As filed with the Securities and Exchange Commission on November 29, 2000
Securities Act File No. 333-_______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. [ ]
PILGRIM MUTUAL FUNDS
(Exact Name of Registrant as Specified in Charter)
7337 East Doubletree Ranch Road, Scottsdale, Arizona 85258
(Address of Principal Executive Offices) (Zip Code)
(800) 992-0180
(Registrant's Area Code and Telephone Number)
James M. Hennessy
ING Pilgrim Investments, Inc.
7337 East Doubletree Ranch Road
Scottsdale, Arizona 85258
(Name and Address of Agent for Service)
With copies to:
Jeffrey S. Puretz, Esq.
Dechert
1775 Eye Street, N.W.
Washington, DC 20006
------------------------
Approximate Date of Proposed Public Offering:
As soon as practicable after this Registration Statement becomes effective.
--------------------------------------------------------------------------------
It is proposed that this filing will become effective on
December 29, 2000 pursuant to Rule 488 under the Securities Act of 1933.
--------------------------------------------------------------------------------
No filing fee is required because an indefinite number of shares have previously
been registered pursuant to Rule 24f-2 under the Investment Company Act of 1940,
as amended.
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<PAGE>
Pilgrim Global Corporate Leaders Fund
7337 East Doubletree Ranch Road
Scottsdale, Arizona 85258
(800) 992-0180
_____________, 2000
Dear Shareholder:
Your Board of Directors has called a Special Meeting of Shareholders of the
Pilgrim Global Corporate Leaders Fund scheduled to be held at _______
[a.m./p.m.], local time, on ___________, 2001 at 7337 East Doubletree Ranch
Road, Scottsdale, Arizona 85258.
The Board of Directors has approved a reorganization of Pilgrim Global
Corporate Leaders Fund ("Global Corporate Leaders Fund") into Pilgrim Worldwide
Growth Fund ("Worldwide Growth Fund"), each of which is managed by ING Pilgrim
Investments Inc. ("ING Pilgrim Investments") and is part of Pilgrim Funds (the
"Reorganization"). If approved by shareholders, you would become a shareholder
of the Worldwide Growth Fund on the date that the Reorganization occurs.
Worldwide Growth Fund has investment objectives and policies that are similar in
many respects to those of the Global Corporate Leaders Fund, and the
Reorganization is expected to result in operating expenses that are lower for
shareholders.
You are being asked to vote to approve an Agreement and Plan of
Reorganization. The accompanying document describes the proposed transaction and
compares the policies and expenses of each of the funds for your evaluation.
After careful consideration, the Board of Global Corporate Leaders Fund
(the only series of Pilgrim Global Corporate Leaders Fund, Inc.) unanimously
approved this proposal and recommended shareholders vote "FOR" the proposal.
A Proxy Statement/Prospectus that describes the Reorganization is enclosed.
We hope that you can attend the Meeting in person; however, we urge you in any
event to vote your shares by completing and returning the enclosed proxy card in
the envelope provided at your earliest convenience.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. IN ORDER
TO AVOID THE ADDED COST OF FOLLOW-UP SOLICITATIONS AND POSSIBLE ADJOURNMENTS,
PLEASE TAKE A FEW MINUTES TO READ THE PROXY STATEMENT/PROSPECTUS AND CAST YOUR
VOTE. IT IS IMPORTANT THAT YOUR VOTE BE RECEIVED NO LATER THAN __________, 2001.
Global Corporate Leaders Fund is using Shareholder Communications
Corporation, a professional proxy solicitation firm, to assist shareholders in
the voting process. As the date of the meeting approaches, if we have not
already heard from you, you may receive a telephone call from Shareholder
Communications Corporation reminding you to exercise your right to vote.
We appreciate your participation and prompt response in this matter and
thank you for your continued support.
Sincerely,
Robert W. Stallings,
President
<PAGE>
Pilgrim Global Corporate Leaders Fund
7337 East Doubletree Ranch Road
Scottsdale, Arizona 85258
(800) 992-0180
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS OF
PILGRIM GLOBAL CORPORATE LEADERS FUND
SCHEDULED FOR ___________, 2001
To the Shareholders:
A Special Meeting of Shareholders of the Pilgrim Global Corporate Leaders
Fund ("Special Meeting") is scheduled for _________, 2001 at _______
[a.m./p.m.], local time, at 7337 East Doubletree Ranch Road, Scottsdale, Arizona
85258.
At the Special Meeting, you will be asked to consider and approve the
following:
1. To approve an Agreement and Plan of Reorganization providing for the
acquisition of all of the assets and liabilities of Pilgrim Global
Corporate Leaders Fund by Pilgrim Worldwide Growth Fund; and
2. To transact such other business as may properly come before the
Special Meeting or any adjournments thereof.
Shareholders of record at the close of business on ___________, 2000, are
entitled to notice of, and to vote at, the meeting. Your attention is called to
the accompanying Proxy Statement/Prospectus. Regardless of whether you plan to
attend the meeting, PLEASE COMPLETE, SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY
CARD so that a quorum will be present and a maximum number of shares may be
voted. If you are present at the meeting, you may change your vote, if desired,
at that time.
By Order of the Board of Directors
James M. Hennessy,
Secretary
______________, 2000
<PAGE>
TABLE OF CONTENTS
INTRODUCTION................................................................ 1
SUMMARY..................................................................... 2
COMPARISON OF INVESTMENT OBJECTIVES AND STRATEGIES.......................... 3
Comparison of Portfolio Characteristics.................................. 5
Relative Performance..................................................... 5
General Information...................................................... 9
ADDITIONAL INFORMATION ABOUT WORLDWIDE GROWTH FUND.......................... 10
Investment Personnel..................................................... 10
Performance of Worldwide Growth Fund..................................... 11
INFORMATION ABOUT THE REORGANIZATION........................................ 12
ADDITIONAL INFORMATION ABOUT THE FUNDS...................................... 14
GENERAL INFORMATION ABOUT THE PROXY STATEMENT............................... 15
Solicitation of Proxies.................................................. 15
Voting Rights............................................................ 16
Other Matters to Come Before the Meeting................................. 17
Reports to Shareholders.................................................. 17
APPENDIX A.................................................................. A-1
APPENDIX B.................................................................. B-1
APPENDIX C.................................................................. C-1
APPENDIX D.................................................................. D-1
APPENDIX E.................................................................. E-1
<PAGE>
PROXY STATEMENT/PROSPECTUS
SPECIAL MEETING OF SHAREHOLDERS SCHEDULED FOR
_________________, 2001
PILGRIM GLOBAL CORPORATE LEADERS FUND
(formerly Lexington Global Corporate Leaders Fund)
Relating to the Reorganization into
PILGRIM WORLDWIDE GROWTH FUND
(a series of Pilgrim Mutual Funds)
(COLLECTIVELY, THE "FUNDS")
INTRODUCTION
This Proxy Statement/Prospectus provides you with information about a
proposed transaction. This transaction involves the transfer of all the assets
and liabilities of Pilgrim Global Corporate Leaders Fund ("Global Corporate
Leaders Fund") to Pilgrim Worldwide Growth Fund ("Worldwide Growth Fund") in
exchange for shares of Worldwide Growth Fund (the "Reorganization"). Global
Corporate Leaders Fund would then distribute to its shareholders their portion
of the shares of Worldwide Growth Fund it receives in the Reorganization. The
result would be a liquidation of the Global Corporate Leaders Fund. (The Global
Corporate Leaders Fund and the Worldwide Growth Fund each may be individually
referred to as the "Fund"). You would receive shares of Worldwide Growth Fund
having an aggregate value equal to the aggregate value of the shares you held of
Global Corporate Leaders Fund, as of the close of business on the business day
of the closing of the Reorganization. You are being asked to vote on the
Agreement and Plan of Reorganization through which these transactions would be
accomplished.
Because you, as a shareholder of Global Corporate Leaders Fund, are being
asked to approve a transaction that will result in your holding of shares of
Worldwide Growth Fund, this Proxy Statement also serves as a Prospectus for
Worldwide Growth Fund.
This Proxy Statement/Prospectus, which you should retain for future
reference, contains important information about Worldwide Growth Fund that you
should know before investing. For a more detailed discussion of the investment
objectives, policies, restrictions and risks of each of the Funds, see the
Prospectus (the "Pilgrim Prospectus") dated November 1, 2000, and the Statement
of Additional Information for Pilgrim Funds dated November 1, 2000, which may be
obtained, without charge, by calling (800) 992-0180. Each of the Funds also
provides periodic reports (and other information) to its shareholders which
highlight certain important information about the Funds, including investment
results and financial information. The annual report for Worldwide Growth Fund
dated June 30, 2000, is incorporated herein by reference. You may receive a copy
of the most recent annual report for any of the Funds, without charge, by
calling (800) 992-0180.
You may also obtain proxy materials, reports and other information filed by
the Worldwide Growth Fund from the Securities and Exchange Commission's ("SEC")
Public Reference Room (1-800-SEC-0330) or from the SEC's internet website at
www.sec.gov.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES, OR DETERMINED THAT THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
1
<PAGE>
SUMMARY
You should read this entire Proxy Statement/Prospectus carefully. For
additional information, you should consult the Pilgrim Prospectus, and the
Agreement and Plan of Reorganization, which is attached hereto as Appendix B.
THE PROPOSED REORGANIZATION. On November 2, 2000, the Board of Directors of
Global Corporate Leaders Fund approved an Agreement and Plan of Reorganization
(the "Reorganization Agreement"). Subject to shareholder approval, the
Reorganization Agreement provides for:
* the transfer of all of the assets of Global Corporate Leaders Fund to
Worldwide Growth Fund, in exchange for shares of Worldwide Growth
Fund;
* the assumption by Worldwide Growth Fund of all of the liabilities of
the Global Corporate Leaders Fund;
* the distribution of Worldwide Growth Fund shares to the shareholders
of Global Corporate Leaders Fund; and
* the complete liquidation of Global Corporate Leaders Fund.
The Reorganization is expected to be effective upon the opening of business
on ___________, 2001, or on a later date as the parties may agree (the
"Closing"). As a result of the Reorganization, each shareholder of Class A
shares of Global Corporate Leaders Fund would become a shareholder of Class A of
Worldwide Growth Fund. Each shareholder would hold, immediately after the
Closing, shares of Class A of Worldwide Growth Fund having an aggregate value
equal to the aggregate value of the shares of Class A of Global Corporate
Leaders Fund held by that shareholder as of the close of business on the
business day of the Closing.
The Reorganization is one of many reorganizations that are proposed among
various Pilgrim funds. The Pilgrim fund complex has grown in recent years
through the addition of many funds. Management of the Pilgrim funds has proposed
the consolidation of a number of the Pilgrim funds that management believes have
similar or compatible investment policies. The proposed reorganizations are
designed to reduce the overlap in funds in the complex, thereby eliminating
duplication of costs and other inefficiencies arising from having similar
portfolios within the same fund group. ING Pilgrim Investments also believes
that the reorganizations may benefit fund shareholders by resulting in surviving
funds with a greater asset base. This is expected to achieve economies of scale
for shareholders and may provide greater investment opportunities for the
surviving funds or the potential to take larger portfolio positions.
In considering whether to approve the Reorganization, you should note
that:
* The Funds have investment objectives and policies that are similar.
* The proposed Reorganization is expected to result in a reduction of
total operating expenses per share for the shareholders of the Global
Corporate Leaders Fund. For example, the operating expenses, expressed
as a percentage of net assets per share for Class A shares, are as
follows.
* Expenses of Global Corporate Leaders Fund (based upon the 12
month period ended 6/30/00)(1): 1.67%
* Expenses of Worldwide Growth Fund (based on the 12 month period
ended 6/30/00): 1.67%
* Projected expenses of Worldwide Growth Fund after the
Reorganization (PRO FORMA): 1.66%
----------
(1) Adjusted for current expenses of contracts and 12b-1 plans which became
effective when ING Pilgrim Investments became adviser to the Fund on July
26, 2000.
2
<PAGE>
* Worldwide Growth Fund normally invests 65% of its total assets in
securities of issuers of any size located in at least three countries,
one of which may be the U.S. Global Corporate Leaders Fund also
normally invests 65% of its total assets in securities of issuers
located in at least three different countries, and normally invests
these assets in blue chip securities.
Approval of the Reorganization Agreement requires the affirmative vote of
a majority of the outstanding shares of the Global Corporate Leaders Fund.
AFTER CAREFUL CONSIDERATION, THE BOARD OF DIRECTORS OF THE GLOBAL
CORPORATE LEADERS FUND UNANIMOUSLY APPROVED THE PROPOSED REORGANIZATION. THE
BOARD RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSED REORGANIZATION.
COMPARISON OF INVESTMENT OBJECTIVES AND STRATEGIES
<TABLE>
<CAPTION>
GLOBAL CORPORATE LEADERS FUND WORLDWIDE GROWTH FUND
----------------------------- ---------------------
<S> <C> <C>
INVESTMENT * Long-term growth of capital through * Maximum long-term capital
OBJECTIVE investment in equity securities and appreciation.
equity equivalents of foreign and
U.S. companies.
INVESTMENT * Normally invests at least 65% of * Normally invests at least 65% of
STRATEGIES its total assets in a diversified its net assets in securities of
portfolio of blue chip securities issuers located in at least three
of companies that represent different countries -- including
"corporate leaders" in their emerging market countries -- one of
respective industries. which may be the U.S.
* Normally invests in at least three * Generally invests at least 75% of
different countries. Intends to its total assets in common and
select the countries, currencies preferred stocks, warrants and
and companies that provide the convertible securities.
greatest potential for long-term
growth. * In selecting foreign securities,
primarily uses a "bottom-up"
* May invest in securities of fundamental analysis to identify
companies and governments of the stocks which are expected to offer
following regions: Asia Region good value relative to their peers
(including Japan); Europe; Latin in the same industry, sector or
America; Africa; North America region. Also uses a "top down"
(including U.S. and Canada); and analysis to identify important
other areas. themes or issues which may affect
the investment environment in
* May invest 35% of its total assets certain regions or sectors and to
in: securities of smaller estimate regional market risks.
capitalization companies; debt
securities; and other investments. * In selecting U.S. securities,
normally invests in equity
securities of large U.S. companies
that are expected to benefit most
from the major social, economic
and technological trends that are
likely to shape the future of
business and commerce over the next
three to five years in the U.S. A
company is considered to be large
if its market capitalization of the
time of purchase, corresponds to
the upper 90% of the S&P Index.
Combines this "top down" thematic
approach with fundamental research
and a sell discipline.
INVESTMENT * ING Pilgrim Investments * ING Pilgrim Investments
ADVISER
PORTFOLIO * Richard T. Saler, Phillip A. * Mary Lisanti, Thomas J. Sullivan,
MANAGERS Schwartz and Alan H. Wapnick Richard T. Saler and Phillip A.
Schwartz
</TABLE>
As you can see from the chart above, the investment objectives and
strategies of the Funds are similar.
3
<PAGE>
COMPARISON OF PORTFOLIO CHARACTERISTICS
The following table compares certain characteristics of the portfolios of
the Funds as of June 30, 2000:
<TABLE>
<CAPTION>
GLOBAL CORPORATE LEADERS FUND WORLDWIDE GROWTH FUND
----------------------------- ---------------------
<S> <C> <C>
Net Assets $18,648,578 $660,179,270
Number of Holdings 48 146
as a Percentage of Net Assets:
Equity Securities (Including Equity
Equivalents) 91.80% 96.55%
U.S. Securities 37.90% 47.19%
Holdings in Companies With:
Market Capitalization Over $10 Billion 91.85% 70.77%
(As a % of Net Assets)
Market Capitalization Between $5 and
$10 Billion (As a % of Net Assets) 0.00% 17.28%
Market Capitalization Under $5 Billion 1.41% 8.50%
(As a % of Net Assets)
Convertible Securities 0.00% 0.00%
Preferred Securities 1.50% 0.26%
Short-term Debt Investments 0.00% 4.13%
Average Market Capitalization of
Companies in Portfolio: $117.1 billion $81.4 billion
Range of Market Capitalization
Companies in Portfolio: $2.2 billion to $524.3 billion $1.7 billion to $447.7 billion
Portfolio Turnover Rate 6.00%(2) 169%(1)
Top 5 Industries Services 14.80% Telecommunication Equipment 7.48%
(as a % of Net Assets) Financial Services 13.70% Electronic Compo-Semicon 6.95%
Electrical & Electronics 10.70% Fiber Optics 5.91%
Telecommunications 9.00% Telecommunication Services 4.27%
Consumer Non-durable Goods 8.90% Networking Products 3.44%
Top 10 Holdings Morgan Stanley Dean Witter 3.48% Nortel Network Corp 2.88%
(as a % of Net Assets) Cisco Systems, Inc. 3.34% Nokia OYJ 2.15%
Intel Corp. 3.30% Intel Corp. 2.07%
NEC Corp. 3.04% Corning, Inc. 2.04%
NTT Corp. 2.64% Ciena Corp. 2.00%
Sony Corp. 2.56% MGM Grand, Inc. 1.92%
Citigroup, Inc. 2.49% JDS Uniphase Corp. 1.88%
Canon, Inc. 2.41% Oracle Corp. 1.82%
General Electric Co. 2.39% Wal-Mart Stores, Inc. 1.80%
American Express Co. 2.35% Sun Microsystems, Inc. 1.78%
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
GLOBAL CORPORATE LEADERS FUND WORLDWIDE GROWTH FUND
----------------------------- ---------------------
<S> <C> <C>
Top 10 Countries United States 47.19% United States 37.91%
(as a % of Net Assets) Japan 8.58% Japan 16.26%
United Kingdom 8.29% United Kingdom 7.89%
France 5.98% Switzerland 7.39%
Canada 5.72% France 7.22%
Netherlands 3.47% Germany 5.57%
Sweden 3.34% Netherlands 5.42%
Finland 3.17% Sweden 2.13%
Germany 2.43% Australia 2.06%
Spain 1.57% Canada 1.41%
</TABLE>
----------
(1) For the year ended June 30, 2000.
(2) For the six months ended June 30, 2000 annualized.
RELATIVE PERFORMANCE
The following table shows for certain periods the annual total return for:
(a) Class A shares of Global Corporate Leaders Fund; (b) Class A Shares of
Worldwide Growth Fund; and (c) the Morgan Stanley Capital International World
Index ("MSCI World Index"). Performance of the Funds in the table does not
reflect the deduction of sales loads, and would be lower if it did. The index
has inherent performance advantages over the Funds since the index has no cash
in its portfolio and incurs no operating expenses. An investor cannot invest
directly in an index. Total return is calculated assuming reinvestment of all
dividends and capital gain distributions at net asset value. The Funds' past
performance is not an indication of future performance.
CALENDAR
YEAR/ GLOBAL CORPORATE WORLDWIDE MSCI
PERIOD ENDED LEADERS FUND(1) GROWTH FUND(2) WORLD INDEX(3)
------------ --------------- -------------- --------------
12/31/94 1.84% 2.45% 5.58%
12/31/95 10.69% 14.74% 21.32%
12/31/96 16.43% 17.92% 14.00%
12/31/97 6.90% 17.28% 16.23%
12/31/98 19.06% 37.34% 24.80%
12/31/99 39.06% 83.52% 23.26%
1/1/00-9/30/00 -10.66% -7.62% -7.25%
----------
(1) Prior to July 26, 2000, the Fund was advised by Lexington Management
Corporation, which was acquired by the parent to ING Pilgrim Investments on
July 26, 2000. ING Pilgrim Investments became the adviser on that same
date.
(2) Prior to October 1, 2000, the Fund was managed by a sub-adviser to the
adviser ING Pilgrim Investments. Prior to May 24, 1999, the prior
sub-adviser was the adviser, rather than sub-adviser, to the Fund. For more
information about the performance of Worldwide Growth Fund, see "Additional
Information about Worldwide Growth Fund."
(3) MSCI World Index is an unmanaged index that measures the performance of
over 1,400 securities listed on exchanges in the U.S., Europe, Canada,
Australia, New Zealand, and the Far East.
COMPARISON OF THE RISKS OF INVESTING IN THE FUNDS
Because the Funds have investment objectives and policies that are
compatible in many respects, many of the risks of investing in Worldwide Growth
5
<PAGE>
Fund are similar to the risks of investing in Global Corporate Leaders Fund. A
principal risk of an investment in either Fund is that you may lose money on
your investment. Each Fund's shares may go up or down, sometimes rapidly and
unpredictably. Market conditions, financial conditions of issuers represented in
the portfolio, investment policies, portfolio management, and other factors
affect such fluctuations.
EQUITY SECURITIES. Each Fund is subject to risks associated with investing
primarily in equity securities, including market risks, issuer risk (including
credit risks), price volatility risks, and market trend risks. Market risk is
the risk that securities may decline in value due to factors affecting
securities markets generally or particular industries. Issuer risk is the risk
that the value of a security may decline for reasons relating to the issuer,
such as changes in the financial condition of the issuer. Credit risk is the
risk that an issuer may not be able to meet its financial obligations when due,
including payments on outstanding debt. While equities may offer the potential
for greater long-term growth than most debt securities, they generally have
higher volatility.
Worldwide Growth Fund may invest, and Global Corporate Leaders Fund may
invest in some degree, in small and medium-sized companies. Small and
medium-sized companies may be more susceptible to greater price swings than
larger companies because they have fewer financial resources, more limited
financial resources, more limited product and market diversification, and many
are dependent on a few key managers. Smaller companies also may experience
relatively high growth rates and higher failure rates than do larger companies.
The securities of smaller companies may trade in lower volumes and may be less
liquid than securities of larger, more established companies. A Fund could lose
money if it cannot sell a security at the time and price that would be most
beneficial to the Fund.
RISKS OF FOREIGN INVESTING. Foreign investments may be riskier than U.S.
investments for many reasons. There are certain risks in owning foreign
securities, including: (i) fluctuations in currency exchange rates; (ii)
devaluation of currencies; (iii) political or economic developments and the
possible imposition of currency exchange blockages or other foreign governmental
laws or restrictions; (iv) reduced availability of public information concerning
issuers; (v) accounting, auditing and financial reporting standards or other
regulatory practices and requirements that are not uniform when compared to
those applicable to domestic companies; and (vi) limitations on foreign
ownership of equity securities. Also, securities of many foreign companies may
be less liquid and the prices more volatile than those of domestic companies.
With certain foreign countries, there is the possibility of expropriation,
nationalization, confiscatory taxation and limitations on the use or removal of
funds or other assets of the Funds, including the withholding of dividends.
Moreover, to the extent either Fund invests in emerging market countries, the
risks may be greater, partly because emerging market countries may be less
politically and economically stable than other countries. It may also be more
difficult to buy and sell securities in emerging market countries.
MARKET TRENDS. From time to time, the stock market may not favor the growth
securities in which the Worldwide Growth Fund invests, or the large "blue chip"
companies in which Global Corporate Leaders Fund invests. Indeed, the market may
not favor equities at all.
INABILITY TO SELL SECURITIES. Securities of foreign companies may trade in
lower volume and may be less liquid than securities of U.S. companies. The Funds
could lose money if they cannot sell a security at the time and price that would
be most beneficial to them.
CHANGE IN PORTFOLIO MANAGEMENT. Pilgrim Worldwide Growth Fund recently
underwent a change in portfolio management. Since October 1, 2000, ING Pilgrim
Investments has managed the Fund directly. Prior to that date, another
investment adviser served as sub-adviser to the Fund. The current portfolio
management structure was not in place at the time of the performance information
presented in this Proxy Statement/Prospectus. Shareholders bear the risk that
the new portfolio managers will not be able to sustain the Fund's historical
relative performance.
6
<PAGE>
COMPARISON OF FEES AND EXPENSES
The following discussion describes and compares the fees and expenses of
the Funds. For further information on the fees and expenses of the Worldwide
Growth Fund, see "Appendix C: Additional Information Regarding Pilgrim Worldwide
Growth Fund."
TOTAL OPERATING EXPENSES. The operating expenses of the Worldwide Growth
Fund, expressed as a ratio of total expenses to average daily net assets
("expense ratio"), have been approximately the same as those of the Global
Corporate Leaders Fund. For the 12 month period ending June 30, 2000, the net
expenses for Class A shares of the Worldwide Growth Fund were 1.67%, the same as
those of Class A of the Global Corporate Leaders Fund, without giving effect to
the expense limitation agreement described below. The operating expenses for the
Global Corporate Leaders Fund are based upon expenses incurred by the Fund for
the 12 month period ended June 30, 2000, adjusted for current expenses of
contracts and distribution plans which became effective when ING Pilgrim
Investments became adviser to the Fund on July 26, 2000.
EXPENSE LIMITATION ARRANGEMENTS. Expense limitation arrangements are in
place for both Global Corporate Leaders Fund and Worldwide Growth Fund. Under
the terms of the expense limitation agreements, ING Pilgrim Investments has
agreed to limit the expenses of the Funds, excluding interest, taxes, brokerage
and extraordinary expenses, subject to possible reimbursement to ING Pilgrim
Investments within three years. The current expense limitation agreements for
the Worldwide Growth Fund and the Global Corporate Leaders Fund provide that
they will remain in effect through at least October 31, 2001 and July 26, 2001,
respectively. There is no assurance that the expense limitation agreement will
be continued after that date. The expense limitation for Class A shares of the
Worldwide Growth Fund is 1.85%. The expense limitation for Class A shares of
Global Corporate Leaders Fund is 2.75%. For both Funds, actual operating
expenses are currently below the expense limits, so that the expenses of neither
Fund are currently subsidized by management.
MANAGEMENT FEE. Global Corporate Leaders Fund has an annual management fee
of 1.00% of the Fund's average daily net assets. Worldwide Growth Fund's
management fee is based on the following breakpoint schedule:
Average Daily Net Assets
to which Fee Applies Fee Breakpoint
-------------------- --------------
First $500 million 1.00%
Next $500 million 0.90%
Over $1 billion 0.85%
DISTRIBUTION AND SERVICE FEES. The distribution (12b-1) and service fees
for Class A Shares of Worldwide Growth Fund are 0.10% higher than those of Class
A shares of Global Corporate Leaders Fund.
EXPENSE TABLE. The current expenses of each of the Funds and estimated PRO
FORMA expenses giving effect to the proposed Reorganization are shown in the
following table. Expenses for the Funds are based upon the operating expenses
incurred by the Class A shares of each Fund for the 12 month period ending June
30, 2000. PRO FORMA numbers show estimated fees of Worldwide Growth Fund after
giving effect to the proposed Reorganization. PRO FORMA numbers are estimated in
good faith and are hypothetical.
7
<PAGE>
ANNUAL FUND OPERATING EXPENSES
(UNAUDITED)
(expenses that are deducted from Fund assets, shown as a ratio of
expenses to average daily net assets) (1)
<TABLE>
<CAPTION>
DISTRIBUTION
(12b-1) AND
SHAREHOLDER TOTAL FUND
MANAGEMENT SERVICING OTHER OPERATING FEE WAIVER NET FUND
FEES FEES(2) EXPENSES EXPENSES BY ADVISER(3) EXPENSES
---- ------- -------- -------- ------------- --------
<S> <C> <C> <C> <C> <C>
CLASS A
Global Corporate Leaders
Fund 1.00% 0.25% .42% 1.67% -- 1.67%
Worldwide Growth Fund 1.00% 0.35% .32% 1.67% -- 1.67%
Worldwide Growth after
Reorganization (Pro forma) 1.00% 0.35% .31% 1.66% -- 1.66%
</TABLE>
----------
(1) Global Corporate Leaders Fund's fiscal year ends on December 31, and
Worldwide Growth Fund's fiscal year ends on June 30. Expenses of the Funds
and the PRO FORMA expenses are estimated based upon expenses incurred by
each Fund for the year ended June 30, 2000. The expenses for Global
Corporate Leaders Fund have been adjusted for current expenses of
contracts and 12b-1 plan which became effective when ING Pilgrim
Investments became adviser to the Fund on July 26, 2000. PRO FORMA results
are adjusted for anticipated contractual changes.
(2) As a result of distribution (Rule 12b-1) fees, a long term investor may pay
more than the economic equivalent of the maximum sales charge allowed by
the Rules of the National Association of Securities Dealers, Inc.
(3) ING Pilgrim Investments has entered into expense limitation agreements that
limit expenses (excluding interest, taxes, brokerage and extraordinary
expenses) for Global Corporate Leaders Fund and Worldwide Growth Fund to
annual rates of 1.85% and 2.75% for Class A shares, respectively. These
agreements for the Worldwide Growth Fund and Global Corporate Leaders Fund
are in effect through October 31, 2001, and July 26, 2001, respectively.
Following the Reorganization and in the ordinary course of managing a
mutual fund, certain of the holdings of the Global Corporate Leaders Fund that
are transferred to the Worldwide Growth Fund in connection with the
Reorganization may be sold. Such sales may result in increased transactional
costs for Worldwide Growth Fund, and the realization of taxable gains or losses
for Worldwide Growth Fund.
EXAMPLES. The examples are intended to help you compare the cost of
investing in each Fund and in the combined Funds on a pro forma basis--assuming
the Funds have been combined. The examples assume that you invest $10,000 in
each Fund and the combined Funds after the Reorganization for the time periods
indicated and then redeem all of your shares at the end of those periods. The
examples also assume that your investment has a 5% return each year and that
each Fund's operating expenses remain the same. The 5% return is an assumption
and is not intended to portray past or future investment results. Based on the
above assumptions, you would pay the following expenses if you redeem your
shares at the end of each period shown. Because this is an estimate, your actual
costs may be higher or lower.
8
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA:
GLOBAL CORPORATE LEADERS FUND WORLDWIDE GROWTH FUND THE FUNDS COMBINED*
----------------------------- ------------------------------- ------------------------------
1 3 5 10 1 3 5 10 1 3 5 10
YEAR YEARS YEARS YEARS YEAR YEARS YEARS YEARS YEAR YEARS YEARS YEARS
---- ----- ----- ----- ---- ----- ----- ----- ---- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A $735 $1071 $1430 $2438 $735 $1071 $1430 $2438 $734 $1068 $1425 $2427
</TABLE>
----------
* Estimated.
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
PRO FORMA:
GLOBAL CORPORATE LEADERS FUND WORLDWIDE GROWTH FUND THE FUNDS COMBINED*
----------------------------- ------------------------------- ------------------------------
1 3 5 10 1 3 5 10 1 3 5 10
YEAR YEARS YEARS YEARS YEAR YEARS YEARS YEARS YEAR YEARS YEARS YEARS
---- ----- ----- ----- ---- ----- ----- ----- ---- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A $735 $1071 $1430 $2438 $735 $1071 $1430 $2438 $734 $1068 $1425 $2427
</TABLE>
----------
* Estimated.
GENERAL INFORMATION
Class A shares of the Worldwide Growth Fund issued to a shareholder in
connection with the Reorganization will be subject to the same contingent
deferred sales charge, if any, applicable to the corresponding shares of the
Global Corporate Leaders Fund by that shareholder immediately prior to the
Reorganization.
In addition, the period that the shareholder held shares of the Global
Corporate Leaders Fund will be included in the holding period of Worldwide
Growth Fund shares for purposes of calculating any contingent deferred sales
charge. Worldwide Growth Fund and Global Corporate Leaders are each subject to
the sales load structure described in the table below.
TRANSACTION FEES ON NEW INVESTMENTS
(fees paid directly from your investment)
CLASS A
-------
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) 5.75%(1)
Maximum deferred sales charge (load) (as a
percentage of the lower of original purchase
price or redemption proceeds) None(2)
----------
(1) Reduced for purchases of $50,000 and over. See "Class A Shares: Initial
Sales Charge Alternative" in Appendix C.
(2) A contingent deferred sales charge of no more than 1.00% may be assessed on
redemptions of Class A shares that were purchased without an initial sales
charge as part of an investment of $1 million or more. See "Class A Shares:
Initial Sales Charge Alternative" in Appendix C.
Worldwide Growth Fund and Global Corporate Leaders Fund each do not have
any exchange fees or sales charges on reinvested dividends.
9
<PAGE>
ADDITIONAL INFORMATION ABOUT WORLDWIDE GROWTH FUND
INVESTMENT PERSONNEL
WORLDWIDE GROWTH FUND
Mary Lisanti and Thomas J. Sullivan share the responsibility for the
day-to-day management of the domestic equity portion of the Worldwide Growth
Fund.
Mary Lisanti is Executive Vice President and Chief Investment
Officer--Domestic Equities of ING Pilgrim Investments. Ms. Lisanti has served as
a Portfolio Manger of the domestic equity portion of Worldwide Growth Fund's
assets since October 1, 2000. Ms. Lisanti has over 20 years experience in small
and mid-cap investments. Before joining Pilgrim, Ms. Lisanti was a Portfolio
Manager at Strong Capital Management where she managed the Strong Small Cap Fund
and co-managed the Strong Mid Cap Fund. From 1993 to 1996, Ms. Lisanti was a
Managing Director and Head of Small and Mid-Capitalization Equity Strategies at
Bankers Trust Corp. where she managed the BT Small Cap Fund and the BT Capital
Appreciation Fund. Prior to Bankers Trust, Ms. Lisanti was a Portfolio Manager
with Evergreen Funds. She began her career as an Analyst specializing in
emerging growth stocks with Donald, Lufkin & Jenrette and Shearson Lehman
Hutton, and was ranked number one Emerging Growth INSTITUTIONAL INVESTOR Stock
Analysts in 1989.
Thomas J. Sullivan is Vice President of ING Pilgrim Investments. Mr.
Sullivan has served as a Portfolio Manager of the domestic equity portion of the
Worldwide Growth Fund's assets since October 1, 2000. Prior to joining ING
Pilgrim Investments in September 2000, Mr. Sullivan was a Partner and Equity
Trader for First NY Securities, LLC. From April 1994 to March 2000, Mr. Sullivan
was Vice President and portfolio manager at Nicholas-Applegate Capital
Management.
Richard T. Saler and Philip A. Schwartz share the responsibility for the
day-to-day management of the international portion of the Worldwide Growth Fund.
Mr. Saler has over 13 years of experience in international investments. He
is a Senior Vice President at ING Pilgrim Investments. He held the same position
with Lexington Management Corporation ("LMC"), which he joined in 1986, prior to
that firm's acquisition by the parent company of ING Pilgrim Investments in
July, 2000. Mr. Saler is a member of an investment management team that manages
both Pilgrim Global Corporate Leaders Fund and the Pilgrim International Fund,
and he is the lead manager of the latter fund.
Mr. Schwartz has over 12 years of experience in international investments.
He is a Senior Vice President at ING Pilgrim Investments, and was a Vice
President with LMC where he began in 1993. Mr. Schwartz is a member of an
investment management team that manages both the Pilgrim Global Corporate
Leaders Fund and Pilgrim International Fund.
PERFORMANCE OF WORLDWIDE GROWTH FUND
The bar chart and table that follow provide an indication of the risks of
investing in Worldwide Growth Fund by showing (on a calendar year basis) changes
in Worldwide Growth Fund's annual total return from year to year and by showing
(on a calendar year basis) how Worldwide Growth Fund's average annual returns
for one year, five years and since inception compare to those of the MSCI World
10
<PAGE>
Index. The information in the bar chart is based on the performance of the Class
A shares of Worldwide Growth Fund, however, the bar chart does not reflect the
deduction of any sales load on Class A shares. If the bar chart included the
sales load, returns would be less than those shown. The Worldwide Growth Fund's
past performance is not necessarily an indication of how the Fund will perform
in the future.
Investors should note that prior to October 1, 2000, another firm served as
sub-adviser of Pilgrim Worldwide Growth Fund and the performance and investment
strategies were indicative of another firm's style of management. The Fund is
now managed by Richard T. Saler and Philip A. Schwartz, who are responsible for
the international investments of the Fund, and Mary Lisanti, who is primarily
responsible for the domestic equity component of the Fund.
CALENDAR YEAR-BY-YEAR RETURN (%)(1)
1994 1995 1996 1997 1998 1999(2)
---- ---- ---- ---- ---- -------
2.45% 14.74% 17.92% 17.28% 37.34% 83.52%
----------
(1) During the periods shown in the chart, the Fund's best quarterly
performance was up 44.54% for the quarter ended December 31, 1999, and the
Fund's worst quarterly performance was down 13.43% for the quarter ended
September 1998. The Fund's year-to date return as of September 30, 2000 was
-7.62%.
(2) Returns in 1999 were primarily achieved during unusually favorable
conditions in the market, particularly for international and domestic
growth stocks. You should not expect that such favorable returns can
consistently be achieved.
The table below shows what the average annual total returns of Worldwide
Growth Fund would equal if you averaged out actual performance over various
lengths of time, compared to the MSCI World Index. The MSCI World Index has
inherent performance advantages over Worldwide Growth 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. Worldwide Growth Fund's performance
reflected in the table assumes the deduction of the maximum sales charge in all
cases.
AVERAGE ANNUAL TOTAL RETURNS for the periods ended December 31, 1999(1)
SINCE
1 YEAR 5 YEARS INCEPTION
------ ------- ---------
Worldwide Growth Fund - Class A (2) 72.95% 30.39% 24.78%
MSCI World Index (3) 23.26% 18.09% 14.87%
----------
(1) This table shows performance of Class A shares of the Fund. Class A
commenced operations on April 19, 1993.
(2) Reflects deduction of sales charge of 5.75%.
(3) The MSCI World Index is an unmanaged index that measures the performance of
over 1,400 securities listed on exchanges in the U.S., Europe, Canada,
Australia, New Zealand, and the Far East.
11
<PAGE>
The table below shows the performance of the Worldwide Growth Fund if
sales charges are not reflected.
AVERAGE ANNUAL TOTAL RETURNS for the 12 month period ended December 31,
1999(1)
SINCE
1 YEAR 5 YEARS INCEPTION
------ ------- ---------
Worldwide Growth Fund - Class A 83.52% 31.95% 25.88%
----------
(1) This table shows performance of Class A shares of the Fund. Class A
commenced operations on April 19, 1993.
For a discussion by the former sub-adviser regarding the performance of
Worldwide Growth Fund for the year ended June 30, 2000, see Appendix A to this
Proxy Statement/Prospectus. Additional information about Worldwide Growth Fund
is included in Appendix C to this Proxy Statement/Prospectus.
INFORMATION ABOUT THE REORGANIZATION
THE REORGANIZATION AGREEMENT. The Reorganization Agreement provides for the
transfer of all of the assets and liabilities of Global Corporate Leaders Fund
to Worldwide Growth Fund in exchange for shares of Worldwide Growth Fund. Global
Corporate Leaders Fund will distribute the shares of Worldwide Growth Fund
received in the exchange to the shareholders of Global Corporate Leaders Fund
and then the Global Corporate Leaders Fund will be liquidated.
After the Reorganization, each shareholder of the Global Corporate Leaders
Fund will own shares in Worldwide Growth Fund having an aggregate value equal to
the aggregate value of each respective Class of shares in the Global Corporate
Leaders Fund held by that shareholder as of the close of business on the
business day preceding the Closing. Shareholders of each Class of shares of the
Global Corporate Leaders Fund will receive shares of the corresponding Class of
Global Corporate Leaders Fund. In the interest of economy and convenience,
shares of Worldwide Growth Fund generally will not be represented by physical
certificates unless requested in writing.
Until the Closing, shareholders of the Global Corporate Leaders Fund will
continue to be able to redeem their shares. Redemption requests received after
the Closing will be treated as requests received by Worldwide Growth Fund for
the redemption of its shares received by the shareholder in the Reorganization.
The obligations of the Funds under the Reorganization Agreement are subject
to various conditions, including approval of the shareholders of the Global
Corporate Leaders Fund. The Reorganization Agreement also requires that each of
the Funds take, or cause to be taken, all action, and do or cause to be done,
all things reasonably necessary, proper or advisable to consummate and make
effective the transactions contemplated by the Reorganization Agreement. The
Reorganization Agreement may be terminated by mutual agreement of the parties or
on certain other grounds. Please refer to Appendix B to review the terms and
conditions of the Reorganization Agreement.
REASONS FOR THE REORGANIZATION. The Reorganization is one of many
reorganizations that are proposed among various Pilgrim funds. The Pilgrim fund
complex has grown in recent years through the addition of many funds. Management
of the Pilgrim funds has proposed the consolidation of a number of the Pilgrim
funds that management believes have similar or compatible investment policies.
The proposed reorganizations are designed to reduce the overlap in funds in the
complex, thereby eliminating duplication of costs and other inefficiencies
12
<PAGE>
arising from having similar portfolios within the same fund group. ING Pilgrim
Investments also believes that the reorganizations may benefit fund shareholders
by resulting in surviving funds with a greater asset base. This is expected to
achieve economies of scale for shareholders and may provide greater investment
opportunities for the surviving funds or the potential to take larger portfolio
positions.
The proposed Reorganization was presented to the Board of Directors of
Global Corporate Leaders Fund for consideration and approval at a meeting held
on November 2, 2000. For the reasons discussed below, the Directors, including
all of the Directors who are not "interested persons" (as defined in the
Investment Company Act of 1940) of Global Corporate Leaders Fund, determined
that the interests of the shareholders of Global Corporate Leaders Fund will not
be diluted as a result of the proposed Reorganization, and that the proposed
Reorganization is in the best interests of Global Corporate Leaders Fund and its
shareholders.
The Reorganization will allow Global Corporate Leaders Fund's shareholders
to continue to participate in a professionally-managed portfolio which seeks to
achieve an objective of maximum long-term capital appreciation. As shareholders
of Worldwide Growth Fund, these shareholders will continue to be able to
exchange into other mutual funds in the group of Pilgrim Funds that offer the
same Class of shares in which such shareholder is currently invested. A list of
the Pilgrim Funds and Classes available after the Reorganization is contained in
Appendix D.
BOARD CONSIDERATIONS. The Board of Directors of Pilgrim Global Corporate
Leaders Fund, Inc. in recommending the proposed transaction, considered a number
of factors, including the following:
(1) The plans of management to reduce overlapping funds in the Pilgrim
Fund complex;
(2) expense ratios and information regarding fees and expenses of Global
Corporate Leaders Fund and Worldwide Growth Fund;
(3) estimates that show that combining the Funds is expected to result in
a lower expense ratio because of economies of scale expected to result
from an increase in the asset size of the surviving Fund;
(4) whether the Reorganization would dilute the interests of Global
Corporate Leaders Fund's current shareholders;
(5) the relative investment performance and risks of Worldwide Growth Fund
as compared to Global Corporate Leaders Fund;
(6) the compatibility of Worldwide Growth Fund's investment objectives,
policies and restrictions with those of Global Corporate Leaders Fund;
and
(7) the tax-free nature of the Reorganization to the Global Corporate
Leaders Fund and its shareholders.
The Board of Directors also considered the future potential benefits to ING
Pilgrim Investments in that it is less likely to incur costs to limit the
expenses of the Worldwide Growth Fund if the Reorganization is approved.
THE DIRECTORS OF THE GLOBAL CORPORATE LEADERS FUND RECOMMEND THAT SHAREHOLDERS
APPROVE THE REORGANIZATION WITH THE WORLDWIDE GROWTH FUND.
TAX CONSIDERATIONS. The Reorganization is intended to qualify for Federal
income tax purposes as a tax-free reorganization under Section 368 of the
Internal Revenue Code of 1986, as amended. Accordingly, pursuant to this
treatment, neither the Global Corporate Leaders Fund nor its shareholders nor
Worldwide Growth Fund is expected to recognize any gain or loss for federal
income tax purposes from the transactions contemplated by the Reorganization
Agreement. As a condition to the Closing of the Reorganization, the Funds will
13
<PAGE>
receive an opinion from the law firm of Dechert to the effect that the
Reorganization will qualify as a tax-free reorganization for Federal income tax
purposes. That opinion will be based in part upon certain assumptions and upon
certain representations made by the Funds.
Immediately prior to the Reorganization, Global Corporate Leaders Fund will
pay a dividend or dividends which, together with all previous dividends, will
have the effect of distributing to its shareholders all of that Fund's
investment company taxable income for taxable years ending on or prior to the
Reorganization (computed without regard to any deduction for dividends paid) and
all of its net capital gain, if any, realized in taxable years ending on or
prior to the Reorganization (after reduction for any available capital loss
carryforward). Such dividends will be included in the taxable income of the
Global Corporate Leaders Fund's shareholders.
EXPENSES OF THE REORGANIZATION. ING Pilgrim Investments, Adviser to Global
Corporate Leaders Fund and Worldwide Growth Fund, will bear half the cost of the
Reorganization. The Funds will bear the other half of the expenses relating to
the proposed Reorganization, including, but not limited to, the costs of
solicitation of voting instructions and any necessary filings with the
Securities and Exchange Commission. Of the Reorganization expenses allocated to
the Funds, each Fund will bear a ratable portion based on their relative net
asset values immediately before Closing.
ADDITIONAL INFORMATION ABOUT THE FUNDS
FORM OF ORGANIZATION. Worldwide Growth Fund is a series of Pilgrim Mutual
Funds, which is a Delaware business trust registered as an open-end, diversified
management investment company. Global Corporate Leaders Fund is the only series
of Pilgrim Global Corporate Leaders Fund, Inc., a Maryland corporation. The
Board of Pilgrim Mutual Funds has eleven trustees and the Board of Global
Corporate Leaders Fund, Inc. has eleven directors. The members of both Boards
are identical.
DISTRIBUTOR. ING Pilgrim Securities, Inc. (the "Distributor"), whose
address is 7337 East Doubletree Ranch Road, Scottsdale, Arizona 85258, is the
principal distributor for each of the Funds. The Worldwide Growth Fund also
offers Class B, Class C and Class Q shares, which have different sales charges
and other expenses that may affect their performance. You can obtain more
information about these other share Classes by calling (800) 992-0980.
DIVIDENDS AND OTHER DISTRIBUTIONS. Worldwide Growth Fund pays dividends
from net investment income and net capital gains, if any, on an annual basis.
Global Corporate Leaders Fund pays dividends from net investment income and net
capital gains, if any, on an annual basis. Dividends and distributions of each
of the Funds are automatically reinvested in additional shares of the respective
Class of the particular Fund, unless the shareholder elects to receive
distributions in cash.
If the Reorganization Agreement is approved by Global Corporate Leaders
Fund's shareholders, then as soon as practicable before the Closing, Global
Corporate Leaders Fund will pay its shareholders a cash distribution of
substantially all undistributed net investment income and undistributed realized
net capital gains.
14
<PAGE>
CAPITALIZATION. The following table shows on an unaudited basis the
capitalization of each of the Funds as of June 30, 2000, and on a PRO FORMA
basis as of June 30, 2000, giving effect to the Reorganization:
NET ASSET VALUE SHARES
NET ASSETS PER SHARE OUTSTANDING
---------- --------- -----------
GLOBAL CORPORATE LEADERS FUND
Class A $18,648,578 $ 11.69 1,594,931
WORLDWIDE GROWTH FUND
Class A $235,341,134 $ 29.98 7,849,453
Class B $130,988,092 $ 33.66 3,891,880
Class C $239,432,294 $ 29.92 8,001,360
Class Q $ 54,417,750 $ 34.53 1,575,894
PRO FORMA - WORLDWIDE GROWTH FUND INCLUDING GLOBAL CORPORATE LEADERS FUND
Class A $253,989,712 $ 29.98 8,471,972
Class B $130,988,092 $ 33.66 3,891,880
Class C $239,432,294 $ 29.92 8,001,360
Class Q $ 54,417,750 $ 34.53 1,575,894
GENERAL INFORMATION ABOUT THE PROXY STATEMENT
SOLICITATION OF PROXIES
Solicitation of proxies is being made primarily by the mailing of this
Notice and Proxy Statement with its enclosures on or about _______, 2000.
Shareholders of the Global Corporate Leaders Fund whose shares are held by
nominees, such as brokers, can vote their proxies by contacting their respective
nominee. In addition to the solicitation of proxies by mail, employees of ING
Pilgrim Investments and its affiliates, without additional compensation, may
solicit proxies in person or by telephone, telegraph, facsimile, or oral
communication. The Global Corporate Leaders Fund has retained Shareholder
Communications Corporation, a professional proxy solicitation firm, to assist
with any necessary solicitation of proxies. Shareholders of the Global Corporate
Leaders Fund may receive a telephone call from the professional proxy
solicitation firm asking the shareholder to vote.
A shareholder may revoke the accompanying proxy at any time prior to its
use by filing with the Global Corporate Leaders Fund a written revocation or
duly executed proxy bearing a later date. In addition, any shareholder who
attends the Meeting in person may vote by ballot at the Meeting, thereby
canceling any proxy previously given. The persons named in the accompanying
proxy will vote as directed by the proxy, but in the absence of voting
directions in any proxy that is signed and returned, they intend to vote "FOR"
the Reorganization proposal and may vote in their discretion with respect to
other matters not now known to the Board of Directors of Global Corporate
Leaders Fund that may be presented at the Meeting.
15
<PAGE>
VOTING RIGHTS
Shareholders of the Global Corporate Leaders Fund are entitled to one vote
for each share held as to any matter on which they are entitled to vote and each
fractional share shall be entitled to a proportionate fractional vote. Shares
have no preemptive or subscription rights.
Shareholders of the Global Corporate Leaders Fund at the close of business
on _________, 2000 (the "Record Date") will be entitled to be present and give
voting instructions for the Fund at the meeting with respect to their shares
owned as of that Record Date. As of the Record Date, ______ shares of the Global
Corporate Leaders Fund were outstanding and entitled to vote.
Approval of the Reorganization requires the affirmative vote of a majority
of the outstanding shares of the Global Corporate Leaders Fund.
The holders of a one-third of the outstanding shares present in person or
represented by proxy shall constitute a quorum. In the absence of a quorum, a
majority of outstanding shares entitled to vote present in person or by proxy
may adjourn the meeting from time to time until a quorum is present.
If a shareholder abstains from voting as to any matter, or if a broker
returns a "non-vote" proxy, indicating a lack of authority to vote on a matter,
the shares represented by the abstention or non-vote will be deemed present at
the meeting for purposes of determining a quorum. However, abstentions and
broker non-votes will not be deemed represented at the meeting for purposes of
calculating the vote on any matter. As a result, an abstention or broker
non-vote will have the same effect as a vote against the Reorganization.
The Global Corporate Leaders Fund expects that, before the meeting,
broker-dealer firms holding shares of the Funds in "street name" for their
customers will request voting instructions from their customers and beneficial
owners. If these instructions are not received by the date specified in the
broker-dealer firms' proxy solicitation materials, the Funds understand that the
broker-dealers that are the members of the New York Stock Exchange may vote on
items to be considered at the Meeting on behalf of their customers and
beneficial owners under the rules of the New York Stock Exchange.
To the knowledge of Global Corporate Leaders Fund, as of November 1, 2000,
no current Director owns 1% or more of the outstanding shares of the Global
Corporate Leaders Fund, and the officers and Directors own, as a group, less
than 1% of the shares of the Global Corporate Leaders Fund.
Appendix E hereto lists the persons that, as of November 1, 2000, owned
beneficially or of record 5% or more of the outstanding shares of any Class of
the Global Corporate Leaders Fund or Worldwide Growth Fund.
OTHER MATTERS TO COME BEFORE THE MEETING
Global Corporate Leaders Fund does not know of any matters to be presented
at the meeting other than those described in this Proxy Statement/Prospectus. If
other business should properly come before the meeting, the proxyholders will
vote thereon in accordance with their best judgment.
SHAREHOLDER PROPOSALS
Global Corporate Leaders Fund is not required to hold regular annual
meetings and, in order to minimize their costs, do not intend to hold meetings
of shareholders unless so required by applicable law, regulation, regulatory
policy or if otherwise deemed advisable by the Global Corporate Leaders Fund's
management. Therefore it is not practicable to specify a date by which
shareholder proposals must be received in order to be incorporated in an
upcoming proxy statement for an annual meeting.
16
<PAGE>
REPORTS TO SHAREHOLDERS
ING Pilgrim Investments will furnish, without charge, a copy of the most
recent Annual Report regarding the Global Corporate Leaders Fund and the most
recent Semi-Annual Report succeeding the Annual Report, if any, on request.
Requests for such reports should be directed to Pilgrim at 7337 East Doubletree
Ranch Road, Scottsdale, Arizona 85258 or at (800) 992-0180.
IN ORDER THAT THE PRESENCE OF A QUORUM AT THE MEETING MAY BE ASSURED,
PROMPT EXECUTION AND RETURN OF THE ENCLOSED PROXY CARD IS REQUESTED. A
SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
James M. Hennessy,
Secretary
_____________, 2001
7337 East Doubletree Ranch Road
Scottsdale, Arizona 85258
17
<PAGE>
APPENDIX A
PILGRIM WORLDWIDE GROWTH FUND
PORTFOLIO MANAGER'S REPORT
Set forth below is an excerpt from Worldwide Growth Fund's Annual Report, dated
June 30, 2000 regarding the Fund's performance, including a report from the
former sub-adviser to the Fund - Nicholas Applegate Capital Management.
Nicholas Applegate Capital Management - Portfolio Management Team: Catherine
Somhegyi, Partner, Chief Investment Officer, Global Equity Management; Andrew B.
Gallagher, Partner, Portfolio Manager; Loretta J. Morris, Partner, Portfolio
Manager; Randall S. Kahn, CFA, Portfolio Manager; Lawrence S. Speidell, CFA,
Partner, Director of Global/Systematic Portfolio Management and Research; Pedro
V. Marcal, Partner, Portfolio Manager; Ernesto Ramos, Ph.D., Melisa A.
Grigolite, Portfolio Manager.
Goal: The Worldwide Growth Fund (the "Fund" or "Worldwide Growth") seeks to
maximize long-term capital appreciation through investments in growth-oriented
companies around the world, regardless of geographic location.
Market Overview: A number of factors contributed to the positive environment for
global investing during the twelve-month period ended June 30, 2000.
In the U.S., strong corporate profits and investor confidence in the durability
of the economic expansion sent stocks higher in spite of rising interest rates
and volatility. For the twelve months ended June 30, 2000, the S&P 500 Index
rose 7.2% and the tech-heavy Nasdaq Composite Index advanced 47.7%.
In response to a booming U.S. GDP growth, the Federal Reserve increased
short-term interest rates a total of 1.75% on six separate occasions from June
1999 through May 2000. Following a spring correction in the technology sector,
renewed optimism that the Federal Reserve Bank may be close to completing its
round of rate hikes drove equity prices higher in June 2000. During the month,
most U.S. stock indexes posted positive returns, led by the Nasdaq, which was up
16.6%.
Amid acceleration in GDP growth in many of its member countries, the European
Central Bank also increased rates a total of 1.75% on five separate occasions
during the fiscal year.
Increased productivity, the technology revolution, and structural reform
propelled international stock markets higher during the twelve-month period,
despite rising rates. The MSCI EAFE Index gained 17.2% in the period, after
advancing 22.2% during the second half of 1999. In the first six months of 2000,
equities overseas moved in tandem with the U.S. market, falling in response to
concerns over higher interest rates, inflation, and higher valuations among
technology stocks.
Performance: For the one year ended June 30, 2000, the Fund's Class A shares,
excluding sales charges, provided a total return of 42.43% versus 12.53% for the
MSCI World Index for the same period. For the one year ended June 30, 2000, the
Fund's Class Q shares provided a total return of 42.63% versus 12.53% for the
MSCI World Index for the same period.
Portfolio Specifics: The Fund's strong performance was largely attributable to
stock selection in the U.S., although stock selection in Japan, the U.K., and
Canada also positively impacted results. Strong domestic performers included
computer hardware manufacturer, Sun Microsystems; systems and business
applications software provider, Oracle Corporation; and Genentech, a
biotechnology firm. Other top-performing holdings were U.K.-based ARM Holdings,
a microprocessor designer, and Nortel Networks, a Canadian telecommunications
company.
During the period, on a stock-specific basis, we significantly increased the
fund's exposure to technology, reflecting our conviction in this sector's
compelling long-term growth potential.
Market Outlook: We remain optimistic in our outlook for global investing as we
continue to identify high-growth companies poised to benefit from positive
change. Favorable themes such as increased international trade, deregulation,
and restructuring should all bode well for the Worldwide Growth Fund.
A-1
<PAGE>
<TABLE>
<CAPTION>
4/19/93 6/93 6/94 6/95 6/96 6/97 6/98 6/99 6/30/00
------- ---- ---- ---- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Pilgrim Worldwide Growth Fund
Class A With Sales Charge 10,000 9,925 11,071 11,807 14,296 17,279 21,621 29,815 42,464
Pilgrim Worldwide Growth Fund
Class A Without Sales Charge 10,000 10,528 11,744 12,524 15,165 18,329 22,936 31,628 45,045
MSCI World Index 10,000 10,148 11,241 12,501 14,876 18,269 21,459 24,909 28,032
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
SINCE INCEPTION OF SINCE INCEPTION OF
CLASS A AND C CLASS B
1 YEAR 5 YEARS 4/19/93 5/31/95
------ ------- ------- -------
<S> <C> <C> <C> <C>
Including Sales Charge:
Class A (1) 34.24% 27.66% 22.24% --
Class B (2) 36.54% 28.27% -- 28.20%
Class C (3) 40.48% 28.37% 22.48% --
Excluding Sales Charge:
Class A 42.43% 29.17% 23.25% --
Class B 41.54% 28.42% -- 28.27%
Class C 41.48% 28.37% 22.48% --
MSCI World Index 12.53% 17.53% 15.47%(4) 17.21%(5)
</TABLE>
----------
(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 2%,
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 the index is shown from 05/01/03.
(5) Since inception performance for the index is shown from 06/01/95.
8/31/95 6/96 6/97 6/98 6/99 6/30/00
------- ---- ---- ---- ---- -------
Pilgrim Worldwide Growth
Fund Class Q 10,000 11,376 13,792 17,328 23,956 34,168
MSCI World Index 10,000 11,586 14,229 16,714 19,401 21,833
A-2
<PAGE>
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD
ENDED JUNE 30, 2000
SINCE INCEPTION
11/22/99
SINCE INCEPTION
1 YEAR 8/31/95
------ -------
Class Q 42.63% 28.90%
MSCI World Index 12.53% 17.53%
Based on a $10,000 initial investment the graph and table above illustrates the
total return of Pilgrim Worldwide Growth Fund against the Standard & Poor's 500
Composite Stock Price 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 show without the imposition of any sales
charges.
Total returns reflect the fact that the Investment Adviser has contractually
agreed to waive or defer its management fees and to pay other operating expenses
otherwise payable by the Fund, subject to possible later reimbursement during a
three-year period. Total returns would have been lower had there been no
deferral 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 letter 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 portfolio manager's
views are subject to change at any time based on market and other conditions.
Portfolio holdings are subject to change daily.
Principal Risk Factor(s): International investing does pose special risks,
including currency fluctation, economic and political risks not found in
investments that are solely domestic.
The Fund may invest in companies located in countries with emerging securities
markets when the subadvisor believes they present attractive investment
opportunities. Risks of foreign investing are generally intensified for
investments in emerging markets.
A-3
<PAGE>
APPENDIX B
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this _____ day of _____________, 2001, by and between Pilgrim Mutual Funds (the
"Pilgrim Trust"), a Delaware business trust with its principal place of business
at 7337 E. Doubletree Ranch Road, Scottsdale, Arizona 85258, on behalf of its
series, Pilgrim Worldwide Growth Fund (the "Acquiring Fund"), and Pilgrim Global
Corporate Leaders Fund, Inc. (the "Pilgrim Fund"), a Maryland Corporation with
its principal place of business at 7337 E. Doubletree Ranch Road, Scottsdale,
Arizona 85258, on behalf of its series, Pilgrim Global Corporate Leaders Fund
(the "Acquired Fund").
This Agreement is intended to be and is adopted as a plan of reorganization
and liquidation within the meaning of Section 368(a)(1) of the United States
Internal Revenue Code of 1986, as amended (the "Code"). The reorganization (the
"Reorganization") will consist of the transfer of all of the assets of the
Acquired Fund to the Acquiring Fund in exchange solely for Class A voting shares
of beneficial interest (no par value) of the Acquiring Fund (the "Acquiring Fund
Shares"), the assumption by the Acquiring Fund of all liabilities of the
Acquired Fund, and the distribution of the Acquiring Fund Shares to the
shareholders of the Acquired Fund in complete liquidation of the Acquired Fund
as provided herein, all upon the terms and conditions hereinafter set forth in
this Agreement.
WHEREAS, the Acquired Fund and the Acquiring Fund are open-end, registered
investment companies of the management type or a series thereof and the Acquired
Fund owns securities which generally are assets of the character in which the
Acquiring Fund is permitted to invest;
WHEREAS, the Trustees of the Pilgrim Trust have determined that the
exchange of all of the assets of the Acquired Fund for Acquiring Fund Shares and
the assumption of all liabilities of the Acquired Fund by the Acquiring Fund is
in the best interests of the Acquiring Fund and its shareholders and that the
interests of the existing shareholders of the Acquiring Fund would not be
diluted as a result of this transaction; and
WHEREAS, the Directors of the Pilgrim Fund, have determined that the
exchange of all of the assets of the Acquired Fund for Acquiring Fund Shares and
the assumption of all liabilities of the Acquired Fund by the Acquiring Fund is
in the best interests of the Acquired Fund and its shareholders and that the
interests of the existing shareholders of the Acquired Fund would not be diluted
as a result of this transaction;
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND TO THE ACQUIRING FUND IN EXCHANGE
FOR THE ACQUIRING FUND SHARES, THE ASSUMPTION OF ALL ACQUIRED FUND
LIABILITIES AND THE LIQUIDATION OF THE ACQUIRED FUND
1.1 Subject to the requisite approval of the Acquired Fund shareholders and
the other terms and conditions herein set forth and on the basis of the
representations and warranties contained herein, the Acquired Fund agrees to
transfer all of the Acquired Fund's assets, as set forth in paragraph 1.2, to
the Acquiring Fund, and the Acquiring Fund agrees in exchange therefor: (i) to
deliver to the Acquired Fund the number of full and fractional Class A Acquiring
Fund Shares determined by dividing the value of the Acquired Fund's net assets
with respect to each class, computed in the manner and as of the time and date
set forth in paragraph 2.1, by the net asset value of one Acquiring Fund Share
of the same class, computed in the manner and as of the time and date set forth
in paragraph 2.2; and (ii) to assume all liabilities of the Acquired Fund, as
set forth in paragraph 1.3. Such transactions shall take place at the closing
provided for in paragraph 3.1 (the "Closing").
B-1
<PAGE>
1.2 The assets of the Acquired Fund to be acquired by the Acquiring Fund
shall consist of all assets and property, including, without limitation, all
cash, securities, commodities and futures interests and dividends or interests
receivable, that are owned by the Acquired Fund, and any deferred or prepaid
expenses shown as an asset on the books of the Acquired Fund, on the closing
date provided for in paragraph 3.1 (the "Closing Date") (collectively,
"Assets").
1.3 The Acquired Fund will endeavor to discharge all of its known
liabilities and obligations prior to the Closing Date. The Acquiring Fund shall
also assume all of the liabilities of the Acquired Fund, whether accrued or
contingent, known or unknown, existing at the Valuation Date (collectively,
"Liabilities"). On or as soon as practicable prior to the Closing Date, the
Acquired Fund will declare and pay to its shareholders of record one or more
dividends and/or other distributions so that it will have distributed
substantially all (and in no event less than 98%) of its investment company
taxable income (computed without regard to any deduction for dividends paid) and
realized net capital gain, if any, for the current taxable year through the
Closing Date.
1.4 Immediately after the transfer of assets provided for in paragraph 1.1,
the Acquired Fund will distribute to the Acquired Fund's shareholders of record
with respect to each class of its shares, determined as of immediately after the
close of business on the Closing Date (the "Acquired Fund Shareholders"), on a
pro rata basis within that class, the Acquiring Fund Shares of the same class
received by the Acquired Fund pursuant to paragraph 1.1, and will completely
liquidate. Such distribution and liquidation will be accomplished, with respect
to each class of the Acquired Fund's shares, by the transfer of the Acquiring
Fund Shares then credited to the account of the Acquired Fund on the books of
the Acquiring Fund to open accounts on the share records of the Acquiring Fund
in the names of the Acquired Fund Shareholders. The aggregate net asset value of
Class A Acquiring Fund Shares to be so credited to Class A Acquired Fund
Shareholders shall, with respect to each class, be equal to the aggregate net
asset value of the Acquired Fund shares of that same class owned by such
shareholders on the Closing Date. All issued and outstanding shares of the
Acquired Fund will simultaneously be canceled on the books of the Acquired Fund,
although share certificates representing interests in Class A shares of the
Acquired Fund will represent a number of the same class of Acquiring Fund Shares
after the Closing Date, as determined in accordance with Section 2.3. The
Acquiring Fund shall not issue certificates representing the Class A Acquiring
Fund Shares in connection with such exchange.
1.5 Ownership of Acquiring Fund Shares will be shown on the books of the
Acquiring Fund's transfer agent.
1.6 Any reporting responsibility of the Acquired Fund including, but not
limited to, the responsibility for filing of regulatory reports, tax returns, or
other documents with the Securities and Exchange Commission (the "Commission"),
any state securities commission, and any federal, state or local tax authorities
or any other relevant regulatory authority, is and shall remain the
responsibility of the Acquired Fund.
2. VALUATION
2.1 The value of the Assets shall be the value computed as of immediately
after the close of business of the New York Stock Exchange and after the
declaration of any dividends on the Closing Date (such time and date being
hereinafter called the "Valuation Date"), using the valuation procedures in the
then-current prospectus and statement of additional information with respect to
the Acquiring Fund, and valuation procedures established by the Acquiring Fund's
Board of Trustees.
2.2 The net asset value of a Class A Acquiring Fund Share shall be the net
asset value per share computed with respect to that class as of the Valuation
Date, using the valuation procedures set forth in the Acquiring Fund's
then-current prospectus and statement of additional information with respect to
the Acquiring Fund, and valuation procedures established by the Acquiring Fund's
Board of Trustees.
B-2
<PAGE>
2.3 The number of the Class A Acquiring Fund Shares to be issued (including
fractional shares, if any) in exchange for the Acquired Fund's assets shall be
determined with respect to each such class by dividing the value of the net
assets with respect to the Class A shares of the Acquired Fund, as the case may
be, determined using the same valuation procedures referred to in paragraph 2.1,
by the net asset value of an Acquiring Fund Share, determined in accordance with
paragraph 2.2.
2.4 All computations of value shall be made by the Acquired Fund's
designated record keeping agent and shall be subject to confirmation by the
Acquiring Fund's record keeping agent and by each Fund's respective independent
accountants.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be _____ ___, 2001, or such other date as the
parties may agree to in writing. All acts taking place at the Closing shall be
deemed to take place simultaneously as of immediately after the close of
business on the Closing Date unless otherwise agreed to by the parties. The
close of business on the Closing Date shall be as of 4:00 p.m., Eastern Time.
The Closing shall be held at the offices of the Acquiring Fund or at such other
time and/or place as the parties may agree.
3.2 The Acquired Fund shall direct Brown Brothers Harriman & Co., as
custodian for the Acquired Fund (the "Custodian"), to deliver, at the Closing, a
certificate of an authorized officer stating that (i) the Assets shall have been
delivered in proper form to the Acquiring Fund within two business days prior to
or on the Closing Date, and (ii) all necessary taxes in connection with the
delivery of the Assets, including all applicable federal and state stock
transfer stamps, if any, have been paid or provision for payment has been made.
The Acquired Fund's portfolio securities represented by a certificate or other
written instrument shall be presented by the Acquired Fund Custodian to the
custodian for the Acquiring Fund for examination no later than five business
days preceding the Closing Date, and shall be transferred and delivered by the
Acquired Fund as of the Closing Date for the account of the Acquiring Fund duly
endorsed in proper form for transfer in such condition as to constitute good
delivery thereof. The Custodian shall deliver as of the Closing Date by book
entry, in accordance with the customary practices of such depositories and the
Custodian, the Acquired Fund's portfolio securities and instruments deposited
with a securities depository, as defined in Rule 17f-4 under the Investment
Company Act of 1940, as amended (the "1940 Act"). The cash to be transferred by
the Acquired Fund shall be delivered by wire transfer of federal funds on the
Closing Date.
3.3 The Acquired Fund shall direct DST Systems, Inc. (the "Transfer
Agent"), on behalf of the Acquired Fund, to deliver at the Closing a certificate
of an authorized officer stating that its records contain the names and
addresses of the Acquired Fund Shareholders and the number and percentage
ownership of outstanding Class A shares owned by each such shareholder
immediately prior to the Closing. The Acquiring Fund shall issue and deliver a
confirmation evidencing the Acquiring Fund Shares to be credited on the Closing
Date to the Secretary of the Acquiring Fund, or provide evidence satisfactory to
the Acquired Fund that such Acquiring Fund Shares have been credited to the
Acquired Fund's account on the books of the Acquiring Fund. At the Closing each
party shall deliver to the other such bills of sale, checks, assignments, share
certificates, if any, receipts or other documents as such other party or its
counsel may reasonably request.
3.4 In the event that on the Valuation Date (a) the New York Stock Exchange
or another primary trading market for portfolio securities of the Acquiring Fund
or the Acquired Fund shall be closed to trading or trading thereupon shall be
restricted, or (b) trading or the reporting of trading on such Exchange or
elsewhere shall be disrupted so that, in the judgment of the Board of the
Directors of the Acquired Fund or the Board of Trustees of the Acquiring Fund,
accurate appraisal of the value of the net assets of the Acquiring Fund or the
Acquired Fund, respectively, is impracticable, the Closing Date shall be
postponed until the first business day after the day when trading shall have
been fully resumed and reporting shall have been restored.
B-3
<PAGE>
4. REPRESENTATIONS AND WARRANTIES
4.1 Except as has been disclosed to the Acquiring Fund in a written
instrument executed by an officer of the Pilgrim Fund, the Pilgrim Fund
represents and warrants to Pilgrim Trust as follows:
(a) The Acquired Fund is duly organized as a series of Pilgrim Fund, which
is a corporation duly organized, and validly existing and in good standing under
the laws of the State of Maryland with power under Pilgrim Fund's Articles of
Incorporation to own all of its properties and assets and to carry on its
business as it is now being conducted;
(b) The Pilgrim Fund is a registered investment company classified as a
management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act, and the registration of
shares of the Acquired Fund under the Securities Act of 1933, as amended ("1933
Act"), is in full force and effect;
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquired Fund of
the transactions contemplated herein, except such as have been obtained under
the 1933 Act, the Securities Exchange Act of 1934, as amended (the "1934 Act")
and the 1940 Act and such as may be required by state securities laws;
(d) The current prospectus and statement of additional information of the
Acquired Fund and each prospectus and statement of additional information of the
Acquired Fund used during the three years previous to the date of this Agreement
conforms or conformed at the time of its use in all material respects to the
applicable requirements of the 1933 Act and the 1940 Act and the rules and
regulations of the Commission thereunder and does not or did not at the time of
its use include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
materially misleading;
(e) On the Closing Date, the Acquired Fund will have good and marketable
title to the Assets and full right, power, and authority to sell, assign,
transfer and deliver such Assets hereunder free of any liens or other
encumbrances, and upon delivery and payment for such Assets, the Acquiring Fund
will acquire good and marketable title thereto, subject to no restrictions on
the full transfer thereof, including such restrictions as might arise under the
1933 Act, other than as disclosed to the Acquiring Fund;
(f) The Acquired Fund is not engaged currently, and the execution, delivery
and performance of this Agreement will not result, in (i) a material violation
of Pilgrim Fund's Articles of Incorporation or By-Laws or of any agreement,
indenture, instrument, contract, lease or other undertaking to which Pilgrim
Fund on behalf of the Acquired Fund is a party or by which it is bound, or (ii)
the acceleration of any obligation, or the imposition of any penalty, under any
agreement, indenture, instrument, contract, lease, judgment or decree to which
Pilgrim Fund on behalf of the Acquired Fund is a party or by which it is bound;
(g) All material contracts or other commitments of the Acquired Fund (other
than this Agreement and certain investment contracts, including options,
futures, and forward contracts) will terminate without liability to the Acquired
Fund on or prior to the Closing Date;
(h) Except as otherwise disclosed in writing to and accepted by Pilgrim
Trust on behalf of the Acquiring Fund, no litigation or administrative
proceeding or investigation of or before any court or governmental body is
presently pending or, to its knowledge, threatened against the Acquired Fund or
any of its properties or assets that, if adversely determined, would materially
and adversely affect its financial condition or the conduct of its business.
Pilgrim Fund on behalf of the Acquired Fund knows of no facts which might form
the basis for the institution of such proceedings and is not a party to or
subject to the provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects its business or its
ability to consummate the transactions herein contemplated;
B-4
<PAGE>
(i) The Statement of Assets and Liabilities, Statements of Operations and
Changes in Net Assets, and Portfolio of Investments of the Acquired Fund at
December 31, 1999 have been audited by KPMG LLP, independent auditors, and are
in accordance with generally accepted accounting principles ("GAAP")
consistently applied, and such statements (copies of which have been furnished
to the Acquiring Fund) present fairly, in all material respects, the financial
condition of the Acquired Fund as of such date in accordance with GAAP, and
there are no known contingent liabilities of the Acquired Fund required to be
reflected on a balance sheet (including the notes thereto) in accordance with
GAAP as of such date not disclosed therein;
(j) Since December 31, 1999, there has not been any material adverse change
in the Acquired Fund's financial condition, assets, liabilities or business,
other than changes occurring in the ordinary course of business, or any
incurrence by the Acquired Fund of indebtedness maturing more than one year from
the date such indebtedness was incurred, except as otherwise disclosed to and
accepted by the Acquiring Fund. For the purposes of this subparagraph (j), a
decline in net asset value per share of the Acquired Fund due to declines in
market values of securities in the Acquired Fund's portfolio, the discharge of
Acquired Fund liabilities, or the redemption of Acquired Fund Shares by
shareholders of the Acquired Fund shall not constitute a material adverse
change;
(k) On the Closing Date, all Federal and other tax returns, dividend
reporting forms, and other tax-related reports of the Acquired Fund required by
law to have been filed by such date (including any extensions) shall have been
filed and are or will be correct in all material respects, and all Federal and
other taxes shown as due or required to be shown as due on said returns and
reports shall have been paid or provision shall have been made for the payment
thereof, and to the best of the Acquired Fund's knowledge, no such return is
currently under audit and no assessment has been asserted with respect to such
returns;
(l) For each taxable year of its operation (including the taxable year
ending on the Closing Date), the Acquired Fund has met (or will meet) the
requirements of Subchapter M of the Code for qualification as a regulated
investment company, has been (or will be) eligible to and has computed (or will
compute) its federal income tax under Section 852 of the Code, and will have
distributed all of its investment company taxable income and net capital gain
(as defined in the Code) that has accrued through the Closing Date, and before
the Closing Date will have declared dividends sufficient to distribute all of
its investment company taxable income and net capital gain for the period ending
on the Closing Date;
(m) All issued and outstanding shares of the Acquired Fund are, and on the
Closing Date will be, duly and validly issued and outstanding, fully paid and
non-assessable by the Pilgrim Fund and have been offered and sold in every state
and the District of Columbia in compliance in all material respects with
applicable registration requirements of the 1933 Act and state securities laws.
All of the issued and outstanding shares of the Acquired Fund will, at the time
of Closing, be held by the persons and in the amounts set forth in the records
of the Transfer Agent, on behalf of the Acquired Fund, as provided in paragraph
3.3. The Acquired Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any of the shares of the Acquired Fund, nor
is there outstanding any security convertible into any of the Acquired Fund
shares;
(n) The execution, delivery and performance of this Agreement will have
been duly authorized prior to the Closing Date by all necessary action, if any,
on the part of the Directors of the Pilgrim Fund on behalf of the Acquired Fund,
and, subject to the approval of the shareholders of the Acquired Fund, this
Agreement will constitute a valid and binding obligation of the Acquired Fund,
enforceable in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium and other laws relating to or
affecting creditors' rights and to general equity principles;
(o) The information to be furnished by the Acquired Fund for use in
registration statements, proxy materials and other documents filed or to be
filed with any federal, state or local regulatory authority (including the
National Association of Securities Dealers, Inc.), which may be necessary in
connection with the transactions contemplated hereby, shall be accurate and
B-5
<PAGE>
complete in all material respects and shall comply in all material respects with
Federal securities and other laws and regulations thereunder applicable thereto;
and
(p) The proxy statement of the Acquired Fund (the "Proxy Statement") to be
included in the Registration Statement referred to in paragraph 5.6, insofar as
it relates to the Acquired Fund, will, on the effective date of the Registration
Statement and on the Closing Date (i) not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which such statements were made, not materially misleading provided, however,
that the representations and warranties in this subparagraph (p) shall not apply
to statements in or omissions from the Proxy Statement and the Registration
Statement made in reliance upon and in conformity with information that was
furnished by the Acquiring Fund for use therein, and (ii) comply in all material
respects with the provisions of the 1933 Act, the 1934 Act and the 1940 Act and
the rules and regulations thereunder.
4.2 Except as has been disclosed to the Pilgrim Fund in a written
instrument executed by an officer of Pilgrim Trust, Pilgrim Trust on behalf of
the Acquiring Fund represents and warrants to Pilgrim Fund as follows:
(a) The Acquiring Fund is duly organized as a series of Pilgrim Trust,
which is a business trust duly organized, validly existing and in good standing
under the laws of the State of Delaware with power under Pilgrim Trust's
Declaration of Trust to own all of its properties and assets and to carry on its
business as it is now being conducted;
(b) Pilgrim Trust is a registered investment company classified as a
management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act and the registration of
shares of the Acquiring Fund under the 1933 Act, is in full force and effect;
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquiring Fund of
the transactions contemplated herein, except such as have been obtained under
the 1933 Act, the 1934 Act and the 1940 Act and such as may be required by state
securities laws;
(d) The current prospectus and statement of additional information of the
Acquiring Fund and each prospectus and statement of additional information of
the Acquiring Fund used during the three years previous to the date of this
Agreement conforms or conformed at the time of its use in all material respects
to the applicable requirements of the 1933 Act and the 1940 Act and the rules
and regulations of the Commission thereunder and does not or did not at the time
of its use include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
materially misleading;
(e) On the Closing Date, the Acquiring Fund will have good and marketable
title to the Acquiring Fund's assets, free of any liens of other encumbrances,
except those liens or encumbrances as to which the Acquired Fund has received
notice and necessary documentation at or prior to the Closing;
(f) The Acquiring Fund is not engaged currently, and the execution,
delivery and performance of this Agreement will not result, in (i) a material
violation of Pilgrim Trust's Declaration of Trust or By-Laws or of any
agreement, indenture, instrument, contract, lease or other undertaking to which
Pilgrim Trust on behalf of the Acquiring Fund is a party or by which it is
bound, or (ii) the acceleration of any obligation, or the imposition of any
penalty, under any agreement, indenture, instrument, contract, lease, judgment
or decree to which Pilgrim Trust on behalf of the Acquiring Fund is a party or
by which it is bound;
(g) Except as otherwise disclosed in writing to and accepted by Pilgrim
Fund on behalf of the the Acquired Fund, no litigation or administrative
proceeding or investigation of or before any court or governmental body is
presently pending or, to its knowledge, threatened against the Acquiring Fund or
B-6
<PAGE>
any of Acquiring Fund's properties or assets that, if adversely determined,
would materially and adversely affect its financial condition or the conduct of
the Acquiring Fund's business. Pilgrim Trust on behalf of the Acquiring Fund
knows of no facts which might form the basis for the institution of such
proceedings and is not a party to or subject to the provisions of any order,
decree or judgment of any court or governmental body which materially and
adversely affects its business or its ability to consummate the transactions
herein contemplated;
(h) The Statement of Assets and Liabilities, Statements of Operations and
Changes in Net Assets and portfolio of Investments of the Acquiring Fund at June
30, 2000, have been audited by KPMG LLP, independent auditors, and are in
accordance with GAAP consistently applied, and such statements (copies of which
have been furnished to the Acquired Fund) present fairly, in all material
respects, the financial condition of the Acquiring Fund as of such date in
accordance with GAAP, and there are no known contingent liabilities of the
Acquiring Fund required to be reflected on a balance sheet (including the notes
thereto) in accordance with GAAP as of such date not disclosed therein;
(i) Since June 30, 2000, there has not been any material adverse change in
the Acquiring Fund's financial condition, assets, liabilities or business, other
than changes occurring in the ordinary course of business, or any incurrence by
the Acquiring Fund of indebtedness maturing more than one year from the date
such indebtedness was incurred, except as otherwise disclosed to and accepted by
the Acquired Fund. For purposes of this subparagraph (i), a decline in net asset
value per share of the Acquiring Fund due to declines in market values of
securities in the Acquiring Fund's portfolio, the discharge of Acquiring Fund
liabilities, or the redemption of Acquiring Fund Shares by shareholders of the
Acquiring Fund, shall not constitute a material adverse change;
(j) On the Closing Date, all Federal and other tax returns, dividend
reporting forms, and other tax-related reports of the Acquiring Fund required by
law to have been filed by such date (including any extensions) shall have been
filed and are or will be correct in all material respects, and all Federal and
other taxes shown as due or required to be shown as due on said returns and
reports shall have been paid or provision shall have been made for the payment
thereof, and to the best of the Acquiring Fund's knowledge no such return is
currently under audit and no assessment has been asserted with respect to such
returns;
(k) For each taxable year of its operation (including the taxable year that
includes the Closing Date), the Acquiring Fund has met (or will meet) the
requirements of Subchapter M of the Code for qualification as a regulated
investment company, has been eligible to and has computed (or will compute) its
federal income tax under Section 852 of the Code and has distributed all of its
investment company taxable income and net capital gain (as defined in the Code)
for periods ending prior to the Closing Date;
(l) All issued and outstanding Acquiring Fund Shares are, and on the
Closing Date will be, duly and validly issued and outstanding, fully paid and
non-assessable by Pilgrim Trust and have been offered and sold in every state
and the District of Columbia in compliance in all material respects with
applicable registration requirements of the 1933 Act and state securities laws.
The Acquiring Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any Acquiring Fund Shares, nor is there
outstanding any security convertible into any Acquiring Fund Shares;
(m) The execution, delivery and performance of this Agreement will have
been fully authorized prior to the Closing Date by all necessary action, if any,
on the part of the Trustees of the Pilgrim Trust on behalf of the Acquiring Fund
and this Agreement will constitute a valid and binding obligation of the
Acquiring Fund, enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium and other
laws relating to or affecting creditors' rights and to general equity
principles;
(n) The Class A Acquiring Fund Shares to be issued and delivered to the
Acquired Fund, for the account of the Acquired Fund Shareholders, pursuant to
the terms of this Agreement, will on the Closing Date have been duly authorized
and, when so issued and delivered, will be duly and validly issued Acquiring
Fund Shares, and will be fully paid and non-assessable by Pilgrim Trust;
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(o) The information to be furnished by Pilgrim Trust for use in the
registration statements, proxy materials and other documents that may be
necessary in connection with the transactions contemplated hereby shall be
accurate and complete in all material respects and shall comply in all material
respects with Federal securities and other laws and regulations applicable
thereto; and
(p) That insofar as it relates to the Pilgrim Trust, the Registration
Statement relating to the Acquiring Fund Shares issuable hereunder, and the
proxy materials of the Acquired Fund to be included in the Registration
Statement, and any amendment or supplement to the foregoing, will, from the
effective date of the Registration Statement through the date of the meeting of
shareholders of the Acquired Fund contemplated therein (i) not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which such statements were made, not misleading provided,
however, that the representations and warranties in this subparagraph (p) shall
not apply to statements in or omissions from the Registration Statement made in
reliance upon and in conformity with information that was furnished by the
Acquired Fund for use therein, and (ii) comply in all material respects with the
provisions of the 1933 Act, the 1934 Act and the 1940 Act and the rules and
regulations thereunder.
5. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND
5.1 The Acquiring Fund and the Acquired Fund each will operate its business
in the ordinary course between the date hereof and the Closing Date, it being
understood that such ordinary course of business will include the declaration
and payment of customary dividends and distributions, and any other distribution
that may be advisable.
5.2 The Acquired Fund will call a meeting of the shareholders of the
Acquired Fund to consider and act upon this Agreement and to take all other
action necessary to obtain approval of the transactions contemplated herein.
5.3 The Acquired Fund covenants that the Class A Acquiring Fund Shares to
be issued hereunder are not being acquired for the purpose of making any
distribution thereof, other than in accordance with the terms of this Agreement.
5.4 The Acquired Fund will assist the Acquiring Fund in obtaining such
information as the Acquiring Fund reasonably requests concerning the beneficial
ownership of the Acquired Fund shares.
5.5 Subject to the provisions of this Agreement, the Acquiring Fund and the
Acquired Fund will each take, or cause to be taken, all action, and do or cause
to be done, all things reasonably necessary, proper or advisable to consummate
and make effective the transactions contemplated by this Agreement.
5.6 The Acquired Fund will provide the Acquiring Fund with information
reasonably necessary for the preparation of a prospectus (the "Prospectus")
which will include the Proxy Statement referred to in paragraph 4.1(p), all to
be included in a Registration Statement on Form N-14 of the Acquiring Fund (the
"Registration Statement"), in compliance with the 1933 Act, the 1934 Act and the
1940 Act, in connection with the meeting of the shareholders of the Acquired
Fund to consider approval of this Agreement and the transactions contemplated
herein.
5.7 As soon as is reasonably practicable after the Closing, the Acquired
Fund will make a liquidating distribution to its shareholders consisting of the
Class A Acquiring Fund Shares received at the Closing.
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5.8 The Acquiring Fund and the Acquired Fund shall each use its reasonable
best efforts to fulfill or obtain the fulfillment of the conditions precedent to
effect the transactions contemplated by this Agreement as promptly as
practicable.
5.9 Pilgrim Trust on behalf of the Acquired Fund covenants that it will,
from time to time, as and when reasonably requested by the Acquiring Fund,
execute and deliver or cause to be executed and delivered all such assignments
and other instruments, and will take or cause to be taken such further action as
Pilgrim Trust on behalf of the Acquiring Fund may reasonably deem necessary or
desirable in order to vest in and confirm (a) Pilgrim Fund's, on behalf of the
Acquired Fund's, title to and possession of the Acquired Fund's shares to be
delivered hereunder, and (b) the Pilgrim Trust's on behalf of the Acquiring
Fund's title to and possession of all the assets and otherwise to carry out the
intent and purpose of this Agreement.
5.10 The Acquiring Fund will use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act and such of
the state blue sky or securities laws as may be necessary in order to continue
its operations after the Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Pilgrim Fund on behalf of the Acquired Fund to
consummate the transactions provided for herein shall be subject, at the Pilgrim
Fund's election, to the performance by the Pilgrim Trust on behalf of the
Acquiring Fund of all the obligations to be performed by it hereunder on or
before the Closing Date, and, in addition thereto, the following further
conditions:
6.1 All representations and warranties of the Pilgrim Trust on behalf of
the Acquiring Fund contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the Closing Date, with
the same force and effect as if made on and as of the Closing Date;
6.2 Pilgrim Trust shall have delivered to the Pilgrim Fund a certificate
executed in its name by its President or Vice President and its Treasurer or
Assistant Treasurer, in a form reasonably satisfactory to the Pilgrim Fund and
dated as of the Closing Date, to the effect that the representations and
warranties of Pilgrim Trust on behalf of the Acquiring Fund made in this
Agreement are true and correct at and as of the Closing Date, except as they may
be affected by the transactions contemplated by this Agreement and as to such
other matters as the Pilgrim Fund shall reasonably request;
6.3 Pilgrim Trust on behalf of the Acquiring Fund shall have performed all
of the covenants and complied with all of the provisions required by this
Agreement to be performed or complied with by Pilgrim Trust on behalf of the
Acquiring Fund on or before the Closing Date; and
6.4 The Acquired Fund and the Acquiring Fund shall have agreed on the
number of full and fractional Acquiring Fund Shares of each Class to be issued
in connection with the Reorganization after such number has been calculated in
accordance with paragraph 1.1.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of Pilgrim Trust on behalf of the Acquiring Fund to
complete the transactions provided for herein shall be subject, at Pilgrim
Trust's election to the performance by Pilgrim Fund on behalf of the Acquired
Fund of all of the obligations to be performed by it hereunder on or before the
Closing Date and, in addition thereto, the following conditions:
7.1 All representations and warranties of Pilgrim Fund on behalf of the
Acquired Fund contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the Closing Date, with
the same force and effect as if made on and as of the Closing Date;
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<PAGE>
7.2 The Pilgrim Fund shall have delivered to the Acquiring Fund a statement
of the Acquired Fund's assets and liabilities, as of the Closing Date, certified
by the Treasurer of the Pilgrim Fund;
7.3 The Pilgrim Fund shall have delivered to the Acquiring Fund on the
Closing Date a certificate executed in its name by its President or Vice
President and its Treasurer or Assistant Treasurer, in form and substance
satisfactory to the Pilgrim Trust and dated as of the Closing Date, to the
effect that the representations and warranties of Pilgrim Fund on behalf of the
Acquired Fund made in this Agreement are true and correct at and as of the
Closing Date, except as they may be affected by the transactions contemplated by
this Agreement, and as to such other matters as the Pilgrim Trust shall
reasonably request;
7.4 The Pilgrim Fund on behalf of Acquired Fund shall have performed all of
the covenants and complied with all of the provisions required by this Agreement
to be performed or complied with by Pilgrim Fund on behalf of the Acquired Fund
on or before the Closing Date;
7.5 The Acquired Fund and the Acquiring Fund shall have agreed on the
number of full and fractional Acquiring Fund Shares of each Class to be issued
in connection with the Reorganization after such number has been calculated in
accordance with paragraph 1.1;
7.6 The Acquired Fund shall have declared and paid a distribution or
distributions prior to the Closing that, together with all previous
distributions, shall have the effect of distributing to its shareholders (i) all
of its investment company taxable income and all of its net realized capital
gains, if any, for the period from the close of its last fiscal year to 4:00
p.m. Eastern time on the Closing; and (ii) any undistributed investment company
taxable income and net realized capital gains from any period to the extent not
otherwise already distributed.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND THE
ACQUIRED FUND
If any of the conditions set forth below have not been satisfied on or
before the Closing Date with respect to the Acquired Fund or Pilgrim Trust on
behalf of the Acquiring Fund, the other party to this Agreement shall, at its
option, not be required to consummate the transactions contemplated by this
Agreement:
8.1 The Agreement and the transactions contemplated herein shall have been
approved by the requisite vote of the holders of the outstanding shares of the
Acquired Fund in accordance with the provisions of the Pilgrim Fund's Articles
of Incorporation, By-Laws, applicable Maryland law and the 1940 Act, and
certified copies of the resolutions evidencing such approval shall have been
delivered to the Acquiring Fund. Notwithstanding anything herein to the
contrary, neither the Pilgrim Trust nor the Pilgrim Fund may waive the
conditions set forth in this paragraph 8.1;
8.2 On the Closing Date no action, suit or other proceeding shall be
pending or, to its knowledge, threatened before any court or governmental agency
in which it is sought to restrain or prohibit, or obtain damages or other relief
in connection with, this Agreement or the transactions contemplated herein;
8.3 All consents of other parties and all other consents, orders and
permits of Federal, state and local regulatory authorities deemed necessary by
the Pilgrim Trust or the Pilgrim Fund to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain any such consent, order or permit would not
involve a risk of a material adverse effect on the assets or properties of the
Acquiring Fund or the Acquired Fund, provided that either party hereto may for
itself waive any of such conditions;
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<PAGE>
8.4 The Registration Statement shall have become effective under the 1933
Act and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act; and
8.5 The parties shall have received the opinion of Dechert addressed to the
Pilgrim Fund and the Pilgrim Trust substantially to the effect that, based upon
certain facts, assumptions, and representations, the transaction contemplated by
this Agreement shall constitute a tax-free reorganization for Federal income tax
purposes. The delivery of such opinion is conditioned upon receipt by Dechert of
representations it shall request of Pilgrim Trust and the Pilgrim Fund.
Notwithstanding anything herein to the contrary, neither Pilgrim Trust nor the
Pilgrim Fund may waive the condition set forth in this paragraph 8.5.
9. BROKERAGE FEES AND EXPENSES
9.1 Pilgrim Trust on behalf of Acquiring Fund and Pilgrim Fund on behalf of
the Acquired Fund represent and warrant to each other that there are no brokers
or finders entitled to receive any payments in connection with the transactions
provided for herein.
9.2 The expenses relating to the proposed Reorganization will be shared so
that (1) half of such costs are borne by the investment adviser to the Acquired
and Acquiring Funds, and (2) half are borne by the Acquired and Acquiring Funds
and will be paid by the Acquired Fund and Acquiring Fund pro rata based upon the
relative net assets of the Acquired Fund and Acquiring Fund as of the close of
business on the record date for determining the shareholders of the Acquired
Fund entitled to vote on the Reorganization. The costs of the Reorganization
shall include, but not be limited to, costs associated with obtaining any
necessary order of exemption from the 1940 Act, preparation of the Registration
Statement, printing and distributing the Acquiring Fund's prospectus and the
Acquired Fund's proxy materials, legal fees, accounting fees, securities
registration fees, and expenses of holding shareholders' meetings.
Notwithstanding any of the foregoing, expenses will in any event be paid by the
party directly incurring such expenses if and to the extent that the payment by
another person of such expenses would result in the disqualification of such
party as a "regulated investment company" within the meaning of Section 851 of
the Code.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 Pilgrim Trust and the Pilgrim Fund agree that neither party has made
any representation, warranty or covenant not set forth herein and that this
Agreement constitutes the entire agreement between the parties.
10.2 The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated hereunder. The
covenants to be performed after the Closing shall survive the Closing.
11. TERMINATION
This Agreement and the transactions contemplated hereby may be terminated
and abandoned by resolution of the Board of Directors of the Acquired Fund or
the Board of Trustees of the Acquiring Fund at any time prior to the Closing
Date, if circumstances should develop that, in the opinion of the Board, make
proceeding with the Agreement inadvisable.
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<PAGE>
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as
may be deemed necessary or advisable by the authorized officers of the Pilgrim
Fund and Pilgrim Trust; provided, however, that following the meeting of the
shareholders of the Acquired Fund called by the Acquired Fund pursuant to
paragraph 5.2 of this Agreement, no such amendment may have the effect of
changing the provisions for determining the number of the Class A Acquiring Fund
Shares to be issued to the Acquired Fund Shareholders under this Agreement to
the detriment of such shareholders without their further approval.
13. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by
facsimile, personal service or prepaid or certified mail addressed to Pilgrim
Trust or to the Pilgrim Fund, 7337 E. Doubletree Ranch Road, Scottsdale, Arizona
85258, attn: James M. Hennessy, in each case with a copy to Dechert, 1775 Eye
Street, N.W., Washington, D.C. 20006, attn: Jeffrey S. Puretz.
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY
14.1 The Article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
14.3 This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware without regard to its principles of conflicts
of laws.
14.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
14.5 It is expressly agreed that the obligations of the parties hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agents, or employees of the Pilgrim Trust or the ING Trust personally, but shall
bind only the trust property of the Pilgrim Trust or the ING Trust, as provided
in the Declaration of Trust of the Pilgrim Trust or the ING Trust. The execution
and delivery by such officers shall not be deemed to have been made by any of
them individually or to impose any liability on any of them personally, but
shall bind only the trust property of such party.
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its President or Vice President and its seal to be affixed
thereto and attested by its Secretary or Assistant Secretary.
Pilgrim Mutual Funds on behalf of
Attest: its Pilgrim Worldwide Growth Fund series
By:
------------------------------- -----------------------------------
SECRETARY
Its:
----------------------------------
Pilgrim Global Corporate Leaders Fund, Inc.,
Attest: a Maryland corporation
By:
------------------------------- -----------------------------------
SECRETARY
B-13
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its President or Vice President and its seal to be affixed
thereto and attested by its Secretary or Assistant Secretary.
Pilgrim Mutual Funds on behalf of
Attest: its Pilgrim Worldwide Growth Fund series
By:
------------------------------- -----------------------------------
SECRETARY
Its:
----------------------------------
Pilgrim Global Corporate Leaders Fund, Inc.,
Attest: a Maryland corporation
By:
------------------------------- -----------------------------------
SECRETARY
B-14
<PAGE>
APPENDIX C
ADDITIONAL INFORMATION REGARDING PILGRIM WORLDWIDE GROWTH FUND
(THE "FUND")
SHAREHOLDER GUIDE
PILGRIM PURCHASE OPTIONS(TM)
This Proxy Statement/Prospectus relates to only one Class of the Fund:
Class A, which represents an identical interest in the Fund's investment
portfolio, but are offered with different sales charges (Rule 12b-1) and
distribution fee arrangements. As described below and elsewhere in this Proxy
Statement/Prospectus, the contingent deferred sales load structure and
conversion characteristics of the Fund shares that will be issued to you in the
Reorganization will be the same as those that apply to the Global Corporate
Leaders Fund shares held by you immediately prior to the Reorganization, and the
period that you held shares of the Global Corporate Leaders Fund will be
included in the holding period of the Fund for purposes of calculating
contingent deferred sales charges and determining conversion rights. Purchases
of the shares of the Fund after the Reorganization will be subject to the sales
load structure and conversion rights discussed below.
The sales charges and fees for each Class of shares of the Fund are shown
and contrasted in the chart below.
CLASS A
-------
Maximum Initial Sales Charge on Purchases 5.75%(1)
Contingent Deferred Sales Charge ("CDSC") None(2)
Annual Distribution (12b-1) and Service Fees 0.35%
Maximum Purchase Unlimited
Automatic Conversion to Class A N/A
----------
(1) Reduced for purchases of $50,000 and over.
(2) For investments of $1 million or more, a CDSC of no more than 1% may be
assessed on redemptions of shares. See "Class A Shares: Initial Sales
Charge Alternative."
The relative impact of the initial sales charges and ongoing annual
expenses will depend on the length of time a share is held.
CLASS A SHARES: INITIAL SALES CHARGE ALTERNATIVE. Class A shares of the
Fund are sold at the net asset value ("NAV") per share in effect plus a sales
charge as described in the following table. For waivers or reductions of the
Class A shares sales charges, see "Special Purchases without a Sales Charge" and
"Reduced Sales Charges" below.
AS A % OF THE AS A %
YOUR INVESTMENT OFFERING PRICE OF NAV
--------------- -------------- ------
Less than $50,000 5.75% 6.10%
$50,000 - $99,999 4.50% 4.71%
$100,000 - $249,999 3.50% 3.63%
$250,000 - $499,999 2.50% 2.56%
$500,000 - $1,000,000 2.00% 2.04%
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There is no initial sales charge on purchases of $1,000,000 or more.
However, the shares will be subject to a CDSC if they are redeemed within one or
two years of purchase, depending on the amount of the purchase, as follows:
PERIOD DURING
YOUR INVESTMENT CDSC WHICH CDSC APPLIES
--------------- ---- ------------------
$1,000,000 - $2,499,999 1.00% 2 years
$2,500,000 - $4,999,999 0.50% 1 year
$5,000,000 and over 0.25% 1 year
Class A shares of the Fund issued in connection with the Reorganization
with respect to Class A shares of Global Corporate Leaders Fund that were
subject to a CDSC at the time of the Reorganization, will be subject to a CDSC
of up to 1% from the date of purchase of the original shares of the Global
Corporate Leaders Fund.
REDUCED SALES CHARGES. An investor may immediately qualify for a reduced
sales charge on a purchase of Class A shares of the Fund or other open-end funds
in the Pilgrim Funds which offer Class A shares, or shares with front-end sales
charges ("Participating Funds") by completing the Letter of Intent section of an
Application to purchase Fund shares. Executing the Letter of Intent expresses an
intention to invest during the next 13 months a specified amount, which, if made
at one time, would qualify for a reduced sales charge. An amount equal to the
Letter of Intent amount multiplied by the maximum sales charge imposed on
purchases of the Fund and Class will be restricted within your account to cover
additional sales charges that may be due if your actual total investment fails
to qualify for the reduced sales charges. See the Statement of Additional
Information for the Fund for details on the Letter of Intent option or contact
the Shareholder Servicing Agent at (800) 992-0180 for more information.
A sales charge may also be reduced by taking into account the current value
of your existing holdings in the Fund or any other open-end funds in the Pilgrim
funds complex or ING funds (excluding Pilgrim Money Market Fund) ("Rights of
Accumulation"). The reduced sales charges apply to quantity purchases made at
one time or on a cumulative basis over any period of time. See the Statement of
Additional Information for the Fund for details or contact the Shareholder
Servicing Agent at (800) 992-0180 for more information.
For the purposes of Rights of Accumulation and the Letter of Intent
Privilege, shares held by investors in the Pilgrim Funds which impose a CDSC may
be combined with Class A shares for a reduced sales charge but will not affect
any CDSC which may be imposed upon the redemption of shares of the Fund which
imposes a CDSC.
SPECIAL PURCHASES WITHOUT A SALES CHARGE. Class A shares may be purchased
without a sales charge by certain individuals and institutions. For additional
information, contact the Shareholder Servicing Agent at (800) 992-0180, or see
the Statement of Additional Information for the Fund.
WAIVERS OF CDSC. The CDSC will be waived in the following cases. In
determining whether a CDSC is applicable, it will be assumed that shares held in
the shareholder's account that are not subject to such charge are redeemed
first.
1) The CDSC will be waived in the case of redemption following the death
or permanent disability of a shareholder if made within one year of death or
initial determination of permanent disability. The waiver is available only for
those shares held at the time of death or initial determination of permanent
disability.
2) The CDSC also will be waived in the case of mandatory distributions
from a tax-deferred retirement plan or an IRA.
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<PAGE>
If you think you may be eligible for a CDSC waiver, contact the
Shareholder Servicing Agent at (800) 992-0180.
RULE 12b-1 PLAN. The Fund has a distribution plan pursuant to Rule 12b-1
under the Investment Company Act of 1940 applicable to each Class of shares of
the Fund ("Rule 12b-1 Plan"). Under the Rule 12b-1 Plan, ING Pilgrim Securities,
Inc., (the "Distributor") may receive from the Fund an annual fee in connection
with the offering, sale and shareholder servicing of the Fund's Class A shares.
DISTRIBUTION AND SERVICING FEES. As compensation for services rendered and
expenses borne by the Distributor in connection with the distribution of shares
of the Fund and in connection with services rendered to shareholders of the
Fund, the Fund pays the Distributor servicing fees and distribution fees up to
the annual rates set forth below (calculated as a percentage of the Fund's
average daily net assets attributable to that Class):
SERVICING FEE DISTRIBUTION FEE
------------- ----------------
Class A 0.25% 0.10%
Fees paid under the Rule 12b-1 Plan may be used to cover the expenses of
the Distributor from the sale of Class A shares of the Fund, including payments
to Authorized Dealers, and for shareholder servicing. Because these fees are
paid out of the Fund's assets on an on-going basis, over time these fees will
increase the cost of your investment and may cost you more than paying other
types of sales charges.
OTHER EXPENSES. In addition to the management fee and other fees described
previously, the Fund pays other expenses, such as legal, audit, transfer agency
and custodian fees, proxy solicitation costs, and the compensation of Directors
who are not affiliated with ING Pilgrim Investments, Inc. ("ING Pilgrim
Investments"). Most Fund expenses are allocated proportionately among all of the
outstanding shares of that Fund. However, the Rule 12b-1 Plan fees for each
Class of shares are charged proportionately only to the outstanding shares of
that Class.
PURCHASING SHARES. The Fund reserves the right to liquidate sufficient
shares to recover annual Transfer Agent fees should the investor fail to
maintain his/her account value at a minimum of $1,000.00 ($250.00 for IRA's).
The minimum initial investment in the Fund is $1,000 ($250 for IRAs), and the
minimum for additional investment in the Fund is $100. The minimum initial
investment for pre-authorized retirement plan is $100 plus monthly investments
of at least $100.
The Fund and the Distributor reserve the right to reject any purchase
order. Please note cash, travelers checks, third party checks, money orders and
checks drawn on non-U.S. banks (even if payment may be effected through a U.S.
bank) will not be accepted. ING Pilgrim Investments reserves the right to waive
minimum investment amounts.
PRICE OF SHARES. When you buy shares, you pay the NAV plus any
applicable sales charge. When you sell shares, you receive the NAV minus any
applicable deferred sales charge. Exchange orders are effected at NAV.
DETERMINATION OF NET ASSET VALUE. The NAV of the Fund's shares is
determined daily as of the close of regular trading on the New York Stock
Exchange (usually at 4:00 p.m. New York City time) on each day that it is open
for business. The NAV of each Class represents that Class' pro rata share of
that Fund's net assets as adjusted for any Class specific expenses (such as fees
under a Rule 12b-1 plan), and divided by that Class' outstanding shares. In
general, the value of the Fund's assets is based on actual or estimated market
value, with special provisions for assets not having readily available market
quotations, and short-term debt securities, and for situations where market
quotations are deemed unreliable. The NAV per share of each Class of the Fund
will fluctuate in response to changes in market conditions and other factors.
Portfolio securities for which market quotations are readily available are
stated at market value. Short-term debt securities having a maturity of 60 days
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<PAGE>
or less are valued at amortized cost, unless the amortized cost does not
approximate market value. Securities prices may be obtained from automated
pricing services. When market quotations are not readily available or are deemed
unreliable, securities are valued at their fair value as determined in good
faith under the supervision of the Board of Directors. Valuing securities at
fair value involves greater reliance on judgment than valuing securities that
have readily available market quotations. For information on valuing foreign
securities, see the Fund's Statement of Additional Information.
PRE-AUTHORIZED INVESTMENT PLAN. You may establish a pre-authorized
investment plan to purchase shares with automatic bank account debiting. For
further information on pre-authorized investment plans, contact the Shareholder
Servicing Agent at (800) 992-0180.
RETIREMENT PLANS. The Fund has available prototype qualified retirement
plans for both corporations and for self-employed individuals. Also available
are prototype IRA, Roth IRA and Simple IRA plans (for both individuals and
employers), Simplified Employee Pension Plans, Pension and Profit Sharing Plans
and Tax Sheltered Retirement Plans for employees of public educational
institutions and certain non-profit, tax-exempt organizations. State Street Bank
& Trust Company ("State Street") acts as the custodian under these plans. For
further information, contact the Shareholder Servicing Agent at (800) 992-0180.
State Street currently receives a $12 custodian fee annually for the maintenance
of such accounts.
EXECUTION OF REQUESTS. Purchase and sale requests are executed at the next
NAV determined after the order is received in proper form by the Transfer Agent
or Distributor. A purchase order will be deemed to be in proper form when all of
the required steps set forth above under "Purchase of Shares" have been
completed. If you purchase by wire, however, the order will be deemed to be in
proper form after the telephone notification and the federal funds wire have
been received. If you purchase by wire, you must submit an application form in a
timely fashion. If an order or payment by wire is received after the close of
regular trading on the New York Stock Exchange (normally 4:00 p.m. Eastern
Time), the shares will not be credited until the next business day.
You will receive a confirmation of each new transaction in your account,
which also will show you the number of shares of the Fund you own including the
number of shares being held in safekeeping by the Transfer Agent for your
account. You may rely on these confirmations in lieu of certificates as evidence
of your ownership. Certificates representing shares of the Fund will not be
issued unless you request them in writing.
TELEPHONE ORDERS. The Fund and its Transfer Agent will not be responsible
for the authenticity of phone instructions or losses, if any, resulting from
unauthorized shareholder transactions if they reasonably believe that such
instructions were genuine. The Fund and its Transfer Agent have established
reasonable procedures to confirm that instructions communicated by telephone are
genuine. These procedures include recording telephone instructions for exchanges
and expedited redemptions, requiring the caller to give certain specific
identifying information, and providing written confirmation to shareholders of
record not later than five days following any such telephone transactions. If
the Fund and its Transfer Agent do not employ these procedures, they may be
liable for any losses due to unauthorized or fraudulent telephone instructions.
Telephone redemptions may be executed on all accounts other than retirement
accounts.
EXCHANGE PRIVILEGES AND RESTRICTIONS
An exchange privilege is available. Exchange requests may be made in
writing to the Transfer Agent or by calling the Shareholder Servicing Agent at
(800) 992-0180. There is no specific limit on exchange frequency; however, the
Fund is intended for long term investment and not as a trading vehicle. ING
Pilgrim Investments reserves the right to prohibit excessive exchanges (more
C-4
<PAGE>
than four per year). ING Pilgrim Investments reserves the right, upon 60 days'
prior notice, to restrict the frequency of, otherwise modify, or impose charges
of up to $5.00 upon exchanges. The total value of shares being exchanged must at
least equal the minimum investment requirement of the fund into which they are
being exchanged. The Fund may change or cancel its exchange policies at any
time, upon 60 days' written notice to shareholders.
Shares of the Fund may generally be exchanged for shares of that same Class
of any other open-end Pilgrim Fund without payment of any additional sales
charge. In most instances if you exchange and subsequently redeem your shares,
any applicable CDSC will be based on the full period of the share ownership.
Shareholders exercising the exchange privilege with any other open-end Pilgrim
Fund or ING Fund should carefully review the Prospectus of that Fund. Exchanges
of shares are sales and may result in a gain or loss for federal and state
income tax purposes. You will automatically be assigned the telephone exchange
privilege unless you mark the box on the Account Application that signifies you
do not wish to have this privilege. The exchange privilege is only available in
states where shares of the fund being acquired may be legally sold.
Exchanges of shares are sales and may result in a gain or loss for federal
and state income tax purposes. There is no specific limit on exchange frequency;
however, the Funds are intended for long term investment and not as a trading
vehicle. The adviser may prohibit excessive exchanges (more than four per year).
The adviser also may, on 60 days' prior notice, restrict the frequency of,
otherwise modify, or impose charges of up to $5.00 upon exchanges.
You will automatically have the ability to request an exchange by calling
the Shareholder Service Agent unless you mark the box on the Account Application
that indicates that you do not wish to have the telephone exchange privilege.
SYSTEMATIC EXCHANGE PRIVILEGE. With an initial account balance of at least
$5,000 and subject to the information and limitations outlined above, you may
elect to have a specified dollar amount of shares systematically exchanged,
monthly, quarterly, semi-annually or annually (on or about the 10th of the
applicable month), from your account to an identically registered account in the
same Class of any other open-end Pilgrim Fund. This exchange privilege may be
modified at any time or terminated upon 60 days written notice to shareholders.
SMALL ACCOUNTS. Due to the relatively high cost of handling small
investments, the Fund reserves the right upon 30 days written notice to redeem,
at NAV, the shares of any shareholder whose account (except for IRAs) has a
value of less than $1,000, other than as a result of a decline in the NAV per
share.
HOW TO REDEEM SHARES
Shares of the Fund will be redeemed at the NAV (less any applicable CDSC
and/or federal income tax withholding) next determined after receipt of a
redemption request in good form on any day the New York Stock Exchange is open
for business.
SYSTEMATIC WITHDRAWAL PLAN. You may elect to have monthly, quarterly,
semi-annual or annual payments in any fixed amount of $100 or more made to
yourself, or to anyone else you properly designate, as long as the account has a
current value of at least $10,000. For additional information, contact the
Shareholder Servicing Agent at (800) 992-0180, or see the Fund's Statement of
Additional Information.
PAYMENTS. Payment to shareholders for shares redeemed or repurchased
ordinarily will be made within three days after receipt by the Transfer Agent of
a written request in good order. The Fund may delay the mailing of a redemption
check until the check used to purchase the shares being redeemed has cleared
which may take up to 15 days or more. To reduce such delay, all purchases should
be made by bank wire or federal funds. The Fund may suspend the right of
redemption under certain extraordinary circumstances in accordance with the
C-5
<PAGE>
Rules of the Securities and Exchange Commission. The Fund intends to pay in cash
for all shares redeemed, but under abnormal conditions that make payment in cash
harmful to the Fund, the Fund may make payment wholly or partly in securities at
their then current market value equal to the redemption price. In such case, the
Fund could elect to make payment in securities for redemptions in excess of
$250,000 or 1% of its net assets during any 90-day period for any one
shareholder. An investor may incur brokerage costs in converting such securities
to cash.
MANAGEMENT OF THE FUND
INVESTMENT MANAGER. ING Pilgrim Investments has overall responsibility for
the management of the Fund. The Fund and ING Pilgrim Investments have entered
into an agreement that requires ING Pilgrim Investments to provide or oversee
all investment advisory and portfolio management services for the Fund. ING
Pilgrim Investments provides the Fund with office space, equipment and personnel
necessary to administer the Fund. The agreement with ING Pilgrim Investments can
be canceled by the Board of Trustees of the Fund upon 60 days written notice.
Organized in December 1994, ING Pilgrim Investments is registered as an
investment adviser with the Securities and Exchange Commission. As of September
30, 2000, ING Pilgrim Investments managed over $20.7 billion in assets. ING
Pilgrim Investments bears its expenses of providing the services described
above. Investment management fees are computed and accrued daily and paid
monthly.
PARENT COMPANY AND DISTRIBUTOR. ING Pilgrim Investments and the Distributor
are indirect, wholly owned subsidiaries of ING Groep N.V. (NYSE: ING) ("ING
Group"). ING Group is a global financial institution active in the field of
insurance, banking and asset management in more than 65 countries, with almost
100,000 employees.
SHAREHOLDER SERVICING AGENT. ING Pilgrim Group, Inc. serves as Shareholder
Servicing Agent for the Fund. The Shareholder Servicing Agent is responsible for
responding to written and telephonic inquiries from shareholders. The Fund pays
the Shareholder Servicing Agent a monthly fee on a per-contact basis, based upon
incoming and outgoing telephonic and written correspondence.
PORTFOLIO TRANSACTIONS. ING Pilgrim Investments will place orders to
execute securities transactions that are designed to implement the Fund's
investment objectives and policies. ING Pilgrim Investments will use its
reasonable efforts to place all purchase and sale transactions with brokers,
dealers and banks ("brokers") that provide "best execution" of these orders. In
placing purchase and sale transactions, ING Pilgrim Investments may consider
brokerage and research services provided by a broker to ING Pilgrim Investments
or its affiliates, and the Fund may pay a commission for effecting a securities
transaction that is in excess of the amount another broker would have charged if
ING Pilgrim Investments determines in good faith that the amount of commission
is reasonable in relation to the value of the brokerage and research services
provided by the broker. In addition, ING Pilgrim Investments may place
securities transactions with brokers that provide certain services to the Fund.
ING Pilgrim Investments also may consider a broker's sale of Fund shares if ING
Pilgrim Investments is satisfied that the Fund would receive best execution of
the transaction from that broker.
C-6
<PAGE>
DIVIDENDS, DISTRIBUTIONS & TAXES
DIVIDENDS AND DISTRIBUTIONS. The Fund generally distributes most or all
of its net earnings in the form of dividends. The Fund pays dividends and
capital gains, if any, annually. Dividends and distributions will be determined
on a Class basis.
Any dividends and distributions paid by the Fund will be automatically
reinvested in additional shares of the respective Class of that Fund, unless you
elect to receive distributions in cash. When a dividend or distribution is paid,
the NAV per share is reduced by the amount of the payment. You may, upon written
request or by completing the appropriate section of the Account Application in
the Pilgrim Prospectus, elect to have all dividends and other distributions paid
on a Class A account in the Fund invested into a Pilgrim Fund or ING Fund which
offers Class A shares.
FEDERAL TAXES. The following information is meant as a general summary for
U.S. shareholders. Please see the Fund's Statement of Additional Information for
additional information. You should rely your own tax adviser for advice about
the particular federal, state and local tax consequences to you of investing in
the Fund.
The Fund will distribute most of its net investment income and net capital
gains to its shareholders each year. Although the Fund will not be taxed on
amounts it distributes, most shareholders will be taxed on amounts they receive.
A particular distribution generally will be taxable as either ordinary income or
long-term capital gains. It does not matter how long you have held your Fund
shares or whether you elect to receive your distributions in cash or reinvest
them in additional Fund shares. For example, if the Fund designates a particular
distribution as a long-term capital gains distribution, it will be taxable to
you at your long-term capital gains rate.
Dividends declared by the Fund in October, November or December and paid
during the following January may be treated as having been received by
shareholders in the year the distributions were declared.
You will receive an annual statement summarizing your dividend and capital
gains distributions.
If you invest through a tax-deferred account, such as a retirement plan,
you generally will not have to pay tax on dividends until they are distributed
from the account. These accounts are subject to complex tax rules, and you
should consult your tax adviser about investment through a tax-deferred account.
There may be tax consequences to you if you sell or redeem Fund shares.
You will generally have a capital gain or loss, which will be long-term or
short-term, generally depending on how long you hold those shares. If you
exchange shares, you may be treated as if you sold them. You are responsible for
any tax liabilities generated by your transactions.
As with all mutual funds, the Fund may be required to withhold U.S.
federal income tax at the rate of 31% of all taxable distributions payable to
you if you fail to provide the Fund with your correct taxpayer identification
number or to make required certifications, or if you have been notified by the
IRS that you are subject to backup withholding. Backup withholding is not an
additional tax; rather, it is a way in which the IRS ensures it will collect
taxes otherwise due. Any amounts withheld may be credited against your U.S.
federal income tax liability.
C-7
<PAGE>
FINANCIAL HIGHLIGHTS
FINANCIAL
HIGHLIGHTS PILGRIM WORLDWIDE GROWTH FUND
--------------------------------------------------------------------------------
For the year ended June 30, 2000 and the three months ended June 30, 1999, the
information in the table below has been audited by KPMG LLP, independent
auditors. For all periods ending prior to June 30, 1999, the financial
information has been audited by other independent auditors.
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------------
Three
Year months
Ended ended
June 30, June 30, Year ended March 31,
2000 1999(1) 1999 1998 1997 1996
---- ------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period $ 23.58 21.39 19.33 16.88 16.57 14.29
Income from investment operations:
Net investment income (loss) $ (0.15) -- (0.02) 0.04 (0.16) (0.07)
Net realized and unrealized gains
(loss) on investments $ 9.62 2.19 5.78 5.33 2.20 2.86
Total from investment operations $ 9.47 2.19 5.76 5.37 2.04 2.79
Less distributions from:
Net investment income $ -- -- 0.06 -- -- 0.12
Net realized gains on investments $ 3.07 -- 3.64 2.92 1.73 0.39
Net asset value, end of period $ 29.98 23.58 21.39 19.33 16.88 16.57
Total Return(3): % 42.43 10.24 33.56 34.55 12.51 19.79
Ratios/Supplemental Data:
Net assets, end of period (000's) $ 235,341 66,245 49,134 38,647 24,022 23,481
Ratios to average net assets:
Net expenses after expense
reimbursement(4)(5) % 1.67 1.75 1.86 1.86 1.85 1.85
Gross expenses prior to expense
reimbursement(4) % 1.67 1.75 2.02 2.21 2.17 2.17
Net investment income (loss) after
expense reimbursement(4)(5) % (0.79) (0.03) (0.62) (0.69) (0.93) (0.35)
Portfolio turnover % 169 57 247 202 182 132
Class B
---------------------------------------------------------------
Three
Year months May 31,
Ended ended 1995(2) to
June 30, June 30, Year ended March 31, March 31,
2000 1999(1) 1999 1998 1997 1996
---- ------- ---- ---- ---- ----
Per Share Operating Performance:
Net asset value, beginning of period $ 26.64 24.21 20.10 16.02 14.34 12.50
Income from investment operations:
Net investment income (loss) $ (0.28) (0.03) (0.08) (0.17) (0.14) (0.05)
Net realized and unrealized gains
(loss) on investments $ 10.76 2.46 6.25 5.44 1.82 1.89
Total from investment operations $ 10.48 2.43 6.17 5.27 1.68 1.84
Less distributions from:
Net investment income $ -- -- 0.01 -- -- --
Net realized gains on investments $ 3.46 -- 2.05 1.19 -- --
Net asset value, end of period $ 33.66 26.64 24.21 20.10 16.02 14.34
Total Return(3): % 41.54 10.04 32.74 34.03 11.72 14.72
Ratios/Supplemental Data:
Net assets, end of period (000's) $ 130,988 27,938 18,556 10,083 5,942 1,972
Ratios to average net assets:
Net expenses after expense
reimbursement(4)(5) % 2.32 2.40 2.51 2.51 2.50 2.50
Gross expenses prior to expense
reimbursement(4) % 2.32 2.40 2.67 2.70 4.81 9.50
Net investment income (loss) after
expense reimbursement(4)(5) % (1.44) (0.68) (1.31) (1.37) (1.62) (1.28)
Portfolio turnover % 169 57 247 202 182 132
Class C
--------------------------------------------------------
Three
Year months
Ended ended
June 30, June 30, Year ended March 31,
2000 1999(1) 1999 1998 1997 1996
---- ------- ---- ---- ---- ----
Per Share Operating Performance:
Net asset value, beginning of period $ 23.69 21.52 19.05 16.92 16.76 14.44
Income from investment operations:
Net investment income (loss) $ (0.33) (0.04) (0.20) (0.19) (0.28) (0.21)
Net realized and unrealized gains
(loss) on investments $ 9.65 2.21 5.83 5.41 2.23 2.92
Total from investment operations $ 9.32 2.17 5.63 5.22 1.95 2.71
Less distributions from:
Net investment income $ -- -- 0.01 -- -- 0.01
Net realized gains on investments $ 3.09 -- 3.15 3.09 1.79 0.38
Net asset value, end of period $ 29.92 23.69 21.52 19.05 16.92 16.76
Total Return(3): % 41.48 10.08 32.73 33.72 11.81 18.95
Ratios/Supplemental Data:
Net assets, end of period (000's) $ 239,432 111,250 98,470 84,292 70,345 71,155
Ratios to average net assets:
Net expenses after expense
reimbursement(4)(5) % 2.32 2.40 2.51 2.51 2.50 2.50
Gross expenses prior to expense
reimbursement(4) % 2.32 2.40 2.67 2.77 2.61 2.57
Net investment income (loss) after
expense reimbursement(4)(5) % (1.44) (0.68) (1.28) (1.34) (1.57) (0.99)
Portfolio turnover % 169 57 247 202 182 132
</TABLE>
C-8
<PAGE>
<TABLE>
<CAPTION>
Class Q
-----------------------------------------------------------
Year Three months August 31,
ended ended 1995(2) to
June 30, June 30, Year ended March 31, March 31,
2000 1999(1) 1999 1998 1997 1996
---- ------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period $ 27.12 24.59 19.63 15.00 13.27 12.50
Income from investment operations:
Net investment income (loss) $ (0.16) 0.01 0.22 (0.11) 0.01 (0.04)
Net realized and unrealized gains (loss) on
investments $ 11.11 2.52 6.15 5.29 1.72 0.81
Total from investment operations $ 10.95 2.53 6.37 5.18 1.73 0.77
Less distributions from:
Net investment income $ -- -- 0.15 -- -- --
Net realized gains on investments $ 3.54 -- 1.26 0.55 -- --
Net asset value, end of period $ 34.53 27.12 24.59 19.63 15.00 13.27
Total Return(3): % 42.63 10.29 33.97 35.11 12.87 6.32
Ratios/Supplemental Data:
Net assets, end of period (000's) $ 54,418 14,870 7,320 645 642 1
Ratios to average net assets:
Net expenses after expense reimbursement(4)(5) % 1.57 1.55 1.59 1.61 1.61 1.60
Gross expenses prior to expense reimbursement(4) % 1.57 1.55 1.76 3.75 34.99 3,232.53
Net investment income (loss) after expense
reimbursement(4)(5) % (0.69) 0.17 0.17 (0.47) (0.91) (0.50)
Portfolio turnover % 169 57 247 202 182 132
</TABLE>
----------
(1) Effective May 24, 1999, Pilgrim Investments, Inc., became the Investment
Manager of the Fund, concurrently Nicholas-Applegate Capital Management was
appointed as sub-advisor and the Fund changed its year end to June 30.
(2) Commencement of offering shares.
(3) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value and excluding the deduction
of sales charges. Total return for less than one year is not annualized.
(4) Annualized for periods less than one year.
(5) The Investment Manager has agreed to limit expenses, excluding, interest,
taxes, brokerage and extraordinary expenses.
C-9
<PAGE>
APPENDIX D
The following is a list of the ING Funds and Pilgrim Funds and the classes of
shares of each Fund that are expected to be offered at or shortly after the
Reorganization:
FUND CLASSES OFFERED
---- ---------------
ING FUNDS
U.S. EQUITY
Internet Fund A, B and C
Tax Efficient Equity Fund A, B and C
GLOBAL/INTERNATIONAL EQUITY
European Equity Fund A, B and C
Global Communications Fund A, B and C
Global Information Technology Fund A, B and C
FIXED INCOME
High Yield Bond Fund A, B and C
Intermediate Bond Fund A, B and C
Money Market Fund A, B, C and I
National Tax-Exempt Bond Fund A, B and C
PILGRIM FUNDS
U.S. EQUITY
Balanced Fund A, B, C, Q and T
Bank and Thrift Fund A and B
Convertible Fund A, B, C and Q
Corporate Leaders Trust Fund A
Growth and Income Fund A, B, C and Q
Growth + Value Fund A, B, C and Q
Growth Opportunities Fund A, B, C, Q, I and T
LargeCap Growth Fund A, B, C and Q
MagnaCap Fund A, B, C, Q and M
MidCap Growth Fund A, B, C and Q
MidCap Opportunities Fund A, B, C, Q and I
Research Enhanced Index Fund A, B, C, Q and I
SmallCap Growth Fund A, B, C, Q
SmallCap Opportunities Fund A, B, C, Q, I and T
GLOBAL/INTERNATIONAL EQUITY
Asia-Pacific Equity Fund A, B and M
Emerging Countries Fund A, B, C and Q
Gold Fund A
International Fund A, B, C and Q
International Core Growth Fund A, B, C and Q
International SmallCap Growth Fund A, B, C and Q
International Value Fund A, B, C and Q
Troika Dialog Russia Fund A
Worldwide Growth Fund A, B, C and Q
FIXED INCOME
GNMA Income Fund A, B, C, Q, M and T
High Yield Fund A, B, C, Q and M
High Yield Fund II A, B, C, Q and T
Lexington Money Market Trust A
Pilgrim Money Market Fund A, B and C
Strategic Income Fund A, B, C and Q
D-1
<PAGE>
APPENDIX E
As of November 1, 2000, no persons owned beneficially or of record 5% or
more of the outstanding shares of the specified Class of Worldwide Growth Fund.
As of November 1, 2000, the following persons owned beneficially or of
record 5% or more of the outstanding shares of the specified Class of Global
Corporate Leaders Fund:
<TABLE>
<CAPTION>
% OF CLASS % OF FUND % OF FUND
BEFORE BEFORE AFTER
NAME AND ADDRESS CLASS REORGANIZATION REORGANIZATION REORGANIZATION
---------------- ----- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Lexington Class A 18.80% 18.80% %
Management Corp. Record Holder
FBO Southeastern Assoc
Attn: Lorraine Kimble
Park 80 West Plaza II
Saddlebrook, NJ 07662
</TABLE>
E-1
<PAGE>
PART B
PILGRIM MUTUAL FUNDS
-----------------------------------------------------------------------
Statement of Additional Information
______________, 2000
-----------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Acquisition of the Assets and Liabilities of By and in Exchange for Shares of
Pilgrim Global Corporate Leaders Fund Pilgrim Worldwide Growth Fund
(a series of Pilgrim Global Corporate Leaders Fund, Inc.) (a series of Pilgrim Mutual Funds)
7337 East Doubletree Ranch Road 7337 East Doubletree Ranch Road
Scottsdale, Arizona 85258 Scottsdale, Arizona 85258
</TABLE>
This Statement of Additional Information is available to the Shareholders of
Pilgrim Global Corporate Leaders Fund in connection with a proposed transaction
whereby all of the assets and liabilities of Global Corporate Leaders Fund, a
series of Pilgrim Global Corporate Leaders Fund, Inc. will be transferred to
Pilgrim Worldwide Growth Fund, a series of Pilgrim Mutual Funds, in exchange for
shares of Pilgrim Worldwide Growth Fund.
This Statement of Additional Information of the Pilgrim Mutual Funds consists of
this cover page and the following documents, each of which was filed
electronically with the Securities and Exchange Commission and is incorporated
by reference herein:
1. The Statement of Additional Information for Pilgrim Global Corporate
Leaders Fund dated July 31, 2000, as filed on July 26, 2000 and for Pilgrim
Worldwide Growth Fund dated November 1, 2000, as filed on November 1, 2000.
2. The Financial Statements of Pilgrim Worldwide Growth Fund are included in
the Annual Report of Pilgrim Mutual Funds dated June 30, 2000, as filed on
September 7, 2000.
3. The Financial Statements of Pilgrim Global Corporate Leaders Fund are
included in the Annual Report of Pilgrim Global Corporate Leaders Fund,
Inc. dated December 31, 1999, as filed on March 6, 2000.
4. The Financial Statement of Pilgrim Global Corporate Leaders Fund are
included in the Semi-Annual Report of Pilgrim Global Corporate Leaders
Fund, Inc. dated June 30, 2000, as filed on August 31, 2000.
This Statement of Additional Information is not a Prospectus. A Proxy
Statement/Prospectus dated _______________, 2000 relating to the Reorganization
of Pilgrim Global Corporate Leaders Fund and Pilgrim Worldwide Growth may be
obtained, without charge, by writing to Pilgrim at 7337 East Doubletree Ranch
Road, Scottsdale, Arizona 85258 or calling (800) 992-0180. This Statement of
Additional Information should be read in conjunction with the Proxy
Statement/Prospectus.
1
<PAGE>
PRO FORMA FINANCIAL STATEMENTS
Shown below are financial statements for each fund and pro forma financial
statements for the Combined Fund, assuming the reorganization is consummated, as
of June 30, 2000. The first table presents Statements of Assets and Liabilities
(unaudited) for each Fund and proforma figures for the Combined Fund. The second
table presents Statements of Operations (unaudited) for each Fund and pro forma
figures for the Combined Fund. The third table presents Portfolios of
Investments for each Fund (unaudited) and pro forma figures for the Combined
Fund. The tables are followed by the Notes to the Pro Forma Financial Statements
(unaudited).
STATEMENTS OF ASSETS AND LIABILITIES AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
Worldwide Global
Growth Corporate Pro Forma Pro Forma
Fund Leaders Adjustments Combined
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments in securities at market value* $ 639,095,933 $ 17,390,965 $ 656,486,898
Short-term investments at amortized cost 27,281,000 -- 27,281,000
Foreign Currency 398 -- 1,043,948
Cash 23,559 1,043,550 23,559
Receivables:
Fund shares sold 4,498,998 310,053 4,809,051
Dividends and interest 622,494 26,683 649,177
Investment securities sold 8,129,229 -- 8,129,229
Prepaid expenses 92,703 -- 92,703
------------- ------------ ---------- -------------
Total Assets 679,744,314 18,771,251 698,515,565
------------- ------------ ---------- -------------
LIABILITIES:
Payable for investment securities purchased 15,496,676 -- 15,496,676
Payable for fund shares redeemed 2,898,211 42,980 2,941,191
Payable to affiliate 902,056 15,033 917,089
Other accrued expenses and liabilities 268,101 64,660 332,761
------------- ------------ ---------- -------------
Total Liabilities 19,565,044 122,673 19,687,717
------------- ------------ ---------- -------------
NET ASSETS $ 660,179,270 $ 18,648,578 $ 678,827,848
============= ============ ========== =============
NET ASSETS CONSIST OF:
Paid-in capital $ 518,940,603 $ 11,960,513 $ 530,901,116
Undistributed net investment loss -- (80,335) (80,335)
Accumulated net realized gain on investments 16,761,834 1,274,999 18,036,833
Net unrealized appreciation (depreciation)
of investments 124,476,833 5,493,401 129,970,234
------------- ------------ ---------- -------------
Net Assets $ 660,179,270 $ 18,648,578 $ -- $ 678,827,848
============= ============ ========== =============
CLASS A:
Net Assets $ 235,341,134 $ 18,648,578 $ 253,989,712
Shares outstanding 7,849,453 1,594,931 (972,412)(A) 8,471,972
Net asset value and redemption price per share $ 29.98 $ 11.69 $ 29.98
Maximum offering price per share $ 31.81 $ 11.69 $ 31.81
CLASS B:
Net Assets $ 130,988,092 N/A $ 130,988,092
Shares outstanding 3,891,880 N/A 3,891,880
Net asset value and redemption price per share $ 33.66 N/A $ 33.66
Maximum offering price per share $ 33.66 N/A $ 33.66
CLASS C:
Net Assets $ 239,432,294 N/A $ 239,432,294
Shares outstanding 8,001,360 N/A 8,001,360
Net asset value and redemption price per share $ 29.92 N/A $ 29.92
Maximum offering price per share $ 29.92 N/A $ 29.92
CLASS Q:
Net Assets $ 54,417,750 N/A $ 54,417,750
Shares outstanding $ 1,575,894 N/A 1,575,894
Net asset value and redemption price per share $ 34.53 N/A $ 34.53
Maximum offering price per share $ 34.53 N/A $ 34.53
* Cost of Securities $ 514,610,089 $ 23,598,340 $ 538,208,429
** Foreign Currency $ 397 $ -- $ 397
</TABLE>
(A) Reflects new shares issued, net of retired shares of the Fund.
(Calculation: Net Assets / NAV per share)
See Accompanying Notes to Unaudited Pro Forma Financial Statements
2
<PAGE>
STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Worldwide Global
Growth Corporate Pro Forma Pro Forma
Fund Leaders Adjustments Combined
------------- ------------- ------------- -------------
Year Ended Year Ended Year Ended Year Ended
June 30, June 30, June 30, June 30,
2000 2000 2000 2000
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends, net of foreign taxes $ 2,256,981 $ 166,578 $ 2,423,559
Interest 1,470,882 33,669 1,504,551
------------- ------------- ------------- -------------
Total investment income 3,727,863 200,247 3,928,110
------------- ------------- ------------- -------------
EXPENSES:
Investment management fees 4,327,642 180,545 -- 4,508,187
Distribution expenses
Class A 515,322 -- 63,106 (A) 578,428
Class B 770,751 -- 770,751
Class C 1,751,460 -- 1,751,460
Class Q 94,045 -- 94,045
Transfer agent and registrar fees 628,483 34,946 663,429
Shareholder Reporting 160,859 -- 160,859
Registration and filing fees 43,713 11,889 (5,945)(B) 49,657
Recordkeeping and pricing fees 76,299 -- 76,299
Professional fees 51,263 43,213 (34,570)(B) 59,906
Custodian fees 271,713 1,346 273,059
Shareholder servicing fees 24,761 -- 24,761
Directors' fees 18,000 39,979 (14,400)(B) 43,579
Insurance 2,281 -- 2,281
Accounting expenses -- 11,104 (11,104)(C) --
Computer processing fees -- 8,176 (8,176)(C) --
Miscellaneous 126,776 22,837 149,613
Interest and credit facility fee 4,496 -- 4,496
------------- ------------- ------------- -------------
Net expenses 8,867,864 354,035 (11,089) 9,210,810
------------- ------------- ------------- -------------
Net investment income (loss) (5,140,001) (153,788) 11,089 (5,282,700)
------------- ------------- ------------- -------------
NET REALIZED AND UNREALIZED LOSS
ON INVESTMENTS:
Net realized gain from:
Investments 32,664,018 1,399,652 34,063,670
Foreign Currency transactions (1,744,754) (1,766) (1,746,520)
Net change in unrealized appreciation
(depreciation) of:
Investments 91,768,013 2,080,801 93,848,814
Translation of other assets, liabilities
and forward contracts denominated in
foreign currencies 24,751 1,427 26,178
------------- ------------- ------------- -------------
Net loss from investments 122,712,028 3,480,114 -- 126,192,142
------------- ------------- ------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 117,572,027 $ 3,326,326 $ 11,089 $ 120,909,442
============= ============= ============= =============
</TABLE>
(A) Reflects adjustment in expenses due to effects of 12b-1 plan rate.
(B) Reflects adjustment in expenses due to elimination of duplicative services.
(C) Reflects adjustment to concur with Pilgrim expense structure.
See Accompanying Notes to Unaudited Pro Forma Financial Statements
3
<PAGE>
--------------------------------------------------------------------------------
Portfolio of Investments
As of June 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Worldwide Global Worldwide Global
Growth Corporate Growth Corporate
Fund Leaders Pro Forma Fund Leaders Pro Forma
Shares Shares Shares Market Value Market Value Market Value
----------- ------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCK: 96.42%
AUSTRALIA: 0.39%
41,700 27,800 69,500 News Corp., LTD. ADR $ 2,272,650 $ 383,909 $ 2,656,559
------------ ----------- ------------
BELGIUM: 0.46%
58,900 58,900 Fortis (B) 1,713,946 1,713,946
32,000 32,000 @ Lernout & Hauspie Speech Products 1,410,000 1,410,000
------------ ----------- ------------
3,123,946 -- 3,123,946
------------ ----------- ------------
BRAZIL: 0.75%
65,800 65,800 Petroleo Brasileiro SA ADR 1,987,917 1,987,917
60,211 60,211 Tele Norte Leste Participacoes ADR 1,422,485 1,422,485
17,000 17,000 Telecomunicacoes Brasileiras SA ADR 1,651,125 1,651,125
------------ ----------- ------------
5,061,527 -- 5,061,527
------------ ----------- ------------
CANADA: 5.60%
167,200 167,200 Abitibi-Consolidated, Inc. 1,567,500 1,567,500
138,800 138,800 @ Anderson Exploration, Ltd. 2,522,784 2,522,784
21,000 21,000 @ Ballard Power Systems, Inc. 1,886,062 1,886,062
42,600 42,600 @ Biovail Corp. 2,361,637 2,361,637
68,700 68,700 Bombardier, Inc. 1,866,041 1,866,041
19,400 19,400 @ C-Mac Industries, Inc. 917,568 917,568
4,200 4,200 Four Seasons Hotels, Inc 262,771 262,771
33,000 33,000 Magna Int'l, Inc. 1,550,777 1,550,777
278,300 278,300 Nortel Networks Corp. 18,993,975 18,993,975
73,500 73,500 @ Precision Drilling Corp. 2,838,937 2,838,937
42,000 42,000 @ QLT, Inc. 3,247,125 3,247,125
------------ ----------- ------------
37,752,406 262,771 38,015,177
------------ ----------- ------------
CHINA: 0.26%
5,000 5,000 @ PetroChina Co., Ltd. ADR 104,687 104,687
8,000,000 8,000,000 @ PetroChina Co., Ltd. 1,662,498 1,662,498
------------ ----------- ------------
1,767,185 -- 1,767,185
------------ ----------- ------------
DENMARK: 0.34%
34,600 34,600 Tele Danmark AS 2,328,595 2,328,595
------------ ----------- ------------
FINLAND: 3.08%
43,200 43,200 Helsingin Puhelin OYJ 4,231,536 4,231,536
283,800 283,800 Nokia OYJ ADR 14,172,262 14,172,262
55,000 55,000 Sonera Group OYJ 2,507,281 2,507,281
------------ ----------- ------------
20,911,079 -- 20,911,079
------------ ----------- ------------
FRANCE: 6.02%
48,300 48,300 Accor SA 1,979,589 1,979,589
82,600 82,600 Alcatel SA 5,417,560 5,417,560
61,700 61,700 Alstom 1,667,600 1,667,600
44,100 44,100 Aventis SA 3,218,718 3,218,718
16,500 2,630 19,130 Axa 2,599,171 415,980 3,015,151
3,626 3,626 @ Bouygues SA 2,423,220 2,423,220
1,020 1,020 Cap Gemini SA 180,397 180,397
17,300 17,300 Groupe Danone 2,295,767 2,295,767
40,000 40,000 Lagardere S.C.A. 3,055,040 3,055,040
83,800 83,800 Rhodia SA 1,408,068 1,408,068
4,700 4,700 Schlumberger, Ltd. 350,737 350,737
74,000 74,000 Societe Television Francaise 1 5,157,289 5,157,289
63,800 63,800 ST Microelectronics NV 4,095,162 4,095,162
26,770 26,770 Total Fina Elf SA 4,104,505 4,104,505
23,600 4,500 28,100 Vivendi (EX-Generale des Eaux) 2,082,984 398,797 2,481,781
------------ ----------- ------------
39,504,673 1,345,911 40,850,584
------------ ----------- ------------
GERMANY: 2.48%
2,211 2,211 DaimlerChrysler AG 116,781 116,781
4,804 4,804 Deutsche Bank AG 396,496 396,496
69,900 69,900 Deutsche Lufthansa AG 1,631,635 1,631,635
71,500 71,500 Dresdner Bank AG 2,894,268 2,894,268
45,800 45,800 EM.TV & Merchandising AG 2,710,966 2,710,966
41,700 41,700 @ Infineon Technologies AG 3,399,859 3,399,859
7,400 7,400 @ Intershop Communications AG 3,384,030 3,384,030
13,500 13,500 Siemens AG 2,020,909 2,020,909
6,500 6,500 Volkswagen AG 248,610 248,610
------------ ----------- ------------
16,041,667 761,887 16,803,554
------------ ----------- ------------
HONG KONG: 0.44%
107,800 107,800 Hutchison Whampoa 1,355,192 1,355,192
830,000 830,000 @ Pacific Century CyberWorks, Ltd. 1,639,664 1,639,664
------------ ----------- ------------
2,994,856 -- 2,994,856
------------ ----------- ------------
ISRAEL: 0.66% -
80,500 80,500 Teva Pharmaceutical ADR 4,462,719 4,462,719
------------ ----------- ------------
ITALY: 1.15%
279,600 279,600 Alleanza Assicurazioni SPA 3,723,731 3,723,731
298,400 298,400 ENI SPA 1,723,539 1,723,539
1,706,000 1,706,000 @ Finmeccanica SPA 2,345,354 2,345,354
------------ ----------- ------------
7,792,624 -- 7,792,624
------------ ----------- ------------
</TABLE>
4
<PAGE>
--------------------------------------------------------------------------------
Portfolio of Investments
As of June 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Worldwide Global Worldwide Global
Growth Corporate Growth Corporate
Fund Leaders Pro Forma Fund Leaders Pro Forma
Shares Shares Shares Market Value Market Value Market Value
----------- ------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
JAPAN: 8.79%
9,000 9,000 Canon, Inc 449,143 449,143
90,000 90,000 Daikin Industries, Ltd. 2,090,853 2,090,853
35,000 35,000 Fanuc, Ltd. 3,559,210 3,559,210
118,000 118,000 Fujitsu, Ltd. 4,081,429 4,081,429
6,000 6,000 Ito-Yokado Company, Ltd. 361,810 361,810
518,000 518,000 Japan Airlines Co., Ltd. 1,967,429 1,967,429
7,100 7,100 Kyocera Corp. 1,203,798 1,203,798
371,000 371,000 Mitsubishi Electric Corp. 4,014,024 4,014,024
185,000 185,000 Mitsui Fudosan Co., Ltd. 2,005,089 2,005,089
88,000 18,000 106,000 NEC Corp. 2,761,793 566,533 3,328,326
185,000 185,000 Nippon Sheet Glass Co., Ltd. 2,570,001 2,570,001
129,000 129,000 Nippon Steel Corp. 271,896 271,896
250 37 287 Nippon Telegraph & Telephone Co., Ltd. 3,322,181 493,093 3,815,274
74,000 74,000 Nomura Securities Co., Ltd. 1,809,811 1,809,811
170 170 NTT Docomo, Inc. 4,598,275 4,598,275
104,000 104,000 Pioneer Corp. 4,048,066 4,048,066
19,200 19,200 Promise Co., Ltd. 1,516,385 1,516,385
19,900 19,900 Softbank Corp. 2,700,721 2,700,721
22,500 5,100 27,600 Sony Corp. 2,099,336 477,214 2,576,550
3,000 3,000 Tokyo Electron, Ltd. 411,714 411,714
376,000 376,000 Toshiba Corp. 4,241,761 4,241,761
38,000 38,000 Toyoda Gosei Co., Ltd. 2,410,254 2,410,254
37,000 37,000 Toyota Motor Corp. 1,684,275 1,684,275
11,000 11,000 @ Trend Micro, Inc. 1,814,241 1,814,241
87,000 87,000 Yamato Transport Co., Ltd. 2,160,549 2,160,549
------------ ----------- ------------
56,659,481 3,031,403 59,690,884
------------ ----------- ------------
NETHERLANDS: 3.53%
4,000 4,000 Aegon NV 142,906 142,906
130,800 130,800 @ ASM Lithography Holding NV 5,771,550 5,771,550
48,500 48,500 Heineken NV 2,951,813 2,951,813
35,800 12,500 48,300 Koninklijke Ahold NV 1,053,716 369,416 1,423,132
116,200 116,200 Koninklijke Philips Electronics NV 5,519,500 5,519,500
9,200 9,200 @ Qiagen NV 1,624,899 1,624,899
36,500 36,500 Randstad Holdings NV 1,350,304 1,350,304
5,400 5,400 Royal Dutch Petroleum Company 336,982 336,982
70,600 70,600 Royal KPN NV 3,157,775 3,157,775
3,750 3,750 Unilever NV - NY Shares 161,250 161,250
29,200 29,200 VNU NV 1,508,159 1,508,159
------------ ----------- ------------
22,937,716 1,010,554 23,948,270
------------ ----------- ------------
RUSSIA: 0.15%
19,400 19,400 Lukoll-Holding ADR 991,728 991,728
------------ ----------- ------------
SINGAPORE: 0.63%
43,900 43,900 @ Flextronics Int'l, Ltd. 3,015,381 3,015,381
127,000 127,000 Singapore Airlines, Ltd. 1,257,499 1,257,499
------------ ----------- ------------
4,272,880 -- 4,272,880
------------ ----------- ------------
SOUTH KOREA: 0.71%
64,720 64,720 Korea Electric Power Corp. 2,008,307 2,008,307
8,410 8,410 Samsung Electronics 2,783,157 2,783,157
------------ ----------- ------------
4,791,464 -- 4,791,464
------------ ----------- ------------
SPAIN: 1.53%
274,400 274,400 Altadis SA 4,215,092 4,215,092
145,700 145,700 Endesa SA 2,822,335 2,822,335
501 501 @ Telefonica SA ADR 32,095 32,095
154,500 154,500 @ Telefonica SA 3,318,776 3,318,776
------------ ----------- ------------
10,388,298 -- 10,388,298
------------ ----------- ------------
SWEDEN: 3.31%
107,200 107,200 Europolitan Holdings AB 1,330,884 1,330,884
38,200 38,200 @ NetCom AB 2, 2,819,524 2,819,524
303,900 303,900 Nordic Baltic Holding AB 2,291,310 2,291,310
163,400 163,400 Skandia Forsakrings AB 4,316,576 4,316,576
176,000 176,000 Svenska Handelsbanken AB 2,554,195 2,554,195
326,700 20,000 346,700 Telefonaktiebolaget LM Ericsson AB ADR 6,534,000 397,915 6,931,915
235,400 235,400 @ Telia AB 2,215,215 2,215,215
------------ ----------- ------------
22,061,704 397,915 22,459,619
------------ ----------- ------------
SWITZERLAND: 0.94%
800 174 974 Nestle SA 1,601,177 349,377 1,950,554
264 264 Novartis AG 419,526 419,526
29 29 Roche Holding AG 283,211 283,211
23,400 2,220 25,620 UBS AG 3,428,309 326,297 3,754,606
------------ ----------- ------------
5,029,486 1,378,411 6,407,897
------------ ----------- ------------
UNITED KINGDOM: 8.27%
133,800 133,800 @ ARM Holdings PLC ADR 4,398,675 4,398,675
55,800 55,800 AstraZeneca PLC 2,605,540 2,605,540
395,143 395,143 BAE Systems PLC 2,461,815 2,461,815
422,600 422,600 BG Group PLC 2,723,998 2,723,998
41,000 41,000 BP Amoco PLC 393,523 393,523
558,500 558,500 Billiton PLC 2,256,327 2,256,327
444,600 444,600 British Airways PLC 2,558,034 2,558,034
22,700 22,700 British Telecommunications plc 293,482 293,482
144,600 144,600 Cable & Wireless PLC 2,454,872 2,454,872
949,400 949,400 Centrica PLC 3,146,016 3,146,016
60,600 60,600 @ Colt Telecom Group PLC 2,012,680 2,012,680
31,300 31,300 Diageo PLC 280,993 280,993
51,000 51,000 @ Energis PLC 1,901,422 1,901,422
670,200 670,200 Invensys PLC 2,512,382 2,512,382
135,000 135,000 Logica PLC 3,231,528 3,231,528
329,400 329,400 Marconi PLC 4,278,894 4,278,894
58,600 58,600 Pearson PLC 1,839,854 1,839,854
29,700 29,700 Reuters Group PLC ADR 2,968,144 2,968,144
</TABLE>
5
<PAGE>
--------------------------------------------------------------------------------
Portfolio of Investments
As of June 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Worldwide Global Worldwide Global
Growth Corporate Growth Corporate
Fund Leaders Pro Forma Fund Leaders Pro Forma
Shares Shares Shares Market Value Market Value Market Value
----------- ------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
19,800 19,800 Rio Tinto PLC 323,732 323,732
618,171 618,171 Rolls-Royce PLC 2,209,775 2,209,775
148,000 148,000 Royal Bank of Scotland Group PLC 2,467,805 2,467,805
292,600 292,600 Sainsbury (J) PLC 1,323,772 1,323,772
481,600 481,600 Shell Transport & Trading Co. 4,051,622 4,051,622
815,731 44,500 860,231 Vodafone AirTouch PLC 3,307,877 179,874 3,487,751
------------ ----------- ------------
54,711,032 1,471,604 56,182,636
------------ ----------- ------------
UNITED STATES: 46.93%
55,600 55,600 @ Aether Systems, Inc. 11,398,000 11,398,000
138,400 138,400 Aetna, Inc. 8,883,550 8,883,550
13,800 13,800 Alcoa, Inc. 400,200 400,200
64,300 64,300 @ Amdocs, Ltd. 4,935,025 4,935,025
8,400 8,400 American Express Company 437,850 437,850
5,300 5,300 American Home Products Corporation 311,375 311,375
3,625 3,625 American International Group, Inc 425,938 425,938
114,700 114,700 @ Amgen, Inc. 8,057,675 8,057,675
128,000 128,000 @ Applied Materials, Inc. 11,600,000 11,600,000
436,780 436,780 @ AT&T - Liberty Media Group 10,591,915 10,591,915
105,900 105,900 @ Cablevision Systems Corp. 7,187,962 7,187,962
79,200 79,200 @ Ciena Corp. 13,201,650 13,201,650
167,900 9,800 177,700 @ Cisco Systems, Inc. 10,672,144 622,606 11,294,750
185,300 7,700 193,000 Citigroup, Inc. 11,164,325 463,925 11,628,250
49,800 49,800 Corning, Inc. 13,439,775 13,439,775
187,900 187,900 @ Dell Computer Corp. 9,265,819 9,265,819
166,000 166,000 Enron Corp. 10,707,000 10,707,000
4,100 4,100 Exxon Mobil Corporation 321,850 321,850
50,200 50,200 @ Genentech, Inc 8,634,400 8,634,400
8,400 8,400 General Electric Company 445,200 445,200
106,800 106,800 @ Hughes Electronics Corp. 9,371,700 9,371,700
189,100 189,100 @ Infinity Broadcasting Corp. 6,890,331 6,890,331
102,400 4,600 107,000 Intel Corp. 13,689,600 614,819 14,304,419
103,500 103,500 @ JDS Uniphase Corp. 12,407,062 12,407,062
5,300 5,300 Lucent Technologies, Inc 314,025 314,025
395,300 395,300 MGM Grand, Inc. 12,699,012 12,699,012
4,000 4,000 Microsoft Corporation(1) 319,875 319,875
7,800 7,800 Morgan Stanley Dean Witter and Company 649,350 649,350
178,400 178,400 @ Nextel Communications, Inc. 10,915,850 10,915,850
142,900 142,900 @ Oracle Corp. 12,012,531 12,012,531
3,700 3,700 Procter & Gamble Company 211,825 211,825
188,400 188,400 @ Qwest Communications Int'l 9,361,125 9,361,125
257,700 257,700 Santa Fe Int'l Corp. 9,461,075 9,461,075
38,700 38,700 Schlumberger, Ltd. 2,887,987 2,887,987
129,300 129,300 @ Sun Microsystems, Inc. 11,758,219 11,758,219
126,600 126,600 Texas Instruments, Inc. 8,695,838 8,695,838
5,100 5,100 The Coca-Cola Company 292,931 292,931
9,200 9,200 The Interpublic Group of Companies, Inc 395,600 395,600
10,700 10,700 The Walt Disney Company 415,294 415,294
53,875 53,875 @ VeriSign, Inc. 9,508,938 9,508,938
82,200 82,200 @ Veritas Software Corp. 9,289,884 9,289,884
139,500 139,500 @ Viacom, Inc. 9,538,313 9,538,313
206,500 7,400 213,900 Wal-Mart Stores, Inc. 11,899,563 426,425 12,325,988
287,000 287,000 @ Weatherford Int'l, Inc. 11,426,188 11,426,188
------------ ----------- ------------
311,552,456 7,069,088 318,621,544
------------ ----------- ------------
TOTAL COMMON STOCKS (COST $513,051,880,
$11,700,417, $524,752,297) 637,410,172 17,113,453 654,523,625
------------ ----------- ------------
PREFERRED STOCKS: 0.29%
BRAZIL: 0.25%
193,648 193,648 Banco Bradesco SA 1,685,761 1,685,761
GERMANY: 0.04%
1,500 1,500 SAP AG (Sysyeme, Anwendungen, Produkte
in der Datenverabeitung) (cost $197,506) 277,512 277,512
------------ ----------- ------------
TOTAL PREFERRED STOCKS (COST $1,558,209,
$11,897,923, $13,456,132) 1,685,761 277,512 1,963,273
------------ ----------- ------------
TOTAL LONG-TERM INVESTMENTS
(COST $514,610,089, $23,598,340,
$538,208,429) 639,095,933 17,390,965 656,486,898
------------ ----------- ------------
SHORT-TERM INVESTMENTS
REPURCHASE AGREEMENTS: 4.02%
$27,281,000 $27,281,000 State Street Repurchase Agreement,
6.20% due 07/03/00 (Collateralized
by $22,220,000 U.S. Treasury Bonds,
8.125% Market Value $27,830,550,
Due 08/15/21 27,281,000 27,281,000
------------ ----------- ------------
TOTAL SHORT-TERM INVESTMENTS
(COST $27,281,000) 27,281,000 -- 27,281,000
------------ ----------- ------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $541,891,089, $11,897,923,
$553,789,012) 100.73% 666,376,933 17,390,965 683,767,898
OTHER ASSETS AND LIABILITIES-NET -0.73% (6,197,663) 1,257,613 (4,940,050)
------ ------------ ----------- ------------
NET ASSETS 100.00% $660,179,270 $18,648,578 $678,827,848
====== ============ =========== ============
</TABLE>
6
<PAGE>
NOTES TO PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 - BASIS OF COMBINATION:
On November 2, 2000, the Boards of Pilgrim Worldwide Growth Fund
("Worldwide Growth Fund") and Pilgrim Global Corporate Leaders Fund ("Global
Corporate Leaders Fund"), approved an Agreement and Plan of Reorganization (the
"Plan") whereby, subject to approval by the shareholders of Global Corporate
Leaders Fund, Worldwide Growth Fund will acquire all the assets of Global
Corporate Leaders Fund subject to the liabilities of such Fund, in exchange for
a number of shares equal to the pro rata net assets of shares of the Worldwide
Growth Fund (the "Merger").
The Merger will be accounted for as a tax free merger of investment
companies. The pro forma combined financial statements are presented for the
information of the reader and may not necessarily be representative of what the
actual combined financial statements would have been had the reorganization
occurred at June 30, 2000. The unaudited pro forma portfolio of investments, and
statement of assets and liabilities reflect the financial position of Worldwide
Growth Fund and Global Corporate Leaders Fund at June 30, 2000. The unaudited
pro forma statement of operations reflects the results of operations of
Worldwide Growth Fund and Global Corporate Leaders Fund for the year ended June
30, 2000. These statements have been derived from the Funds' respective books
and records utilized in calculating daily net asset value at the dates indicated
above for Worldwide Growth Fund and Global Corporate Leaders Fund under
generally accepted accounting principles. The historical cost of investment
securities will be carried forward to the surviving entity and results of
operations of Worldwide Growth Fund for pre-combination periods will not be
restated.
The pro forma portfolio of investments, and statements of assets and
liabilities and operations should be read in conjunction with the historical
financial statements of the Funds incorporated by reference in the Statements of
Additional Information.
NOTE 2 - SECURITY VALUATION:
Investments in equity securities traded on a national securities exchange
or included on the NASDAQ National Market System are valued at the last reported
sale price. Securities traded on an exchange or NASDAQ for which there has been
no sale and securities traded in the over-the-counter-market are valued at the
mean between the last reported bid and ask prices. U.S. Government obligations
are valued by using market quotations or independent pricing services which use
prices provided by market-makers or estimates of market values obtained from
yield data relating to instruments or securities with similar characteristics.
All investments quoted in foreign currencies will be valued daily in U.S.
Dollars on the basis of the foreign currency exchange rates prevailing at the
time such valuation is determined by each Fund's Custodian. Securities for which
market quotations are not readily available are valued at their respective fair
values as determined in good faith and in accordance with policies set by the
Board of Directors. Investments in securities maturing in less than 60 days are
valued at cost, which, when combined with accrued interest, approximates market
value.
NOTE 3 - FOREIGN CURRENCY TRANSACTIONS:
The books and records of the funds are maintained in U.S. dollars. Any foreign
currency amounts are translated into U.S. dollars on the following basis:
(1) Market value of investment securities, other assets and
liabilities--at the exchange rates prevailing at the end of the day.
(2) Purchases and sales of investment securities, income and expenses - at
the rates of exchange prevailing on the respective dates of such
transactions.
Although the net assets and the market values are presented at the foreign
exchange rates at the end of the day, the Funds do not isolate the portion of
the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from the changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gains or losses from the investments. Reported net realized foreign
exchange gains or losses arise from sales and maturities of short-term
securities, sales of foreign currencies, currency gains or losses realized
between the trade and settlement on securities transactions, the difference
between the amounts of dividends, interest, and foreign withholding taxes
7
<PAGE>
recorded on the Fund's books, and the U.S. dollar equivalent of the amounts
actually received or paid. Net unrealized foreign exchange gains and losses
arise from changes in the value of assets and liabilities other than investments
in securities at fiscal year end, resulting from changes in the exchange rate.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with investing U.S. companies and the U.S.
Government. These risks include but are not limited to re-evaluation of
currencies and future adverse political and economic developments which could
cause securities and their markets to be less liquid and prices more volatile
than those of the comparable U.S. Government.
NOTE 4 - CAPITAL SHARES:
The pro forma net asset value per share assumes additional shares of common
stock issued in connection with the proposed acquisition of Global Corporate
Leaders Fund by Worldwide Growth Fund as of June 30, 2000. The number of
additional shares issued was calculated by dividing the net asset value of each
Class A shares of Global Corporate Leaders Fund by the respective Class A shares
net asset value per share of Worldwide Growth Fund.
NOTE 5 - PRO FORMA ADJUSTMENTS:
The accompanying pro forma financial statements reflect changes in fund
shares as if the merger had taken place on June 30, 2000. Global Corporate
Leaders Fund expenses were adjusted assuming Worldwide Growth Fund's fee
structure was in effect for the year ended June 30, 2000.
NOTE 6 - MERGER COSTS:
Merger costs are estimated at approximately $125,000 and are not included
in the pro forma statement of operations since these costs are not reoccurring.
These costs represent the estimated expense of both Funds carrying out their
obligations under the Plan and consist of management's estimate of legal fees,
accounting fees, printing costs and mailing charges related to the proposed
merger. ING Pilgrim Investments, Investment Adviser to the Funds, will bear half
the cost of the Reorganization. The Funds will bear the other half of the
expenses relating to the proposed Reorganization.
NOTE 7 - FEDERAL INCOME TAXES:
It is the policy of the Funds, to comply with the requirements of the
Internal Revenue Code that are applicable to regulated investment companies and
to distribute substantially all of their net investment income and any net
realized gains to their shareholders. Therefore, a federal income tax or excise
tax provision is not required. In addition, by distributing during each calendar
year substantially all of its net investment income and net realized capital
gains, each Fund intends not to be subject to any federal excise tax.
The Board of Directors intends to offset any net capital gains with any
available capital loss carryforward until each carryforward has been fully
utilized or expires. In addition, no capital gain distribution shall be made
until the capital loss carryforward has been fully utilized or expires.
8
<PAGE>
PART C
OTHER INFORMATION
ITEM 15. INDEMNIFICATION
Article 5.2 of the Amended and Restated Declaration of Trust provides for
the indemnification of Registrant's trustees, officers, employees and agents
against liabilities incurred by them in connection with the defense or
disposition of any action or proceeding in which they may be involved or with
which they may be threatened, while in office or thereafter, by reason of being
or having been in such office, except with respect to matters as to which it has
been determined that they acted with willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of their
office ("disabling conduct").
Section 8 of Registrant's Administration Agreement provides for the
indemnification of Registrant's Administrator against all liabilities incurred
by it in performing its obligations under the agreement, except with respect to
matters involving its disabling conduct. Section 9 of Registrant's Distribution
Agreement provides for the indemnification of Registrant's Distributor against
all liabilities incurred by it in performing its obligations under the
Agreement, except with respect to matters involving its disabling conduct.
Section 4 of the Shareholder Service Agreement provides for the indemnification
of Registrant's Distributor against all liabilities incurred by it in performing
its obligations under the Agreement, except with respect to matters involving
its disabling conduct.
Registrant has obtained from a major insurance carrier a trustees' and
officers' liability policy covering certain types of errors and omissions.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to trustees, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a trustee, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
trustee, officer, or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
ITEM 16. EXHIBITS
(1) (A) Form of Certificate of Trust of Registrant - Filed as an
exhibit to Post-Effective Amendment No. 30 to the Registrant's
Form N-1A Registration Statement on June 4, 1996 and
incorporated herein by reference.
(B) Form of Certificate of Amendment of Certificate of Trust -
Filed as an exhibit to Post-Effective Amendment No. 30 to the
Registrant's Form N-1A Registration Statement on June 4, 1996
and incorporated herein by reference.
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(C) Form of Amended and Restated Declaration of Trust - Filed as an
exhibit to Post-Effective Amendment No. 30 to the Registrant's
Form N-1A Registration Statement on June 4, 1996 and
incorporated herein by reference.
(D) Form of Establishment of Additional Series - Filed as an
exhibit to Post-Effective Amendment No. 30 to the Registrant's
Form N-1A Registration Statement on June 4, 1996 and
incorporated herein by reference.
(E) Form of Establishment of Additional Series- Filed as an exhibit
to Post-Effective Amendment No. 30 to the Registrant's Form
N-1A Registration Statement on June 4, 1996 and incorporated
herein by reference.
(F) Form of Amendment No. 2 to Amended and Restated Declaration of
Trust - Filed as an exhibit to Post-Effective Amendment No. 30
to the Registrant's Form N-1A Registration Statement on June 4,
1996 and incorporated herein by reference.
(G) Form of Amendment No. 3 to Amended and Restated Declaration of
Trust - Filed as an exhibit to Post-Effective Amendment No. 30
to the Registrant's Form N-1A Registration Statement on June 4,
1996 and incorporated herein by reference.
(H) Form of Amendment No. 4 to Amended and Restated Declaration of
Trust - Filed as an exhibit to Post-Effective Amendment No. 30
to the Registrant's Form N-1A Registration Statement on June 4,
1996 and incorporated herein by reference.
(I) Form of Amendment No. 5 to Amended and Restated Declaration of
Trust - Filed as an exhibit to Post-Effective Amendment No. 30
to the Registrant's Form N-1A Registration Statement on June 4,
1996 and incorporated herein by reference.
(J) Form of Amendment No. 6 to Amended and Restated Declaration of
Trust - Filed as an exhibit to Post-Effective Amendment No. 30
to the Registrant's Form N-1A Registration Statement on June 4,
1996 and incorporated herein by reference.
(K) Form of Amendment No. 7 to Amended and Restated Declaration of
Trust - Filed as an exhibit to Post-Effective Amendment No. 30
to the Registrant's Form N-1A Registration Statement on June 4,
1996 and incorporated herein by reference.
(L) Form of Amendment No. 8 to Amended and Restated Declaration of
Trust - Filed as an exhibit to Post-Effective Amendment No. 30
to the Registrant's Form N-1A Registration Statement on June 4,
1996 and incorporated herein by reference.
(M) Form of Amendment No. 9 to Amended and Restated Declaration of
Trust - Filed as an exhibit to Post-Effective Amendment No. 30
to the Registrant's Form N-1A Registration Statement on June 4,
1996 and incorporated herein by reference.
(N) Form of Amendment No. 10 to Amended and Restated Declaration of
Trust - Filed as an exhibit to Post-Effective Amendment No. 29
to Registrant's Form N-1A Registration Statement on May 3, 1996
and incorporated herein by reference.
(O) Form of Amendment No. 11 to Amended and Restated Declaration of
Trust - Filed as an exhibit to Post-Effective Amendment No. 38
to Registrants Form N-1A Registration Statement of January 3,
1997 and incorporated herein by reference.
(P) Form of Amendment No. 12 to Amended and Restated Declaration of
Trust - Filed as an exhibit to Post-Effective Amendment No. 38
to Registrants Form N-1A Registration Statement of January 3,
1997 and incorporated herein by reference.
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(Q) Form of Amendment No. 13 to Amended and Restated Declaration of
Trust - Filed as an exhibit to Post-Effective Amendment No. 30
to the Registrant's Form N-1A Registration Statement on June 4,
1996 and incorporated herein by reference.
(R) Form of Amendment No. 14 to Amended and Restated Declaration of
Trust - Filed as an exhibit to Post-Effective Amendment No. 40
to Registrants form N-1A Registration Statement on May 2, 1997
and incorporated herein by reference.
(S) Form of Amendment No. 15 to Amended and Restated Declaration of
Trust - Filed as an exhibit to Post-Effective Amendment No. 43
to Registrant's Form N-1A Registration Statement on July 14,
1997 and incorporated herein by reference.
(T) Form of Amendment No. 16 to Amended and Restated Declaration of
Trust - Filed as an exhibit to Post-Effective Amendment No. 48
to Registrant's Form N-1A Registration Statement on December
15, 1997 and incorporated herein by reference.
(U) Form of Amendment No. 17 to Amended and Restated Declaration of
Trust - Filed as an exhibit to Post-Effective Amendment No. 48
to Registrant's Form N-1A Registration Statement on December
15, 1997 and incorporated herein by reference.
(V) Form of Amendment No. 18 to Amended and Restated Declaration of
Trust - Filed as an exhibit to Post-Effective Amendment No. 48
to Registrant's Form N-1A Registration Statement on December
15, 1997 and incorporated herein by reference.
(W) Form of Amendment No. 19 to Amended and Restated Declaration of
Trust - Filed as an exhibit to Post-Effective Amendment No. 63
to Registrant's Form N-1A Registration Statement on July 21,
1998 and incorporated herein by reference.
(X) Form of Amendment No. 20 to Amended and Restated Declaration of
Trust - Filed as an exhibit to Post-Effective Amendment No. 63
to Registrant's Form N-1A Registration Statement on July 21,
1998 and incorporated herein by reference.
(Y) Form of Amendment No. 21 to Amended and Restated Declaration of
Trust - Filed as an exhibit to Post-Effective Amendment No. 66
to Registrant's Form N-1A Registration Statement on August 14,
1998 and incorporated herein by reference. Form of Certificate
of Amendment to Certificate of Trust - Filed as an exhibit to
(Z) Post-Effective Amendment No. 67 to the Registrant's Form N-1A
Registration Statement on March 25, 1999 and incorporated
herein by reference.
(AA) Form of Amendment No. 22 to Amended and Restated Declaration of
Trust - Filed as an exhibit to Post-Effective Amendment No. 67
to the Registrant's Form N-1A Registration Statement on March
25, 1999 and incorporated herein by reference.
(BB) Form of Amendment No. 23 to Amended and Restated Declaration of
Trust - Filed as an exhibit to Post-Effective Amendment No. 68
to the Registrant's Form N-1A Registration Statement on May 24,
1999 and incorporated herein by reference.
(CC) Form of Amendment No. 24 to Amended and Restated Declaration of
Trust - Filed as an exhibit to Post-Effective Amendment No. 75
to the Registrant's Form N-1A Registration Statement on January
4, 2000 and incorporated herein by reference.
(2) (A) Form of Amended Bylaws of Registrant - Filed as an exhibit to
Post-Effective Amendment No. 30 to the Registrant's Form N-1A
Registration Statement on June 4, 1996 and incorporated herein
by reference.
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(B) Form of Amendment to Section 2.5 of Bylaws of Registrant -
Filed as an exhibit to Post-Effective Amendment No. 30 to the
Registrant's Form N-1A Registration Statement on June 4, 1996
and incorporated herein by reference.
(3) Not Applicable
(4) Form of Agreement and Plan of Reorganization between Pilgrim Mutual
Funds on behalf of Pilgrim Worldwide Growth Fund, and Pilgrim Global
Corporate Leaders Fund, Inc., on behalf of its series Global Corporate
Leaders Fund.
(5) See Exhibits 1 and 2.
(6) Form of Investment Management Agreement between the Trust and Pilgrim
Investments, Inc.- Filed as an exhibit to Post-Effective Amendment No.
80 to the Registrant's Form N-1A Registration Statement on November 1,
2000 and incorporated herein by reference.
(7) Form of Underwriting Agreement between Pilgrim Mutual Funds and
Pilgrim Securities, Inc.
(8) Not Applicable.
(9) (A) Form of Custodian Agreement between Registrant and Brown
Brothers Harriman & Co. dated as of June 1, 1998. - Filed as an
exhibit to Post-Effective Amendment No. 66 to Registrant's Form
N-1A Registration Statement on August 14, 1998 and incorporated
herein by reference.
(B) Form of Amendment to Custodian Agreement between Registrant and
Brown Brothers Harriman & Co. - Filed as an exhibit to
Post-Effective Amendment No. 66 to Registrant's Form N-1A
Registration Statement on August 14, 1998 and incorporated
herein by reference.
(C) Form of Foreign Custody Manager Delegation Agreement between
Registrant and Brown Brothers Harriman & Co. dated as of June
1, 1998 - Filed as an exhibit to Post-Effective Amendment No.
66 to Registrant's Form N-1A Registration Statement on August
14, 1998 and incorporated herein by reference.
(D) Form of Novation Agreement to Custody Agreement with Brown
Brothers Harriman & Co. - Filed as an exhibit to Post-Effective
Amendment No. 68 to the Registrant's Form N-1A Registration
Statement on May 24, 1999 and incorporated herein by reference.
(E) Form of Appendix C to Custody Agreement with Brown Brothers
Harriman & Co. - Filed as an exhibit to Post-Effective
Amendment No. 68 to the Registrant's Form N-1A Registration
Statement on May 24, 1999 and incorporated herein by reference.
(F) Form of Novation Agreement to Foreign Custody Manager
Delegation Agreement with Brown Brothers Harriman & Co. - Filed
as an exhibit to Post-Effective Amendment No. 68 to the
Registrant's Form N-1A Registration Statement on May 24, 1999
and incorporated herein by reference.
(G) Form of Appendix C to Foreign Custody Manager Delegation
Agreement with Brown Brothers Harriman & Co. - Filed as an
exhibit to Post-Effective Amendment No. 68 to the Registrant's
Form N-1A Registration Statement on May 24, 1999 and
incorporated herein by reference.
(H) Form of Custodian Agreement with Investors Fiduciary Trust
Company - Filed as an exhibit to Post-Effective Amendment No.
68 to the Registrant's Form N-1A Registration Statement on May
24, 1999 and incorporated herein by reference.
4
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(10) (A) Form of Amended and Restated Service and Distribution Plan for
Class A - Filed as an exhibit to Post-Effective Amendment No.
67 to the Registrant's Form N-1A Registration Statement on
March 25, 1999 and incorporated herein by reference.
(B) Form of Amended and Restated Service and Distribution Plan for
Class B - Filed as an exhibit to Post-Effective Amendment No.
67 to the Registrant's Form N-1A Registration Statement on
March (C) 25, 1999 and incorporated herein by reference.
(C) Form of Amended and Restated Service and Distribution Plan for
Class C - Filed as an exhibit to Post-Effective Amendment No.
67 to the Registrant's Form N-1A Registration Statement on
March 25, 1999 and incorporated herein by reference.
(D) Form of Amended and Restated Service Plan for Class Q - Filed
as an exhibit to Post-Effective Amendment No. 67 to the
Registrant's Form N-1A Registration Statement on March 25, 1999
and incorporated herein by reference.
(E) Form of Amendment to Amended and Restated Service and
Distribution Plan for Class B - Filed as an exhibit to
Post-Effective Amendment No. 68 to the Registrant's Form N-1A
Registration Statement on May 24, 1999 and incorporated herein
by reference.
(F) Form of Amendment to Amended and Restated Service and
Distribution Plan for Class C - Filed as an exhibit to
Post-Effective Amendment No. 68 to the Registrant's Form N-1A
Registration Statement on May 24, 1999 and incorporated herein
by reference.
(G) Form of Amendment to Amended and Restated Service and
Distribution Plan for Class A - Filed as an exhibit to
Post-Effective Amendment No. 73 to the Registrant's Form N-1A
Registration Statement on October 29, 1999 and incorporated
herein by reference.
(H) Form of Amendment to Amended and Restated Service and
Distribution Plan for Class T - Filed as an exhibit to
Post-Effective Amendment No. 74 to the Registrant's Form N-1A
Registration Statement on November 5, 1999 and incorporated
herein by reference.
(I) Form of Multiple Class Plan Pursuant to Rule 18f-3 - Filed as
an exhibit to Post-Effective Amendment No. 74 to the
Registrant's Form N-1A Registration Statement on November 5,
1999 and incorporated herein by reference.
(11) Form of Opinion and Consent of Counsel
(12) Form of Opinion and Consent of Counsel supporting tax matters and
consequences.
(13) (A) Form of Administration Agreement - Filed as an exhibit to
Post-Effective Amendment No. 68 to the Registrant's Form N-1A
Registration Statement on May 24, 1999 and incorporated herein
by reference.
(B) Form of Agency Agreement - Filed as an exhibit to
Post-Effective Amendment No. 68 to the Registrant's Form N-1A
Registration Statement on May 24, 1999 and incorporated herein
by reference.
(C) Form of Shareholder Service Agreement - Filed as an exhibit to
Post-Effective Amendment No. 68 to the Registrant's Form N-1A
Registration Statement on May 24, 1999 and incorporated herein
by reference.
5
<PAGE>
(D) Form of Expense Limitation Agreement - Filed as an exhibit to
Post-Effective Amendment No. 68 to the Registrant's Form N-1A
Registration Statement on May 24, 1999 and incorporated herein
by reference.
(E) Form of Recordkeeping Agreement - Filed as an exhibit to
Post-Effective Amendment No. 68 to the Registrant's Form N-1A
Registration Statement on May 24, 1999 and incorporated herein
by reference.
(F) Form of Expense Limitation Agreement pertaining to Money Market
Fund - Filed as an exhibit to Post-Effective Amendment No. 71
to the Registrant's Form N-1A Registration Statement on July 1,
1999 and incorporated herein by reference.
(G) Form of Agreement among Reserve Institutional Trust; Reserve
Management Company, Inc.; Reserve Partners, Inc.; Pilgrim
Mutual Funds; Pilgrim Investments, Inc. with Pilgrim
Securities, Inc. - Filed as an exhibit to Post-Effective
Amendment No. 71 to the Registrant's Form N-1A Registration
Statement on July 1, 1999 and incorporated herein by reference.
(H) Form of Amended and Restated Expense Limitation Agreement -
Filed as an exhibit to Post-Effective Amendment No. 75 to the
Registrant's Form N-1A Registration Statement on January 4,
2000 and incorporated herein by reference.
(14) Consent of Independent Auditors
(15) Not Applicable.
(16) Filed herewith.
(17) Not Applicable
ITEM 17. UNDERTAKINGS
(1) The undersigned registrant agrees that prior to any public reoffering
of the securities registered through the use of a prospectus which is a part of
this registration statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) of the Securities Act 17 CFR
230.145(c), the reoffering prospectus will contain the information called for by
the applicable registration form for reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
(2) The undersigned registrant agrees that every prospectus that is filed
under paragraph (1)above will be filed as a part of an amendment to the
registration statement and will not be used until the amendment is effective,
and that, in determining any liability under the 1933 Act, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering of them.
6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form N-14 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Scottsdale and State of Arizona on the 29th day of November, 2000.
PILGRIM MUTUAL FUNDS
By: /s/ James M. Hennessy
------------------------------
James M. Hennessy
Senior Executive Vice
President & Secretary
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the date indicated.
Signature Title Date
--------- ----- ----
/s/ John G. Turner
---------------------------- Director and Chairman November 29, 2000
John G. Turner*
/s/ Robert W. Stallings
---------------------------- Director and President November 29, 2000
Robert W. Stallings* (Chief Executive Officer)
/s/ Al Burton
---------------------------- Director November 29, 2000
Al Burton*
/s/ Paul S. Doherty
---------------------------- Director November 29, 2000
Paul S. Doherty*
/s/ Robert B. Goode
---------------------------- Director November 29, 2000
Robert B. Goode*
/s/ Alan L. Gosule
---------------------------- Director November 29, 2000
Alan L. Gosule*
/s/ Walter H. May
---------------------------- Director November 29, 2000
Walter H. May*
7
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/s/ Jock Patton
---------------------------- Director November 29, 2000
Jock Patton*
/s/ David W.C. Putnam
---------------------------- Director November 29, 2000
David W.C. Putnam*
/s/ John R. Smith
---------------------------- Director November 29, 2000
John R. Smith*
/s/ David W. Wallace
---------------------------- Director November 29, 2000
David W. Wallace*
/s/ Michael J. Roland
---------------------------- Senior Vice President and November 29, 2000
Michael J. Roland* Principal Financial Officer
* By: /s/ James M. Hennessy
------------------------
James M. Hennessy
Attorney-in-Fact**
** Executed pursuant to powers of attorney filed herewith.
8
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints
Robert W. Stallings, James M. Hennessy, Jeffrey S. Puretz and Karen L.
Anderberg, and each of them his true and lawful attorney-in-fact as agent with
full power of substitution and resubstitution of him in his name, place, and
stead, to sign any and all registration statements on Form N-14 applicable to
Pilgrim Mutual Funds and any amendment or supplement thereto, and to file the
same with all exhibits thereto and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitutes, may lawfully do or cause to be
done by virtue hereof.
Dated: November 10, 2000
/s/ John G. Turner /s/ Alan L. Gosule
------------------------------- -------------------------------
John G. Turner Alan L. Gosule
/s/ Robert W. Stallings /s/ Walter H. May
------------------------------- -------------------------------
Robert W. Stallings Walter H. May
/s/ Al Burton /s/ Jock Patton
------------------------------- -------------------------------
Al Burton Jock Patton
/s/ Paul S. Doherty /s/ David W.C. Putnam
------------------------------- -------------------------------
Paul S. Doherty David W.C. Putnam
/s/ Robert B. Goode, Jr. /s/ John R. Smith
------------------------------- -------------------------------
Robert B. Goode, Jr. John R. Smith
/s/ David W. Wallace
-------------------------------
David W. Wallace
9
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints
Robert W. Stallings, James M. Hennessy, Jeffrey S. Puretz and Karen L.
Anderberg, and each of them his true and lawful attorney-in-fact as agent with
full power of substitution and resubstitution of him in his name, place, and
stead, to sign any and all registration statements on Form N-14 applicable to
the Pilgrim Mutual Funds and any amendment or supplement thereto, and to file
the same with all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorney-in-fact
and agent full power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitutes, may lawfully do or cause to be
done by virtue hereof.
Dated: November 14, 2000 /s/ Michael J. Roland
-------------------------------
Michael J. Roland
10
<PAGE>
EXHIBIT INDEX
(4) Form of Agreement and Plan of Reorganization between Pilgrim Global
Corporate Leaders Fund, Inc., on behalf of Pilgrim Global Corporate
Leaders Fund and Pilgrim Mutual Funds, on behalf of Pilgrim Worldwide
Growth Fund.
(7) Form of Underwriting Agreement between Pilgrim Mutual Funds and Pilgrim
Securities, Inc.
(11) Form of Opinion and Consent of Counsel
(12) Form of Opinion and Consent of Counsel supporting tax matters and
consequences
(14) Consent of Independent Auditor
<PAGE>
PILGRIM GLOBAL CORPORATE LEADERS FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS ON ________ ___, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) Robert W. Stallings and James M. Hennessy or
any one or more of them, proxies, with full power of substitution, to vote all
shares of the Pilgrim Global Corporate Leaders Fund (the "Fund") which the
undersigned is entitled to vote at the Special Meeting of Shareholders of the
Fund to be held at the offices of the Fund at 7337 East Doubletree Ranch Road,
Scottsdale, Arizona 85258. on ________ ___, 2001 at ______ a.m., local time, and
at any adjournment thereof.
This proxy will be voted as instructed. If no specification is made, the proxy
will be voted "FOR" the proposals.
Please vote, date and sign this proxy and return it promptly in the enclosed
envelope.
Please indicate your vote by an "X" in the appropriate box below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSAL:
1. To approve an Agreement and Plan of Reorganization providing for the
acquisition of all of the assets of Pilgrim Global Corporate Leaders Fund by
Pilgrim Worldwide Growth Fund in exchange for shares of common stock of
Pilgrim Worldwide Growth Fund and the assumption by Pilgrim Worldwide Growth
Fund of all of the liabilities of Pilgrim Global Corporate Leaders Fund.
For [ ] Against [ ] Abstain [ ]
This proxy must be signed exactly as your name(s) appears hereon. If as an
attorney, executor, guardian or in some representative capacity or as an officer
of a corporation, please add titles as such. Joint owners must each sign.
------------------------------- -------------------------------
Signature Date
------------------------------- -------------------------------
Signature (if held jointly) Date
