SEC FILE NO. 33-847
SEC FILE NO. 33-56094
SEC FILE NO. 33-67852
SEC FILE NO. 33-91706
SEC FILE NO. 2-34552
PILGRIM FUNDS
Supplement dated January 28, 2000 to the Class Q Prospectus
dated January 4, 2000
1. CLOSURE OF PILGRIM SMALLCAP OPPORTUNITIES FUND
Pilgrim SmallCap Opportunities Fund ("SmallCap Opportunities") will be
closed to new investors effective February 29, 2000. Investors who are
shareholders of SmallCap Opportunities on February 29, 2000 may continue to buy
shares after that date into accounts existing on that day. SmallCap
Opportunities may reopen in the future subject to the discretion of the Board of
Trustees.
2. TERMINATION OF SUB-ADVISER FOR PILGRIM MIDCAP GROWTH FUND AND PILGRIM
SMALLCAP GROWTH FUND
Effective March 31, 2000, Nicholas-Applegate Capital Management ("NACM")
will no longer serve as Sub-Adviser of Pilgrim MidCap Growth Fund ("MidCap
Growth Fund") and Pilgrim SmallCap Growth Fund ("SmallCap Growth Fund")
(collectively, the "Funds"). NACM currently serves as a Sub-Adviser to Pilgrim
Investments, Inc. ("Pilgrim Investments") which is the Adviser for those Funds.
Effective April 1, 2000, Pilgrim Investments will manage directly these Funds
pursuant to its existing Investment Management Agreement. The fees payable to
Pilgrim Investments for serving as Adviser will not change.
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.
Effective April 1, Mary Lisanti, Executive Vice President and Chief
Investment Officer -- Equities of Pilgrim Investments, will be primarily
responsible for the day-to-day management of the Funds. The biography for Ms.
Lisanti is set forth on pages 52 through 53 of the Prospectus.
Ms. Lisanti also manages Pilgrim MidCap Opportunities Fund and Pilgrim
SmallCap Opportunities Fund, which have investment objectives, strategies, and
policies substantially similar to those of the Funds. The chart below shows the
historical performance of Pilgrim MidCap Opportunities Fund and Pilgrim SmallCap
Opportunities Fund during the time periods that Ms. Lisanti has been primarily
responsible for those funds. This information shows the historical track record
of the portfolio manager, and is not intended to imply how MidCap Growth Fund
and SmallCap Growth Fund have performed or will perform.
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THIS CHART DOES NOT SHOW YOU THE PERFORMANCE OF MIDCAP GROWTH FUND OR
SMALLCAP GROWTH FUND -- IT SHOWS THE PERFORMANCE OF SIMILAR FUNDS MANAGED BY
PILGRIM INVESTMENTS.
YEAR ENDED SINCE INCEPTION OF
FUND DECEMBER 31, 1999 MANAGEMENT
---- ----------------- ----------
PILGRIM MIDCAP OPPORTUNITIES FUND (8/20/98 - 12/31/99)
-- Excluding Sales Charges 103.24% 102.78%
-- Including Sales Charges 91.57% 94.20%
S&P MidCap 400 Index 4.70% 41.61%
PILGRIM SMALLCAP OPPORTUNITIES FUND (7/1/98 - 12/31/99)
-- Excluding Sales Charges 146.94% 80.04%
-- Including Sales Charges 132.73% 73.08%
Russell 2000 Index 21.26% 8.28%
The performance information shown above is for Class A shares of Pilgrim MidCap
Opportunities Fund and Pilgrim SmallCap Opportunities Fund. The performance
information is net of operating expenses and assumes the reinvestment of
dividends and distributions. Also shown above is performance of the S&P MidCap
400 Index and the Russell 2000 Index. The S&P MidCap 400 Index is an unmanaged
index that measures the performance of the mid-size company segment of the U.S.
market. The Russell 2000 Index is an unmanaged index that measures the
performance of securities of small companies. Performance information is shown
for the year ended December 31, 1999 and for the period Ms. Lisanti assumed
primary responsibility for managing each fund -- July 1998 for Pilgrim SmallCap
Opportunities Fund and August 1998 for Pilgrim MidCap Opportunities Fund.
3. CHANGE IN DESCRIPTION OF INVESTMENT STRATEGY FOR PILGRIM GROWTH + VALUE
FUND
Effective January 31, 2000, the following disclosure will replace the three
paragraphs under "Pilgrim Growth + Value Fund -- Investment Strategy" on page 18
of the Prospectus:
The Fund invests primarily in a diversified portfolio of equity securities,
including common and preferred stock, warrants and convertible securities.
The Fund invests in common stock of companies the portfolio manager
believes are poised to rise in price. The Sub-Adviser uses a "bottom-up"
quantitative screening process designed to identify and select
inefficiently priced stocks that achieved superior returns compared to
their risk characteristics. The Sub-Adviser first uses a proprietary
computer model to calculate and analyze a "reward/risk" ratio. The
reward/risk ratio is designed to identify stocks with above average market
returns and risk levels which are reasonable for higher return rates. The
Sub-Adviser then applies a quantitative analysis which focuses on growth
and value fundamental characteristics, such as earnings growth, earnings
momentum, price to earnings (P/E) ratios, and internal reinvestment rates.
The Sub-Adviser then allocates stocks according to how they complement
other portfolio holdings.
Under normal market conditions, the Fund invests at least 65% of its total
assets in securities purchased on the basis of the potential for capital
appreciation. These securities may be from large-cap, mid-cap, or small-cap
companies.
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4. PROPOSED AGREEMENTS AND PLANS OF REORGANIZATION
On January 27, 2000, the Board of Directors/Trustees of the Pilgrim Funds
approved the following proposed reorganizations: (i) Pilgrim MidCap Value Fund
into Pilgrim MagnaCap Fund and (ii) Pilgrim Strategic Income Fund into Pilgrim
High Yield Fund. The proposed reorganization of Pilgrim MidCap Value Fund into
Pilgrim MagnaCap Fund is subject to the approval of the shareholders of Pilgrim
MidCap Value Fund. The proposed reorganization of Pilgrim Strategic Income Fund
into Pilgrim High Yield Fund is subject to the approval of the shareholders of
Pilgrim Strategic Income Fund. If shareholder approval is obtained, it is
expected that the reorganizations will take place in Summer 2000.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
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