PILGRIM(R)
---------------------------
FUNDS FOR SERIOUS INVESTORS
Semi-Annual Report
Classes A, B, C, T and I
June 30, 2000
U.S. EQUITY FUNDS
Pilgrim Growth Opportunities
Pilgrim MidCap Opportunities
Pilgrim SmallCap Opportunities
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Pilgrim
Funds
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TABLE OF CONTENTS
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Chairman's Message ........................... 1
Portfolio Managers' Reports:
U.S. Equity Funds ............................ 2
Index Descriptions ........................... 8
Statements of Assets and Liabilities ......... 10
Statements of Operations ..................... 12
Statements of Changes in Net Assets .......... 13
Financial Highlights ......................... 14
Notes to Financial Statements ................ 17
Portfolios of Investments .................... 23
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Pilgrim
Funds
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CHAIRMAN'S MESSAGE
--------------------------------------------------------------------------------
Dear Shareholder:
We are pleased to present the Semi-Annual Report for the Pilgrim Funds and
Pilgrim Equity Trust. On October 29, 1999, ReliaStar Financial Corp., the
indirect parent company of Northstar Investment Management Corporation
("Northstar"), acquired Pilgrim Capital Corporation and its subsidiaries. The
Advisor to the Funds, Pilgrim Advisors, Inc. merged into Pilgrim Investments,
Inc. on April 30, 2000.
Our fund family now has 41 funds of varying types which provide core
investment choices for the serious investor. There are three U.S. Equity Funds
included in this Semi-Annual Report. Seasoned investment professionals at
Pilgrim Investments, Inc. manage all of the Funds.
At Pilgrim, we are dedicated to providing core investments for the serious
investor. We believe that the key to success is matching quality core
investments to the individual needs of investors. Core investments are the
foundation of every portfolio and the basis of other important investment
decisions. Pilgrim prides itself on providing a family of core investments
designed to help you reach your financial goals. Our goal is for every investor
to have a successful investment experience.(SM)
Sincerely,
/s/ Robert W. Stallings
Robert W. Stallings
Chairman
Pilgrim Investments, Inc.
July 31, 2000
1
<PAGE>
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U.S. Equity
Funds
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Portfolio
PILGRIM GROWTH OPPORTUNITIES FUND Manager's Report
--------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT: Mary Lisanti, Executive Vice President and Portfolio
Manager.
GOAL: The Growth Opportunities Fund seeks long-term growth of capital by
investing primarily in common stock of U.S. companies that the Portfolio
Manager feels have above average prospects for growth.
MARKET OVERVIEW: The first half of 2000 was a particularly difficult time to
navigate the financial markets, as volatility reached all-time highs for all
major stock indices. Stock performance varied greatly across economic sectors,
as well as across small, mid, and large cap equities. All of the major indices
reached record highs in the first three months of the year, but they went
through a quick, sharp correction early in the second quarter. Bonds were just
as erratic as the stock market, as investors struggled to analyze the
conflicting influences of the Federal Reserve, the massive repurchase of US
treasury debt, and the highest level of oil prices in a decade. However, the
overriding theme was the Federal Reserve acting to curb the continued strong
growth of the US economy by moving short term interest rates higher.
In the first six months of the year, technology and telecommunications shares
drove the market volatility. After recording spectacular gains in January and
February, these "new economy" stocks corrected quickly as investors sought
protection from a slowing economy and an aggressive Federal Reserve. In this
environment, healthcare stocks provided an excellent defensive investment, as
the managed care and pharmaceutical sectors outperformed the market.
Biotechnology was more volatile than the rest of the healthcare sector, but
these stocks staged a significant rally over the final six weeks of the quarter.
At the same time, energy and utilities provided support to a market that has
become biased against high-growth, high-beta stocks.
Despite the record levels achieved at the outset of the year, 2000 has been a
difficult time for investors. All of the major large cap benchmarks are in
negative territory for the year, with the Dow Jones Industrials having the worst
performance, dropping 9.13% through June. After reaching another record in
March, the NASDAQ Composite fell into negative territory and has now lost 2.54%
in 2000, while the S&P 500 has fallen 0.42%. However, small and mid cap stocks
have been the best performers for the year, with the Russell 2000 Index gaining
3.04% and the S&P Midcap Index jumping 8.98%.
PERFORMANCE: For the six month period ended June 30, 2000 the Fund's Class A
shares, excluding sales charges, had provided a total return of 0.78% versus a
decline of 0.42% for the S&P 500 for the same period.
PORTFOLIO SPECIFICS: The Fund invests in high-growth, high-beta stocks, which
were highly volatile during the period, but the portfolio has undergone
substantial diversification to reflect our view that the economy would slow in a
rising interest rate environment. While our allocation towards technology and
telecommunications remains significant, we continued to broaden our positions
into themes such as "Flourishing in the Managed Care Environment," the "Life
Sciences Revolution," and "Re-energizing America." We also used the volatility
in the market to add to or enter into new positions in the portfolio.
Some of the individual stocks that were significant contributors to performance
in the first half of 2000 were Andrew Corp., Sepracor, SDL Inc., and Redback
Networks.
MARKET OUTLOOK: We expect that the Federal Reserve's seven rate increases will
slow the US economy, creating a more challenging backdrop for investors in the
remainder of 2000. The market has already started to broaden from the
technology- and telecommunications-driven market of late 1999 and the first
quarter of this year. However, this broadening will create a "market of stocks"
as opposed to a "stock market," where company performance will vary
significantly within specific industries. Competitive positioning and business
strategies will differentiate companies, as they deal with secular changes such
as globalization and the Internet.
Companies will not be treated equally in the slowing US economy, and the stock
market will do the same, creating significant opportunities for active portfolio
managers to outperform their benchmarks. The ability to identify companies with
consistent earnings growth will be essential to steering through the current
economic environment. By blending bottoms-up research and a top-down thematic
approach, we believe that we will be able to identify stocks that will flourish
in the changing economy. At the same time, we continue to exploit the market
volatility to our investors' advantage, using weakness to accumulate or add to
positions opportunistically.
2
<PAGE>
Portfolio
Manager's Report PILGRIM GROWTH OPPORTUNITIES FUND
--------------------------------------------------------------------------------
Average Annual Total Returns
for the Periods Ended June 30, 2000
-------------------------------------------------
Since
Inception Since
of Class Inception
A, B and C of Class I
1 Year 5 Year 10 Year 6/5/95 3/31/97
------ ------ ------- ------ -------
Including Sales Charge:
Class A (1) 41.82% 29.48% -- 29.92% --
Class B (2) 44.54% 30.04% -- 30.52% --
Class C (3) 48.49% 30.18% -- 30.59% --
Class T (4) 45.48% 30.22% 19.77% -- --
Class I 51.04% -- -- -- 40.48%
Excluding Sales Charge:
Class A 50.48% 31.02% -- 31.44% --
Class B 49.39% 30.18% -- 30.59% --
Class C 49.46% 30.18% -- 30.59% --
Class T 49.37% 30.22% 19.77% -- --
Class I 57.04% -- -- -- 40.48%
S&P 500 Index 7.24% 23.80% 17.80% 23.93%(5) 23.99%
Based on a $10,000 initial investment, the table above illustrates the total
return of Pilgrim Growth Opportunities Fund against the S&P 500 Index. The Index
has an inherent performance advantage over the Fund since it has no cash in its
portfolio, imposes no sales charges and incurs no operating expenses. An
investor cannot invest directly in an index. The Fund's performance is shown
both with and without the imposition of sales charges.
Performance data represents past performance and is no assurance of future
results. Investment return and principal value of an investment in the Fund will
fluctuate. Shares, when sold, may be worth more or less than their original
cost.
This report contains statements that may be "forward-looking" statements. Actual
results may differ materially from those projected in the "forward-looking"
statements.
The views expressed in this report reflect those of the portfolio manager, only
through the end of the period as stated on the cover. The manager's views are
subject to change at any time based on market and other conditions.
Portfolio holdings are subject to change daily.
(1) Reflects deduction of the maximum Class A sales charge of 5.75%.
(2) Reflects deduction of the Class B deferred sales charge of 5%, 2% and 1%,
respectively, for the 1 year, 5 year and since inception returns.
(3) Reflects deduction of the Class C deferred sales charge of 1.00% for the 1
year return.
(4) Reflects deduction of the deferred Class T sales charge of 4.00% for the 1
year return.
(5) Since inception performance for Index is shown from 6/1/95.
PRINCIPAL RISK FACTOR(S): Exposure to financial and market risks that accompany
investments in equities. In exchange for higher growth potential, investing in
stocks of smaller companies may entail greater price variability than investing
in stocks of larger companies. This Fund may invest in IPO's which may
significantly impact performance.
See accompanying index descriptions on page 8.
3
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U.S. Equity
Funds
-----------
Portfolio
PILGRIM MIDCAP OPPORTUNITIES FUND Manager's Report
--------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT: Mary Lisanti, Executive Vice President and Portfolio
Manager.
GOAL: The MidCap Opportunities Fund seeks long-term capital appreciation by
investing at least 65% of its total assets in the common stocks of mid-sized
U.S. companies that the Portfolio Manager feels have above average prospects for
growth.
MARKET OVERVIEW: The first half of 2000 was a particularly difficult time to
navigate the financial markets, as volatility reached all-time highs for all
major stock indices. Stock performance varied greatly across economic sectors,
as well as across small, mid, and large cap equities. All of the major indices
reached record highs in the first three months of the year, but they went
through a quick, sharp correction early in the second quarter. Bonds were just
as erratic as the stock market, as investors struggled to analyze the
conflicting influences of the Federal Reserve, the massive repurchase of US
treasury debt, and the highest level of oil prices in a decade. However, the
overriding theme was the Federal Reserve acting to curb the continued strong
growth of the US economy by moving short term interest rates higher.
In the first six months of the year, technology and telecommunications shares
drove the market volatility. After recording spectacular gains in January and
February, these "new economy" stocks corrected quickly as investors sought
protection from a slowing economy and an aggressive Federal Reserve. In this
environment, healthcare stocks provided an excellent defensive investment, as
the managed care and pharmaceutical sectors outperformed the market.
Biotechnology was more volatile than the rest of the healthcare sector, but
these stocks staged a significant rally over the final six weeks of the quarter.
At the same time, energy and utilities provided support to a market that has
become biased against high-growth, high-beta stocks.
Despite the record levels achieved at the outset of the year, 2000 has been a
difficult time for investors. All of the major large cap benchmarks are in
negative territory for the year, with the Dow Jones Industrials having the worst
performance, dropping 9.13% through June. After reaching another record in
March, the NASDAQ Composite fell into negative territory and has now lost 2.54%
in 2000, while the S&P 500 has fallen 0.42%. However, small and mid cap stocks
have been the best performers for the year, with the Russell 2000 Index gaining
3.04% and the S&P Midcap Index jumping 8.98%.
PERFORMANCE: For the six month period ended June 30, 2000 the Fund's Class A
shares, excluding sales charges, provided a total return of 10.71%, versus 8.98%
for the Midcap 400 Index for the same period.
PORTFOLIO SPECIFICS: The Fund invests in high-growth, high-beta stocks, which
were highly volatile during the period, but the portfolio has been diversified
substantially since the beginning of the year to reflect our view that the
economy would slow in a rising interest rate environment. While exposure to
technology stocks remains significant, it is clearly more selective, and the
Fund continued to increase weightings in themes such as "Flourishing in the
Managed Care Environment," the "Life Sciences Revolution," and "Re-energizing
America." We also used the volatility in the market to add to or enter into new
positions in the portfolio.
Some of the individual stocks that were significant contributors to performance
in the first half of 2000 were Cephalon, Ditech Communications, Mercury
Interactive, and Siebel Systems.
MARKET OUTLOOK: We expect that the Federal Reserve's rate increases will slow
the US economy, creating a more challenging backdrop for investors in the
remainder of 2000. The market has already started to broaden from the
technology- and telecommunications-driven market of late 1999 and the first
quarter of this year. However, this broadening will create a "market of stocks"
as opposed to a "stock market," where company performance will vary
significantly within specific industries. Competitive positioning and business
strategies will differentiate companies, as they deal with secular changes such
as globalization and the Internet.
Companies will not be treated equally in the slowing US economy, and the stock
market will do the same, creating significant opportunities for active portfolio
managers to outperform their benchmarks. The ability to identify companies with
consistent earnings growth will be essential to steering through the current
economic environment. By blending bottoms-up research and a top-down thematic
approach, we believe that we will be able to identify stocks that will flourish
in the changing economy. At the same time, we are seeking to continue to exploit
the market volatility to our investors' advantage, using weakness to accumulate
or add to positions opportunistically.
4
<PAGE>
Portfolio
Manager's Report PILGRIM MIDCAP OPPORTUNITIES FUND
--------------------------------------------------------------------------------
Average Annual Total Returns for the
Periods Ended June 30, 2000
-------------------------------------
Since Inception
of Class A, B, C and I
1 Year 8/20/98
------ -------
Including Sales Charge:
Class A (1) 59.70% 72.21%
Class B (2) 62.82% 75.49%
Class C (3) 66.77% 76.51%
Class I 69.59% 78.20%
Excluding Sales Charge:
Class A 69.44% 77.79%
Class B 67.82% 76.81%
Class C 67.77% 76.51%
Class I 69.59% 78.20%
S&P MidCap 400 Index 16.96% 35.77%(4)
Based on a $10,000 initial investment, the table above illustrates the total
return of Pilgrim MidCap Opportunities Fund against the S&P MidCap 400 Index.
The Index has an inherent performance advantage over the Fund since it has no
cash in its portfolio, imposes no sales charges and incurs no operating
expenses. An investor cannot invest directly in an index. The Fund's performance
is shown both with and without the imposition of sales charges.
Total returns reflect the fact that the Investment Manager has waived certain
fees and expenses otherwise payable by the Fund. Total returns would have been
lower had there been no waiver to the Fund.
Performance data represents past performance and is no assurance of future
results. Investment return and principal value of an investment in the Fund will
fluctuate. Shares, when sold, may be worth more or less than their original
cost.
This report contains statements that may be "forward-looking" statements. Actual
results may differ materially from those projected in the "forward-looking"
statements.
The views expressed in this report reflect those of the portfolio manager, only
through the end of the period as stated on the cover. The manager's views are
subject to change at any time based on market and other conditions.
Portfolio holdings are subject to change daily.
(1) Reflects deduction of the maximum Class A sales charge of 5.75%.
(2) Reflects deduction of the Class B deferred sales charge of 5% and 4%,
respectively, for the 1 year and since inception returns.
(3) Reflects deduction of the Class C deferred sales charge of 1.00% for the 1
year return.
(4) Since inception performance for Index is shown from 8/31/98.
PRINCIPAL RISK FACTOR(S): Exposure to financial and market risks that accompany
investments in equities. In exchange for higher growth potential, investing in
stocks of smaller companies may entail greater price variability than investing
in stocks of larger companies. This Fund may invest in IPO's which may
significantly impact performance. Securities of mid-size companies may be more
susceptible to price savings than investments in larger companies.
See accompanying index descriptions on page 8.
5
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U.S. Equity
Funds
-----------
Portfolio
PILGRIM SMALLCAP OPPORTUNITIES FUND Manager's Report
--------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT: Mary Lisanti, Executive Vice President and Portfolio
Manager
GOAL: The SmallCap Opportunities Fund seeks capital appreciation by investing at
least 65% of its total assets in the common stock of smaller, lesser-known U.S.
companies that the Portfolio Manager feels have above average prospects for
growth.
MARKET OVERVIEW: The first half of 2000 was a particularly difficult time to
navigate the financial markets, as volatility reached all-time highs for all
major stock indices. Stock performance varied greatly across economic sectors,
as well as across small, mid, and large cap equities. All of the major indices
reached record highs in the first three months of the year, but they went
through a quick, sharp correction early in the second quarter. Bonds were just
as erratic as the stock market, as investors struggled to analyze the
conflicting influences of the Federal Reserve, the massive repurchase of US
treasury debt, and the highest level of oil prices in a decade. However, the
overriding theme was the Federal Reserve acting to curb the continued strong
growth of the US economy by moving short term interest rates higher.
In the first six months of the year, technology and telecommunications shares
drove the market volatility. After recording spectacular gains in January and
February, these "new economy" stocks corrected quickly as investors sought
protection from a slowing economy and an aggressive Federal Reserve. In this
environment, healthcare stocks provided an excellent defensive investment, as
the managed care and pharmaceutical sectors outperformed the market.
Biotechnology was more volatile than the rest of the healthcare sector, but
these stocks staged a significant rally over the final six weeks of the quarter.
At the same time, energy and utilities provided support to a market that has
become biased against high-growth, high-beta stocks.
Despite the record levels achieved at the outset of the year, 2000 has been a
difficult time for investors. All of the major large cap benchmarks are in
negative territory for the year, with the Dow Jones Industrials having the worst
performance, dropping 9.13% through June. After reaching another record in
March, the NASDAQ Composite fell into negative territory and has now lost 2.54%
in 2000, while the S&P 500 has fallen 0.42%. However, small and mid cap stocks
have been the best performers for the year, with the Russell 2000 Index gaining
3.04% and the S&P Midcap Index jumping 8.98%.
PERFORMANCE: For the six month period ended June 30, 2000 the Fund's Class A
shares, excluding sales charges, provided a total return of 7.78% versus 3.04%
for the Russell 2000 Index for the same period.
PORTFOLIO SPECIFICS: The Fund invests in high-growth, high-beta stocks, which
were highly volatile during the period, but the portfolio has been diversified
substantially to reflect our view that the economy would slow in response to
rising interest rates. While our allocation towards technology sectors such as
the "Ubiquitous Semiconductor" remains significant, we continued to broaden our
positions into themes such as "Flourishing in the Managed Care Environment" and
the "Life Sciences Revolution." We also used the volatility in the market to add
to or enter into new positions in the portfolio.
Some of the most significant individual contributors to performance in the first
half of the year were Celgene, COR Therapeutics, TriQuint Semiconductor, and
Natural Microsystems.
MARKET OUTLOOK: We expect that the Federal Reserve's rate increases will slow
the US economy, creating a more challenging backdrop for investors in the
remainder of 2000. The market has already started to broaden from the
technology- and telecommunications-driven market of late 1999 and the first
quarter of this year. However, this broadening will create a "market of stocks"
as opposed to a "stock market," where company performance will vary
significantly within specific industries. Competitive positioning and business
strategies will differentiate companies, as they deal with secular changes such
as globalization and the Internet.
Companies will not be treated equally in the slowing US economy, and the stock
market will do the same, creating significant opportunities for active portfolio
managers to outperform their benchmarks. The ability to identify companies with
consistent earnings growth will be essential to steering through the current
economic environment. By blending bottoms-up research and a top-down thematic
approach, we believe that we will be able to identify stocks that will flourish
in the changing economy. At the same time, we continue to exploit the market
volatility to our investors' advantage, using weakness to accumulate or add to
positions opportunistically.
6
<PAGE>
Portfolio
Manager's Report PILGRIM SMALLCAP OPPORTUNITIES FUND
--------------------------------------------------------------------------------
Average Annual Total Returns
for the Periods Ended June 30, 2000
----------------------------------------------------
Since
Inception Since
of Class Inception
A, B and C of Class I
1 Year 5 Year 10 Year 6/5/95 4/1/99
------ ------ ------- ------ ------
Including Sales Charge:
Class A (1) 100.51% 30.81% -- 32.17% --
Class B (2) 106.28% 31.30% -- 32.74% --
Class C (3) 110.19% 31.41% -- 32.78% --
Class T (4) 107.58% 31.58% 21.58% -- --
Class I 113.53% -- -- -- 104.01%
Excluding Sales Charge:
Class A 112.73% 32.36% -- 33.72% --
Class B 111.28% 31.43% -- 32.81% --
Class C 111.19% 31.41% -- 32.78% --
Class T 111.58% 31.58% 21.58% -- --
Class I 113.53% -- -- -- 104.01%
Russell 2000 Index 14.32% 14.27% 13.56% 15.16%(5) 24.95%
Based on a $10,000 initial investment, the table above illustrates the total
return of Pilgrim SmallCap Opportunities Fund against the Russell 2000 Index.
The Index has an inherent performance advantage over the Fund since it has no
cash in its portfolio, imposes no sales charges and incurs no operating
expenses. An investor cannot invest directly in an index. The Fund's performance
is shown both with and without the imposition of sales charges.
Performance data represents past performance and is no assurance of future
results. Investment return and principal value of an investment in the Fund will
fluctuate. Shares, when sold, may be worth more or less than their original
cost.
This report contains statements that may be "forward-looking" statements. Actual
results may differ materially from those projected in the "forward-looking"
statements.
The views expressed in this report reflect those of the portfolio manager, only
through the end of the period as stated on the cover. The manager's views are
subject to change at any time based on market and other conditions.
Portfolio holdings are subject to change daily.
(1) Reflects deduction of the maximum Class A sales charge of 5.75%.
(2) Reflects deduction of the Class B deferred sales charge of 5%, 2% and 1%,
respectively, for the 1 year, 5 year and since inception returns.
(3) Reflects deduction of the Class C deferred sales charge of 1.00% for the 1
year return.
(4) Reflects deduction of the deferred Class T sales charge of 4.00% for the 1
year return.
(5) Since inception performance for Index is shown from 6/1/95.
Principal Risk Factor(s): Exposure to financial and market risks that accompany
investments in equities. In exchange for higher growth potential, investing in
stocks of smaller companies may entail greater price variability than investing
in stocks of larger companies. This Fund may invest in IPO's which may
significantly impact performance.
See accompanying index descriptions on page 8.
7
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Pilgrim
Funds
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INDEX DESCRIPTIONS
--------------------------------------------------------------------------------
The S&P 500 Index is a widely recognized unmanaged index of 500 common stocks.
The Russell 2000 Index is an unmanaged index that measures the performance of
2000 small companies.
The NASDAQ Composite Index is an unmanaged index that measures all NASDAQ
domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The
index is market-value weighted.
The S&P MidCap Index is an unmanaged index that measures the performance of 800
smaller companies.
The S&P Mid Cap 400 Index is an unmanaged index which measures the performance
of the mid-size company segment of the U.S. market.
The Dow Jones Industrial Average is an unmanaged index comprised of 30 stocks
that are major factors in their industries and widely held by individuals and
institutional investors.
An investor cannot invest directly in an index.
8
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9
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Pilgrim
Funds
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STATEMENTS OF ASSETS AND LIABILITIES as of June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Pilgrim Pilgrim Pilgrim
Growth MidCap SmallCap
Opportunities Opportunities Opportunities
------------- ------------- -------------
<S> <C> <C> <C>
ASSETS:
Investments in securities, at market value
(cost $612,790,776, $105,026,805, $472,609,746
respectively) $ 759,941,124 $ 143,706,519 $ 696,236,705
Repurchase agreements 33,533,000 3,900,000 6,123,000
Cash 2,517 975 100
Receivable for investments sold 15,001,397 1,610,235 10,211,605
Receivable for shares of beneficial interest sold 17,333,201 683,864 473,268
Dividends and interest receivable 272,507 19,237 26,195
Prepaid expenses 102,413 38,100 103,498
------------- ------------- -------------
Total Assets 826,186,159 149,958,930 713,174,371
------------- ------------- -------------
LIABILITIES:
Payable for investments purchased 34,631,101 121,289 11,289,539
Investment advisory fee payable 460,208 118,694 409,087
Payable for shares of beneficial interest reacquired 8,182,423 24,100 937,329
Distribution fees payable 376,697 45,686 433,294
Administrative service fees payable 60,046 11,783 46,357
Transfer agent fees payable 103,836 6,995 233,341
Other accrued expenses and liabilities 291,896 35,096 57,970
------------- ------------- -------------
Total Liabilities 44,106,207 363,643 13,406,917
------------- ------------- -------------
NET ASSETS $ 782,079,952 $ 149,595,287 $ 699,767,454
============= ============= =============
NET ASSETS CONSIST OF:
Paid in capital for shares of beneficial interest,
$0.01 par value outstanding (unlimited shares
authorized) $ 627,678,768 $ 104,551,913 $ 397,860,986
Accumulated net investment loss (2,780,007) (711,316) (4,501,533)
Accumulated net realized gain on investments 10,030,843 7,074,976 82,781,042
Net unrealized appreciation of investments 147,150,348 38,679,714 223,626,959
------------- ------------- -------------
Net Assets $ 782,079,952 $ 149,595,287 $ 699,767,454
============= ============= =============
</TABLE>
See Accompanying Notes to Financial Statements
10
<PAGE>
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Pilgrim
Funds
-------
STATEMENTS OF ASSETS AND LIABILITIES as of June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Pilgrim Pilgrim Pilgrim
Growth MidCap SmallCap
Opportunities Opportunities Opportunities
------------- ------------- -------------
<S> <C> <C> <C>
Class A:
Net Assets $214,415,962 $ 21,821,005 $200,519,311
Shares outstanding 6,414,489 925,611 3,134,517
Net asset value and redemption value per share
(net assets/shares outstanding) $ 33.43 $ 23.57 $ 63.97
Maximum offering price per share
(net asset value plus sales charge
of 5.75% of offering price) $ 35.47 $ 25.01 $ 67.87
Class B:
Net Assets $231,445,288 $ 29,384,168 $331,731,146
Shares outstanding 7,267,993 1,261,083 5,411,898
Net asset value and offering price per share(1)
(net assets/shares outstanding) $ 31.84 $ 23.30 $ 61.30
Class C:
Net Assets $122,321,442 $ 21,758,204 $135,623,455
Shares outstanding 3,834,868 937,344 2,215,945
Net asset value and offering price per share(1)
(net assets/shares outstanding) $ 31.90 $ 23.21 $ 61.20
Class T:
Net Assets $ 68,486,305 N/A $ 30,429,149
Shares outstanding 2,134,615 N/A 493,272
Net asset value and offering price per share(1)
(net assets/shares outstanding) $ 32.08 N/A $ 61.69
Class I:
Net Assets $134,290,246 $ 75,421,982 $ 307
Shares outstanding 3,938,028 3,184,685 5
Net asset value, offering price and redemption
price per share (net assets/shares outstanding) $ 34.10 $ 23.68 $ 64.22(2)
Class Q:
Net Assets $ 11,120,709 $ 1,209,928 $ 1,464,086
Shares outstanding 332,653 51,314 22,879
Net asset value, offering price and redemption
price per share (net assets/shares outstanding) $ 33.43 $ 23.58 $ 63.99
</TABLE>
----------
(1) Redemption price per share varies with length of time Class B, C and T
shares are held.
(2) Actual net asset value differs from calculated net asset value due to
rounding.
See Accompanying Notes to Financial Statements
11
<PAGE>
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Pilgrim
Funds
-------
STATEMENTS OF OPERATIONS for the six months ended June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Pilgrim Pilgrim Pilgrim
Growth MidCap SmallCap
Opportunities Opportunities Opportunities
----------- ----------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 1,592,352 $ 111,735 $ 227,242
Interest 710,008 189,966 1,521,459
----------- ----------- ------------
Total investment income 2,302,360 301,701 1,748,701
----------- ----------- ------------
EXPENSES:
Investment advisory fees 2,301,487 629,654 2,534,971
Distribution fees:
Class A 255,561 23,867 283,567
Class B 811,211 105,339 1,647,693
Class C 354,656 74,292 624,219
Class T 347,182 n/a 152,859
Class Q 2,147 435 480
Administrative service fees 306,865 62,965 337,996
Transfer agent fees and expenses 256,757 36,635 407,385
Registration fees 157,397 21,940 27,332
Accounting and custodian fees 110,471 18,890 84,499
Printing and postage 92,059 12,593 91,259
Miscellaneous 60,548 8,571 41,685
Professional fees 20,930 12,740 11,193
Trustee fees 5,096 5,096 5,096
----------- ----------- ------------
Total expenses 5,082,367 1,013,017 6,250,234
----------- ----------- ------------
Net investment loss (2,780,007) (711,316) (4,501,533)
----------- ----------- ------------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain (loss) on investments 1,988,313 2,803,514 (12,547,711)
Net change in unrealized appreciation
(depreciation) of investments (7,179,265) 5,895,547 34,800,263
----------- ----------- ------------
Net realized and unrealized gain (loss)
from investments (5,190,952) 8,699,061 22,252,552
----------- ----------- ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $(7,970,959) $ 7,987,745 $ 17,751,019
=========== =========== ============
</TABLE>
See Accompanying Notes to Financial Statements
12
<PAGE>
-------
Pilgrim
Funds
-------
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Pilgrim Growth Opportunities Pilgrim MidCap Opportunities
--------------------------------- ---------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
June 30, 2000 December 31, June 30, 2000 December 31,
(Unaudited) 1999 (Unaudited) 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment loss $ (2,780,007) $ (2,696,734) $ (711,316) $ (533,884)
Net realized gain (loss) on investments 1,988,313 99,757,033 2,803,514 15,933,086
Net change in unrealized appreciation
(depreciation) of investments (7,179,265) 83,704,065 5,895,547 23,414,702
------------- ------------- ------------- -------------
Net increase (decrease) in net assets
resulting from operations (7,970,959) 180,764,364 7,987,745 38,813,904
------------- ------------- ------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Net realized gain from investments -- (103,343,720) -- (10,428,057)
------------- ------------- ------------- -------------
Total distributions -- (103,343,720) -- (10,428,057)
------------- ------------- ------------- -------------
FROM CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 478,629,127 138,399,126 67,422,738 15,834,997
Net asset value of shares resulting
from dividend reinvestment -- 94,714,507 -- 10,198,746
------------- ------------- ------------- -------------
478,629,127 233,113,633 67,422,738 26,033,743
Cost of shares redeemed (115,873,722) (64,957,986) (12,871,992) (1,640,736)
------------- ------------- ------------- -------------
Net increase in net assets resulting
from capital share transactions 362,755,405 168,155,647 54,550,746 24,393,007
------------- ------------- ------------- -------------
Net increase in net assets 354,784,466 245,576,291 62,538,491 52,778,854
NET ASSETS:
Beginning of period 427,295,506 181,719,215 87,056,796 34,277,942
------------- ------------- ------------- -------------
End of period $ 782,079,952 $ 427,295,506 $ 149,595,287 $ 87,056,796
============= ============= ============= =============
Accumulated net investment loss $ (2,780,007) -- $ (711,316) --
============= ============= ============= =============
Pilgrim SmallCap Opportunities
---------------------------------
Six Months Ended Year Ended
June 30, 2000 December 31,
(Unaudited) 1999
------------- -------------
FROM OPERATIONS:
Net investment loss $ (4,501,533) $ (4,533,770)
Net realized gain (loss) on investments (12,547,711) 148,711,313
Net change in unrealized appreciation
(depreciation) of investments 34,800,263 125,857,120
------------- -------------
Net increase (decrease) in net assets
resulting from operations 17,751,019 270,034,663
------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Net realized gain from investments -- (49,037,189)
------------- -------------
Total distributions -- (49,037,189)
------------- -------------
FROM CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 394,802,459 120,520,056
Net asset value of shares resulting
from dividend reinvestment -- 33,630,861
------------- -------------
394,802,459 154,150,917
Cost of shares redeemed (207,055,004) (98,356,454)
------------- -------------
Net increase in net assets resulting
from capital share transactions 187,747,455 55,794,463
------------- -------------
Net increase in net assets 205,498,474 276,791,937
NET ASSETS:
Beginning of period 494,268,980 217,477,043
------------- -------------
End of period $ 699,767,454 $ 494,268,980
============= =============
Accumulated net investment loss $ (4,501,533) --
============= =============
</TABLE>
See Accompanying Notes to Financial Statements
13
<PAGE>
Financial
PILGRIM GROWTH OPPORTUNITIES FUND (UNAUDITED) Highlights
--------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
<TABLE>
<CAPTION>
Six Months Class A
Ended Year ended December 31,
June 30, 2000 ------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995(1)
----------- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
Operating performance:
Net asset value, beginning of the period $ 33.17 26.06 21.26 17.92 15.53 17.59
Net investment income (loss) $ -- (0.15) (0.08) 0.03 0.02 0.08
Net realized and unrealized gain
on investments $ 0.26 20.10 5.09 4.16 3.18 1.95
Total from investment operations $ 0.26 19.95 5.01 4.19 3.20 2.03
Dividends from net investment income $ -- -- -- -- -- (0.10)
Distributions from net realized gain $ -- (12.84) (0.21) (0.85) (0.81) (3.99)
Total distributions $ -- (12.84) (0.21) (0.85) (0.81) (4.09)
Net asset value, end of the period $ 33.43 33.17 26.06 21.26 17.92 15.53
Total return(2) % 0.78 93.26 23.61 23.59 20.54 11.55
Ratios and supplemental data:
Net assets at the end of the period (000s) $ 214,416 101,260 29,358 9,334 4,750 1,355
Ratio of expenses to average net
assets after reimbursement % 1.39(3) 1.39 1.37 1.37 150 1.42
Ratio of expenses to average net
assets prior to expense
reimbursement % 1.39(3) 1.39 1.37 1.40 1.56 1.42
Ratio of net investment income
(loss) to average net assets % (0.62)(3) (0.98) (0.47) 0.04 0.11 0.63
Portfolio turnover % 151 286 98 32 62 134
Six Months Class B
Ended Year ended December 31,
June 30, 2000 -------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995(1)
----------- ---- ---- ---- ---- -------
Operating performance:
Net asset value, beginning of the period $ 31.70 25.46 20.93 17.76 15.50 17.59
Net investment income (loss) $ (0.04) (0.18) (0.23) (0.15) (0.06) 0.06
Net realized and unrealized gain
on investments $ 0.18 19.26 4.97 4.17 3.13 1.92
Total from investment operations $ 0.14 19.08 4.74 4.02 3.07 1.98
Dividends from net investment income $ -- -- -- -- -- (0.08)
Distributions from net realized gain $ -- (12.84) (0.21) (0.85) (0.81) (3.99)
Total distributions $ -- (12.84) (0.21) (0.85) (0.81) (4.07)
Net asset value, end of the period $ 31.84 31.70 25.46 20.93 17.76 15.50
Total return(2) % 0.44 91.84 22.69 22.84 19.74 11.27
Ratios and supplemental data:
Net assets at the end of the period (000s) $ 231,445 88,305 15,480 8,815 4,444 1,987
Ratio of expenses to average net
assets after reimbursement % 2.10 2.10 2.13 2.14 2.20 2.07
Ratio of expenses to average net
assets prior to expense
reimbursement % 2.10 2.10 2.13 2.14 2.24 2.07
Ratio of net investment income
(loss) to average net assets % (1.35)(3) (1.69) (1.26) (0.95) (0.55) 0.06
Portfolio turnover % 151 286 98 32 62 134
Six Months Class C
Ended Year ended December 31,
June 30, 2000 ------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995(1)
----------- ---- ---- ---- ---- -------
Operating performance:
Net asset value, beginning of the period $ 31.75 25.48 20.91 17.76 15.50 17.59
Net investment income (loss) $ (0.04) (0.10) (0.27) (0.13) (0.05) 0.04
Net realized and unrealized gain
on investments $ 0.19 19.21 5.05 4.13 3.12 1.92
Total from investment operations $ 0.15 19.11 4.78 4.00 3.07 1.96
Dividends from net investment income $ -- -- -- -- -- (0.06)
Distributions from net realized gain $ -- (12.84) (0.21) (0.85) (0.81 (3.99)
Total distributions $ -- (12.84) (0.21) (0.85) (0.81 (4.05)
Net asset value, end of the period $ 31.90 31.75 25.48 20.91 17.76 15.50
Total return(2) % 0.47 91.90 22.90 22.73 19.74 11.17
Ratios and supplemental data:
Net assets at the end of the period (000s) $ 122,321 21,006 1,625 1,152 365 69
Ratio of expenses to average net assets
after reimbursement % 2.10(3) 2.10 2.13 2.17 2.20 2.11
Ratio of expenses to average net assets
prior to expense reimbursement % 2.10(3) 2.10 2.13 2.17 2.35 2.11
Ratio of net investment income (loss) to
average net assets % (1.35)(3) (1.69) (1.24) (1.00) (0.57 0.02
Portfolio turnover % 151 286 98 32 62 134
Six Months Class T
Ended Year ended December 31,
June 30, 2000 --------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995
----------- ---- ---- ---- ---- ----
Operating performance:
Net asset value, beginning of the period $ 31.93 25.59 21.02 17.82 15.53 15.75
Net investment income (loss) $ (0.31) (0.39) (0.36) (0.17) (0.06) 0.07
Net realized and unrealized gain
on investments $ 0.46 19.57 5.14 4.22 3.16 3.77
Total from investment operations $ 0.15 19.18 4.78 4.05 3.10 3.84
Dividends from net investment income $ -- -- -- -- -- (0.07)
Distributions from net realized gain $ -- (12.84) (0.21) (0.85) (0.81) (3.99)
Total distributions $ -- (12.84) (0.21) (0.85) (0.81) (4.06)
Net asset value, end of the period $ 32.08 31.93 25.59 21.02 17.82 15.53
Total return(2) % 0.47 91.72 22.79 22.94 19.90 24.40
Ratios and supplemental data:
Net assets at the end of the period (000s) $ 68,486 83,772 52,023 73,674 70,406 76,343
Ratio of expenses to average net assets
after reimbursement % 2.03 2.03 2.05 2.03 2.00 2.00
Ratio of expenses to average net assets
prior to expense reimbursement % 2.03 2.03 2.05 2.03 2.04 2.00
Ratio of net investment income (loss) to
average net assets % (1.31)(3) (1.62) (1.19) (0.81) (3.05) 0.37
Portfolio turnover % 151 286 98 32 62 134
Class I
Six Months Year ended December 31,
Ended -----------------------------
June 30, 2000 1999 1998 1997(1)
------------- ---- ---- -------
Operating performance:
Net asset value, beginning of the period $ 33.76 26.28 21.36 17.90
Net investment income (loss) $ (0.05) (0.17) (0.05) 0.01
Net realized and unrealized gain
on investments $ 0.39 20.49 5.18 4.30
Total from investment operations $ 0.34 20.32 5.13 4.31
Dividends from net investment income $ -- -- -- --
Distributions from net realized gain $ -- (12.84) (0.21) (0.85)
Total distributions $ -- (12.84) (0.21) (0.85)
Net asset value, end of the period $ 34.10 33.76 26.28 21.36
Total return(2) % 1.01 93.86 24.06 24.29
Ratios and supplemental data:
Net assets at the end of the period (000s) $ 134,290 132,953 83,233 113,529
Ratio of expenses to average net assets
after reimbursement % 1.00 1.00 1.00 1.02
Ratio of expenses to average net assets
prior to expense reimbursement % 1.00 1.00 1.00 1.02
Ratio of net investment income (loss) to
average net assets % (0.28)(3) (0.61) (0.13) 0.08
Portfolio turnover % 151 286 98 32
</TABLE>
----------
(1) Class A, B and C commenced operations on June 5, 1995 and Class I commenced
operations on March 31, 1997.
(2) Assumes dividends have been reinvested and does not reflect the effect of
sales charges.
(3) Annualized.
See Accompanying Notes to Financial Statements
14
<PAGE>
Financial
Highlights PILGRIM MIDCAP OPPORTUNITIES FUND (UNAUDITED)
--------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
<TABLE>
<CAPTION>
Class A Class B
Six Months Year ended Six Months Year ended
Ended Dec. 31, Ended Dec. 31,
June 30, 2000 --------------- June 30, 2000 ----------------
(Unaudited) 1999 1998(1) (Unaudited) 1999 1998(1)
----------- ---- ------- ----------- ---- -------
<S> <C> <C> <C> <C> <C> <C>
Operating performance
Net asset value, beginning of the period $ 21.29 12.96 10.00 21.12 12.97 10.00
Net investment loss $ (0.04) (0.09) (0.03) (0.11) (0.07) (0.03)
Net realized and unrealized gain
on investments $ 2.32 12.01 2.99 2.29 11.81 3.00
Total from investment operations $ 2.28 11.92 2.96 2.18 11.74 2.97
Distributions from net realized gain $ -- (3.59) -- -- (3.59) --
Total distributions $ -- (3.59) -- -- (3.59) --
Net asset value, end of the period $ 23.57 21.29 12.96 23.30 21.12 12.97
Total return(2): % 10.71 103.24 29.60 10.32 101.73 29.70
Ratios and supplemental data
Net assets, end of the period (000s) $ 21,821 6,291 610 29,384 8,252 140
Ratio of expenses to average net
assets after reimbursement % 1.63 1.74 1.80 2.33 2.40 2.50
Ratio of expenses to average net assets
prior to expense reimbursement % 1.63 1.74 2.42 2.33 2.40 3.27
Ratio of net investment loss to
average net assets % (1.15) (1.34) (1.10)(3) (1.85) (2.00) (2.05)(3)
Portfolio turnover % 78 201 61 78 201 61
Class C Class I
Six Months Year ended Six Months Year ended
Ended Dec. 31, Ended Dec. 31,
June 30, 2000 ---------------- June 30, 2000 ----------------
(Unaudited) 1999 1998(1) (Unaudited) 1999 1998(1)
----------- ---- ------- ----------- ---- -------
Operating performance
Net asset value, beginning of the period $ 21.03 12.96 10.00 21.34 12.99 10.00
Net investment loss $ (0.09) (0.07) (0.04) (0.09) (0.15) (0.02)
Net realized and unrealized gain
on investments $ 2.27 11.73 3.00 2.43 12.09 3.01
Total from investment operations $ 2.18 11.66 2.96 2.34 11.94 2.99
Distributions from net realized gain $ -- (3.59) -- -- (3.59) --
Total distributions $ -- (3.59) -- -- (3.59) --
Net asset value, end of the period $ 23.21 21.03 12.96 23.68 21.34 12.99
Total return(2): % 10.37 101.16 29.60 10.97 103.19 29.90
Ratios and supplemental data
Net assets, end of the period (000s) $ 21,578 4,560 87 75,422 67,954 33,441
Ratio of expenses to average net
assets after reimbursement % 2.40 2.36 2.50 1.33 1.41 1.50
Ratio of expenses to average net assets
prior to expense reimbursement % 2.33 2.36 3.22 1.25 1.41 2.01
Ratio of net investment loss to
average net assets % (1.83) (1.98) (2.04)(3) (0.78) (1.04) (0.70)
Portfolio turnover % 78 201 61 78 201 61
</TABLE>
----------
(1) Class A, B, C and I commenced operations on August 20, 1998.
(2) Assumes dividends have been reinvested and does not reflect the effect of
sales charges.
(3) Annualized.
See Accompanying Notes to Financial Statements
15
<PAGE>
Financial
PILGRIM SMALLCAP OPPORTUNITIES FUND (UNAUDITED) Highlights
--------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
<TABLE>
<CAPTION>
Six Months Class A
Ended Year Ended December 31,
June 30, 2000 ---------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995(1)
----------- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
Operating performance:
Net asset value, beginning of the period $ 59.35 29.00 27.77 24.72 20.92 19.56
Net investment loss $ (0.13) (0.32) (0.27) (0.02) (0.04) (0.09)
Net realized and unrealized gain
on investments $ 4.75 38.23 2.23 3.68 3.84 2.48
Total from investment operations $ 4.62 37.91 1.96 3.66 3.80 2.39
Distributions from net realized gain $ -- (7.56) (0.73) (0.61) -- (1.03)
Total distributions $ -- (7.56) (0.73) (0.61) -- (1.03)
Net asset value, end of the period $ 63.97 59.35 29.00 27.77 24.72 20.92
Total return(2) % 7.78 146.94 7.59 14.92 18.16 12.20
Ratios and supplemental data:
Net assets at the end of the period (000s) $ 200,519 123,377 45,461 78,160 65,660 2,335
Ratio of expenses to average net assets
after reimbursement % 1.31 1.43 1.47 1.43 1.46 1.50
Ratio of expenses to average net assets
prior to expense reimbursement % 1.31 1.43 1.47 1.43 1.47 1.50
Ratio of net investment loss to
average net assets % (0.80) (1.21) (0.70) (0.07) (0.30) (0.91)
Portfolio turnover % 64 223 257 175 140 71
Six Months Class B
Ended Year Ended December 31,
June 30, 2000 ------------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995(1)
----------- ---- ---- ---- ---- -------
Operating performance:
Net asset value, beginning of the period $ 57.06 28.26 27.27 24.46 20.84 19.56
Net investment loss $ (0.39) (0.60) (0.48) (0.19) (0.12) (0.12)
Net realized and unrealized gain
on investments $ 4.63 36.96 2.20 3.61 3.74 2.43
Total from investment operations $ 4.24 36.36 1.72 3.42 3.62 2.31
Distributions from net realized gain $ -- (7.56) (0.73) (0.61) -- (1.03)
Total distributions $ -- (7.56) (0.73) (0.61) -- (1.03)
Net asset value, end of the period $ 61.30 57.06 28.26 27.27 24.46 20.84
Total return(2) % 7.43 145.24 6.84 14.10 17.37 11.79
Ratios and supplemental data:
Net assets at the end of the period (000s) $ 331,731 264,677 124,065 169,516 126,859 1,491
Ratio of expenses to average net assets
after reimbursement % 2.01 2.15 2.18 2.15 2.17 2.20
Ratio of expenses to average net assets
prior to expense reimbursement % 2.01 2.15 2.18 2.15 2.18 2.21
Ratio of net investment loss to
average net assets % (1.53) (1.93) (1.43) (0.78) (1.01) (1.64)
Portfolio turnover % 64 223 257 175 140 71
Six Months Class C
Ended Year Ended Dec. 31,
June 30, 2000 --------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995(1)
----------- ---- ---- ---- ---- -------
Operating performance:
Net asset value, beginning of the period $ 56.98 28.24 27.26 24.46 20.84 19.56
Net investment loss $ (0.22) (0.53) (0.55) (0.20) (0.13) (0.15)
Net realized and unrealized gain
(loss) on investments $ 4.44 36.83 2.26 3.61 3.75 2.46
Total from investment operations $ 4.22 36.30 1.71 3.41 3.62 2.31
Distributions from net realized gain $ -- (7.56) (0.73) (0.61) -- (1.03)
Total distributions $ -- (7.56) (0.73) (0.61) -- (1.03)
Net asset value, end of the period $ 61.20 56.98 28.24 27.26 24.46 20.84
Total return(2) % 7.41 145.12 6.81 14.06 17.37 11.79
Ratios and supplemental data:
Net assets at the end of the period (000s) $ 135,623 72,581 29,746 51,460 37,342 62
Ratio of expenses to average net
assets after reimbursement % 2.01 2.18 2.22 2.18 2.20 2.20
Ratio of expenses to average net
assets prior to expense reimbursement % 2.01 2.18 2.22 2.18 2.21 2.23
Ratio of net investment loss to average
net assets % (1.57) (1.96) (1.45) (0.82) (1.03) (1.60)
Portfolio turnover % 64 223 257 175 140 71
Six Months Class T
Ended Year Ended Dec. 31,
June 30, 2000 --------------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995(1)
----------- ---- ---- ---- ---- -------
Operating performance:
Net asset value, beginning of the period $ 57.39 28.36 27.34 24.48 20.84 19.64
Net investment loss $ (0.59) (0.65) (0.51) (0.18) (0.21) (0.34)
Net realized and unrealized gain
(loss) on investments $ 4.89 37.24 2.26 3.65 3.85 2.57
Total from investment operations $ 4.30 36.59 1.75 3.47 3.64 2.23
Distributions from net realized gain $ -- (7.56) (0.73) (0.61) -- (1.03)
Total distributions $ -- (7.56) (0.73) (0.61) -- (1.03)
Net asset value, end of the period $ 61.69 57.39 28.36 27.34 24.48 20.84
Total return(2) % 7.51 145.51 6.94 14.29 17.47 11.34
Ratios and supplemental data:
Net assets at the end of the period (000s) $ 30,429 33,634 18,203 32,800 35,670 33,557
Ratio of expenses to average net
assets after reimbursement % 1.96 2.06 2.10 1.99 2.07 2.16
Ratio of expenses to average net
assets prior to expense reimbursement % 1.96 2.06 2.10 1.99 2.11 2.16
Ratio of net investment loss to average
net assets % (1.45) (1.85) (1.33) (0.62) (0.89) (1.50)
Portfolio turnover % 64 223 257 175 140 71
Class I
Six Months Year Ended
Ended Dec. 31,
June 30, 2000 --------
(Unaudited) 1999(1)
----------- -------
Operating performance:
Net asset value, beginning of the period $ 59.54 31.78
Net investment loss $ (0.20) (0.08)
Net realized and unrealized gain
(loss) on investments $ 4.88 35.40
Total from investment operations $ 4.68 35.32
Distributions from net realized gain $ -- (7.56)
Total distributions $ -- (7.56)
Net asset value, end of the period $ 64.22 59.54
Total return(2) % 7.86 126.05
Ratios and supplemental data:
Net assets at the end of the period (000s) $ -- --
Ratio of expenses to average net
assets after reimbursement % 0.64 0.47
Ratio of expenses to average net
assets prior to expense reimbursement % 0.64 0.47
Ratio of net investment loss to average
net assets % (0.64) (0.35) (3)
Portfolio turnover % 64 223
</TABLE>
----------
(1) Classes A, B & C commenced operations on June 5, 1995, and Class I
commenced operations on April 1, 1999.
(2) Assumes dividends have been reinvested and does not reflect the effect of
sales charges.
(3) Annualized.
See Accompanying Notes to Financial Statements
16
<PAGE>
-------
Pilgrim
Funds
-------
NOTES TO FINANCIAL STATEMENTS AS OF JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
NOTE 1 -- ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION. Pilgrim Funds comprising Pilgrim Growth Opportunities Fund,
Pilgrim SmallCap Opportunities Fund, and Pilgrim Equity Trust, comprising
Pilgrim MidCap Opportunities Fund (collectively, the "Funds") were organized
under the laws of the Commonwealth of Massachusetts and registered under the
Investment Company Act of 1940 as diversified open-end management investment
companies.
The Growth Opportunities Fund seeks long-term capital appreciation by investing
primarily in the common stocks of U.S. companies that the Portfolio Manager
believes have above average prospects for growth.
The MidCap Opportunities Fund seeks long-term capital appreciation by investing
primarily in the common stocks of mid-sized U.S. companies that the Portfolio
Manager believes have above average prospects for growth.
The SmallCap Opportunities Fund seeks capital appreciation by investing at least
65% of its total assets in the common stocks of smaller lesser-known U.S.
companies that the Portfolio Manager believes have above average prospects for
growth.
On October 29, 1999, ReliaStar Financial Corp., the indirect parent company of
Northstar Investment Management Corporation ("Northstar") the investment adviser
to the Funds, acquired Pilgrim Capital Corporation and its subsidiaries. In
conjunction with the acquisition, Northstar changed its name to Pilgrim
Advisors, Inc. Pilgrim Advisors, Inc. merged into Pilgrim Investments, Inc. on
April 30, 2000.
SECURITY VALUATION. Equity securities are valued daily at the closing sale
prices reported on recognized securities exchanges or lacking any sales, at the
last available bid price. Prices of long-term debt securities are valued on the
basis of last reported sales price, or if no sales are reported, the value is
determined based upon the mean of representative quoted bid and asked prices for
such securities, or, if such prices are not available, at prices provided by
market makers, or at prices for securities of comparable maturity, quality and
type. Short-term debt instruments with remaining maturities of less than 60 days
are valued at amortized cost, unless the Trustees determine that amortized cost
does not reflect the fair value of such obligations. Securities for which market
quotations are not readily available are valued at fair value determined in good
faith by or under direction of the Trustees of the Funds. The books and records
of the Funds are maintained in U.S. dollars. Securities quoted in foreign
currencies are translated into U.S. dollars based on the prevailing exchange
rates on that day. The Adviser uses independent pricing services to price the
Funds' securities.
SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES. Security transactions are
recorded on the trade date. Realized gains or losses on sales of investments are
calculated on the identified cost basis. Interest income is recorded on the
accrual basis except when collection is not expected; discounts are accreted,
and premiums amortized to par at maturity; dividend income is recorded on the
ex-dividend dates. Income, expenses (except class specific expenses), and
realized/unrealized gains/losses, are allocated proportionately to each Fund or
class of shares based upon the relative daily net asset value.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends from net investment income are declared
and paid annually by the Growth Opportunities Fund, MidCap Opportunities Fund
and SmallCap Opportunities Fund. Distributions of net realized capital gains, if
any, are declared annually;however, to the extent that a net realized capital
gain can be reduced by a capital loss carryover, such gain will not be
distributed.
The Funds may periodically make reclassifications among certain of their capital
accounts as a result of the timing and characterization of certain income and
capital gains distributions determined annually in accordance with Federal tax
regulations which may differ from generally accepted accounting principles.
FOREIGN CURRENCY. The Funds isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held.
Net realized gain (loss) on foreign currency transactions represents the foreign
exchange: (1) gains and losses from the sale of holdings of foreign currencies,
17
<PAGE>
-------
Pilgrim
Funds
-------
NOTES TO FINANCIAL STATEMENTS AS OF JUNE 30, 2000 (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
(2) gains and losses between trade date and settlement date on investment
securities transactions and forward exchange contracts, and (3) gains and losses
from the difference between amounts of interest and dividends recorded and the
amounts actually received. Net change in unrealized appreciation (depreciation)
of investment and foreign currency arise from changes in the value of assets and
liabilities including investment in securities at fiscal year end, resulting
from changes in the exchange rate.
FOREIGN CURRENCY FORWARD CONTRACTS. The Funds may enter into foreign currency
forward contracts primarily to hedge against foreign currency exchange rate
risks on their non-U.S. dollar denominated investment securities. When entering
into a currency forward contract, the Funds agree to receive or deliver a fixed
quantity of foreign currency for an agreed-upon price on an agreed future date.
These contracts are valued daily and the funds' net equity therein, representing
unrealized gain or loss on the contracts as measured by the difference between
the forward foreign exchange rates at the dates of entry into the contracts and
the forward rates at the reporting date, is included in the statement of assets
and liabilities. Realized and unrealized gains and losses are included in the
statement of operations. These instruments involve market and/or credit risk in
excess of the amount recognized in the statement of assets and liabilities.
Risks arise from the possible inability of counterparties to meet the terms of
their contracts and from movement in currency and securities values and interest
rates.
OPTIONS. The Funds may write (sell) and purchase put and call options. The
premium collected or paid by a Fund for the sale or purchase of a call or put
option is recorded as an investment and subsequently "marked to market" to
reflect the current market value of the option. If an option which a Fund has
sold or purchased expires on the stipulated expiration date, the Fund realizes a
gain or loss in the amount of the premium received or paid for the option.
For written options, the Fund's obligation may be discharged in three ways: (1)
the option expires on the stipulated expiration date; (2) the option holder
exercises the right to call (buy) or put (sell) the securitiy; or (3) the Fund
enters into a closing transaction. If the option is held until expiration, the
Fund recognizes a gain equal to the amount of premium received. If the written
call option is exercised by the counterparty, the premium is added to the
proceeds from the sale of the underlying security or currency in determining
whether the Fund has realized a gain or loss. If the written put option is
exercised by the counterparty, the premium reduces the cost basis of the
securities purchased by the Fund. If the Fund enters into a closing transaction,
a gain or loss is recognized equal to the difference between the premium
received by the Fund from the counterparty and the amount paid by the Fund on
effecting a closing purchase transaction, incluing brokerage commissions. As the
writer of options, the Fund bears the market risk of an unfavorable change in
the price of the security underlying the written option.
FUTURES CONTRACTS. The Funds may invest in futures contracts solely for the
purpose of hedging its existing portfolio securities, or securities that the
Funds intend to purchase, against fluctuations in fair value caused by changes
in prevailing market or interest rates.
Initial margin deposits made upon entering into futures contracts are recognized
as assets due from the broker (the Funds' agent in acquiring the futures
position). During the period the futures contract is open, changes in the value
of the contract are recognized as unrealized gains or losses by "marking to
market" on a daily basis to reflect the daily market value of the contract.
Variation margin payments are received or made by the Funds each day, depending
upon the daily fluctuations in the fair value of the underlying instrument. The
Funds recognize a gain or loss equal to the daily variation margin. When the
contract is closed, the Funds record a realized gain or loss equal to the
difference between the proceeds from (or cost of) the closing transaction and
the Funds' basis in the contract.
Should market conditions move unexpectedly, the Funds may not achieve the
anticipated benefits of the financial futures contracts and may realize a loss.
The use of futures transactions involve the risk of imperfect correlation in
movements in the price of futures contracts, interest rates, and the underlying
hedged assets.
18
<PAGE>
-------
Pilgrim
Funds
-------
NOTES TO FINANCIAL STATEMENTS AS OF JUNE 30, 2000 (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
REPURCHASE AGREEMENTS. The Funds' Custodian takes possession of collateral
pledged for investments in repurchase agreements. The underlying collateral is
valued daily on a mark-to-market basis to assure that the value, including
accrued interest, is at least equal to the repurchase price. In the event of
default of the obligation to repurchase, the Funds have the right to liquidate
the collateral and apply the proceeds in satisfaction of the obligation. If the
seller defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Funds may be delayed or limited.
FEDERAL INCOME TAXES. The Funds intend to comply with the special provisions of
the Internal Revenue Code available to investment companies and to distribute
all of the taxable net income to their respective shareholders. Therefore, no
Federal income tax provision or excise tax provision is required.
MANAGEMENT'S USE OF ESTIMATES. The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
income and expenses during the reporting period. Actual results could differ
from those estimates.
NOTE 2. INVESTMENT ADVISER, ADMINISTRATOR AND DISTRIBUTOR
Pilgrim Investments, Inc. (the "Adviser"), serves as each Fund's investment
adviser. Each Fund pays the Adviser an investment advisory fee calculated at an
annual rate of 0.75% of average daily net assets for Growth Opportunities Fund
and SmallCap Opportunities Fund and 1.00% of average daily net assets of MidCap
Opportunities Fund. The Funds paid advisory fees to Pilgrim Investments, Inc.
of $5,466,112.
Pilgrim Group, Inc. (the "Administrator") serves as administator to each Fund.
The Funds paid the Administrator a fee calculated at an annual rate of 0.10% of
each Fund's average daily net assets, and an annual shareholder account
servicing fee of $5.00, payable semi-annually, for each account of beneficial
owners of shares. The Administrator earned $707,826 in administrative and
account servicing fees.
Pilgrim Securities, Inc. (the "Distributor") is the distributor of each Fund's
shares. Under separate Plans of Distribution pertaining to Class A, Class B,
Class C, Class T and Class Q shares, the Funds pay the Distributor monthly
service fees at an annual rate of 0.25% of the average daily net assets in the
case of Class A, Class B, Class C, Class T and Class Q shares, and monthly
distribution fees at the annual rate of 0.05% of the average daily net assets of
Class A shares and 0.75% of the average daily net assets of Class B and Class C
shares for all Funds. Class T shares pay monthly distribution fees at an annual
rate of 0.70% of average daily net assets for the Growth Opportunities and
SmallCap Opportunities Funds. Class I does not pay distribution or service fees.
The distributor earned $4,683,508 in service and distribution fees.
The Distributor also receives the proceeds of the initial sales charges paid by
shareholders upon the purchase of Class A shares, and the contingent deferred
sales charge paid by shareholders upon certain redemptions of Class A, Class B,
Class C, and Class T shares. For the six months ended June 30, 2000. The
Distributor earned the following amounts in sales charges:
Class A Class B Class C Class T
Shares Shares Shares Shares
------ ------ ------ ------
Initial sales charges $614,200 N/A N/A N/A
Contingent deferred
sales charges N/A -- $88,795 --
NOTE 3 -- PURCHASES AND SALES OF INVESTMENT SECURITIES
The aggregate cost of purchases and proceeds from sales of investments
(excluding short-term investments) for the six months ended June 30, 2000, were
as follows:
Growth MidCap SmallCap
Opportunities Opportunities Opportunities
-------------- -------------- --------------
Aggregate purchases $1,326,500,822 $ 156,135,163 $ 672,006,057
Aggregate sales 965,035,233 100,531,566 429,670,832
19
<PAGE>
-------
Pilgrim
Funds
-------
NOTES TO FINANCIAL STATEMENTS AS OF JUNE 30, 2000 (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
NOTE 4. CAPITAL SHARE TRANSACTIONS
Transactions in capital shares of each Fund for the six months ended June 30,
2000, were as follows:
<TABLE>
<CAPTION>
Growth Opportunities Fund
-----------------------------------------------------------------------------------
Class A Class B Class C
------------------------- ------------------------ ------------------------
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 5,725,981 $ 195,531,167 4,904,904 $ 160,556,545 3,367,828 $ 110,888,683
Shares issued as reinvestment
of dividends -- -- -- -- -- --
Shares redeemed (2,364,077) (79,021,664) (422,596) (13,610,872) (194,532) (6,250,955)
---------- ------------- ---------- ------------- ---------- -------------
Net increase 3,361,904 $ 116,509,503 4,482,308 $ 146,945,673 3,173,296 $ 104,637,728
---------- ------------- ---------- ------------- ---------- -------------
Growth Opportunities Fund
-----------------------------------------------------------------------------------
Class T Class I Class Q
------------------------- ------------------------ ------------------------
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------
Shares sold 25,055 $ 17,250 364 $ 871,887 338,985 $ 10,763,595
Shares issued as reinvestment
of dividends -- -- -- -- -- --
Shares redeemed (514,101) (16,778,590) (18) (555) (6,332) (211,086)
--------- ------------ ------- --------- --------- ------------
Net increase (decrease) (489,046) $(16,761,340) 346 $ 871,332 332,653 $ 10,552,509
--------- ------------ ------- --------- --------- ------------
MidCap Opportunities Fund
-----------------------------------------------------------------------------------
Class A Class B Class C
------------------------- ------------------------ ------------------------
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------
Shares sold 1,022,023 $ 23,805,664 942,775 $ 22,413,040 818,858 $ 19,881,866
Shares issued as reinvestment
of dividends -- -- -- -- -- --
Shares redeemed (391,965) (8,794,087) (72,307) (1,660,621) (98,393) (2,243,263)
--------- ------------ --------- ------------ --------- ------------
Net increase 630,058 $ 15,011,577 870,468 $ 20,752,419 720,465 $ 17,638,603
--------- ------------ --------- ------------ --------- ------------
MidCap Opportunities Fund
----------------------------------------------
Class I Class Q
--------------------- ----------------------
Shares Amount Shares Amount
--------- --------- --------- ----------
Shares sold -- $ -- 59,607 $1,322,168
Shares issued as reinvestment
of dividends -- -- -- --
Shares redeemed -- -- (8,293) (174,021)
------ ------ ------- ----------
Net increase -- $ -- 51,314 $1,148,147
------ ------ ------- ----------
</TABLE>
20
<PAGE>
-------
Pilgrim
Funds
-------
NOTES TO FINANCIAL STATEMENTS AS OF JUNE 30, 2000 (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SmallCap Opportunities Fund
-----------------------------------------------------------------------------------
Class A Class B Class C
------------------------- ------------------------ ------------------------
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 3,358,982 $ 224,688,971 1,366,937 $ 89,896,388 1,166,096 $ 78,250,147
Shares issued as reinvestment
of dividends -- -- -- -- -- --
Shares redeemed (2,303,139) (150,800,351) (593,987) (36,367,061) (224,022) (13,592,163)
---------- ------------- ---------- ------------ ---------- -------------
Net increase (decrease) 1,055,843 $ 73,888,620 772,950 $ 53,529,327 942,074 $ 64,657,984
---------- ------------- ---------- ------------ ---------- -------------
SmallCap Opportunities Fund
-----------------------------------------------------------------------
Class T Class I Class Q
----------------------- ----------------- -----------------------
Shares Amount Shares Amount Shares Amount
Shares sold 9,219 $ 604,993 -- $ -- 23,108 $ 1,361,960
Shares issued as reinvestment
of dividends -- -- -- -- -- --
Shares redeemed (102,030) (6,282,370) -- -- (229) (13,059)
-------- ----------- ---- ------ -------- -----------
Net increase (decrease) (92,811) $(5,677,377) -- $ -- 22,879 $ 1,348,901
-------- ----------- ---- ------ -------- -----------
</TABLE>
Transactions in capital shares of each Fund for the year ended December 31, 1999
were as follows:
<TABLE>
<CAPTION>
Growth Opportunities Fund
-----------------------------------------------------------------------------------
Class A Class B Class C
------------------------- ------------------------ ------------------------
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 1,872,541 $ 58,142,156 2,027,675 $ 60,130,033 608,874 $ 18,046,757
Shares issued as reinvestment
of dividends 666,579 17,817,292 419,874 10,812,398 57,478 1,505,195
Shares redeemed (613,071) (19,006,293) (269,785) (8,084,430) (68,548) (2,043,259)
----------- ------------ ---------- ------------ --------- ------------
Net increase 1,926,049 $ 56,953,155 2,177,764 $ 62,858,001 597,804 $ 17,508,693
----------- ------------ ---------- ------------ --------- ------------
Growth Opportunities Fund
-------------------------------------------------------
Class T Class I
------------------------- -------------------------
Shares Amount Shares Amount
------ ------ ------ ------
Shares sold 67,360 $ 2,034,349 1,435 $ 45,831
Shares issued as reinvestment
of dividends 887,743 22,790,921 1,554,695 41,788,702
Shares redeemed (364,750) (10,823,333) (786,186) (25,000,672)
--------- ------------ ---------- ------------
Net increase 590,353 $ 14,001,937 769,944 $ 16,833,861
--------- ------------ ---------- ------------
MidCap Opportunities Fund
--------------------------------------------------------------------------------------------------
Class A Class B Class C Class I
------------------------ ----------------------- ----------------------- ---------------------
Shares Amount Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------ ------ ------
Shares sold 283,890 $ 4,973,246 374,335 $ 6,815,739 222,578 $ 4,045,982 2 $ 30
Shares issued as reinvestment
of dividends 24,465 383,131 14,896 234,378 8,538 134,709 609,885 9,446,529
Shares redeemed (59,847) (1,090,275) (9,457) (158,643) (20,948) (391,819) -- --
-------- ----------- -------- ----------- --------- ----------- --------- -----------
Net increase 248,508 $ 4,266,102 379,774 $ 6,891,474 210,168 $ 3,788,872 609,887 $ 9,446,559
-------- ----------- -------- ----------- --------- ----------- --------- -----------
SmallCap Opportunities Fund
---------------------------------------------------------------------------------
Class A Class B Class C
------------------------- ------------------------ ------------------------
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------
Shares sold 1,243,016 $ 55,402,036 989,671 $ 41,747,885 540,114 $ 22,951,710
Shares issued as reinvestment
of dividends 215,723 8,110,268 520,483 18,773,628 83,500 3,031,530
Shares redeemed (947,712) (36,030,267) (1,261,882) (43,273,188) (403,119) (13,179,237)
---------- ------------ ---------- ------------ -------- ------------
Net increase (decrease) 511,027 $ 27,482,037 248,272 $ 17,248,325 220,495 $ 12,804,003
---------- ------------ ---------- ------------ -------- ------------
SmallCap Opportunities Fund
-------------------------------------------------------
Class T Class I
------------------------- -------------------------
Shares Amount Shares Amount
------ ------ ------ ------
Shares sold 10,438 $ 418,294 4 $ 130
Shares issued as reinvestment
of dividends 102,739 3,715,408 1 27
Shares redeemed (168,928) (5,873,761) -- --
-------- ----------- ----- -----
Net increase (decrease) (55,751) $(1,740,059) 5 $ 157
-------- ----------- ----- -----
</TABLE>
21
<PAGE>
-------
Pilgrim
Funds
-------
NOTES TO FINANCIAL STATEMENTS AS OF JUNE 30, 2000 (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
NOTE 6. SECURITY LOANS
Each Fund may lend its securities to brokers, dealers and other financial
institutions in amounts up to one third of the value of its total assets. The
loans are fully collateralized at all times by cash or liquid high grade
securities. As with other extensions of credit, each Fund may bear risk of delay
in recovery or even loss of rights in the collateral should the borrower of the
securities fail financially. The Funds receive compensation for lending their
securities in the form of fees or all or a portion of the income from
investments of the collateral. The Funds also continue to earn income on the
securities loaned. At June 30, 2000, the Funds did not have any securities on
loan.
NOTE 7. FEDERAL INCOME TAX -- CAPITAL LOSS CARRYFORWARD
During 1999, the MidCap Opportunities Fund utilized the prior year's capital
loss carryforward amount of $699,683.
NOTE 8. COMPENSATING BALANCE ARRANGEMENT
The Funds have an informal compensating balance with the Custodian whereby the
Funds may have overdrafts in their respective accounts and have no interest
assessed on the overdrafts. In return, the Funds are required to maintain
positive balances to offset negative balances. The required deposits are
calculated by dividing the overdrawn amounts by 0.90. At June 30, 2000, the
Funds did not have any compensating balances.
NOTE 9. LETTER OF CREDIT
The Pilgrim Funds, Pilgrim Equity Trust, Pilgrim Variable Products Trust and
Pilgrim Mayflower Trust (collectively, the "Funds") have entered into an
unsecured committed revolving line of credit agreement (the "Credit Agreement")
with State Street Bank and Trust Company for an aggregate amount of $50,000,000.
The proceeds may be used only to (1) temporarily finance the purchase and sale
of securities; (2) finance the redemption of shares of an investor in the Funds;
and (3) enable the Funds to meet other emergency expenses as defined in the
Credit Agreement. The Funds pay a commitment fee equal to 0.08% per annum on the
daily unused portion of the committed line amount payable quarterly in arrears.
During the six months ended June 30, 2000, the Funds did not have any loans
outstanding.
NOTE 10. SUBSEQUENT EVENTS
On May 1, 2000, ReliaStar Financial Corp. (NYSE:RLR), the indirect parent
company of Pilgrim Investments, Inc., Adviser to the Funds, and Pilgrim
Securities, Inc., Distributor to the Funds, entered into an agreement under
which it will be acquired by ING Groep N.V. (NYSE:ING). ING Groep is a global
financial institution active in the field of insurance, banking, and asset
management in more than 60 countries, with almost 90,000 employees. Completion
of the acquisition is contingent upon, among other things, approval by the
Directors/Trustees of the Pilgrim Funds and certain shareholder and regulatory
approvals. The closing of the acquisition is expected to occur during the third
quarter of 2000.
A proxy dated July 12, 2000 was sent to shareholders of Pilgrim Growth
Opportunities Fund and Pilgrim SmallCap Opportunities Fund to increase
investment advisory fees from 0.75% to 0.95% for Growth Opportunities Fund and
from 0.75% to 1.00% for SmallCap Opportunities Fund at a shareholder meeting to
be held on August 25, 2000.
22
<PAGE>
Pilgrim
Growth Opportunities
Fund
PORTFOLIO OF INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
COMMON STOCKS: 97.17%
Banks: 1.93%
199,000 Bank of New York Co., Inc. $ 9,253,500
171,700 Fleet Boston Financial Corp. 5,837,800
------------
15,091,300
------------
Beverages: 0.40%
54,800 Coca-Cola Co. 3,147,575
------------
Biotechnology: 5.09%
26,000 @ Amgen, Inc. 1,826,500
113,900 @ Biogen, Inc. 7,346,550
29,800 @ Diacrin, Inc. 234,675
27,500 @ Human Genome Sciences, Inc. 3,667,812
148,100 @ Immunex Corp. 7,321,694
86,200 @ Incyte Genomics, Inc. 7,084,562
48,200 @ Millennium Pharmaceuticals 5,392,375
41,800 @ Protein Design Labs, Inc. 6,895,041
------------
39,769,209
------------
Computers: 11.47%
42,000 @ Brocade Communications System 7,706,344
112,600 @ Cisco Systems, Inc. 7,157,137
56,800 @ EMC Corp. 4,370,050
76,700 @ Foundry Networks, Inc. 8,475,350
73,600 @ Juniper Networks, Inc. 10,713,400
87,000 @ Oracle Corp. 7,313,437
79,100 @ Redback Networks 14,079,800
56,700 @ Sandisk Corp. 3,469,331
64,400 @ Sapient Corp. 6,886,775
47,000 @ Silicon Storage Technology, Inc. 4,150,688
8,500 @ StorageNetworks, Inc. 767,125
41,500 @ Stratos Lightwave, Inc. 1,156,813
46,900 @ Turnstone Systems, Inc. 7,770,011
50,000 @ Veritas Software Corp. 5,650,781
------------
89,667,042
------------
Cosmetics/Personal Care: 0.95%
167,100 Avon Products 7,435,950
------------
Diversified Financial Services: 4.25%
100,600 Citigroup, Inc. 6,061,150
72,300 Lehman Brothers
Holdings, Inc. 6,836,869
33,100 Merrill Lynch & Co. 3,806,500
95,400 Morgan Stanley
Dean Witter &
Co. 7,942,050
188,000 Paine Webber
Group, Inc. 8,554,000
------------
33,200,569
------------
Electric: 2.07%
111,400 Duke Energy Corp. 6,280,175
109,700 PECO Energy Co. 4,422,281
185,700 Reliant Energy, Inc. 5,489,756
------------
16,192,212
------------
Electronics: 2.68%
88,563 @ Agilent
Technologies, Inc 6,531,521
84,000 @ Sanmina Corp. 7,182,000
57,800 @ Waters Corp. 7,214,163
------------
20,927,684
------------
Food: 0.76%
131,800 @ Safeway, Inc. 5,947,475
------------
Healthcare-Products: 2.05%
83,100 Baxter Int'l, Inc. 5,842,969
100,300 Johnson & Johnson 10,218,062
------------
16,061,031
------------
Healthcare-Services: 1.95%
117,200 HCA - The Healthcare Co. 3,559,950
102,800 UnitedHealth Group, Inc. 8,815,100
40,000 @ Wellpoint Health Networks 2,897,500
------------
15,272,550
------------
Internet: 1.07%
69,100 @ Infospace, Inc. 3,817,775
135,200 Schwab (Charles) Corp. 4,546,100
------------
8,363,875
------------
Media: 1.93%
72,900 @ Comcast Corp. 2,952,450
158,900 Disney (Walt) Co. 6,167,306
87,500 @ Viacom, Inc. 5,966,407
------------
15,086,163
------------
Oil & Gas Producers: 3.53%
131,100 Apache Corp. 7,710,319
236,900 Ensco Int'l, Inc. 8,483,981
249,900 EOG Resources, Inc. 8,371,650
38,500 Exxon Mobil Corp. 3,022,250
------------
27,588,200
------------
Oil & Gas Services: 2.55%
253,000 Baker Hughes, Inc. 8,096,000
91,200 @ BJ Services Co. 5,700,000
154,100 @ Weatherford Int'l,
Inc. 6,135,107
------------
19,931,107
------------
Pharmaceuticals: 11.08%
57,100 @ Alkermes, Inc. 2,690,838
125,600 @ Alza Corp. 7,426,100
100,000 Cardinal Health, Inc. 7,400,000
127,200 @ Celgene Corp. 7,488,900
91,300 @ COR Therapeutics, Inc. 7,789,031
81,000 Eli Lilly & Co. 8,089,875
81,900 @ Medimmune, Inc. 6,060,600
105,200 Merck & Co., Inc. 8,060,950
169,200 Pfizer, Inc. 8,121,600
230,500 Schering-Plough Corp. 11,640,250
98,700 @ Sepracor, Inc. 11,905,688
------------
86,673,831
------------
Pipelines: 3.08%
114,930 Dynegy, Inc. 7,851,155
159,700 EL Paso Energy Corp. 8,134,719
47,400 Enron Corp. 3,057,300
104,200 Equitable Resources, Inc. 5,027,650
------------
24,070,824
------------
Retail: 3.87%
108,900 @ AnnTaylor Stores Corp. 3,607,313
299,200 Intimate Brands, Inc. 5,909,200
128,200 @ Kohls Corp. 7,131,125
289,200 Limited, Inc. 6,253,950
116,800 Nordstrom, Inc. 2,817,800
244,700 TJX Cos., Inc. 4,588,125
------------
30,307,513
------------
See Accompanying Notes to Financial Statements
23
<PAGE>
Pilgrim
Growth Opportunities
Fund
PORTFOLIO OF INVESTMENTS AS OF JUNE 30, 2000 (CONTINUED) (UNAUDITED)
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
Semiconductors: 17.19%
68,600 @ Altera Corp. $ 6,992,913
82,300 @ Analog Devices, Inc. 6,254,800
36,800 @ Applied Materials, Inc. 3,335,000
112,700 @ Atmel Corp. 4,155,813
44,300 @ Broadcom Corp. 9,698,931
117,000 @ Cypress Semiconductor Corp. 4,943,250
74,500 @ Globespan, Inc. 9,094,820
55,600 @ Infineon Technologies AG ADR 4,406,300
90,000 Intel Corp. 12,031,875
116,000 @ Intersil Holding Corp. 6,271,250
124,500 @ KLA-Tencor Corp. 7,291,031
151,500 @ Lam Research Corp. 5,681,250
56,300 @ LSI Logic Corp. 3,047,238
4,900 @ Marvell Technology Group Ltd. 279,300
112,400 @ Micron Technology, Inc. 9,898,225
72,700 @ National Semiconductor Corp. 4,125,725
119,300 @ Novellus Systems, Inc. 6,747,906
25,900 @ PMC - Sierra, Inc. 4,602,106
13,000 @ Silicon Laboratories, Inc. 690,625
72,300 @ Teradyne, Inc. 5,314,050
73,000 Texas Instruments, Inc. 5,014,188
31,600 @ Triquint Semiconductor, Inc. 3,023,725
134,700 @ Vitesse Semiconductor Corp. 9,908,869
19,700 @ Xilinx, Inc. 1,626,481
------------
134,435,670
------------
Software: 4.34%
69,700 Adobe Systems, Inc. 9,061,000
42,100 @ Alteon Websystems, Inc. 4,212,631
64,000 @ Macromedia, Inc. 6,188,000
51,800 @ Siebel Systems, Inc. 8,472,538
34,200 @ VeriSign, Inc. 6,036,300
------------
33,970,469
------------
Telecommunications: 14.93%
46,900 @ ADC Telecommunications, Inc. 3,933,737
256,300 @ Andrew Corp. 8,602,069
98,400 @ Avanex Corp. 9,397,200
62,300 @ Ciena Corp. 10,384,631
64,900 @ Digital Lightwave, Inc. 6,522,450
25,000 @@ Exfo Electro Optical Engineering 1,096,875
75,900 @ JDS Uniphase Corp. 9,098,512
79,600 @ Natural Microsystems Corp. 8,950,025
115,800 @@ Nortel Networks Corp. 7,903,350
76,000 @ Qwest Communications Int'l 3,776,250
53,300 Scientific-Atlanta, Inc. 3,970,850
45,200 @ SDL, Inc. 12,890,475
129,000 Sprint Corp. (FON Group) 6,579,000
73,300 @ Sycamore Networks, Inc. 8,090,488
92,800 US West, Inc. 7,957,600
166,700 @ Worldcom, Inc. 7,647,363
------------
116,800,875
------------
Total Common Stocks
(Cost $612,790,776) 759,941,124
------------
SHORT TERM INVESTMENTS: 4.29%
Repurchase Agreement: 4.29%
$33,533,000 State Street Bank & Trust Repurchase
Agreement, 6.200%due 07/03/00
(Collateralized by $8,685,000
U.S. Treasury Notes, 3.875%,
Market Value $8,706,713 Due 04/15/29,
$23,860,000 U.S. Treasury Notes,
7.875% Due 11/15/04, Market Value
$25,500,375) $ 33,533,000
------------
(Cost $33,533,000) 33,533,000
------------
Total Investments in Securities
(Cost $ 646,323,776)* 101.46% $793,474,124
Other Assets and Liabilities-Net -1.46% (11,394,172)
------- ------------
Net Assets 100.00% $782,079,952
======= ============
@ Non income producing security.
@@ Foreign issuer
ADR American Depsitory Receipt
* Cost for federal income tax purposes is $646,796,974. Net unrealized
appreciation consists of:
Gross Unrealized Appreciation $161,036,656
Gross Unrealized Depreciation (13,413,110)
------------
Net Unrealized Appreciation $147,623,546
============
See Accompanying Notes to Financial Statements
24
<PAGE>
Pilgrim
MidCap Opportunities
Fund
PORTFOLIO OF INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
COMMON STOCKS: 96.06%
Apparel: 0.53%
33,700 @ Jones Apparel Group, Inc. $ 791,950
------------
Biotechnology: 5.70%
23,600 @ Diacrin, Inc. 185,850
15,000 @ Idec Pharmaceuticals Corp. 1,759,687
17,300 @ Incyte Genomics, Inc 1,421,844
11,400 @ Inhale Therapeutic Systems, Inc. 1,156,744
14,000 @ Millennium Pharmaceuticals 1,566,250
11,700 @ PE Corp.-Celera Genomics 1,093,950
8,100 @ Protein Design Labs, Inc. 1,336,120
------------
8,520,445
------------
Commercial Services: 1.38%
12,400 @ Quanta Services, Inc. 682,000
48,400 @ Robert Half Int'l, Inc. 1,379,400
------------
2,061,400
------------
Computers: 6.98%
30,300 @ ASM Lithography Holding NV 1,336,987
13,500 @ Brocade Communications System 2,477,039
9,500 @ Extreme Networks 1,002,250
5,200 @ Foundry Networks, Inc. 574,600
7,200 @ Juniper Networks, Inc. 1,048,050
13,400 @ Redback Networks 2,385,200
9,200 @ Sandisk Corp. 562,925
9,400 @ Silicon Storage Technology, Inc. 830,138
8,100 @ Stratos Lightwave, Inc. 225,788
------------
10,442,977
------------
Diversified Financial Service: 1.93%
36,300 Capital One Financial Corp. 1,619,888
19,300 Dain Rauscher Corp. 1,273,800
------------
2,893,688
------------
Electric: 3.57%
22,900 @ Calpine Corp. 1,505,675
36,500 Cinergy Corp. 928,469
22,900 Kansas City Power & Light 515,250
29,200 Montana Power Co. 1,031,125
35,100 NiSource, Inc. 653,737
23,900 Reliant Energy, Inc. 706,544
------------
5,340,800
------------
Electrical Components & Equipment: 1.44%
18,850 @ Power-One, Inc. 2,147,722
------------
Electronics: 4.20%
26,400 @ Amphenol Corp. 1,747,350
14,800 Millipore Corp. 1,115,550
7,800 PE Corp.-PE Biosystems Group 513,825
18,900 @ Tektronix, Inc. 1,398,600
31,700 @ Thermo Electron Corp. 667,681
6,700 @ Waters Corp. 836,244
------------
6,279,250
------------
Food: 0.50%
20,200 Keebler Foods Co. 749,925
------------
Gas: 1.14%
42,100 KeySpan Corp. 1,294,575
17,100 Washington Gas Light Co. 411,469
------------
1,706,044
------------
Healthcare-Services: 2.28%
57,300 @ Community Health
Systems, Inc. 927,544
86,800 @ Health Management Associates, Inc. 1,133,825
18,900 @ Quest Diagnostics, Inc. 1,352,531
------------
3,413,900
------------
Insurance: 0.76%
40,600 ACE Ltd. 1,136,800
------------
Media: 1.91%
29,300 @ Gemstar-TV Guide Int'l 1,800,577
26,400 Readers Digest Association 1,049,400
------------
2,849,977
------------
Oil & Gas Producers: 9.52%
20,100 Anadarko Petroleum Corp. 991,182
27,300 Apache Corp. 1,605,581
54,500 Ensco Int'l, Inc. 1,951,781
50,800 EOG Resources, Inc. 1,701,800
71,900 @ Global Marine, Inc. 2,026,681
49,900 @ Nabors Industries, Inc. 2,073,969
43,200 @ Noble Drilling Corp. 1,779,300
54,800 @ Precision Drilling Corp. 2,116,650
------------
14,246,944
------------
Oil & Gas Services: 6.85%
61,900 Baker Hughes, Inc. 1,980,800
25,800 @ BJ Services Co. 1,612,500
30,200 @ Cooper Cameron Corp. 1,993,200
40,300 @ Grant Prideco, Inc 1,007,500
63,800 @ National-Oilwell, Inc. 2,097,425
39,300 @ Weatherford Int'l, Inc. 1,564,631
------------
10,256,056
------------
Pharmaceuticals: 9.05%
36,900 @ Celgene Corp. 2,172,488
36,000 @ Cephalon, Inc. 2,155,500
20,900 @ COR Therapeutics, Inc. 1,783,031
7,100 @ Forest Laboratories-Class A 717,100
27,900 @ Ivax Corp. 1,157,850
17,000 @ King Pharmaceuticals, Inc. 745,875
21,000 @ Sepracor, Inc. 2,533,125
7,400 @ Vertex Pharmaceuticals, Inc. 779,775
27,700 @ Watson Pharmaceutical, Inc. 1,488,875
------------
13,533,619
------------
Pipelines: 3.72%
22,011 Dynegy, Inc. 1,503,626
31,100 EL Paso Energy Corp. 1,584,156
20,600 Equitable Resources, Inc. 993,950
42,800 Kinder Morgan, Inc. 1,479,275
------------
5,561,007
------------
Retail: 3.62%
3,600 @ Linens 'N Things, Inc. 97,650
25,000 Nordstrom, Inc. 603,125
29,300 @ Starbucks Corp. 1,118,893
19,700 Talbots, Inc. 1,082,269
21,300 Tiffany & Co. 1,437,750
57,100 TJX Cos., Inc. 1,070,625
------------
5,410,312
------------
See Accompanying Notes to Financial Statement s
25
<PAGE>
Pilgrim
MidCap Opportunities
Fund
PORTFOLIO OF INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
Semiconductors: 11.82%
19,800 @ Analog Devices, Inc. $ 1,504,800
19,000 @ Atmel Corp. 700,625
22,300 @ Credence Systems Corp. 1,230,681
32,600 @ Cypress Semiconductor Corp. 1,377,350
29,500 @ Integrated Device Technology, Inc. 1,766,313
17,700 @ Kla-Tencor Corp. 1,036,556
46,200 @ Lam Research Corp. 1,732,500
24,000 @ Mercury Interactive Corp. 2,322,000
36,600 @ Micrel, Inc. 1,589,812
23,500 @ National Semiconductor Corp. 1,333,625
22,500 @ Novellus Systems, Inc. 1,272,656
16,000 @ Transwitch Corp. 1,235,000
6,100 @ Triquint Semiconductor, Inc. 583,694
------------
17,685,612
------------
Software: 9.64%
8,200 @ Alteon Websystems, Inc. 820,513
12,800 @@ Business Objects SA ADR 1,128,000
14,300 @ Clarent Corp. 1,022,450
20,700 @ Macromedia, Inc. 2,001,431
15,400 @ Micromuse, Inc. 2,548,459
6,000 @ Portal Software, Inc. 383,250
12,400 @ Rational Software Corp. 1,152,425
24,800 @ Siebel Systems, Inc. 4,056,350
8,000 @ Universal Access, Inc 196,000
3,300 @ VeriSign, Inc. 582,450
8,800 @ Vitria Technology, Inc 537,900
------------
14,429,228
------------
Telecommunications: 9.52%
9,450 @ Allegiance Telecom, Inc. 604,800
51,800 @ Andrew Corp. 1,738,538
24,000 @ Comverse Technology, Inc. 2,232,000
12,700 @ Digital Lightwave, Inc. 1,276,350
25,000 @ Ditech Communications Corp. 2,364,062
6,300 @ E-Tek Dynamics, Inc. 1,662,019
24,000 @ Focal Communications Corp. 858,000
22,500 @ Natural Microsystems Corp. 2,529,844
9,500 @ Univision Communications, Inc. 983,250
------------
14,248,863
------------
Total Common Stocks (Cost $105,026,805) 143,706,519
------------
SHORT-TERM INVESTMENTS: 2.61%
$3,900,000 Repurchase Agreement: 2.61%
State Street Bank & Trust Repurchase
Agreement, 6.200% due 07/03/00
(Collateralized by $3,095,000 U.S.
Treasury Notes, 8.500% Due 02/15/20,
Market Value $3,980,944) $ 3,900,000
------------
Total Short-Term Investments
(Cost $3,900,000) 3,900,000
------------
Total Investments in Securities
(Cost $ 108,926,805)* 98.67% $147,606,519
Other Assets and Liabilities-Net 1.33% 1,988,768
------ ------------
Net Assets 100.00% $149,595,287
====== ============
@ Non income producing security
@@ Foreign Issuer
ADR American Depository Receipt
* Cost for federal income tax purposes is $108,970,724. Net unrealized
appreciation consists of:
Gross Unrealized Appreciation $ 42,555,191
Gross Unrealized Depreciation (3,831,558)
------------
Net Unrealized Appreciation $ 38,723,633
============
See Accompanying Notes to Financial Statements
26
<PAGE>
Pilgrim
SmallCap Opportunities
Fund
PORTFOLIO OF INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
COMMON STOCKS: 99.49%
Apparel: 0.17%
59,700 Russell Corp. $ 1,194,000
------------
Biotechnology: 6.79%
99,100 @ Aclara BioSciences, Inc. 5,047,905
116,800 @ Charles River Laboratories Int'l 2,591,500
137,900 @ Diacrin, Inc. 1,085,961
45,600 @ Genome Therapeutics Corp. 1,387,950
80,000 @ Incyte Genomics, Inc. 6,575,000
35,300 @ Inhale Therapeutic Systems, Inc. 3,581,847
54,300 @ Invitrogen Corp. 4,083,530
53,500 @ Maxygen 3,036,961
25,200 @ Orchid BioSciences, Inc. 956,813
44,700 @ Protein Design Labs, Inc. 7,373,405
47,300 @ Sequenom, Inc. 2,146,238
341,800 @ Texas Biotech Corp. 6,494,200
70,600 @ Visible Genetics, Inc. 3,185,825
------------
47,547,135
------------
Commercial Services: 5.40%
131,000 @ Albany Molecular Research, Inc. 7,131,313
145,600 @ Aurora Biosciences Corp. 9,928,100
75,700 @ First Health Group Corp. 2,483,906
147,300 @ Heidrick & Struggles, Inc. 9,298,312
282,600 @ Korn/Ferry Int'l 8,954,888
------------
37,796,519
------------
Computers: 1.55%
40,900 @ Immersion 1,227,000
176,000 @ Manhattan Associates, Inc. 4,400,000
37,000 @ Silicon Storage Technology, Inc. 3,267,563
37,000 @ Stratos Lightwave, Inc 1,031,375
5,600 @ Turnstone Systems, Inc 927,763
------------
10,853,701
------------
Diversified Financial Services: 1.81%
151,100 @ CompuCredit Corp. 4,533,000
178,100 Paine Webber Group, Inc. 8,103,550
------------
12,636,550
------------
Electric: 0.91%
188,800 Kansas City Power & Light 4,248,000
117,500 @ NRG Energy, Inc. 2,144,375
------------
6,392,375
------------
Electrical Components & Equipment: 1.74%
104,200 @ Advanced Energy Industries 6,141,286
8,600 @ Capstone Turbine Corp. 387,537
49,350 @ Power-One, Inc. 5,622,816
------------
12,151,639
------------
Electronics: 1.66%
65,900 @ Electro Scientific Industries, Inc. 2,901,659
231,800 @ Kent Electronics Corp. 6,910,538
107,300 @ Packard Biosciences 1,824,100
------------
11,636,297
------------
Environmental Control: 0.02%
8,000 @ Waste Connections, Inc. 158,000
------------
Healthcare-Products: 2.23%
196,000 @ Cytyc Corp. 10,461,500
203,300 @ Edwards Lifesciences Corp. 3,888,113
114,100 @ Kensey Nash Corp. 1,269,363
------------
15,618,976
------------
Healthcare-Services: 7.43%
266,000 @ Community Health Systems, Inc. 4,305,875
89,400 @ Coventry Health Care, Inc. 1,191,534
89,900 @ Laboratory Corp. of America Holdings 6,933,538
319,800 @ LifePoint Hospitals, Inc 7,115,550
139,200 @ Oxford Health Plans 3,314,700
196,400 @ Province Healthcare Co. 7,094,950
99,200 @ Quest Diagnostics, Inc. 7,099,000
338,800 @ Triad Hospitals, Inc. 8,194,725
131,400 @ Trigon Healthcare, Inc. 6,775,313
------------
52,025,185
------------
Insurance: 1.42%
166,900 Radian Group, Inc. 8,637,075
35,700 PartnerRe, Ltd. 1,265,119
------------
9,902,194
------------
Internet: 0.11%
21,800 @ Digital Insight Corp. 741,200
------------
Machinery-Diversified: 0.91%
23,300 @ Brooks Automation, Inc. 1,489,742
74,600 @ PRI Automation, Inc. 4,878,141
------------
6,367,883
------------
Media: 0.47%
78,800 @ Emmis Communications Corp. 3,260,350
------------
Oil & Gas Producers: 6.77%
125,000 @ Atwood Oceanics 5,546,875
295,300 Cross Timbers Oil Co. 6,533,513
128,100 @ HS Resources, Inc. 3,843,000
403,100 @ Key Energy Group 3,879,838
74,000 @ Louis Dreyfus Natural Gas 2,317,125
131,200 @ Marine Drilling Co., Inc. 3,673,600
78,200 @ Newfield Exploration Co. 3,059,575
186,000 @ Precision Drilling Corp. 7,184,250
223,900 @ Pride Int'l, Inc. 5,541,525
130,600 @ Spinnaker Exploration Co. 3,346,625
40,800 @ Stone Energy Corp. 2,437,800
------------
47,363,726
------------
Oil & Gas Services: 4.53%
109,800 @ BJ Services Co. 6,862,500
116,700 @ Cooper Cameron Corp. 7,702,200
124,000 @ Dril-Quip 5,797,000
107,600 @ Global Industries Ltd. 2,030,950
190,000 @ National-Oilwell, Inc. 6,246,250
92,400 @ Universal Compression Holdings 3,095,400
------------
31,734,300
------------
See Accompanying Notes to Financial Statements
27
<PAGE>
Pilgrim
SmallCap Opportunities
Fund
PORTFOLIO OF INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
Pharmaceuticals: 15.70%
75,400 @ Abgenix, Inc. $ 9,037,397
141,700 @ Alkermes, Inc. 6,677,611
61,200 Alpharma, Inc. 3,809,700
130,700 @ Anesta Corp. 3,251,163
174,900 @ Celgene Corp. 10,297,238
141,300 @ Cephalon, Inc. 8,460,338
184,400 @ COR Therapeutics, Inc. 15,731,625
81,500 @ Cubist Pharmaceuticals, Inc. 4,013,875
170,500 @ Ilex Oncology, Inc. 6,010,125
321,600 @ Intrabiotics Pharmaceuticals, Inc. 8,582,700
140,400 @ Pharmacopeia, Inc. 6,511,050
67,700 @ Priority Healthcare Corp. 5,030,956
105,800 @ Syncor Int'l Corp. 7,617,600
80,100 @ Trimeris, Inc. 5,601,994
52,400 @ United Therapeutics Corp. 5,678,850
33,900 @ Vertex Pharmaceuticals, Inc. 3,572,212
------------
109,884,434
------------
Retail: 5.71%
48,900 @ AnnTaylor Stores Corp. 1,619,812
91,400 @ Factory 2-U Stores, Inc. 3,456,063
37,300 @ Krispy Kreme Doughnuts, Inc. 2,741,550
16,300 @ Linens 'N Things, Inc. 442,138
156,400 @ Michaels Stores, Inc. 7,165,075
266,000 @ MSC Industrial Direct Co. 5,569,375
171,000 @ Pacific Sunwear of California 3,206,250
81,200 Talbots, Inc. 4,460,925
156,100 @ Too, Inc. 3,970,794
242,100 @ Tweeter Home Entertainment Group 7,353,788
------------
39,985,770
------------
Semiconductors: 17.65%
74,200 @ Alpha Industries 3,269,438
159,200 @ Asyst Technologies, Inc. 5,452,600
146,400 @ ATMI, Inc. 6,807,600
103,000 @ Credence Systems Corp. 5,684,313
97,200 @ Exar Corp. 8,474,625
84,500 @ Fairchild Semiconductor Int'l 3,422,250
53,100 @ Globespan, Inc. 6,482,348
24,100 Helix Technology Corp. 939,900
60,000 @ Integrated Device Technology, Inc. 3,592,500
75,400 @ Intersil Holding Corp. 4,076,313
133,100 @ Kulicke & Soffa Industries 7,902,813
141,300 @ Lam Research Corp. 5,298,750
167,400 @ Micrel, Inc. 7,271,438
50,800 @ Qlogic Corp. 3,355,975
232,200 @ Quicklogic Corp. 5,166,450
26,100 @ Rudolph Technologies, Inc. 1,011,375
90,600 @ Semtech Corp. 6,929,484
31,800 @ Silicon Image, Inc. 1,586,025
169,100 Stewart & Stevenson Services 2,547,069
204,100 @ Therma-Wave, Inc. 4,553,981
46,500 @ Three-Five Systems, Inc. 2,743,500
103,225 @ Transwitch Corp. 7,967,680
28,200 @ Triquint Semiconductor, Inc. 2,698,388
88,100 @ Varian Semiconductor Equipment 5,533,781
179,800 @ Virata Corp. 10,720,573
------------
123,489,169
------------
Software: 8.51%
42,500 @ AppNet, Inc. 1,530,000
37,000 @ Art Technology Group, Inc. 3,734,686
37,500 @ Clarent Corp. 2,681,250
154,400 @ Exchange Applications, Inc. 4,110,900
90,900 @ Extensity, Inc. 3,113,324
120,500 @ Manugistics Group, Inc. 5,633,375
60,200 @ Micromuse, Inc. 9,962,159
70,500 @ Numerical Technologies, Inc. 3,428,063
174,600 @ Open Market, Inc. 2,411,663
126,000 @ OTG Software, Inc. 3,598,875
32,800 @ PC-Tel, Inc. 1,246,400
3,200 @ RADVision, Ltd. 89,400
220,200 @ Serena Software Inc. 9,998,456
47,100 @ Universal Access, Inc. 1,153,950
19,400 @ Webmethods, Inc. 3,049,438
151,300 @ Websense, Inc 3,801,413
------------
59,543,352
------------
Telecommunications: 8.00%
7,500 @ Accelerated
Networks, Inc 316,406
239,700 @ Andrew Corp. 8,044,931
112,500 @ Digital Lightwave, Inc. 11,306,250
86,800 @ Ditech Communications Corp. 8,208,025
194,300 @ I3 Mobile, Inc. 3,570,263
29,400 @ Inet Technologies, Inc. 1,594,950
119,600 @ Natural Microsystems Corp. 13,447,525
1,000 @ New Focus, Inc 82,125
30,300 @ SDL, Inc. 8,641,181
67,100 @ World Access, Inc. 742,294
------------
55,953,950
------------
Total Common Stocks (Cost $472,609,746) 696,236,705
------------
See Accompanying Notes to Financial Statements
28
<PAGE>
Pilgrim
SmallCap Opportunities
Fund
PORTFOLIO OF INVESTMENTS AS OF JUNE 30, 2000 (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
Principal
Amount
-----------
SHORT-TERM INVESTMENTS: 0.88%
Repurchase Agreement: 0.88%
$6,123,000 State Street Bank & Trust Repurchase
Agreement, 6.200% due 07/03/00
(Collateralized by $5,845,000 U.S.
Treasury Notes, 7.875% Due 11/15/04,
Market Value $6,246,844) $ 6,123,000
------------
Total Short-Term Investments
(Cost $6,123,000) 6,123,000
------------
Total Investments in Securities
(Cost $ 478,732,746)* 100.37% $702,359,705
Other Assets and Liabilities-Net -0.37% (2,592,251)
------- ------------
Net Assets 100.00% $699,767,454
======= ============
@ Non-income producing security
* Cost for federal income tax purposes is $480,672,999. Net unrealized
appreciation consists of:
Gross Unrealized Appreciation $239,982,114
Gross Unrealized Depreciation (14,414,902)
------------
Net Unrealized Appreciation $225,567,212
============
See Accompanying Notes to Financial Statements
29
<PAGE>
Investment Manager
Pilgrim Investments, Inc.
40 North Central Avenue, Suite 1200
Phoenix, Arizona 85004-4408
Distributor
Pilgrim Securities, Inc.
40 North Central Avenue, Suite 1200
Phoenix, Arizona 85004-4408
Administrator
Pilgrim Group, Inc.
40 North Central Avenue, Suite 1200
Phoenix, Arizona 85004-4408
Transfer Agent
DST Systems, Inc.
P.O. Box 419368
Kansas City, Missouri 64141-6368
Custodian
State Street Bank and Trust
1 Heritage Place
North Quincy, MA 02171
Legal Counsel
Dechert Price & Rhoads
1775 Eye Street, N.W.
Washington, D.C. 20006
Prospectus containing more complete information regarding the Funds, including
charges and expenses, may be obtained by calling Pilgrim Securities, Inc.
Distributor at 1-800-334-3444. Please read the prospectus carefully before you
invest or send money.
OPPSEMI063000
