so you can forward it directly to your new custodian with a letter of instruction explaining that the check is a "return of capital" and you want the funds deposited into your retirement account.

3. If you wish to have this check made payable to yourself, you will need to do the following:
   1. Void and return the original check to us and include a letter of instruction requesting that the check be made payable to you. Please include your date of birth in your letter of instruction.
   2. Please print and complete the appropriate reissue form(s) ("substitute W-4P/W-9") found in the tax information section of the web site Tax Information and Tax Forms. The W-9 section of this form must be completed and is used to certify your U.S. Social Security # or Tax ID. The W-4P section of this form should be completed if you wish to forgo tax withholding. Please be advised that all applicable federal and state taxes, as well as any penalties, will be deducted from your check, prior to being reissued.

   Please return all required documentation to us at the following address:

   Pilgrim Baxter Fair Fund Settlement
   PO Box 859224
   Braintree, MA 02185-9224

   You should consult with your financial advisor or tax professional in order to determine the potential tax consequences and appropriate tax treatment for your particular situation.

16. Who can I contact if I disagree with the amount of the distribution check I receive?

You will need to put your concerns in writing, along with all supporting documentation, and send them to the Administrator of the Distribution Plan at:

Pilgrim & Baxter Distribution Fund
PO Box 859224
Braintree MA 02185-9224

Disputes relating to the distribution will be considered and resolved by the Settlement Claims Administrator under the direction of the IDC.

17. I held my PBHG mutual fund shares through my broker. Were my shares included in determining if I was an eligible accountholder?

Yes. The Distribution Plan explains in detail the process used to identify accountholders that owned their PBHG mutual fund shares through their broker.

The Administrator of the Distribution Plan requested from the broker dealer firms all registration and transactional information needed to determine if you were indeed eligible for this settlement. Any information received from your brokerage firm by the Administrator of the Distribution Plan will be kept in strict confidence.

18. What happens to the money that remains unclaimed by eligible accountholders?

When the IDC declares that the settlement period has ended, any distribution checks that remain uncashed shall be distributed to the PBHG Funds based on the proportion of aggregate excess profits by market timers accounted for by each fund. For example, the proportion of aggregate excess profits earned by market timers in the Growth Fund was 68.1% of the total excess profits. If $20 million remains uncashed at the end of the settlement period, then $13.62 million will be distributed to the PBHG Growth Fund ($20 million x 68.1%).

19. What if I have additional questions about the settlement?

Please contact the Administrator of the Distribution Plan at (800) 920-5408, Monday through Friday, 8:00 a.m. to 7:00 p.m.