Securities Act File No. 33-849
Securities Act File No. 33-847
Securities Act File No. 33-67852
Securities Act File No. 33-56881
Securities Act File No. 02-34552
Securities Act File No. 33-91706
Securities Act File No. 33-56094
Securities Act File No. 02-91302
Securities Act File No. 02-14767
Securities Act File No. 02-48906
Securities Act File No. 33-72226
Securities Act File No. 33-05827
PILGRIM FUNDS
Supplement dated September 1, 2000 to
the Class Q Prospectus dated July 31, 2000
(This Supplement supercedes the Supplement dated July 31, 2000)
1. PILGRIM GNMA INCOME FUND -- CLASS Q
Class Q shares of Pilgrim GNMA Income Fund are not currently available for
purchase. All references in the prospectus to Class Q shares of GNMA Income Fund
should be disregarded.
2. ACQUISITION OF RELIASTAR FINANCIAL CORP. BY ING GROEP N.V.
On September 1, 2000, ING Groep N.V. (NYSE: ING) acquired ReliaStar Financial
Corp. (NYSE: RLR), the indirect parent company of Pilgrim Investments, Inc.
("Pilgrim Investments"), Adviser to the Funds, and Pilgrim Securities, Inc.
("Pilgrim Securities"), Distributor to the Funds. ING Group is a global
financial institution active in the fields of insurance, banking, and asset
management in more than 65 countries, with almost 100,000 employees.
Pilgrim Investments and Pilgrim Securities are expected to remain intact after
the acquisition. Pilgrim Investments does not currently anticipate that there
will be any changes in the investment personnel primarily responsible for
management of the Funds as a result of the acquisition.
Under the provisions of the advisory contracts between the Pilgrim Funds and
Pilgrim Investments, those agreements might be deemed to terminate automatically
at the time of the acquisition. As a result, the Board of Directors/Trustees and
the shareholders of the Funds approved new advisory contracts between the
Pilgrim Funds and Pilgrim Investments, and the Sub-Advisers to the Funds, which
took effect immediately after the acquisition.
3. TERMINATION OF SUB-ADVISER FOR PILGRIM LARGECAP GROWTH FUND, PILGRIM
WORLDWIDE GROWTH FUND, PILGRIM INTERNATIONAL CORE GROWTH FUND, PILGRIM
EMERGING COUNTRIES FUND, AND PILGRIM CONVERTIBLE FUND.
Effective October 1, 2000, Nicholas-Applegate Capital Management ("NACM") will
no longer serve as Sub-Adviser of Pilgrim LargeCap Growth Fund ("LargeCap Growth
Fund"), Pilgrim Worldwide Growth Fund ("Worldwide Growth Fund"), Pilgrim
International Core Growth Fund ("International Core Growth Fund"), Pilgrim
Emerging Countries Fund ("Emerging Countries Fund") and Pilgrim Convertible Fund
("Convertible Fund") (collectively, the "Funds"). NACM currently serves as a
Sub-Adviser to Pilgrim Investments which is the Adviser for those Funds.
<PAGE>
Effective October 1, 2000, Pilgrim Investments will manage directly these Funds
under its existing Investment Management Agreement. The fees payable to Pilgrim
Investments for serving as Adviser will not change.
Effective October 1, 2000, Mary Lisanti, Executive Vice President and Chief
Investment Officer -- Domestic Equities of Pilgrim Investments, and Thomas J.
Sullivan will share responsibility for the day-to-day management of LargeCap
Growth Fund. Ms. Lisanti also will be primarily responsible for the day-to-day
management of the domestic equity component of Worldwide Growth Fund. The
biography for Ms. Lisanti is set forth in the Prospectus. Thomas J. Sullivan has
been a Partner and Equity Trader for First NY Securities, LLC in New York since
April, 2000. From April, 1994 to March, 2000, Mr. Sullivan was Vice President
and portfolio manager at NACM and part of the team that managed LargeCap Growth
Fund. Mr. Sullivan was also the co-manager of the Pilgrim MidCap Growth Fund
during that time and was the lead manager of the Nicholas-Applegate US Growth
Equity Offshore Fund.
Effective October 1, 2000, Richard T. Saler and Philip A. Schwartz will share
responsibility for the day-to-day management of the International Core Growth
Fund, the Emerging Countries Fund, and the international portion of the
Worldwide Growth Fund. Mr. Saler has over 13 years of experience in
international investments. He is Senior Vice President at Pilgrim Investments
and held a similar position with Lexington Management Corporation ("LMC") prior
to that firm's recent acquisition by the parent company of Pilgrim Investments.
Mr. Saler is a member of an investment management team that manages both the
Pilgrim Global Corporate Leaders Fund and the Pilgrim International Fund
(formerly the Lexington Global Corporate Leaders Fund and the Lexington
International Fund, respectively), and he is the lead manager for the latter
fund. Mr. Saler has focused on international markets since joining LMC in 1986.
Mr. Schwartz has over 12 years experience in international investments. He is a
Vice President at Pilgrim Investments, and held the same position with LMC prior
to that firms' recent acquisition. He is also a Chartered Financial Analyst and
a member of the New York Society of Security Analysts. Mr. Schwartz is a member
of an investment management team that manages both the Pilgrim Global Corporate
Leaders Fund and Pilgrim International Fund. Prior to joining LMC in 1993, he
was Vice President of European Research Sales with Cheuvreux De Virieu in Paris
and New York, serving the institutional market. Prior to Cheuvreux, Mr. Schwartz
was affiliated with Olde and Co. and Kidder, Peabody as a stockbroker.
Effective October 1, 2000, Andrew Chow will be primarily responsible for the
day-to-day management of Convertible Fund. Prior to joining Pilgrim, Mr. Chow
was the portfolio manager of the Conseco Convertible Securities Fund since 1998.
He joined Conseco in 1991 where he was also responsible for managing convertible
securities accounts.
Following the assumption of portfolio management duties by Pilgrim Investments,
portfolio turnover may be higher than usual in connection with the potential
restructuring of the holdings of these Funds to reflect the management style of
Pilgrim Investments. Such potential restructuring may result in transactional
costs for the Funds and may result in accelerated capital gain distributions as
a result of the turnover.
4. CHANGE IN DESCRIPTION OF INVESTMENT STRATEGY FOR PILGRIM WORLDWIDE GROWTH
FUND.
Effective October 1, 2000, the following disclosure will replace the disclosure
under "Pilgrim Worldwide Growth Fund -- Investment Strategy" on page 30 of the
Prospectus:
Under normal conditions the Fund invests at least 65% of its total assets
in securities of issuers located in at least three different countries, one
of which normally includes the U.S. The Fund normally invests at least 75%
of its total assets in common stock. The Fund may invest in companies
located in countries with emerging securities markets when the Adviser
believes they present attractive investment opportunities.
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<PAGE>
In considering common stock of U.S. companies, the Adviser selects
companies that it believes have above average prospects for growth. The
companies may have a large, medium or small market capitalization. The
Adviser seeks companies expected to benefit most from major social,
economic and technological trends that are likely to shape the future of
business and commerce over the next three to five years in the U.S. This
trend-oriented approach is combined with fundamental research to guide
stock selection and the structure of the U.S. portion of the portfolio.
In considering the common stock of non-U.S. companies, the Adviser selects
companies that it believes offer the best relative value in a number of
different categories and, as a result, the best prospects for capital
appreciation. Such categories may include, but are not limited to,
companies affected by important socio-economic trends (as described above
in the case of U.S. stock selection); companies based in certain regions;
and companies operating in major economic sectors. This relative value
seeking approach is combined with fundamental research to guide stock
selection and the structure of the non-U.S. portion of the portfolio.
From time to time, the Adviser reviews the allocation between U.S. stocks
and non-U.S. stocks with reference to the corresponding breakdown of market
capitalization in the major indices of global stocks and to other factors
deemed appropriate by the Adviser.
5. AMENDMENT TO ADVISORY AGREEMENT FOR PILGRIM GROWTH OPPORTUNITIES FUND AND
PILGRIM SMALLCAP OPPORTUNITIES FUND
At meetings held on August 25, 2000 and on August 29, 2000, respectively,
shareholders of Pilgrim Growth Opportunities Fund ("Growth Opportunities Fund")
and Pilgrim SmallCap Opportunities Fund ("SmallCap Opportunities Fund") approved
an amendment to the Advisory Agreements of the Funds with Pilgrim Investments.
The amendment has the effect of increasing the current management fee that each
Fund pays of 0.75% per annum of each Fund's average daily net assets to 0.95%
for Growth Opportunities Fund, and 1.00% for SmallCap Opportunities Fund.
The disclosure for Growth Opportunities Fund and SmallCap Opportunities Fund in
the Prospectus section entitled "What You Pay to Invest" is revised to reflect
the following:
OPERATING EXPENSES PAID EACH YEAR BY THE FUNDS (AS A % OF AVERAGE NET ASSETS)(1)
Growth
Opportunities Management Other Operating
Fund Fee 12b-1 Fee Expenses Expenses
---- --- --------- -------- --------
Class Q 0.95% 0.25% 0.34% 1.54%
SmallCap
Opportunities Management Other Operating
Fund Fee 12b-1 Fee Expenses Expenses
---- --- --------- -------- --------
Class Q 1.00% 0.25% 0.38% 1.63%
----------
(1) These tables show the estimated operating expenses for each Fund by class
as a ratio of expenses to average daily net assets. These expenses are
based on each Fund's actual operating expenses for its most recent complete
fiscal year, revised to reflect the new advisory fees of the Funds.
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<PAGE>
EXAMPLES
The following examples are intended to help compare the cost of investing in the
Pilgrim Funds with the cost of investing in other mutual funds. Each example
assumes that you invested $10,000, reinvested all your dividends, the Fund
earned an average annual return of 5%, and annual operating expenses remained at
the current level. Keep in mind this is only an estimate -- actual expenses and
performance may vary.
1 year 3 years 5 years 10 years
------ ------- ------- --------
Growth Opportunities Fund - Class Q $157 $486 $839 $1,835
SmallCap Opportunities Fund - Class Q $166 $514 $887 $1,933
Please be advised of the new address of the Pilgrim Funds, effective
immediately:
ING Pilgrim Funds
7337 E. Doubletree Ranch Road
Scottsdale, Arizona 85258
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
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