[PILGRIM LOGO]
ANNUAL REPORT
October 31, 2000
Class Q
INTERNATIONAL EQUITY FUNDS
Pilgrim Worldwide Growth
Pilgrim International Value
Pilgrim International Core Growth
Pilgrim International Smallcap Growth
Pilgrim Emerging Countries
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Pilgrim
Funds
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TABLE OF CONTENTS
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Letter to Shareholders ............................... 1
Portfolio Managers' Reports:
International Equity Funds ........................... 2
Index Descriptions ................................... 12
Report of Independent Accountants .................... 13
Statements of Assets and Liabilities ................. 14
Statements of Operations ............................. 16
Statements of Changes in Net Assets .................. 19
Financial Highlights ................................. 24
Notes to Financial Statements ........................ 29
Portfolios of Investments ............................ 43
Shareholder Meetings ................................. 59
Tax Information ...................................... 61
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Pilgrim
Funds
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LETTER TO SHAREHOLDERS
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Dear Shareholder:
We are pleased to present the October 31, 2000 Annual Report for several of the
International ING Pilgrim Funds which offer Q classes as of October 31, 2000.(1)
On September 1, 2000 ING Groep N.V. (NYSE: ING) acquired Reliastar Financial
Corp., the indirect parent company of Pilgrim Investments, Inc. Adviser to the
Funds, Pilgrim Securities, Inc. Distributor to the Funds and Pilgrim Group, Inc,
Administrator to the Funds. In conjunction with the acquisition the Adviser,
Distributor Sincerely, and Administrator changed their names to ING Pilgrim ING
Pilgrim Group, Inc. Investments, Inc., ING Pilgrim Securities, Inc. and ING
December 28, 2000 Pilgrim Group, Inc. effective September 8, 2000.
Our fund family now has many funds of varying types which provide core
investment choices for the serious investor. As our fund family has grown, we
have taken steps to rationalize the reporting for similar funds. We have
conformed all of our International Funds to an October 31 year end for financial
reporting purposes. There are five International Equity Funds included in this
Annual Report.
At ING Pilgrim, we are dedicated to providing core investments for the serious
investor. We believe that the key to success is matching quality core
investments to the individual needs of investors. Core investments are the
foundation of every portfolio and the basis of other important investment
decisions. Pilgrim prides itself on providing a family of core investments
designed to help you reach your financial goals. Our goal is for every investor
to have a successful investment experience.SM
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(1) The Annual Report for other Pilgrim Fund classes has been issued
separately.
1
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International
Equity Funds
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Portfolio
PILGRIM WORLDWIDE GROWTH FUND Managers' Report
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Portfolio Management Team: Mary Lisanti, Portfolio Manager; Philip A. Schwartz,
Portfolio Manager; Richard T. Saler, Portfolio Manager.
Goal: The Fund seeks to invest at least 65% of its assets in equity securities
of issuers located in at least three countries, one of which may be the U.S. The
Fund generally invests at least 75% of its assets in common and preferred
stocks, warrants and convertible securities. The fund may invest in countries
with emerging securities markets when portfolio managers believe they present
attractive opportunities.
US Market: The Fund seeks to invest in equity securities the portfolio managers
feel have above-average prospects for growth. The portfolio managers emphasize a
growth approach by searching for companies that they believe are managing change
advantageously and may be poised to exceed growth expectations. The portfolio
managers focus on both a "bottom-up" analysis that evaluates the financial
condition and competitiveness of individual companies and a "top-down" thematic
approach and sell discipline. The portfolio managers seek to identify themes
that reflect the major social, economic and technological trends that they
believe are likely to shape the future of business and commerce over the next
three to five years. They also seek to provide a framework for identifying the
industries and companies they believe may benefit most.
Foreign Markets: The portfolio managers primarily use "bottom-up" fundamental
analysis to identify stocks, which they believe offer good value relative to
their peers in the same industry, sector or region. They also use "top-down"
analysis to identify important themes or issues which may affect the investment
environment in regions or sectors, and to estimate market risks. The portfolio
managers focus on various factors, including valuation, catalysts to stock price
appreciation, quality of management and financial measures.
Market Overview:
US Market: In what is proving to be an extremely difficult year for equity
investors, US markets continued to struggle during the month of October.
Evidence that the US economy has slowed significantly appeared not just in
macroeconomic data, but also in the earnings performance and outlook for many of
the leading companies in the US and the world. While the Consumer Price Index
showed a higher than expected gain of 0.50% in September, economic growth and
manufacturing activity slowed significantly. Third quarter GDP reported economic
growth of 2.70%, well below the expected 3.50% growth, and the National
Association of Purchasing Management Index indicated a contraction in
manufacturing activity with a reading of 48.3. Meanwhile, the Euro sank to an
all-time low before a central bank intervention spurred a recovery late in
October. As retailers voiced concerns over weak Christmas sales and other third
quarter reports disappointed the markets, investors became very defensive during
the month. The slowdown in the rate of change in earnings growth for technology
stocks became apparent, and investors shunned the sector in favor of safer
sectors such as consumer staples, basic materials, and transportation.
The slowing economy and earnings growth in the technology sector weighed heavily
on the US stock market in October. All of the major US indices were dragged
lower during the month with the exception of the Dow Jones Industrial Average,
which was helped mainly by General Electric's acquisition of fellow
index-component Honeywell. The DJIA rose 3.00% in October but has now lost 4.58%
in 2000. The NASDAQ Composite slumped again, falling 8.26% during the month; the
technology-heavy benchmark has now lost 17.19% this year. Smaller stocks fared
no better, as the Russell 2000 Index dropped 4.46% in October and has a loss of
0.47% in 2000. The S&P Midcap still has a year to date gain of 18.07% despite
dropping 3.39% during the month.
Foreign Markets: Structural reform and technology themes were among the positive
factors driving foreign markets higher in the first six months of the fiscal
year ended October 31, 2000. In the fiscal second half, concerns over rising oil
prices, higher interest rates and a declining Euro caused a correction in
technology shares. Sentiment was further dampened by earnings disappointments in
a range of industries, along with concerns about the future strength of economic
growth. The MSCI World Index gained 1.40% in the period. European markets
declined as the European Central Bank raised interest rates in order to bolster
the Euro. Technology heavy markets, such as Sweden and Finland, were especially
weak later in the fiscal year after posting strong gains in the first half. The
MSCI Japan Index fell by 7.60% during the year, relating to concerns over the
sustainability of economic recovery. Many leading stocks in Japan also declined
in tandem with the global technology correction.
Performance: For the year ended October 31, 2000, the Pilgrim Worldwide Growth
Fund's class Q shares provided a total return of 15.13% versus a gain in the
MSCI World Index of 1.39% for the same period.
However, The Fund fell 8.28% in October and has now lost 15.27% in the year
2000, trailing the benchmark MSCI World Index, which fell 1.66% in October and
is now down 8.79% for the year.
US Market: Domestically, during October, the Fund received a positive
contribution from financial stocks but was dragged lower by the energy and
telecommunications sectors. Among the individual stocks that contributed to
performance were Adobe Systems, Comverse Technology, Microsoft, and Fannie Mae.
Foreign Markets: With respect to overseas equities, lower exposure to European
markets and the Euro contributed positively throughout the period.
Market Outlook:
US Market: While October may have been a difficult month for US markets, there
are more things about the market that are clearly known. First, the economy has
clearly slowed. Second, earnings growth in the technology sector is slowing
while picking up in other sectors, and third, there is a shift where the users
of technology are gaining more benefit from the producers of technology. While
the market may be under pressure until the presidential race is resolved, we
feel that the market is in the process of forming a bottom, and interest rates
will probably decline from here. While the aggregate benchmarks may be
challenging, active portfolio managers will have an opportunity to significantly
outperform the major indices. There is a tremendous amount of secular change
occurring in today's global economy, as companies struggle to adapt to rapid
technological innovation. These secular changes are more powerful than the
cyclical changes, and identification of these changes will be the key to
navigating equity markets going forward.
Foreign Markets: In the year going forward, the developing global economic
slowdown is at risk of further adversely affecting earnings. In the medium and
longer-term, international markets remain attractive. The positive themes of
restructuring and the growing equity culture abroad are still very much in
place, and will continue to spur earnings growth.
2
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Portfolio
Managers' Report PILGRIM WORLDWIDE GROWTH FUND
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Portfolio Strategy:
US Market: In this environment, we believe that Fund is well positioned to
benefit going forward. Not all companies will be successful despite the
continued growth in the US economy (albeit at a slower rate), and therefore,
broad sector investments will not result in the returns of the recent past. This
"market of stocks" with a wide dispersion of returns within individual sectors
will create a very different market environment from the "stock market" of the
last few
<TABLE>
<CAPTION>
8/31/95 10/95 10/96 10/97 10/98 10/99 10/31/00
------- ----- ----- ----- ----- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Pilgrim Worldwide Growth Fund Class Q 10,000 9,904 11,384 13,920 15,832 26,112 30,062
MSCI World Index 10,000 10,133 11,839 13,881 16,058 20,126 20,406
</TABLE>
years. In this environment, the combination of a top-down thematic approach and
bottoms-up research with a focus on identifying inflection points will provide a
formula for identifying stocks within the broader market that will flourish in
the changing economy.
Foreign Markets: The fund will continue to emphasize securities of countries
that are expected to provide the best opportunities for meeting the Fund's
investment objective.
Average Annual Total Returns
for the periods ended October 31, 2000
-----------------------------------------
Since Inception
of Class Q
1 Year 5 Year 8/31/95
------ ------ -------
Class Q 15.13% 24.87% 23.73%
MSCI World Index 1.39% 15.03% 14.80%
Based on a $10,000 initial investment, the graph and table above illustrate the
total return of Pilgrim Worldwide Growth Fund against the MSCI World 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.
Total returns reflect the fact that the Investment Adviser has contractually
agreed to waive or defer its management fee 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): Price volatility and other risks that accompany an
investment in growth-oriented foreign equities. Sensitive to currency exchange
rates, international political and economic conditions and other risks that
affect foreign securities. The Fund may also invest in small and medium sized
companies, which may be more susceptible to price availability than larger
companies. Risks of foreign investing are generally intensified for investments
in emerging markets.
See accompanying index descriptions on page 12.
3
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International
Equity Funds
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Portfolio
PILGRIM INTERNATIONAL VALUE FUND Managers' Report
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Portfolio Management Team: Charles Brandes, CFA, Managing Partner; Jeff Busby,
CFA, Managing Partner; Brandes Investment Partners, L.P.
Goal: The Fund seeks to maximize long-term capital appreciation by investing
primarily in non-U.S. companies with market capitalizations greater than $1
billion. The Fund may hold up to 25% of its assets in companies with smaller
market capitalizations. The portfolio managers apply a company-by-company search
for businesses that have determinable value and which, in their estimation, are
currently priced below their actual value. Undervalued businesses may translate
into undervalued stocks, providing what they believe to be an above-average
chance for profit.
Market Overview: For much of the first half of the period, solid returns among
technology stocks lifted international indices to record highs. Between November
1, 1999 and March 31, 2000, gains for technology-related stocks lifted the MSCI
EAFE Index 12.80%.
By mid-March, however, amid concerns over higher interest rates and escalating
valuation levels, investors began to shed what had been top-performing tech
stocks and purchased issues in long-overlooked value sectors. Aggressive
interest-rate hikes by the European Central Bank during the second quarter and
the slumping euro weighed on investor confidence. As international markets fell
during the summer, investors refocused on attractively priced issues.
Between March 31 and the end of the period, the MSCI EAFE Index fell 13.70%.
Amid these developments, emerging markets were especially vulnerable. Late in
the period, stock market weakness in emerging nations was exacerbated by steep
rises in oil prices. Emerging markets, many of which are net importers of oil,
tend to be more sensitive to rising prices than some developed nations.
Performance: For the period from January 24, 2000 (commencement of offering of
shares) thru October 31, 2000, the Fund's Class Q shares provided a total return
of 4.91% compared to a decline in the MSCI EAFE Index of 7.88% for the same
period.
Portfolio Strategy: Stock selection across a wide range of countries and sectors
contributed to the Fund's significant outperformance versus the benchmark in the
period. Despite overall market weakness in Japan for much of the period, the
Fund's holdings in this country were among the strongest performers.
Top-performing Japanese holdings included Kyocera (industrial components) and
Nippon Mitsubishi (energy sources). Generally, holdings in these countries also
had a positive influence on returns: Canada; Brazil; Germany; and France.
With respect to sectors, stock selection in the insurance, electrical &
electronics, energy sources, industrial components, and telecommunications
industries tended to boost Fund returns. Among the best performing holdings in
the period were Sun Life Financial (Canada -- financial services) and Alcatel
(France -- electrical & electronics). Holdings in the United Kingdom and in the
metals industry generally were the weakest performers during the period and
detracted from overall results.
The continued application of our company-by-company research and analysis
changed the composition of the Fund slightly during the period. We reduced or
completely eliminated positions in the insurance and electrical & electronics
industries that reached price levels consistent with our estimation of the
underlying business values. We redeployed assets to undervalued companies in the
food & household products and beverages & tobacco industries, lifted Fund
weightings in these areas. With respect to countries, we reduced exposure in
France, Germany, and Japan and increased the Fund's weighting on a
stock-by-stock basis in the United Kingdom.
Market Outlook: The sharp declines that characterized certain segments of
international markets in the period have no effect on the execution of our
proven approach. We continue to find and hold what we believe are world-class
businesses selling at bargain prices. Over the long term, we remain confident
the strengths of these undervalued companies will be recognized.
4
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Portfolio
Managers' Report PILGRIM INTERNATIONAL VALUE FUND
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1/24/00 10/31/00
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Pilgrim International Value Fund Class Q 10,000 10,491
MSCI EAFE Index 10,000 9,212
Average Annual Total Returns
for the period ended October 31, 2000
-------------------------------------
Since inception
of Class Q
1/24/00
-------
Class Q 4.91%
MSCI EAFE Index -7.88%(1)
Based on a $10,000 initial investment, the graph and table above illustrate the
total return of Pilgrim International Value Fund against the MSCI EAFE 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.
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 has 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.
(1) Since inception performance for the index is shown from 02/01/00.
Principal Risk Factor(s): In exchange for higher growth potential, investing in
stocks of smaller companies may entail greater price volatility than those of
larger companies. Price volatility and other risks that accompany an investment
in foreign equities. Sensitive to currency exchange rates, international
political and economic conditions and other risks that affect foreign
securities. The risks of foreign investing are generally intensified for
investing in emerging markets.
See accompanying index descriptions on page 12.
5
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International
Equity Funds
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PILGRIM INTERNATIONAL Portfolio
CORE GROWTH FUND Managers' Report
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Portfolio Management Team: Philip A. Schwartz, Portfolio Manager; Richard T.
Saler, Portfolio Manager.
Goal: The Fund seeks to invest at least 65% of its assets in equity securities
of issuers located in countries outside the U.S. The Fund generally invests at
least 75% of its assets in common and preferred stocks, warrants and convertible
securities. The Fund may invest in companies located in countries with emerging
securities markets when the portfolio managers believe they present attractive
investment opportunities. The portfolio managers primarily use a "bottom-up"
fundamental analysis to identify stocks which they believe offer good value
relative to their peers in the same industry sector or region. The portfolio
managers will invest at least 65% of the Fund's net assets in companies which,
based upon a fundamental analysis of a company's earnings prospects, they
believe will experience faster earnings per share growth than that of other
companies located in one or more of the same market, sector or industry. They
also use "top-down" analysis to identify important themes or issues which may
affect the investment environment in regions or sectors, and to estimate
regional market risks. The portfolio managers focus on various factors,
including valuation of the companies, catalysts to stock price appreciation,
quality of management and financial measures.
Market Overview: Structural reform and technology themes were among the positive
factors driving foreign markets higher in the first six months of the fiscal
year ended October 31, 2000. In the fiscal second half, concerns over rising oil
prices, higher interest rates and a declining Euro caused for a correction in
technology shares. Sentiment was further dampened by earnings disappointments in
a wide range of industries, and questions about the future strength of economic
growth. The MSCI EAFE Index declined 2.66% in the period, with a Dollar
translation effect accounting for much of the decline. European markets declined
as the European Central Bank raised interest rates in order to bolster the Euro.
Technology heavy markets, such as Sweden and Finland, were especially weak later
in the fiscal year after posting strong gains in the first half. The MSCI Japan
Index fell by 7.60% during the year, relating to concerns over the
sustainability of economic recovery. Many leading stocks in Japan also declined
in tandem with the global technology correction.
Performance: For the year ended October 31, 2000, the Fund's Class Q shares
provided a total return of 3.49% versus a decline in the MSCI EAFE Index of
2.66% for the same period.
Portfolio Strategy: Contributing to positive relative performance was a strong
showing by several leading technology companies in the first half of the fiscal
year. Nokia, Ericcson and Nortel Networks were up enough early in the year to
soften the effects of the technology correction later in the year. The Fund
benefited from a relatively large weighting in energy shares as well, and an
underweight position in telecom services. Overall, the decline in technology
stocks not only ended the easy financing of questionable companies, but also
re-focused the market's attention to companies with higher earnings visibility.
Market Outlook: In the year going forward, the developing global economic
slowdown is at risk of further adversely affecting earnings. The Fund will
emphasize companies with higher visibility, and seek to reduce holdings with
potential earnings disappointments. The managers will, however, carefully seek
opportunities in telecom and technology sectors as value begins to emerge. In
the medium and longer-term international markets remain attractive. The positive
themes of restructuring and the growing equity culture abroad are still very
much in place, and should continue to spur earnings growth.
6
<PAGE>
Portfolio PILGRIM INTERNATIONAL
Managers' Report CORE GROWTH FUND
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2/28/97 10/97 10/98 10/99 10/31/00
------- ----- ----- ----- --------
<S> <C> <C> <C> <C> <C>
Pilgrim International Core Growth Fund Class Q 10,000 11,864 12,876 17,783 18,403
MSCI EAFE Index 10,000 10,412 11,448 14,124 13,747
</TABLE>
Average Annual Total Returns
for the periods ended October 31, 2000
--------------------------------------
Since Inception
1 Year 02/28/97
------ --------
Class Q 3.49% 18.08%
MSCI EAFE Index -2.66% 9.07%(1)
Based on a $10,000 initial investment, the graph and table above illustrate the
total return of Pilgrim International Core Growth Fund against the MSCI EAFE
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.
Total returns reflect the fact that the Investment Adviser has contractually
agreed to waive or defer its management fee 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.
(1) Since inception performance for the index is shown from 03/01/97.
Principal Risk Factor(s): Price volatility and other risks that accompany an
investment in growth-oriented foreign equities. Sensitive to currency exchange
rates, international political and economic conditions and other risks that
affect foreign securities. Risks of foreign investing are generally intensified
for investments in emerging markets.
See accompanying index descriptions on page 12.
7
<PAGE>
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International
Equity Funds
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PILGRIM INTERNATIONAL Portfolio
SMALLCAP GROWTH FUND Managers' Report
--------------------------------------------------------------------------------
Portfolio Management Team: Catherine Somhegyi, Chief Investment Officer,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., Portfolio Manager; Jason Campbell, Portfolio Manager; Jessica
Goncalves, Portfolio Manager; Melisa Grigolite, Portfolio Manager; Christopher
Angioletti, Portfolio Manager; Jon Borchardt, Investment Analyst; John
Casarietti, Investment Analyst; Rebecca Hagstrom, CFA, Investment Analyst;
Christopher Herrera, Investment Analyst; Theodora Jamison, Investment Analyst;
David Lopez, Investment Analyst; Eric Sagmeister, Investment Analyst; Andrew
Parmet, Investment Analyst; Jacob Pozharny, Investment Analyst; Rolf Schild,
Investment Analyst; Nicholas-Applegate, Capital Management.
Goal: The Fund seeks to maximize long-term capital appreciation through
investing primarily in companies located outside the United States corresponding
to the lower 25% market capitalization within each country.
Market Overview: International small-cap stocks registered declines for the four
months ended October 31, 2000. A variety of factors sent equity prices lower
including higher energy prices, rising interest rates in Europe, a slowing US
economy and continuing structural problems in Japan.
In Japan, positive developments, such as the continued rise in the country's
industrial production and increasing job offers, were overshadowed by worries
over the impact of a United States-led global economic slowdown of Asian
economies, which rely heavily on exports. Japan is one of Asia's top exporters.
The European Central Bank (ECB), which sets monetary policy for the 11-nation
euro zone, raised short-term interest rates by one-quarter point in early
October. The move was aimed at stifling inflationary pressures that are
exacerbated by a weak euro and high oil prices. Rising interest rates make it
more expensive for consumers and companies to borrow money, which tends to curb
spending and ease inflationary pressures. The Salomon EPAC EMI Index dropped
11.00% for the four month period ended October 31, 2000.
Performance: For the year ended October 31, 2000, the Fund's Class Q shares
provided a total return of 27.94% versus a decline of 2.17% for the Salomon EPAC
EMI Index.
Portfolio Specifics: Stock selection in the technology, energy and healthcare
services sectors had a positive contribution to performance. On the country
level, stock selection and underweighting in Japan relative to the benchmark
helped returns, as did investments in Switzerland. Holdings in the United
Kingdom and Germany were negative contributors to performance.
The Fund also had a significant weighting in Canada, where the benchmark had no
exposure. We are finding particularly exciting opportunities on a
company-by-company basis among energy companies, such as Anderson Exploration
and Petro-Canada.
Market Outlook: We remain optimistic about the investment potential for
international small cap stocks due to many positive factors, including:
* Continued advances in technology and structural reforms that are reshaping
the world's business landscape and creating opportunities for smaller
companies.
* The emergence of stock markets such as Neuer Markt in Germany, Nouveau
Marche in France, Mothers Exchange in Japan, and Nasdaq Japan which provide
new avenues for investors to gain access to smaller, high-growth companies
outside the United States.
In this environment, we are confident that by adhering to our strict investment
philosophy we will seek to continue to identify international companies with
superior growth prospects.
8
<PAGE>
Portfolio PILGRIM INTERNATIONAL
Managers' Report SMALLCAP GROWTH FUND
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
8/31/95 10/95 10/96 10/97 10/98 10/99 10/31/00
------- ----- ----- ----- ----- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Pilgrim International SmallCap Growth Fund Class Q 10,000 9,760 11,408 13,986 16,221 28,593 36,581
Salomon EPAC EMI Index 10,000 9,790 10,969 10,468 10,585 12,494 12,223
</TABLE>
Average Annual Total Returns
for the periods ended October 31, 2000
--------------------------------------
Since Inception
of Class Q
1 Year 5 Year 8/31/95
------ ------ -------
Class Q 27.94% 30.25% 28.51%
Salomon EPAC EMI Index -2.17% 4.54% 3.96%
Based on a $10,000 initial investment, the graph and table above illustrate the
total return of Pilgrim International SmallCap Growth Fund against the Salomon
EPAC EMI 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.
Total returns reflect the fact that the Investment Adviser has contractually
agreed to waive or defer its management fee 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): In exchange for higher growth potential, investing in
stocks of smaller companies may entail greater price volatility than investing
in larger companies. Price volatility and other risks that accompany an
investment in growth-oriented foreign equities. Sensitive to currency exchange
rates, international political and economic conditions and other risks that
affect foreign securities. Risks of foreign investing are generally intensified
for investments in emerging markets.
See accompanying index descriptions on page 12.
9
<PAGE>
-------------
International
Equity Funds
-------------
Portfolio
PILGRIM EMERGING COUNTRIES FUND Managers' Report
--------------------------------------------------------------------------------
Portfolio Management Team: Richard Saler, Portfolio Manager; Philip Schwartz,
Portfolio Manager
Goal: The Fund seeks to invest at least 65% of its assets in securities of
issues located in at least three countries with emerging securities markets. In
selecting stocks, the Advisor uses a "bottom-up" fundamental analysis to
indentify companies which it believes have good earnings growth prospects and
that can be bought at a price which seems reasonable.
Market Overview: It was a difficult year for emerging market equities. The MSCI
Emerging Market Free Index declined 8.81%. Among the worst performing markets
were Indonesia (-57%), Philippines (-49%), and Thailand (-43%). Latin America
fared much better than Asia as Brazil gained 39% and Mexico advanced 18%. Part
of the dismal returns in Asia can be attributed to weak currencies, political
unrest, and a slowing of economic reform. Latin America benefitted from a strong
US economy and progress on economic and political reform.
Performance: For the year ended October, 31, 2000, the Fund's Class Q shares
declined 0.36% versus a decline of 8.81% for the MSCI EMF Index.
Portfolio Specifics: Performance was aided by a relatively large weighing in
Latin America. However, poorly performing technology and telecommunication
shares pulled returns lower. Defensive stocks such as Israel's Teva
Pharmaceutical were among the highest returning stocks in the portfolio. Other
strong performers included Mexico's Grupo Televisa and Tubos de Acero de Mexico.
Market Outlook: After a long period of underperformance, emerging markets appear
to offer excellent long term value. Downside risk also appears limited due to
cheap currencies and a lack of speculative excess in most developing economies.
The major risk to emerging market stocks would be a further spike in oil prices
or a hard US economic landing. Long term investors may want to ignore this short
term noise and add to quality companies which are now selling at attractive
price levels. Asian markets such as Korea and Taiwan look particularly inviting
after the steep declines suffered by many leading global companies.
10
<PAGE>
Portfolio
Managers' Report PILGRIM EMERGING COUNTRIES FUND
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
8/31/95 10/95 10/96 10/97 10/98 10/99 10/31/00
------- ----- ----- ----- ----- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Pilgrim Emerging Countries Fund Class Q 10,000 9,520 11,552 13,235 9,901 13,781 13,732
MSCI EMF Index 10,000 9,572 10,192 9,328 6,437 9,310 8,490
</TABLE>
Average Annual Total Returns
for the periods ended October 31, 2000
--------------------------------------
Since Inception
of Class Q
1 Year 5 Year 8/31/95
------ ------ -------
Class Q -0.36% 7.60% 6.33%
MSCI EMF Index -8.81% -2.37% -3.12%
Based on a $10,000 initial investment, the graph and table above illustrate the
total return of Pilgrim Emerging Countries Fund against the MSCI EMF 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.
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): Sensitive to currency exchange rates, international
political and economic conditions and other risks that affect foreign
securities. Risks of foreign investing are generally intensified for investments
in emerging markets.
See accompanying index descriptions on page 12.
11
<PAGE>
-------
Pilgrim
Funds
-------
INDEX DESCRIPTIONS
--------------------------------------------------------------------------------
The S&P 500 Index is a widely recognized index of 500 common stocks.
The Dow Jones Industrial Average is a price-weighted average of 30 blue-chip
stocks that are generally the leaders of their industry.
The NASDAQ Composite Index is a broad-based capitalization-weighted index of all
NASDAQ National Market & SmallCap stocks.
The Russell 2000 Index consists of the smallest 2000 companies in the Russell
3000 Index.
The MSCI EAFE Index consists of more than 1,400 securities in the U.S., Europe,
Canada, Australia, New Zealand, and the Far East. It is a generally accepted
index for major overseas markets.
The MSCI Emerging Markets Free (EMF) Index is comprised of companies
representative of the market structure of 22 emerging countries in Europe, Latin
America and the Pacific Rim Basin.
The MSCI World Index consists of more than 1,400 securities located in the U.S.,
Europe, Canada, Australia, New Zealand and the Far East.
The Salomon EPAC Extended Market Index measures the performance of securities of
smaller-capitalized companies in 22 countries excluding the U.S. and Canada.
All indices are unmanaged.
An investor cannot invest directly in an index
12
<PAGE>
-------
Pilgrim
Funds
-------
REPORT OF INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------
To the Shareholders and Trustees of the Pilgrim Mayflower Trust and the
Shareholders and Board of Directors of Pilgrim Mutual Funds:
In our opinion, the accompanying statements of assets and liabilities, including
the portfolios of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Pilgrim Worldwide Growth Fund,
Pilgrim International Core Growth Fund, Pilgrim International SmallCap Growth
Fund and Pilgrim Emerging Countries Fund, four of the twelve funds comprising
Pilgrim Mutual Funds (collectively, "PMF"), Pilgrim International Value Fund,
one of the six funds comprising Pilgrim Mayflower Trust, ("PMT"), (collectively,
the "Funds") at October 31, 2000, and the results of each of their operations
for the periods then ended, the changes in each of their net assets and
financial highlights for each of the periods presented except as described
below, in conformity with accounting principles generally accepted in the United
States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of PMF
and PMT's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with auditing standards generally accepted in
the United States of America, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 2000 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
For all periods ending prior to and including June 30, 2000 for Pilgrim
Worldwide Growth Fund, Pilgrim International Core Growth Fund, Pilgrim
International SmallCap Growth Fund and Pilgrim Emerging Countries Fund the
statements of operations and of changes in net assets and financial highlights
were audited by other auditors whose report dated August 4, 2000 expressed
unqualified opinions on those financial statements and financial highlights.
PRICEWATERHOUSECOOPERS LLP
Denver, Colorado
December 29, 2000
13
<PAGE>
-------------
International
Equity Funds
-------------
STATEMENTS OF ASSETS AND LIABILITIES as of October 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
International International
Worldwide International Core SmallCap Emerging
Growth Value Growth Growth Countries
Fund Fund Fund Fund Fund
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments in securities, at
value* $ 572,643,199 $1,912,520,584 $ 72,119,660 $ 646,634,200 $ 178,469,338
Short-term securities, at amortized
cost 50,195,499 -- 3,000,000 -- 22,926,151
Repurchase agreements -- 125,011,000 -- 39,589,000 --
Cash 46,206 10,249 936,917 3,423,106 462,292
Foreign currency, at value** 349 1,366,994 4,044 7,413,742 978,708
Receivable for investments sold 12,435,780 -- 954,615 13,474,241 1,499,911
Receivable for shares of beneficial
interest sold 21,978,147 18,891,380 5,157,680 24,671,502 2,229,516
Dividends and interest receivable 518,450 4,441,300 153,759 700,546 143,582
Unrealized appreciation of
forward currency contracts -- 158,553 -- -- --
Receivable due from affilitate -- -- 20,391 3,357 47,232
Other receivable -- -- 167,736 154,046 40,470
Prepaid expenses 190,020 99,629 24,347 148,178 55,627
-------------- -------------- -------------- -------------- --------------
Total Assets 658,007,650 2,062,499,689 82,539,149 736,211,918 206,852,827
-------------- -------------- -------------- -------------- --------------
LIABILITIES:
Payable for investments
purchased 4,818,844 63,902,107 -- 30,334,701 9,664,247
Payable for shares of beneficial
interest reacquired 20,182,180 4,935,786 152,673 2,593,933 1,349,243
Investment advisory fee payable 532,375 1,624,499 66,075 572,690 205,526
Distribution fee payable 274,306 1,089,059 30,015 226,605 41,090
Transfer agent fee payable 97,619 576,601 24,241 146,734 56,725
Administrative services fee
payable -- 162,450 -- -- 34,063
Unrealized depreciation of
forward foreign currency
contracts -- 360,454 -- -- 1,597,233
Accrued expenses 211,495 932,779 113,531 534,667 306,974
-------------- -------------- -------------- -------------- --------------
Total Liabilities 26,116,819 73,583,735 386,535 34,409,330 13,255,101
-------------- -------------- -------------- -------------- --------------
NET ASSETS $ 631,890,831 $1,988,915,954 $ 82,152,614 $ 701,802,588 $ 193,597,726
============== ============== ============== ============== ==============
NET ASSETS WERE
COMPRISED OF:
Paid-in-capital $ 573,190,225 $1,676,493,307 $ 75,262,552 $ 642,802,543 $ 237,061,309
Undistributed (distribution in
excess of) net investment
income (587,286) 10,143,582 742,176 (3,454,110) (58,147)
Accumulated net realized
gain/loss on investments, foreign
currency and futures contracts (net
of foreign tax on the sale of Indian
investments of $0, $0, $0, $0 and
$1,323,652, respectively -- Note 2) 12,812,487 239,137,225 3,821,020 34,362,301 (49,128,400)
Net unrealized appreciation
(depreciation) of investments, foreign
currency and futures contracts (net of
estimated tax liability on Indian
investments of $0, $0, $0, $0 and
$273,581, respectively -- Note 2) 46,475,405 63,141,840 2,326,866 28,091,854 5,722,964
-------------- -------------- -------------- -------------- --------------
Net Assets $ 631,890,831 $1,988,915,954 $ 82,152,614 $ 701,802,588 $ 193,597,726
============== ============== ============== ============== ==============
*Cost $ 526,165,276 $1,849,228,137 $ 69,778,215 $ 618,598,454 $ 172,476,656
**Cost of foreign currency 347 1,366,994 4,112 7,360,991 978,697
</TABLE>
See Accompanying Notes to Financial Statements
14
<PAGE>
<TABLE>
<CAPTION>
International International
Worldwide International Core SmallCap Emerging
Growth Value Growth Growth Countries
Fund Fund Fund Fund Fund
------------- ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
Class A:
Net assets $ 246,589,814 $ 920,591,095 $ 23,588,259 $ 273,392,970 $ 59,541,217
------------- ------------- ------------ ------------- ------------
Shares authorized unlimited unlimited unlimited unlimited unlimited
------------- ------------- ------------ ------------- ------------
Par value $ 0.00 $ 0.01 $ 0.00 $ 0.00 $ 0.00
------------- ------------- ------------ ------------- ------------
Shares outstanding 9,355,074 55,201,299 1,127,662 7,578,351 3,646,780
------------- ------------- ------------ ------------- ------------
Net asset value and redemption value
per share (net assets/shares
outstanding) $ 26.36 $ 16.68 $ 20.92 $ 36.08 $ 16.33
============= ============= ============ ============= ============
Maximum offering price per share (net
asset value plus sales charge of
5.75% of offering price) $ 27.97 $ 17.69 $ 22.19 $ $37.28 $ 17.32
============= ============= ============ ============= ============
Class B:
Net assets $ 126,756,201 $ 437,764,707 $ 19,116,474 $ 126,861,025 $ 22,707,035
------------- ------------- ------------ ------------- ------------
Shares authorized unlimited unlimited unlimited unlimited unlimited
------------- ------------- ------------ ------------- ------------
Par value $ 0.00 $ 0.01 $ 0.00 $ 0.00 $ 0.00
------------- ------------- ------------ ------------- ------------
Shares outstanding 4,293,287 26,643,010 915,669 3,334,092 1,383,679
------------- ------------- ------------ ------------- ------------
Net asset value and offering price per
share (net assets/shares outstanding)* $ 29.52 $ 16.43 $ 20.88 $ 38.05 $ 16.41
============= ============= ============ ============= ============
Class C:
Net assets $ 213,842,768 $ 605,678,290 $ 25,501,161 $ 136,829,717 $ 22,455,463
------------- ------------- ------------ ------------- ------------
Shares authorized unlimited unlimited unlimited unlimited unlimited
------------- ------------- ------------ ------------- ------------
Par value $ 0.00 $ 0.01 $ 0.00 $ 0.00 $ 0.00
------------- ------------- ------------ ------------- ------------
Shares outstanding 8,144,711 36,915,901 1,216,504 3,917,302 1,419,906
------------- ------------- ------------ ------------- ------------
Net asset value and offering price per
share (net assets/shares outstanding)* $ 26.26 $ 16.41 $ 20.96 $ 34.93 $ 15.81
============= ============= ============ ============= ============
Class Q:
Net assets $ 44,702,048 $ 24,881,862 $ 13,946,720 $ 164,718,876 $ 88,894,011
------------- ------------- ------------ ------------- ------------
Shares authorized unlimited unlimited unlimited unlimited unlimited
------------- ------------- ------------ ------------- ------------
Par value $ 0.00 $ 0.01 $ 0.00 $ 0.00 $ 0.00
------------- ------------- ------------ ------------- ------------
Shares outstanding 1,471,824 1,491,611 640,881 4,313,811 5,288,407
------------- ------------- ------------ ------------- ------------
Net asset value, offering and
redemption price per share (net
assets/shares outstanding) $ 30.37 $ 16.68 $ 21.76 $ 38.18 $ 16.81
============= ============= ============ ============= ============
</TABLE>
* Redemption price varies by length of time shares are held.
15
<PAGE>
-------------
International
Equity Funds
-------------
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Worldwide International
Growth Value
Fund Fund
------------------------------- -------------
For the For the For the
period year year
July 1, 2000 ended ended
to October 31, June 30, October 31,
2000 2000 2000
------------- ------------- -------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign taxes) $ 1,232,902 $ 2,256,981 $ 40,782,003
Interest 772,158 1,470,882 3,610,484
------------- ------------- -------------
Total investment income 2,005,060 3,727,863 44,392,487
------------- ------------- -------------
EXPENSES:
Investment advisory and
management fees 2,199,958 4,327,642 15,936,553
Distribution fees:
Class A 296,248 515,322 2,119,691
Class B 451,319 770,751 3,859,074
Class C 791,255 1,751,460 4,868,323
Class Q 42,066 94,045 35,847
Transfer agent fees and expenses 320,899 628,483 1,593,655
Administrative service fee -- 24,761(1) 1,755,565
Custodian and fund accounting
expenses 156,540 348,012 1,318,066
Printing and postage expenses 54,489 160,859 159,365
Registration fees 34,569 43,713 356,967
Professional fees 13,284 51,263 98,014
Trustee expenses 6,150 18,000 41,980
Miscellaneous expenses 25,996 133,553 33,498
------------- ------------- -------------
4,392,773 8,867,864 32,176,598
Less:
Waived and reimbursed
fees/(recoupment) (25,414) -- --
------------- ------------- -------------
Total expenses 4,418,187 8,867,864 32,176,598
------------- ------------- -------------
Net investment income (loss) (2,413,127) (5,140,001) 12,215,889
------------- ------------- -------------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY:
Net realized gain (loss) on
investments (1,077,591) 32,664,018 239,567,326
Net realized gain (loss) on foreign
currency (3,632,015) (1,744,754) (910,801)
Net change in unrealized
appreciation (depreciation) of
investments and foreign currency (78,001,428) 91,792,764 (41,147,980)
------------- ------------- -------------
Net realized and unrealized
gain (loss) on investments
and foreign currency (82,711,034) 122,712,028 197,508,545
------------- ------------- -------------
Increase (decrease) in net assets
resulting from operations $ (85,124,161) $ 117,572,027 $ 209,724,434
============= ============= =============
</TABLE>
----------
(1) Reflected as shareholder service fee in the June 30, 2000 financial
statements.
See Accompanying Notes to Financial Statements
16
<PAGE>
-------------
International
Equity Funds
-------------
STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
International International
Core SmallCap
Growth Growth
Fund Fund
------------------------------ ------------------------------
For the For the For the For the
period year period year
July 1, 2000 ended July 1, 2000 ended
to October 31, June 30, to October 31, June 30,
2000 2000 2000 2000
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign taxes) $ 297,428 $ 499,020 $ 798,529 $ 1,791,777
Interest 68,680 205,365 1,298,101 2,145,159
------------- ------------- ------------- -------------
Total investment income 366,108 704,385 2,096,630 3,936,936
------------- ------------- ------------- -------------
EXPENSES:
Investment advisory and
management fees 288,517 698,942 2,362,535 4,285,711
Distribution fees:
Class A 26,372 65,630 330,792 559,207
Class B 70,469 173,309 453,253 796,853
Class C 89,573 194,645 486,408 798,961
Class Q 13,294 35,869 138,277 293,086
Transfer agent fees and expenses 58,126 168,428 319,534 561,375
Administrative service fee -- 9,609(1) -- 28,293(1)
Custodian and fund accounting
expenses 72,758 194,978 234,069 494,344
Printing and postage expenses 11,439 28,436 79,286 167,665
Registration fees 11,737 78,072 46,499 83,587
Professional fees 3,075 11,733 120,947 54,085
Trustee expenses 1,722 5,000 12,177 34,991
Miscellaneous expenses 2,105 55,204 29,142 43,176
------------- ------------- ------------- -------------
649,187 1,719,855 4,612,919 8,201,334
Less:
Waived and reimbursed
fees/(recoupment) 41,295 212,567 (15,793) --
------------- ------------- ------------- -------------
Total expenses 607,892 1,507,288 4,628,712 8,201,334
------------- ------------- ------------- -------------
Net investment income (loss) (241,784) (802,903) (2,532,082) (4,264,398)
------------- ------------- ------------- -------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY:
Net realized gain (loss) on investments
(net of foreign tax on the sale of
Indian investments of $0, $0, $784,263
and $0, respectively -- Note 2) 923,712 8,378,791 (4,911,433) 60,928,025
Net realized gain (loss) on foreign
currency (1,359,550) (485,310) (8,476,248) (2,124,426)
Net change in unrealized appreciation
(depreciation) of investments and
foreign currency (10,007,118) 7,236,744 (73,243,053) 73,844,281
------------- ------------- ------------- -------------
Net realized and unrealized gain
(loss) on investments and foreign
currency (10,442,956) 15,130,225 (86,630,734) 132,647,880
------------- ------------- ------------- -------------
Increase (decrease) in net assets resulting
from operations $ (10,684,740) $ 14,327,322 $ (89,162,816) $ 128,383,482
============= ============= ============= =============
</TABLE>
----------
(1) Reflected as shareholder service fee in the June 30, 2000 financial
statements.
See Accompanying Notes to Financial Statements
17
<PAGE>
-------------
International
Equity Funds
-------------
STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Emerging
Countries
Fund
----------------------------
For the For the
period year
July 1, 2000 ended
to October 31, June 30,
2000 2000
------------ ------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign taxes) $ 679,961 $ 1,758,417
Interest 175,362 283,787
------------ ------------
Total investment income 855,323 2,042,204
------------ ------------
EXPENSES:
Investment advisory and management fees 969,468 2,773,339
Distribution fees:
Class A 79,524 226,595
Class B 90,642 295,635
Class C 88,953 276,850
Class M -- --
Class Q 92,178 249,693
Transfer agent fees and expenses 131,281 517,621
Administrative service fee -- 14,946(1)
Custodian and fund accounting expenses 265,723 682,516
Printing and postage expenses 34,563 81,878
Registration fees 15,170 77,620
Professional fees 12,423 39,069
Trustee expenses 5,043 15,000
Miscellaneous expenses 195,725 89,734
------------ ------------
1,980,693 5,340,496
Less:
Waived and reimbursed fees 100,513 346,154
------------ ------------
Total expenses 1,880,180 4,994,342
------------ ------------
Net investment income (loss) (1,024,857) (2,952,138)
------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY:
Net realized gain (loss) on investments (net of
foreign tax on the sale of Indian investments
of $1,489,942 and $4,489,899, respectively -- Note 2 ) (10,974,819) 39,798,714
Net realized gain (loss) on foreign currency (1,941,282) (303,058)
Net change in unrealized appreciation (depreciation) of
investments and foreign currency (net of change in estimated
tax liability on Indian investments of $273,581 and $860,486,
respectively -- see Note 2) (33,354,364) (3,851,223)
------------ ------------
Net realized and unrealized gain (loss) on investments and
foreign currency (46,270,465) 35,644,433
------------ ------------
Increase (decrease) in net assets
resulting from operations $(47,295,322) $ 32,692,295
============ ============
</TABLE>
----------
(1) Reflected as shareholder service fee in the June 30, 2000 financial
statements.
See Accompanying Notes to Financial Statements
18
<PAGE>
-------------
International
Equity Funds
-------------
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Worldwide Growth Fund
-----------------------------------------------------------------
For the period For the year For the period For the year
July 1, 2000 ended April 1, 1999 ended
to October 31, June 30, to June 30, March 31,
2000 2000 1999 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
>From Operations:
Net investment income (loss) $ (2,413,127) $ (5,140,001) $ (238,891) $ (1,461,258)
Net realized gain (loss) from
investments (1,077,591) 32,664,018 5,142,968 34,678,990
Net realized gain (loss) on
foreign currency (3,632,015) (1,744,754) (317,798) (229,650)
Net change in unrealized
appreciation (depreciation)
of investments and foreign
currency (78,001,428) 91,792,764 20,367,556 12,614,021
------------- ------------- ------------- -------------
Increase (decrease) in
net assets resulting from
operations (85,124,161) 117,572,027 24,953,835 45,602,103
Distributions to shareholders:
>From net investment income:
Class A -- -- -- --
Class B -- -- -- --
Class C -- -- -- --
Class M -- -- -- --
Class Q -- -- -- --
Retail Classes -- -- -- (136,708)(1)
Advisory and Institutional
Classes -- -- -- (337,084)(1)
>From realized gain from
investments -- (37,665,102) -- (21,269,643)(2)
------------- ------------- ------------- -------------
Total distributions -- (37,665,102) -- (21,743,435)
------------- ------------- ------------- -------------
>From Capital Share Transactions:
Net proceeds from sales of shares 187,453,816 664,789,596 53,831,659 242,170,764
Net asset value of shares issued to
shareholders in reinvestment of
dividends -- 33,052,649 -- 5,494,245
------------- ------------- ------------- -------------
187,453,816 697,842,245 53,831,659 247,665,009
Cost of shares redeemed (130,618,094) (337,872,684) (106,485,390)(3) (168,874,579)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets
derived from capital share
transactions 56,835,722 359,969,561 (52,653,731) 78,790,430
------------- ------------- ------------- -------------
Net increase (decrease) in net
assets (28,288,439) 439,876,486 (27,699,896) 102,649,098
Net Assets:
Beginning of period 660,179,270 220,302,784 248,002,680 145,353,582
------------- ------------- ------------- -------------
End of period $ 631,890,831 $ 660,179,270 $ 220,302,784 $ 248,002,680
============= ============= ============= =============
Undistributed (distribution in excess)
net investment income $ (587,286) $ -- $ -- $ (7,189,744)
============= ============= ============= =============
</TABLE>
----------
(1) As reflected in the June 30, 2000 Annual Report.
(2) Includes distributions from realized gains from both retail classes along
with advisory and institutional classes.
(3) Includes Class I redemptions of $80,662,778.
See Accompanying Notes to Financial Statements
19
<PAGE>
-------------
International
Equity Funds
-------------
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
International Value Fund
----------------------------------
Year Year
Ended Ended
October 31, October 31,
2000 1999
--------------- ---------------
<S> <C> <C>
>From Operations:
Net investment income (loss) $ 12,215,889 $ 3,580,736
Net realized gain (loss) from investments 239,567,326 49,724,160
Net realized gain (loss) on foreign currency (910,801) 3,476,523
Net change in unrealized appreciation
(depreciation) of investments and
foreign currency (41,147,980) 128,073,707
--------------- ---------------
Increase (decrease) in net assets resulting
from operations 209,724,434 184,855,126
Distributions to Shareholders:
>From net investment income:
Class A (3,809,622) (2,447,955)
Class B (593,913) (638,225)
Class C (828,109) (652,956)
Class Q -- --
>From realized gain from investments (53,012,739) (28,295,922)
--------------- ---------------
Total distributions (58,244,383) (32,035,058)
--------------- ---------------
>From Capital Share Transactions:
Net proceeds from sales of shares 1,843,922,647 765,122,980
Net asset value of shares issued to shareholders
in reinvestment of dividends 44,206,140 25,417,235
--------------- ---------------
1,888,128,787 790,540,215
Cost of shares redeemed (1,091,605,981) (397,092,669)
--------------- ---------------
Net increase (decrease) in net assets derived
from capital share transactions 796,522,806 393,447,546
--------------- ---------------
Net increase in net assets 948,002,857 546,267,614
Net Assets:
Beginning of year 1,040,913,097 494,645,483
--------------- ---------------
End of year $ 1,988,915,954 $ 1,040,913,097
=============== ===============
Undistributed (distribution in excess of) net
investment income $ 10,143,582 $ 3,538,149
=============== ===============
</TABLE>
See Accompanying Notes to Financial Statements
20
<PAGE>
-------------
International
Equity Funds
-------------
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
International Core Growth Fund
------------------------------------------------------------------
For the period Year For the period For the year
July 1, 2000 Ended April 1, 1999 Ended
to October 31, June 30, to June 30, March 31,
2000 2000 1999 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
>From Operations:
Net investment income (loss) $ (241,784) $ (802,903) $ 69,633 $ (310,557)
Net realized gain from investments 923,712 8,378,791 4,193,951 793,552
Net realized loss on foreign currency (1,359,550) (485,310) (280,912) (1,322,452)
Net change in unrealized appreciation (depreciation) of
investments and foreign currency (10,007,118) 7,236,744 4,018,188 13,512,294
------------- ------------- ------------- -------------
Increase (decrease) in net assets resulting from
operations (10,684,740) 14,327,322 8,000,860 12,672,837
Distributions to Shareholders:
>From net investment income:
Class A -- -- -- --
Class B -- -- -- --
Class C -- -- -- --
Class Q -- -- -- --
Retail Classes -- -- -- (205,129)(1)
Advisory and Institutional Classes -- (1,678) -- (29,622)(1)
>From realized gain from investments -- (2,936,042) -- (168,744)(2)
------------- ------------- ------------- -------------
Total distributions -- (2,937,720) -- (403,495)
------------- ------------- ------------- -------------
>From Capital Share Transactions:
Net proceeds from sales of shares 66,836,057 192,088,330 35,644,077 173,884,589
Net asset value of shares issued to shareholders in
reinvestment of dividends -- 2,747,516 -- 228,203
------------- ------------- ------------- -------------
66,836,057 194,835,846 35,644,077 174,112,792
Cost of shares redeemed (61,845,481) (164,147,202) (160,094,007)(3) (82,311,581)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets derived from capital
share transactions 4,990,576 30,688,644 (124,449,930) 91,801,211
------------- ------------- ------------- -------------
Net increase (decrease) in net assets (5,694,164) 42,078,246 (116,449,070) 104,070,553
Net Assets:
Beginning of period 87,846,778 45,768,532 162,217,602 58,147,049
------------- ------------- ------------- -------------
End of period $ 82,152,614 $ 87,846,778 $ 45,768,532 $ 162,217,602
============= ============= ============= =============
Undistributed (distribution in excess of) net investment
income $ 742,176 $ -- $ 69,633 $ (647,924)
============= ============= ============= =============
</TABLE>
----------
(1) As reflected in the June 30, 2000 Annual Report.
(2) Includes distributions from realized gains from both retail classes along
with advisory and institutional classes.
(3) Includes Class I redemptions of $112,851,333.
See Accompanying Notes to Financial Statements
21
<PAGE>
-------------
International
Equity Funds
-------------
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
International Small Cap Growth Fund
---------------------------------------------------------------------
For the period Year For the period For the year
July 1, 2000 Ended April 1, 1999 ended
to October 31, June 30, to June 30, March 31,
2000 2000 1999 1999
--------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
>From Operations:
Net investment income (loss) $ (2,532,082) $ (4,264,398) $ (217,461) $ (725,193)
Net realized gain (loss) from investments (4,911,433) 60,928,025 5,411,890 8,536,211
Net realized gain (loss) on foreign currency (8,476,248) (2,124,426) (79,978) (310,687)
Net change in unrealized appreciation (depreciation)
of investments and foreign currency (73,243,053) 73,844,281 11,694,205 14,357,916
--------------- --------------- ------------- -------------
Increase (decrease) in net assets resulting from
operations (89,162,816) 128,383,482 16,808,656 21,858,247
>From Dividends to Shareholders:
>From net investment income:
Class A -- -- -- --
Class B -- -- -- --
Class C -- -- -- --
Class Q -- -- -- --
Retail Classes -- -- -- --
Advisory and Institutional Classes -- -- -- (76,552)(1)
>From realized gain from investments -- (17,147,337) -- (4,000,132)(2)
--------------- --------------- ------------- -------------
Total distributions -- (17,147,337) -- (4,076,684)
--------------- --------------- ------------- -------------
>From Capital Share Transactions:
Net proceeds from sales of shares 443,296,214 1,305,859,725 48,190,262 194,823,908
Net asset value of shares issued to shareholders in
reinvestment of dividends -- 15,848,417 -- 3,425,742
--------------- --------------- ------------- -------------
443,296,214 1,321,708,142 48,190,262 198,249,650
Cost of shares redeemed (370,749,870) (832,581,584) (103,559,352)(3) (142,304,879)
--------------- --------------- ------------- -------------
Net increase (decrease) in net assets derived from
capital share transactions 72,546,344 489,126,558 (55,369,090) 55,944,771
--------------- --------------- ------------- -------------
Net increase (decrease) in net assets (16,616,472) 600,362,703 (38,560,434) 73,726,334
Net Assets:
Beginning of period 718,419,060 118,056,357 156,616,791 82,890,457
--------------- --------------- ------------- -------------
End of period $ 701,802,588 $ 718,419,060 $ 118,056,357 $ 156,616,791
=============== =============== ============= =============
Accumulated net investment loss $ (3,454,110) $ -- $ -- $ (1,982,021)
=============== =============== ============= =============
</TABLE>
----------
(1) As reflected in the June 30, 2000 Annual Report.
(2) Includes distributions from realized gains from both retail classes along
with advisory and institutional classes.
(3) Includes Class I redemptions of $73,163,306.
See Accompanying Notes to Financial Statements
22
<PAGE>
-------------
International
Equity Funds
-------------
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Emerging Countries Fund
-----------------------------------------------------------------
For the period For the year For the period For the year
July 1, 2000 ended April 1, 1999 ended
to October 31, June 30, to June 30, March 31,
2000 2000 1999 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
>From Operations:
Net investment income (loss) $ (1,024,857) $ (2,952,138) $ (30,573) $ (444,466)
Net realized gain (loss) from
investments (10,974,819) 39,798,714 11,704,157 (82,042,109)
Net realized gain (loss) on
foreign currency (1,941,282) (303,058) (465,273) (1,781,198)
Net change in unrealized
appreciation (depreciation) of
investments and foreign currency (33,354,364) (3,851,223) 51,126,351 10,517,870
------------- ------------- ------------- -------------
Increase (decrease) in net assets
resulting from operations (47,295,322) 32,692,295 62,334,662 (73,749,903)
Distributions to Shareholders:
>From net investment income:
Class A -- -- -- --
Class B -- -- -- --
Class C -- -- -- --
Retail Classes -- -- -- (105,494)(1)
Advisory and Institutional Classes -- -- -- (676,244)(1)
>From realized gain from investments -- -- -- (1,117,064)(2)
------------- ------------- ------------- -------------
Total distributions -- -- -- (1,898,802)
------------- ------------- ------------- -------------
>From Capital Share Transactions:
Net proceeds from sales of shares 66,531,341 250,385,738 38,136,033 234,887,012
Net asset value of shares issued to
shareholders in reinvestment of
dividends -- -- -- 1,499,434
------------- ------------- ------------- -------------
66,531,341 250,385,738 38,136,033 236,386,446
Cost of shares redeemed (80,132,252) (211,768,273) (199,492,674)(3) (160,102,083)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets
derived from capital share
transactions (13,600,911) 38,617,465 (161,356,641) 76,284,363
------------- ------------- ------------- -------------
Net increase (decrease) in net assets (60,896,233) 71,309,760 (99,021,979) 635,658
Net Assets:
Beginning of period 254,493,959 183,184,199 282,206,178 281,570,520
------------- ------------- ------------- -------------
End of period $ 193,597,726 $ 254,493,959 $ 183,184,199 $ 282,206,178
============= ============= ============= =============
Accumulated net investment loss $ (58,147) $ -- $ -- $ (2,164,624)
============= ============= ============= =============
</TABLE>
----------
(1) As reflected in the June 30, 2000 Annual Report.
(2) Includes distributions from realized gains from both retail classes along
with advisory and institutional classes.
(3) Includes Class I redemptions of $167,510,018.
See Accompanying Notes to Financial Statements
23
<PAGE>
FINANCIAL
HIGHLIGHTS PILGRIM WORLDWIDE GROWTH FUND
--------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
<TABLE>
<CAPTION>
Class Q
--------------------------------------------------------------------
Four months Year Three months August 31,
ended ended ended Year ended March 31, 1995(2) to
October 31, June 30, June 30, --------------------- March 31,
2000(6)(7) 2000 1999(1) 1999 1998 1997 1996
---------- ---- ------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period $ 34.53 27.12 24.59 19.63 15.00 13.27 12.50
Income from investment operations:
Net investment income (loss) $ (0.07) (0.16) 0.01 0.22 (0.11) 0.01 (0.04)
Net realized and unrealized gains (loss) on investments $ (4.09) 11.11 2.52 6.15 5.29 1.72 0.81
Total from investment operations $ (4.16) 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 -- --
Total distributions -- 3.54 -- 1.41 0.55 -- --
Net asset value, end of period $ 30.37 34.53 27.12 24.59 19.63 15.00 13.27
Total Return(3): % (12.05) 42.63 10.29 33.97 35.11 12.87 6.32
Ratios/Supplemental Data:
Net assets, end of period (000's) $ 44,702 54,418 14,870 7,320 645 642 1
Ratios to average net assets:
Net expenses after expense reimbursement (recoupment)(4)(5) % 1.52 1.57 1.55 1.59 1.61 1.61 1.60
Gross expenses prior to expense reimbursement
(recoupment)(4) % 1.49 1.57 1.55 1.76 3.75 34.99 3,232.53
Net investment income (loss) after expense reimbursement
(recoupment)(4)(5) % (0.62) (0.69) 0.17 0.17 (0.47) (0.91) (0.50)
Portfolio turnover % 71 169 57 247 202 182 132
</TABLE>
----------
(1) Effective May 24, 1999, ING Pilgrim Investments, Inc., became the
Investment Manager of the Fund, concurrently Nicholas-Applegate Capital
Management was appointed as sub-adviser 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. 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 subject to possible
reimbursement to ING Pilgrim Investments, Inc. within three years.
(6) Effective October 1, 2000, ING Pilgrim Investments, Inc., became the
Investment Manager of the Fund, replacing Nicholas-Applegate Capital
Management.
(7) The Fund changed its fiscal year-end from June 30 to October 31.
See Accompanying Notes to Financial Statements
24
<PAGE>
FINANCIAL
PILGRIM INTERNATIONAL VALUE FUND HIGHLIGHTS
--------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
Class Q
-------------------
Period Ended
October 31, 2000(1)
-------------------
Operating performance:
Net asset value, beginning of the period $ 15.90
Income from investment operations:
Net investment income $ 0.13
Net realized and unrealized loss on investments $ 0.65
Total from investment operations $ 0.78
Less distributions from:
Net realized gains on investments $ --
Total distributions $ --
Net asset value, end of the period $ 16.68
Total return(2) % 4.91
Ratios and supplemental data:
Net assets, end of the period (000's) $ 24,882
Ratio to average net assets:
Expenses(3) % 1.57
Net Investment Income(3) % 1.35
Portfolio turnover % 34
----------
(1) Class Q commenced operations on January 24, 2000.
(2) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value. Total return for less than
one year is not annualized.
(3) Annualized for periods less than one year.
See Accompanying Notes to Financial Statements
25
<PAGE>
FINANCIAL
HIGHLIGHTS PILGRIM INTERNATIONAL CORE GROWTH FUND
--------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
<TABLE>
<CAPTION>
Class Q
-----------------------------------------------------------------------
Four months Year Three months February 28,
ended ended ended Year ended March 31, 1997(1) to
October 31, June 30, June 30, -------------------- March 31,
2000(6)(7) 2000 1999(2) 1999 1998 1997
---------- ---- ------- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period $ 24.78 19.63 18.36 17.43 12.75 12.50
Income from investment operations:
Net investment income (loss) $ (0.04) (0.17) 0.04 0.09 (0.04) --
Net realized and unrealized gains on investments $ (2.98) 6.48 1.23 0.97 4.72 0.25
Total from investment operations $ (3.02) 6.31 1.27 1.06 4.68 0.25
Less distributions from:
Net investment income $ -- -- -- 0.13 -- --
Net realized gains on investments $ -- 1.16 -- -- -- --
Total distributions -- 1.16 -- 0.13 -- --
Net asset value, end of period $ 21.76 24.78 19.63 18.36 17.43 12.75
Total Return(3): % (12.19) 32.56 6.92 6.11 36.63 2.00
Ratios/Supplemental Data:
Net assets, end of period (000's) $ 13,947 16,567 9,390 11,268 1,719 1
Ratios to average net assets:
Net expenses after expense reimbursement(4)(5) % 1.84 1.75 1.54 1.63 1.66 0.00
Gross expenses prior to expense reimbursement(4) % 1.99 2.06 1.63 1.87 3.18 2,667.07
Net investment income (loss) after expense reimburse-
ment(4)(5) % (0.45) (0.73) 0.73 (0.27) (0.47) 0.00
Portfolio turnover % 73 200 67 214 274 76
</TABLE>
----------
(1) The Fund commenced operations on February 28, 1997.
(2) Effective May 24, 1999, ING 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.
(3) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value. 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.
(6) Effective October 1, 2000, ING Pilgrim Investments, Inc., became the
Investment Manager of the Fund, replacing Nicholas-Applegate Capital
Management.
(7) The Fund charged its fiscal year-end from June 30 to October 31.
See Accompanying Notes to Financial Statements
26
<PAGE>
FINANCIAL
PILGRIM INTERNATIONAL SMALLCAP GROWTH FUND HIGHLIGHTS
--------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
<TABLE>
<CAPTION>
Class Q
--------------------------------------------------------------------
Four months Year Three months August 31,
ended ended ended Year ended March 31, 1995(1) to
October 31, June 30, June 30, ---------------------- March 31,
2000(6) 2000 1999(2) 1999 1998 1997 1996
------- ---- ------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period $ 43.30 25.16 22.23 19.18 14.01 13.52 12.50
Income from investment operations:
Net investment income (loss) $ (0.09) (0.21) (0.03) (0.02) 0.05 (0.06 0.01
Net realized and unrealized gains on investments $ (5.03) 20.53 2.96 3.36 5.12 2.01 1.01
Total from investment operations $ (5.12) 20.32 2.93 3.34 5.17 1.95 1.02
Less distributions from:
Net investment income $ -- -- -- 0.09 -- -- --
Net realized gains on investments $ -- 2.18 -- 0.20 -- 1.46 --
Total distributions -- 2.18 -- 0.29 -- 1.46 --
Net asset value, end of period $ 38.18 43.30 25.16 22.23 19.18 14.01 13.52
Total Return(3): % 11.82 82.99 13.18 17.61 36.90 15.03 8.16
Ratios/Supplemental Data:
Net assets, end of period (000's) $ 164,719 163,843 42,881 32,819 8,810 42 19
Ratios to average net assets:
Net expenses after expense reimbursement (recoupment)(4)(5) % 1.58 1.57 1.65 1.65 1.66 1.66 1.65
Gross expenses prior to expense reimbursement
(recoupment(4) % 1.58 1.57 1.67 1.80 6.15 151.33 531.72
Net investment income (loss) after expense
reimbursement (recoupment)(4)(5) % (0.71) (0.66) (0.50) (0.50) (0.43) (0.64) 0.33
Portfolio turnover % 56 164 44 146 198 206 141
</TABLE>
----------
(1) Commencement of offering shares.
(2) Effective May 24, 1999, ING 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.
(3) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value. 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, subject to possible
reimbursement to ING Pilgrim Investments, Inc. within three years.
(6) The Fund changed its fiscal year-end from June 30 to October 31.
See Accompanying Notes to Financial Statements
27
<PAGE>
FINANCIAL
HIGHLIGHTS PILGRIM EMERGING COUNTRIES FUND
--------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
<TABLE>
<CAPTION>
Class Q
-------------------------------------------------------------------------
Four months Year Three months August 31,
ended ended ended Year Ended March 31, 1995(1) to
October 31, June 30, June 30, ----------------------- March 31,
2000(6)(7) 2000 1999(2) 1999 1998 1997 1996
---------- ---- ------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period $ 20.74 17.20 13.79 17.76 16.47 13.18 12.50
Income from investment operations:
Net investment income (loss) $ (0.27) (0.16) (0.04) (0.01) 0.07 (0.04) 0.01
Net realized and unrealized gains (loss) on
investments $ (3.66) 3.70 3.45 (3.78) 1.33 3.37 0.67
Total from investment operations $ (3.93) 3.54 3.41 (3.79) 1.40 3.33 0.68
Less distributions from:
Net investment income $ -- -- -- 0.18 -- -- --
Net realized gains on investments $ -- -- -- -- 0.11 0.04 --
Total distributions $ -- -- -- 0.18 0.11 0.04 --
Net asset value, end of period $ 16.81 20.74 17.20 13.79 17.76 16.47 13.18
Total Return(3): % (18.95) 20.58 24.73 (21.42) 8.60 25.29 5.44
Ratios/Supplemental Data:
Net assets, end of period (000's) $ 88,894 119,251 79,130 53,125 46,711 8,660 350
Ratios to average net assets:
Net expenses after expense reimbursement(4)(5) % 2.13 2.09 1.90 1.94 1.91 1.91 1.90
Gross expenses prior to expense reimburse-
ment(4) % 2.28 2.24 2.43 2.23 2.43 4.20 44.24
Net investment income (loss) after expense
reimbursement(4)(5) % (1.21) (1.05) (1.07) (0.01) 1.06 (0.87 ) 0.47
Portfolio turnover % 94 211 67 213 243 176 118
</TABLE>
----------
(1) Commencement of offering shares.
(2) Effective May 24, 1999, ING 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.
(3) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value. 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.
(6) Effective October 1, 2000, ING Pilgrim Investments, Inc. became the
Investment Manager of the Fund, replacing Nicholas-Applegate Capital
Management.
(7) The Fund changed its fiscal year-end from June 30 to October 31.
See Accompanying Notes to Financial Statements
28
<PAGE>
-------
Pilgrim
Funds
-------
NOTES TO FINANCIAL STATEMENTS as of October 31, 2000
--------------------------------------------------------------------------------
NOTE 1 -- ORGANIZATION
Organization. The Pilgrim Funds are comprised of Pilgrim Mutual Funds ("PMF"),
Pilgrim Advisory Funds, Inc. ("PAF"), Pilgrim Mayflower Trust ("PMT"), Pilgrim
Global Corporate Leaders Fund ("Global Corporate Leaders") (formerly Lexington
Global Corporate Leaders Fund Inc.), Pilgrim International Fund
("International") (formerly Lexington International Fund Inc.), Pilgrim
Worldwide Emerging Markets Fund ("Worldwide Emerging Markets") (formerly
Lexington Worldwide Emerging Markets Fund Inc.), Pilgrim Global Technology Fund
("Global Technology") (formerly Lexington Global Technology Fund Inc.), Pilgrim
SmallCap Asia Growth Fund ("SmallCap Asia Growth") (formerly Lexington SmallCap
Asia Growth Fund Inc.), Pilgrim Troika Dialog Russia Fund ("Troika Dialog
Russia") (formerly Lexington Troika Dialog Russia Fund), Pilgrim Gold Fund
("Gold") (formerly Lexington Goldfund Inc.), Pilgrim Silver Fund ("Silver")
(formerly Lexington Silver Fund Inc.), and Pilgrim Global Income Fund ("Global
Income") (formerly Lexington Global Income Fund Inc.), which are each open-end
investment management companies registered under the Investment Company Act of
1940, as amended.
PMF is a Delaware business trust organized in 1992 with twelve separate series
(Portfolios). The "Funds" in this annual report are Pilgrim Worldwide Growth
Fund ("Worldwide Growth"), Pilgrim International Core Growth Fund
("International Core Growth"), Pilgrim International SmallCap Growth Fund
("International SmallCap Growth"), and Pilgrim Emerging Countries Fund
("Emerging Countries"). PMT is a Massachusetts business trust organized in 1992
with six separate series (Portfolios). The "Fund" in this annual report is
Pilgrim International Value Fund. The investment objective of each Fund is
described in each Fund's prospectus.
Each Fund offers one or more of the following classes of shares: Class A, Class
B, Class C, Class M and Class Q. This report only covers Funds that offer Class
Q. The separate classes of shares differ principally in the applicable sales
charges (if any), distribution fees and shareholder servicing fees. Shareholders
of each class also bear certain expenses that pertain to that particular class.
All shareholders bear the common expenses of the Fund and earn income from the
portfolio pro rata based on the average daily net assets of each class, without
distinction between share classes. Dividends are determined separately for each
class based on income and expenses allocable to each class. Realized gains are
allocated to each class pro rata based on the net assets of each class on the
date of distribution. No class has preferential dividend rights. Differences in
per share dividend rates generally result from the relative weighting of pro
rata income and realized gain allocations and from differences in separate class
expenses, including distribution, and shareholder servicing fees. Class B
shares, along with their pro rata reinvested dividend shares, automatically
convert to Class A shares approximately eight years after purchase.
Prior to April 30, 2000, Pilgrim Advisors, Inc. ("Pilgrim Advisors") served as
investment advisor to certain of the Funds. On April 30, 2000, Pilgrim Advisors
merged with Pilgrim Investments. Pilgrim Advisors and Pilgrim Investments, Inc.
were sister companies and shared certain resources and investment personnel.
Prior to July 26, 2000, Lexington Management Corporation ("Lexington") served
as investment advisor to certain of the former Lexington Funds. On July 26,
2000, ReliaStar Financial Corp. ("Reliastar") acquired Lexington Global Asset
Managers, Inc., the parent company of Lexington, and ING Pilgrim Investments,
Inc. was approved as Adviser to the Funds formerly advised by Lexington.
On September 1, 2000, ING Groep N.V. (NYSE: ING) acquired ReliaStar, the
indirect parent company of Pilgrim Investments, Inc., Adviser to the Funds,
Pilgrim Securities, Inc., Distributor to the Funds and Pilgrim Group, Inc.,
Administrator to the Funds. In conjunction with the acquisition the Adviser,
Distributor and Administrator changed their names to ING Pilgrim Investments,
Inc., ING Pilgrim Securities, Inc., and ING Pilgrim Group, Inc. ("PGI")
effective September 8, 2000.
Reorganizations. Before a shareholder approved reorganization effective July 24,
1998, the funds
29
<PAGE>
-------
Pilgrim
Funds
-------
NOTES TO FINANCIAL STATEMENTS as of October 31, 2000 (Continued)
--------------------------------------------------------------------------------
comprising PMF invested all of their assets in corresponding portfolios of
Nicholas-Applegate Investment Trust, an arrangement known as a "master/feeder"
structure. Upon the reorganization, the Institutional Portfolio series of the
Trust were renamed Funds and were authorized to issue multiple classes of
shares, and their outstanding shares were classified as Class I shares. At the
same time, the A, B, C and Advisory Portfolios of the Trust transferred their
assets to the corresponding Funds, and their shareholders received Class A, B, C
and Q shares of the Funds on a tax-free basis. Effective May 7, 1999 and
concurrent with the change in investment adviser from Nicholas Applegate Capital
Management to Pilgrim Investments, Inc., the Institutional Classes of PMF were
transferred in a tax free reorganization to new funds being managed by
Nicholas-Applegate Capital Management.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies are consistently followed by the
Funds in the preparation of their financial statements, and such policies are in
conformity with generally accepted accounting principles for investment
companies.
A. 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, securities traded in the
over-the-counter-market and gold and silver bullion are valued at the mean
between the last reported bid and ask prices. 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
value.
B. Security Transactions and Revenue Recognition. Securities transactions are
accounted for on the trade date. Realized gains and losses are reported on
the basis of identified cost of securities delivered. Interest income is
recorded on an accrual basis. Dividend income is recorded on the
ex-dividend date, or for certain foreign securities, when the information
becomes available to the funds. Premium amortization and discount accretion
are determined by the effective yield method.
C. Foreign Currency Translation. 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 changes in market
prices of securities held. Such fluctuations are included with the net
realized and unrealized gains or losses from investments. For securities
which are subject to foreign withholding tax upon disposition, liabilities
are recorded on the statement of assets and liabilities for the estimated
tax withholding based on the securities current market value. Upon
disposition, realized gains or losses on such securities are recorded net
of foreign withholding tax.
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 dates on
securities transactions, the difference between the amounts of dividends,
interest, and foreign withholding taxes recorded on the Fund's books, and
the U.S. dollar equivalent of the amounts
30
<PAGE>
-------
Pilgrim
Funds
-------
NOTES TO FINANCIAL STATEMENTS as of October 31, 2000 (Continued)
--------------------------------------------------------------------------------
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 in
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 comparable U.S.
companies and the U.S. Government.
D. Foreign Currency Transactions. Certain funds may enter into foreign
currency exchange transactions to convert to and from different foreign
currencies and to and from the U.S. dollar in connection with the planned
purchases or sales of securities. The Funds either enter into these
transactions on a spot basis at the spot rate prevailing in the foreign
currency exchange market or use forward foreign currency contracts to
purchase or sell foreign currencies. When the contract is fulfilled or
closed, gains or losses are realized. Until then, the gain or loss is
included in unrealized appreciation or depreciation. Risks may arise upon
entering into forward contracts from the potential inability of
counterparties to meet the terms of their forward contracts and from
unanticipated movements in the value of foreign currencies relative to the
U.S. dollar.
Each Fund may enter into futures contracts involving foreign currency,
interest rates, securities and securities indices, for hedging purposes
only. A futures contract obligates the seller of the contract to deliver
and the purchaser of the contract to take delivery of the type of foreign
currency, financial instrument or security called for in the contract at a
specified future time for a specified price. Upon entering into such a
contract, a Fund is required to deposit and maintain as collateral such
initial margin as required by the exchange on which the contract is traded.
Pursuant to the contract, a Fund agrees to receive from or pay to the
broker an amount equal to the daily fluctuations in the value of the
contract. Such receipts or payments are known as variation margins and are
recorded as unrealized gains or losses by the Fund. When the contract is
closed, the Fund records a realized gain or loss equal to the difference
between the value of the contract at the time it was opened and the value
at the time it was closed. There were no open futures contracts at October
31, 2000.
E. Distributions to Shareholders. The Funds record distributions to their
shareholders on ex-date. Each Fund pays dividends and capital gains, if any
annually. Pilgrim Global Income Fund pays dividends quarterly, if any.
The amount of distributions from net investment income and net realized
capital gains are determined in accordance with federal income tax
regulations, which may differ from generally accepted accounting
principles. These "book/tax" differences are either considered temporary or
permanent in nature. Key differences are the treatment of short-term
capital gains, foreign currency transactions, organization costs and other
temporary differences. To the extent that these differences are permanent
in nature, such amounts are reclassified within the capital accounts based
on their federal tax-basis treatment; temporary differences do not require
reclassifications. Distributions which exceed net investment income and net
realized capital gains for financial reporting purposes but not for tax
purposes, are reported as distributions in excess of net investment income
and/or net realized capital gains. To the extent they exceed net investment
income and/or net realized capital gains for tax purposes, they are
reported as distributions of paid-in capital. Accordingly, amounts as of
October 31, 2000 have been increased (decreased) through reclassification
as follows:
Accumlated
net realized
Undistributed gains (losses)
(Distribution is excess) on investments
Paid-in net investment and foreign
capital income currency transactions
------- ------ ---------------------
Worldwide Growth $(2,583,533) $1,823,273 $ 760,260
International Value -- (378,812) 378,812
International Core (2,726,638) 983,960 1,742,678
31
<PAGE>
-------
Pilgrim
Funds
-------
NOTES TO FINANCIAL STATEMENTS as of October 31, 2000 (Continued)
--------------------------------------------------------------------------------
Accumlated
net realized
Undistributed gains (losses)
(Distribution is excess) on investments
Paid-in net investment and foreign
capital income currency transactions
------- ------ ---------------------
International
SmallCap Growth -- $ (922,028) $ 922,028
Emerging Countries (3,127,882) 966,710 2,161,172
F. 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 capital gains to their shareholders.
Therefore, a federal income 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/Trustees 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.
Capital loss carryforwards were as follows at October 31, 2000:
Amount Expiration Dates
----------- --------------------
Worldwide Growth $ 3,925,607 October 2008
International SmallCap Growth 10,815,771 October 2008
Emerging Countries 48,415,929 October 2006 to 2008
G. Use of Estimates. Management of the Funds has made certain estimates and
assumptions relating to the reporting of assets, liabilities, income, and
expenses to prepare these financial statements in conformity with generally
accepted accounting principles. Actual results could differ from these
estimates.
H. Repurchase Agreements. Each Fund may invest in repurchase agreements only
with government securities dealers recognized by the Board of Governors of
the Federal Reserve System or with member banks of the Federal Reserve
System. Under such agreements, the seller of the security agrees to
repurchase it at a mutually agreed upon time and price. The resale price is
in excess of the purchase price and reflects an agreed upon interest rate
for the period of time the agreement is outstanding. The period of the
repurchase agreements is usually short, from overnight to one week, while
the underlying securities generally have longer maturities. Each Fund will
always receive as collateral securities acceptable to it whose market value
is equal to at least 100% of the amount being invested by the Fund. If the
seller defaults, a Fund might incur a loss or delay in the realization of
proceeds if the value of security collateralizing the repurchase agreement
declines, and it might incur disposition costs in liquidating the
collateral.
I. Securities Lending. Each Fund had the option to temporarily loan 331|M/3%
of its total assets to brokers, dealers or other financial institutions in
exchange for a negotiated lender's fee. The borrower is required to fully
collateralize the loans with cash, letters of credit or U.S. Government
securities.
NOTE 3 -- INVESTMENT TRANSACTIONS
For the periods ended October 31, 2000, the cost of purchases and proceeds from
the sales of securities, excluding short-term securities, were as follows:
Purchases Sales
-------------- ------------
Worldwide Growth (1) $ 471,483,817 $455,557,275
International Value (2) 1,220,243,069 499,152,324
International Core Growth (1) 61,346,868 58,790,704
International SmallCap Growth (1) 457,484,733 370,312,350
Emerging Countries (1) 209,290,711 238,753,252
----------
(1) For the period July 1, 2000 thru October 31, 2000 (2) For the year ended
October 31, 2000
NOTE 4 -- INVESTMENT MANAGEMENT AND ADMINISTRATIVE FEES
Each of the Funds has entered into an Investment Management Agreement with ING
Pilgrim Investments, Inc. ("the Manager"), a wholly-owned subsidiary of PGI. The
investment management agreements compensate the Manager with a fee, computed
daily and payable
32
<PAGE>
-------
Pilgrim
Funds
-------
NOTES TO FINANCIAL STATEMENTS as of October 31, 2000 (Continued)
--------------------------------------------------------------------------------
monthly, based on the average daily net assets of each Fund, at the following
annual rates:
As a percent of average net assets
----------------------------------
Worldwide Growth 1.00% on first $500 million; 0.90% on next
$500 million; and 0.85% in excess of $1 billion
International Value 1.00%
International Core Growth 1.00% on first $500 million; 0.90% on next
$500 million; and 0.85% in excess of $1 billion
International SmallCap Growth 1.00% on first $500 million; 0.90% on next
$500 million; and 0.85% in excess of $1 billion
Emerging Countries 1.25%
For the period ended October 31, 2000 the Advisor earned $21,757,031 in
investment management fees.
On July 31, 2000, Pilgrim Investments, Inc. notified Nicholas-Applegate Capital
Management ("NACM") of its intention to terminate NACM as sub-advisor to the
Worldwide Growth, International Core Growth and Emerging Countries effective
September 30, 2000. October 1, 2000, ING Pilgrim Investments, Inc. began
advising the Funds directly.
PGI (the "Administrator") serves as administrator to the International Value
Fund. The Fund paid the Administrator a fee calculated at an annual rate of
0.10% of the Fund's average daily net assets and an annual shareholder account
servicing fee of $5.00, payable semi-annually, for each account of beneficial
owners of shares. For the period ended October 31, 2000 the Administrator earned
$1,755,565 in administrative and account servicing fees.
NOTE 5 -- DISTRIBUTION FEES
Each share class of the Funds has adopted a Plan pursuant to Rule 12b-1 under
the 1940 Act (the "12b-1 Plans"), whereby ING Pilgrim Securities, Inc. (the
"Distributor") is reimbursed or compensated (depending on the class of shares)
by the Funds for expenses incurred in the distribution of each Funds' shares.
Pursuant to the 12b-1 Plans, the Distributor is entitled to payment each month
for actual expenses incurred in the distribution and promotion of each Fund's
shares, including the printing of prospectuses and reports used for sales
purposes, expenses of preparation and printing of sales literature and other
such distribution related expenses, including any distribution or service fees
paid to securities dealers who have executed a distribution agreement with the
Distributor. Under the 12b-1 Plans, each class of shares of the Fund pays the
Distributor the following annual fees:
Class A Class B Class C Class M Class Q
------- ------- ------- ------- -------
Worldwide Growth 0.35% 1.00% 1.00% N/A 0.25%
International Value 0.30 1.00 1.00 N/A 0.25
International Core Growth 0.35 1.00 1.00 N/A 0.25
International SmallCap Growth 0.35 1.00 1.00 N/A 0.25
Emerging Countries 0.35 1.00 1.00 N/A 0.25
Fees paid to the Distributor by class during the period ended October 31, 2000
are shown in the accompanying Statements of Operations. For the period ended
October 31, 2000, the Distributor earned $14,423,558 in Distributor fees.
The Distributor also receives the proceeds of the initial sales charge paid by
shareholders upon the purchase of Class A shares, and the contingent deferred
sales charge paid by shareholders upon certain redemptions for Class A, Class B,
and Class C shares. For the period ended October 31, 2000, the Distributor
earned the following amounts in sales charges from all International Funds:
Class A Class B Class C Class M
Shares Shares Shares Shares
------ ------ ------ ------
Initial Sales Charges $779,776 N/A N/A $132
Contingent deferred sales charges $117,808 $ 0 $340,042 N/A
NOTE: International Value and Emerging Markets were for the year ended October
31, 2000. International Core Growth, International SmallCap Growth, Emerging
Countries, Asia-Pacific Equity, and Worldwide Growth were for the period from
July 1, 2000 to October 31, 2000. Worldwide Emerging Markets, Global Technology,
Global Corporate Leaders, SmallCap Asia Growth, Troika Dialog Russia, Global
Income, Gold, and Silver were for the period from August 1, 2000 to October 31,
2000.
33
<PAGE>
-------
Pilgrim
Funds
-------
NOTES TO FINANCIAL STATEMENTS as of October 31, 2000 (Continued)
--------------------------------------------------------------------------------
NOTE 6 -- SHAREHOLDER SERVICING FEES
Each of the Funds has entered into a Service Agreement with PGI whereby PGI will
act as Shareholder Service Agent for each Fund. The agreement provides that PGI
will be compensated for incoming and outgoing shareholder telephone calls and
letters, and all reasonable out-of-pocket expenses incurred in connection with
the performance of such services. Fees accrued during the year ended October 31,
2000 are shown in the accompanying Statements of Operations.
NOTE 7 -- EXPENSE WAIVERS
For the following Funds, the Investment Manager has voluntarily agreed to limit
expenses, excluding interest, taxes, brokerage and extraordinary expenses to the
levels listed below:
Maximum Operating Expense Limit
(as a percentage of average net assets)
-------------------------------------------------------
Class A Class B Class C Class M Class Q
------- ------- ------- ------- -------
Worldwide Growth 1.85% 2.50% 2.50% N/A 1.60%
International Value N/A N/A N/A N/A N/A
International Core
Growth 1.95 2.60 2.60 N/A 1.65
International
SmallCap
Growth 1.95 2.60 2.60 N/A 1.65
Emerging Countries 2.25 2.90 2.90 N/A 1.90
NOTE 8 -- CREDIT FACILITY
The Pilgrim Funds, Pilgrim Equity Trust and Pilgrim Mayflower Trust have entered
into an unsecured committed revolving line of credit agreement with State Street
Bank and Trust Company for an aggregate amount of $50,000,000. In addition,
Pilgrim Investment Funds, Inc., Pilgrim Advisory Funds, Inc., Pilgrim Bank &
Thrift Fund, Inc., Pilgrim Government Securities Income Fund, Inc. and Pilgrim
Mutual Funds have entered into an unsecured committed revolving line of credit
agreement ("the Credit Agreements") with State Street Bank and Trust Company for
an aggregate amount of $75,000,000. The proceeds may be used only to (1)
temporarily finance the purchase and sale of securities; (2) finance the
redemption of shares of an Investor in the Funds; and (3) enable the Funds to
meet other emergency expenses as defined in the Credit Agreements. Each Fund
pays its pro rata share of an annual commitment fee plus interest on its
specific borrowings. As of and for the periods ended October 31, 2000 there was
no balance outstanding under the credit facility.
34
<PAGE>
-------
Pilgrim
Funds
-------
NOTES TO FINANCIAL STATEMENTS as of October 31, 2000 (Continued)
--------------------------------------------------------------------------------
NOTE 9 -- CAPITAL SHARES
Transactions in capital shares and dollars were as follows:
<TABLE>
<CAPTION>
Class A Shares
----------------------------------------------------------------
Four Months Year Three Months Year
Ended Ended Ended Ended
October 31, June 30, June 30, March 31,
2000 2000 1999 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Worldwide Growth
(Number of Shares)
Shares sold 4,005,399 14,001,807 1,172,285 5,575,910
Shares issued as
reinvestment of
dividends 422,437 86 96,384
Shares redeemed (2,499,778) (9,384,459) (660,100) (5,374,372)
------------- ------------- ------------- -------------
Net increase in shares
outstanding 1,505,621 5,039,785 512,271 297,922
============= ============= ============= =============
Worldwide Growth ($)
Shares sold $ 116,318,819 $ 404,667,268 $ 26,425,907 $ 110,310,826
Shares issued as
reinvestment of
dividends 10,797,545 -- 1,739,418
Shares redeemed (73,218,592) (273,872,546) (14,957,153) (107,031,318)
------------- ------------- ------------- -------------
Net increase in shares
outstanding $ 43,100,227 $ 141,592,267 $ 11,468,754 $ 5,018,926
============= ============= ============= =============
Class B Shares
----------------------------------------------------------------
Four Months Year Three Months Year
Ended Ended Ended Ended
October 31, June 30, June 30, March 31,
2000 2000 1999 1999
------------- ------------- ------------- -------------
Worldwide Growth
(Number of Shares)
Shares sold 631,926 2,987,911 353,077 544,757
Shares issued as
reinvestment of
dividends -- 192,099 -- 39,170
Shares redeemed (230,519) (336,704) (70,889) (319,228)
------------- ------------- ------------- -------------
Net increase in shares
outstanding 401,407 2,843,306 282,188 264,699
============= ============= ============= =============
Worldwide Growth ($)
Shares sold $ 20,649,472 $ 95,993,252 $ 9,019,106 $ 11,616,885
Shares issued as
reinvestment of
dividends -- 5,534,613 -- 799,305
Shares redeemed (7,450,350) (10,888,095) (1,811,055) (6,778,733)
------------- ------------- ------------- -------------
Net increase in shares
outstanding $ 13,199,122 $ 90,639,770 $ 7,208,051 $ 5,637,457
============= ============= ============= =============
Class C Shares
----------------------------------------------------------------
Four Months Year Three Months Year
Ended Ended Ended Ended
October 31, June 30, June 30, March 31,
2000 2000 1999 1999
------------- ------------- ------------- -------------
Worldwide Growth
(Number of Shares)
Shares sold 1,218,370 3,546,660 316,937 1,258,419
Shares issued as
reinvestment of
dividends -- 554,745 -- 117,737
Shares redeemed (1,075,019) (797,116) (195,915) (1,224,596)
------------- ------------- ------------- -------------
Net increase (decrease)
in shares outstanding 143,351 3,304,289 121,022 151,560
============= ============= ============= =============
Worldwide Growth ($)
Shares sold $ 34,976,677 $ 103,794,801 $ 7,199,228 $ 23,846,842
Shares issued as
reinvestment of
dividends -- 14,207,022 -- 2,145,255
Shares redeemed (31,067,826) (22,853,219) (4,443,951) (22,854,997)
------------- ------------- ------------- -------------
Net increase (decrease)
in shares outstanding $ 3,908,851 $ 95,148,604 $ 2,755,277 $ 3,137,100
============= ============= ============= =============
Class Q Shares
----------------------------------------------------------------
Four Months Year Year Year
Ended Ended Ended Ended
October 31, June 30, June 30, March 31,
2000 1999 1999 1999
------------- ------------- ------------- -------------
Worldwide Growth
(Number of Shares)
Shares sold 458,143 1,816,105 430,631 350,299
Shares issued as
reinvestment of
dividends -- 85,463 -- 4,352
Shares redeemed (562,214) (873,920) (180,058) (89,828)
------------- ------------- ------------- -------------
Net increase (decrease)
in shares outstanding (104,071) 1,027,648 250,573 264,823
============= ============= ============= =============
Worldwide Growth ($)
Shares sold $ 15,506,281 $ 60,334,275 $ 11,187,418 $ 7,773,616
Shares issued as
reinvestment of
dividends -- 2,513,469 -- 89,521
Shares redeemed (18,881,326) (30,258,824) (4,610,453) (1,884,358)
------------- ------------- ------------- -------------
Net increase (decrease)
in shares outstanding $ (3,375,045) $ 32,588,920 $ 6,576,965 $ 5,978,779
============= ============= ============= =============
</TABLE>
35
<PAGE>
-------
Pilgrim
Funds
-------
NOTES TO FINANCIAL STATEMENTS as of October 31, 2000 (Continued)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Shares Class B Shares
---------------------------------- ----------------------------------
Year Year
Ended Ended
October 31, October 31,
---------------------------------- ----------------------------------
2000 1999 2000 1999
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
International Value
(Number of Shares)
Shares sold 83,175,007 37,389,180 9.796,492 8,274,008
Shares issued as reinvestments
of dividends 1,328,930 1,139,195 622,312 520,861
Shares redeemed (59,935,901) (25,654,229) (2,916,805) (2,066,590)
--------------- --------------- --------------- ---------------
Net increase in shares
outstanding 24,568,036 12,874,146 7,501,999 6,728,279
=============== =============== =============== ===============
International Value ($)
Shares sold $ 1,354,284,766 $ 491,487,619 $ 157,186,306 $ 111,215,626
Shares issued as reinvestments
of dividends 21,993,188 13,398,457 10,213,421 6,044,049
Shares redeemed (975,073,293) (331,576,463) (46,780,828) (26,329,963)
--------------- --------------- --------------- ---------------
Net increase in shares
outstanding $ 401,204,661 $ 173,309,613 $ 120,618,899 $ 90,929,712
=============== =============== =============== ===============
Class C Shares Class Q Shares
---------------------------------- ----------------------------------
Year Year
Ended Ended
October 31, October 31,
---------------------------------- ----------------------------------
2000 1999 2000 2000
--------------- --------------- --------------- ---------------
International Value
(Number of Shares)
Shares sold 19,178,129 12,104,834 1,548,084 913,289
Shares issued as reinvestments
of dividends 732,571 515,060 -- --
Shares redeemed (4,309,599) (3,018,495) (56,473) (1,321)
--------------- --------------- --------------- ---------------
Net increase in shares
outstanding 15,601,101 9,601,399 1,491,611 911,968
=============== =============== =============== ===============
International Value ($)
Shares sold $ 307,905,636 $ 162,419,735 $ 24,545,939 13,989,768
Shares issued as reinvestments
of dividends 11,999,531 5,974,729 -- --
Shares redeemed (68,808,206) (39,186,243) (943,654) (21,126)
--------------- --------------- --------------- ---------------
Net increase in shares
outstanding $ 251,096,961 $ 129,208,221 $ 23,602,285 $ 13,968,642
=============== =============== =============== ===============
</TABLE>
36
<PAGE>
-------
Pilgrim
Funds
-------
NOTES TO FINANCIAL STATEMENTS as of October 31, 2000 (Continued)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Shares
----------------------------------------------------------------
Four Months Year Three Months Year
Ended Ended Ended Ended
October 31, June 30, June 30, March 31,
2000 2000 1999 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
International Core Growth
(Number of Shares)
Shares sold 1,609,319 5,045,863 1,699,541 4,111,884
Shares issued as
reinvestment of
dividends 33,304 -- 5,819
Shares redeemed (1,446,511) (4,770,319) (2,264,636) (3,641,067)
------------- ------------- ------------- -------------
Net increase in
shares outstanding 162,808 308,848 (565,095) 476,636
============= ============= ============= =============
International Core
Growth ($)
Shares sold $ 35,660,867 $ 121,096,575 $ 30,866,314 $ 72,899,494
Shares issued as
reinvestment of
dividends 740,357 -- 109,877
Shares redeemed (32,390,856) (114,696,068) (41,080,307) (65,603,216)
------------- ------------- ------------- -------------
Net increase in
shares outstanding $ 3,270,011 $ 7,140,864 $ (10,213,993) $ 7,406,155
============= ============= ============= =============
Class B Shares
----------------------------------------------------------------
Four Months Year Three Months Year
Ended Ended Ended Ended
October 31, June 30, June 30, March 31,
2000 2000 1999 1999
------------- ------------- ------------- -------------
International Core Growth
(Number of Shares)
Shares sold 177,101 458,137 47,812 317,938
Shares issued as
reinvestment of
dividends 30,801 -- 2,484
Shares redeemed (165,362) (215,896) (33,706) (168,120)
------------- ------------- ------------- -------------
Net increase in
shares outstanding 11,739 273,042 14,106 152,302
============= ============= ============= =============
International Core
Growth ($)
Shares sold $ 4,037,626 $ 11,335,788 $ 888,899 $ 5,553,372
Shares issued as
reinvestment of
dividends 689,313 -- 47,437
Shares redeemed (3,765,765) (5,138,991) (610,199) (2,893,130)
------------- ------------- ------------- -------------
Net increase in
shares outstanding $ 271,861 $ 6,886,110 $ 278,700 $ 2,707,679
============= ============= ============= =============
Class C Shares
----------------------------------------------------------------
Four Months Year 3 Months Year
Ended Ended Ended Ended
October 31, June 30, June 30, March 31,
2000 2000 1999 1999
------------- ------------- ------------- -------------
International Core Growth
(Number of Shares)
Shares sold 1,025,108 1,618,402 113,784 455,651
Shares issued as
reinvestment of
dividends 33,214 -- 1,471
Shares redeemed (925,675) (1,158,306) (69,740) (82,349)
------------- ------------- ------------- -------------
Net increase (decrease) in
shares outstanding 99,433 493,310 44,044 374,773
============= ============= ============= =============
International Core
Growth ($)
Shares sold $ 23,241,494 $ 39,015,970 $ 2,117,597 $ 7,964,267
Shares issued as
reinvestment of
dividends 745,659 -- 28,148
Shares redeemed (21,161,483) (27,691,220) (1,298,517) (1,412,367)
------------- ------------- ------------- -------------
Net increase (decrease) in
shares outstanding $ 2,080,011 $ 12,070,409 $ 819,080 $ 6,580,048
============= ============= ============= =============
Class Q Shares
----------------------------------------------------------------
Four Months Year Three Months Year
Ended Ended Ended Ended
October 31, June 30, June 30, March 31,
2000 2000 1999 1999
------------- ------------- ------------- -------------
International Core Growth
(Number of Shares)
Shares sold 165,852 780,577 93,649 581,442
Shares issued as
reinvestment of
dividends -- 24,738 -- 1,463
Shares redeemed (193,498) (615,038) (228,977) (67,954)
------------- ------------- ------------- -------------
Net increase (decrease) in
shares outstanding (27,646) 190,277 (135,328) 514,951
============= ============= ============= =============
International Core
Growth ($)
Shares sold $ 3,896,070 $ 20,639,997 $ 1,771,267 $ 10,297,873
Shares issued as
reinvestment of
dividends -- 572,187 -- 31,169
Shares redeemed (4,527,377) (16,620,923) (4,253,651) (1,185,061)
------------- ------------- ------------- -------------
Net increase (decrease) in
shares outstanding $ (631,307) $ 4,591,261 $ (2,482,384) $ 9,143,981
============= ============= ============= =============
</TABLE>
37
<PAGE>
-------
Pilgrim
Funds
-------
NOTES TO FINANCIAL STATEMENTS as of October 31, 2000 (Continued)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Shares
----------------------------------------------------------------
Ten Months Year Three Months Year
Ended Ended Ended Ended
October 31, June 30, June 30, March 31,
2000 2000 1999 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
International SmallCap Growth
(Number of Shares)
Shares sold 7,284,746 18,367,774 1,367,921 4,953,991
Shares issued as reinvestment
of dividends -- 169,910 -- 41,096
Shares redeemed (6,508,231) (13,311,135) (997,179) (4,370,199)
------------- ------------- ------------- -------------
Net increase in shares
outstanding 776,515 5,226,549 370,742 624,888
============= ============= ============= =============
International SmallCap Growth ($)
Shares sold $ 281,224,096 $ 753,445,372 $ 30,182,958 $ 101,529,799
Shares issued as reinvestment
of dividends -- 5,544,302 -- 811,876
Shares redeemed (252,360,434) (552,362,495) (22,024,759) (90,418,518)
------------- ------------- ------------- -------------
Net increase in shares
outstanding $ 28,863,662 $ 206,627,179 $ 8,158,199 $ 11,923,157
============= ============= ============= =============
Class B Shares
----------------------------------------------------------------
Ten Months Year Three Months Year
Ended Ended Ended Ended
October 31, June 30, June 30, March 31,
2000 2000 1999 1999
------------- ------------- ------------- -------------
International SmallCap Growth
(Number of Shares)
Shares sold 647,440 2,668,131 98,528 574,326
Shares issued as reinvestment
of dividends 85,395 -- 21,611
Shares redeemed (364,779) (465,407) (55,682) (472,298)
------------- ------------- ------------- -------------
Net increase in shares
outstanding 282,661 2,288,119 42,846 123,639
============= ============= ============= =============
International SmallCap Growth ($)
Shares sold $ 27,240,137 $ 110,600,703 $ 2,333,350 $ 12,177,504
Shares issued as reinvestment
of dividends 2,953,812 -- 452,596
Shares redeemed (15,204,196) (20,315,971) (1,302,925) (9,959,007)
------------- ------------- ------------- -------------
Net increase in shares
outstanding $ 12,035,941 $ 93,238,544 $ 1,030,425 $ 2,671,093
============= ============= ============= =============
Class C Shares
----------------------------------------------------------------
Ten Months Year Three Months Year
Ended Ended Ended Ended
October 31, June 30, June 30, March 31,
2000 2000 1999 1999
------------- ------------- ------------- -------------
International SmallCap Growth
(Number of Shares)
Shares sold 1,025,749 4,361,314 146,271 660,257
Shares issued as reinvestment
of dividends -- 80,888 -- 13,435
Shares redeemed (736,411) (1,600,661) (34,123) (464,252)
------------- ------------- ------------- -------------
Net increase in shares
outstanding 289,338 2,841,541 112,148 209,440
============= ============= ============= =============
International SmallCap Growth ($)
Shares sold $ 38,976,927 $ 174,228,168 $ 3,168,229 $ 12,933,840
Shares issued as reinvestment
of dividends -- 2,568,991 -- 258,146
Shares redeemed (28,136,442) (63,584,070) (740,072) (9,055,952)
------------- ------------- ------------- -------------
Net increase in shares
outstanding $ 10,840,485 $ 113,213,089 $ 2,428,157 $ 4,136,034
============= ============= ============= =============
Class Q Shares
----------------------------------------------------------------
Ten Months Year Three Months Year
Ended Ended Ended Ended
October 31, June 30, June 30, March 31,
2000 2000 1999 1999
------------- ------------- ------------- -------------
International SmallCap Growth
(Number of Shares)
Shares sold 2,318,401 6,375,425 529,877 1,567,046
Shares issued as reinvestment
of dividends -- 154,058 -- 12,918
Shares redeemed (1,788,278) (4,450,408) (269,090) (563,058)
------------- ------------- ------------- -------------
Net increase in shares
outstanding 530,123 2,079,075 260,787 1,016,906
============= ============= ============= =============
International SmallCap Growth ($)
Shares sold $ 95,855,054 $ 267,585,482 $ 12,505,725 $ 32,536,160
Shares issued as reinvestment
of dividends -- 4,781,312 -- 249,737
Shares redeemed (75,048,798) (196,319,048) (6,328,290) (11,408,948)
------------- ------------- ------------- -------------
Net increase in shares
outstanding $ 20,806,256 $ 76,047,746 $ 6,177,435 $ 21,376,949
============= ============= ============= =============
</TABLE>
38
<PAGE>
-------
Pilgrim
Funds
-------
NOTES TO FINANCIAL STATEMENTS as of October 31, 2000 (Continued)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Shares
------------------------------------------------------------------
Four Months Year Three Months Year
Ended Ended Ended Ended
October 31, June 30, June 30, March 31,
2000 2000 1999 1999
--------------- ----------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Emerging Countries
(Number of Shares)
Shares sold 2,018,292 7,123,710 1,064,600 3,262,352
Shares issued as reinvestment
of dividends -- -- -- 17,479
Shares redeemed (2,106,144) (6,583,130) (1,382,928) (3,852,081)
------------- ------------- ------------- -------------
Net increase (decrease) in
shares outstanding (87,852) 540,580 (318,328) (572,250)
============= ============= ============= =============
Emerging Countries ($)
Shares sold $ 37,136,028 $ 142,495,750 $ 16,015,629 $ 45,426,994
Shares issued as reinvestment
of dividends -- -- -- 277,913
Shares redeemed (39,399,667) (131,430,829) (20,693,691) (51,942,286)
------------- ------------- ------------- -------------
Net increase (decrease) in
shares outstanding $ (2,263,639) $ 11,064,921 $ (4,678,062) $ (6,237,379)
============= ============= ============= =============
Class B Shares
----------------------------------------------------------------
Four Months Year Three Months Year
Ended Ended Ended Ended
October 31, June 30, June 30, March 31,
2000 2000 1999 1999
------------- ------------- ------------- -------------
Emerging Countries
(Number of Shares)
Shares sold 72,083 261,876 82,535 382,174
Shares issued as reinvestment
of dividends -- -- -- 7,286
Shares redeemed (181,835) (320,122) (168,473) (951,609)
------------- ------------- ------------- -------------
Net increase (decrease) in
shares outstanding (109,752) (58,246) (85,938) (562,149)
============= ============= ============= =============
Emerging Countries ($)
Shares sold $ 1,296,696 $ 5,287,628 $ 1,322,669 $ 5,698,657
Shares issued as reinvestment
of dividends -- -- -- 118,138
Shares redeemed (3,310,448) (6,237,718) (2,572,889) (12,756,398)
------------- ------------- ------------- -------------
Net increase (decrease) in
shares outstanding $ (2,013,752) $ (950,090) $ (1,250,220) $ (6,939,603)
============= ============= ============= =============
Class C Shares
----------------------------------------------------------------
Four Months Year Three Months Year
Ended Ended Ended Ended
October 31, June 30, June 30, March 31,
2000 2000 1999 1999
------------- ------------- ------------- -------------
Emerging Countries
(Number of Shares)
Shares sold 80,835 395,139 116,572 521,678
Shares issued as reinvestment
of dividends -- -- -- 5,264
Shares redeemed (174,804) (363,300) (99,525) (1,239,995)
------------- ------------- ------------- -------------
Net increase (decrease) in
shares outstanding (93,969) 31,839 17,047 (713,053)
============= ============= ============= =============
Emerging Countries ($)
Shares sold $ 1,412,550 $ 7,854,682 $ 1,744,612 $ 7,326,720
Shares issued as reinvestment
of dividends -- -- -- 82,205
Shares redeemed (3,092,478) (6,755,539) (1,481,896) (16,381,157)
------------- ------------- ------------- -------------
Net increase (decrease) in
shares outstanding $ (1,679,928) $ 1,099,143 $ 262,716 $ (8,972,232)
============= ============= ============= =============
Class Q Shares
----------------------------------------------------------------
Four Months Year Three Months Year
Ended Ended Ended Ended
October 31, June 30, June 30, March 31,
2000 2000 1999 1999
------------- ------------- ------------- -------------
Emerging Countries
(Number of Shares)
Shares sold 1,364,617 4,383,749 1,208,239 4,616,946
Shares issued as reinvestment
of dividends -- -- -- 36,438
Shares redeemed (1,825,785) (3,235,471) (459,541) (3,431,547)
------------- ------------- ------------- -------------
Net increase (decrease) in
shares outstanding (461,168) 1,148,278 748,698 1,221,837
============= ============= ============= =============
Emerging Countries ($)
Shares sold $ 26,686,067 $ 94,747,678 $ 19,053,123 $ 65,385,070
Shares issued as reinvestment
of dividends -- -- -- 593,577
Shares redeemed (34,329,659) (67,344,187) (7,234,180) (45,346,860)
------------- ------------- ------------- -------------
Net increase (decrease) in
shares outstanding $ (7,643,592) $ 27,403,491 (11,818,943) $ 20,631,787
============= ============= ============= =============
</TABLE>
39
<PAGE>
-------
Pilgrim
Funds
-------
NOTES TO FINANCIAL STATEMENTS as of October 31, 2000 (Continued)
--------------------------------------------------------------------------------
NOTE 10 -- CHANGE IN FUND'S YEAR-END
Effective October 31, 2000 Worldwide Growth, International Core Growth,
International SmallCap Growth, and Emerging Countries changed their fiscal
year-end from June 30 to October 31. This change was done to facilitate the
administration of the Funds.
NOTE 11 -- FORWARD FOREIGN CURRENCY CONTRACTS AS OF OCTOBER 31, 2000 FOR THE
PILGRIM INTERNATIONAL VALUE FUND.
<TABLE>
<CAPTION>
Currency In Net
to Settlement Exchange Unrealized
Purchase Date For Value$ Depreciation
-------- ---- --- ------ ------------
<S> <C> <C> <C> <C>
British Pound USD
GBP 3,131,226 11/1/00 4,498,318 4,543,249 $ 44,931
GBP 1,709,917 11/2/00 2,453,560 2,481,002 27,442
GBP 3,633,747 11/2/00 5,214,064 5,272,382 58,318
Japanese Yen
JP4 2,940,951,000 11/10/00 27,313,219 26,952,765 (360,454)
Swiss Francs
CHF 4,694,527 11/1/00 2,598,688 2,611,554 12,864
CHF 6,711,447 11/2/00 3,718,562 3,733,560 14,998
----------
$ (201,901)
----------
</TABLE>
NOTE 12 -- Foreign Taxes Withheld
For the period ended October 31, 2000, the Funds had foreign taxes withheld
which have been deducted from dividend income:
<TABLE>
<S> <C>
Worldwide Growth(1) $ 100,499
International Value(2) 5,170,145
International Core Growth(1) --
International SmallCap Growth(1) 101,407
Emerging Countries(1) 56,592
</TABLE>
----------
(1) For the period July 1, 2000 thru October 31, 2000
(2) For the year ended October 31, 2000
40
<PAGE>
--------
Pilgrim
Funds
--------
NOTES TO FINANCIAL STATEMENTS as of October 31, 2000 (Continued)
--------------------------------------------------------------------------------
NOTE 13 -- SUBSEQUENT EVENTS
Subsequent to October 31, 2000, the following Funds declared dividends of:
<TABLE>
<CAPTION>
Per Share
Fund Name Type Amount Payable Date Record Date
--------- ---- ------ ------------ -----------
<S> <C> <C> <C> <C>
Worldwide Growth
Class A STCG $ 0.8196 November 20, 2000 November 15, 2000
Class B STCG $ 0.9178 November 20, 2000 November 15, 2000
Class C STCG $ 0.8161 November 20, 2000 November 15, 2000
Class Q STCG $ 0.9444 November 20, 2000 November 15, 2000
Class A LTCG $ 0.2542 November 20, 2000 November 15, 2000
Class B LTCG $ 0.2846 November 20, 2000 November 15, 2000
Class C LTCG $ 0.2531 November 20, 2000 November 15, 2000
Class Q LTCG $ 0.2929 November 20, 2000 November 15, 2000
International Core Growth
Class A STCG $ 0.1544 November 20, 2000 November 15, 2000
Class B STCG $ 0.1540 November 20, 2000 November 15, 2000
Class C STCG $ 0.1546 November 20, 2000 November 15, 2000
Class Q STCG $ 0.1606 November 20, 2000 November 15, 2000
Class A LTCG $ 0.8903 November 20, 2000 November 15, 2000
Class B LTCG $ 0.8881 November 20, 2000 November 15, 2000
Class C LTCG $ 0.8915 November 20, 2000 November 15, 2000
Class Q LTCG $ 0.9529 November 20, 2000 November 15, 2000
Class A NII $ 0.4099 November 20, 2000 November 15, 2000
Class B NII $ 0.3146 November 20, 2000 November 15, 2000
Class C NII $ 0.3320 November 20, 2000 November 15, 2000
Class Q NII $ 0.4177 November 20, 2000 November 15, 2000
International SmallCap Growth
Class A STCG $ 0.9984 November 20, 2000 November 15, 2000
Class B STCG $ 1.0530 November 20, 2000 November 15, 2000
Class C STCG $ 0.9665 November 20, 2000 November 15, 2000
Class Q STCG $ 1.0572 November 20, 2000 November 15, 2000
Class A LTCG $ 1.4849 November 20, 2000 November 15, 2000
Class B LTCG $ 1.5661 November 20, 2000 November 15, 2000
Class C LTCG $ 1.4375 November 20, 2000 November 15, 2000
Class Q LTCG $ 1.5724 November 20, 2000 November 15, 2000
Class A NII $ 0.2335 November 20, 2000 November 15, 2000
Class B NII $ 0.0716 November 20, 2000 November 15, 2000
Class C NII $ 0.0916 November 20, 2000 November 15, 2000
Class Q NII $ 0.2461 November 20, 2000 November 15, 2000
</TABLE>
41
<PAGE>
--------
Pilgrim
Funds
--------
NOTES TO FINANCIAL STATEMENTS as of October 31, 2000 (Continued)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Per Share
Fund Name Type Amount Payable Date Record Date
--------- ---- ------ ------------ -----------
<S> <C> <C> <C> <C>
International Value
All Classes STCG $ 0.5311 November 20, 2000 November 15, 2000
All Classes LTCG $ 1.3496 November 20, 2000 November 15, 2000
Class A NII $ 0.1419 November 20, 2000 November 15, 2000
Class B NII $ 0.0278 November 20, 2000 November 15, 2000
Class C NII $ 0.0366 November 20, 2000 November 15, 2000
Class Q NII $ 0.1446 November 20, 2000 November 15, 2000
</TABLE>
----------
NII -- Net investment income
STCG -- Short-term capital gain
LTCG -- Long-term capital gain
On November 29, 2000, a proxy statement was filed with the Securities and
Exchange Commission ("SEC") for the reorganization of Global Corporate Leaders
into Worldwide Growth. On December 4, 2000, a proxy statement was filed with the
SEC for the reorganization of Emerging Markets Value and Worldwide Emerging
Markets into Emerging Countries. Upon approval, proxy statements will be mailed
to the shareholders.
42
<PAGE>
Pilgrim
Worldwide
Growth Fund PORTFOLIO OF INVESTMENTS as of October 31, 2000
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
COMMON STOCKS: 89.79%
BERMUDA: 0.54%
101,050 @ Tycom Ltd. ADR $ 3,385,175
------------
Total Bermuda 3,385,175
------------
BRAZIL: 0.48%
72,711 Tele Norte Leste
Participacoes SA ADR 1,608,731
19,300 Telecomunicacoes
Brasileiras SA ADR 1,413,725
------------
Total Brazil 3,022,456
------------
CANADA: 4.89%
117,450 Abitibi-Consolidated Inc. 1,027,687
67,000 Alberta Energy Co., Ltd. 2,467,267
138,800 @ Anderson Exploration Ltd. 2,544,288
18,400 @ Ballard Power Systems, Inc. 1,978,000
125,800 @ Biovail Corp. 5,291,463
145,500 Bombardier Inc. 2,281,326
28,500 @ C-Mac Industries Inc. 1,581,750
66,700 @ Celestica Inc. 4,750,874
13,500 Magna Int'l, Inc. 603,633
155,400 Nortel Networks Corp. 7,070,700
46,400 @ Precision Drilling Corp. 1,328,200
------------
Total Canada 30,925,188
------------
CHINA: 0.37%
10,700,000 PetroChina Co., Ltd. 2,250,032
5,000 PetroChina Co., Ltd. ADR 105,938
------------
Total China 2,355,970
------------
DENMARK: 0.55%
16,300 Novo-Nordisk A/S 3,457,210
------------
Total Denmark 3,457,210
------------
FINLAND: 0.40%
45,100 Elisa Communications OYJ 1,251,494
29,250 Nokia OYJ ADR 1,250,437
------------
Total Finland 2,501,931
------------
FRANCE: 5.35%
48,300 Accor SA $ 1,955,099
44,000 Alcatel SA 2,684,632
44,100 Aventis SA 3,180,978
8,900 Groupe Danone 1,244,659
30,700 France Telecom 3,209,610
98,300 Sanofi-Synthelabo SA 5,171,880
33,700 Schneider Electric SA 2,194,884
76,700 STMicroelectronics NV ADR 3,983,606
84,000 Societe Television Francaise 4,583,460
21,370 Total Fina Elf SA 3,057,492
67,800 @ Vivendi Environnement 2,531,545
------------
Total France 33,797,845
------------
GERMANY: 1.04%
71,500 Dresdner Bank AG 2,979,139
52,800 E.ON AG 2,682,989
21,500 Intershop Communications 930,490
------------
Total Germany 6,592,618
------------
GREECE: 0.44%
74,600 Alpha Bank SA 2,757,232
------------
Total Greece 2,757,232
------------
HONG KONG: 1.22%
330,000 Cheung Kong (Holdings) 3,649,506
325,800 @ Hutchison Whampoa 4,052,135
------------
Total Hong Kong 7,701,641
------------
IRELAND: 0.92%
237,500 Allied Irish Banks PLC 2,418,511
64,900 @ Elan Corp PLC ADR 3,370,744
------------
Total Ireland 5,789,255
------------
ISRAEL: 0.75%
80,500 Teva Pharmaceutical Industries ADR 4,759,563
------------
Total Israel 4,759,563
------------
ITALY: 1.69%
279,600 Alleanza Assicurazioni SpA 3,708,509
346,400 Edison SpA 3,262,902
284,600 Riunione Adriatica di Sicurta SpA 3,736,186
------------
Total Italy 10,707,597
------------
JAPAN: 6.37%
90,000 Daikin Industries $ 1,740,366
40,600 Fanuc 3,646,428
118,000 Fujitsu Ltd. 2,102,296
15,600 @ Itochu Techno Science 3,708,601
48,000 Konami Co. 4,047,106
185,000 Mitsui Fudosan 2,241,397
25,100 Murata Manufacturing Co., Ltd. 3,004,225
88,000 NEC Corp. 1,677,496
198,000 Nippon Sheet Glass 3,012,235
131 Nippon Telegraph & Telephone Corp. 1,192,164
119,000 Nomura Securities Co., Ltd. 2,524,722
89 NTT Docomo Inc. 2,194,107
104,000 Pioneer Corp. 3,221,555
398,000 Sanyo Electric Co., Ltd. 3,027,448
36,700 Sony Corp. 2,932,906
------------
Total Japan 40,273,052
------------
MEXICO: 0.14%
16,200 Telefonos de Mexico SA ADR 873,787
------------
Total Mexico 873,787
------------
NETHERLANDS: 3.10%
116,800 Koninklijke Ahold NV 3,392,758
45,200 Akzo Nobel NV 2,057,839
54,050 @ ASM Lithography Holding NV ADR 1,503,266
58,865 Konnklijke Phillips Electronics ADR 2,350,921
53,400 Numico NV 2,496,871
36,700 @ Qiagen NV 1,572,753
52,600 Royal Dutch Petroleum Co. 3,119,637
61,700 Unilever NV 3,094,396
------------
Total Netherlands 19,588,441
------------
PORTUGAL: 0.77%
548,800 Portugal Telecom 4,889,975
------------
Total Portugal 4,889,975
------------
SINGAPORE: 0.84%
97,000 Flextronics International 3,686,000
162,000 Singapore Airlines Ltd. 1,623,413
------------
Total Singapore 5,309,413
------------
SOUTH KOREA: 0.23%
64,720 Korea Electric Power Corp. 1,445,176
------------
Total South Korea 1,445,176
------------
See Accompanying Notes to Financial Statements
43
<PAGE>
Pilgrim
Worldwide
Growth Fund
PORTFOLIO OF INVESTMENTS as of October 31, 2000 (Continued)
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
SPAIN: 1.32%
183,000 Altadis SA $ 2,740,937
332,600 Banco Santander Central Hispano SA 3,223,232
145,700 Endesa SA 2,373,908
501 Telefonica SA ADR 29,027
-------------
Total Spain 8,367,104
-------------
SWEDEN: 1.34%
131,000 Telefonaktiebolaget LM Ericsson ADR 1,817,625
303,900 Nordic Baltic Holding AB 2,281,006
278,100 Svenska Handelsbanken 4,369,535
-------------
Total Sweden 8,468,166
-------------
SWITZERLAND: 1.37%
1,600 Nestle SA 3,315,531
17,200 UBS AG 2,382,510
6,100 Zurich Financial Services AG 2,952,270
-------------
Total Switzerland 8,650,311
-------------
UNITED KINGDOM: 8.66%
214,300 BAA PLC 1,781,677
421,042 BAE Systems PLC 2,391,715
66,900 Barclays PLC 1,914,191
687,800 BG Group PLC 2,754,378
643,600 Billiton PLC 2,455,975
171,300 Cable & Wireless PLC 2,423,339
949,400 Centrica PLC 3,264,749
185,000 CMG PLC 3,054,683
330,500 Diageo PLC 3,119,399
287,600 @ Energis PLC 2,459,942
268,000 HSBC Holdings 3,728,427
687,800 @ Lattice Group PLC 1,467,005
186,600 Logica PLC 5,520,534
22,800 Reuters Group PLC ADR 2,687,550
154,400 Rio Tinto PLC 2,497,896
208,100 Royal Bank of Scotland Group PLC 4,671,051
140,000 Sema Group PLC 1,767,256
398,400 Shell Transport & Trading Co. 3,205,333
13,200 @ Shire Pharmaceuticals PLC ADR 829,950
649,100 Vodafone Group PLC 2,700,644
-------------
Total United Kingdom 54,695,694
-------------
UNITED STATES: 47.01%
71,800 Adobe Systems, Inc. $ 5,461,288
158,000 AES Corp. 8,927,000
18,100 @ Amdocs Ltd. 1,173,106
123,300 America Online, Inc. 6,218,019
63,200 @ Applied Micro Circuits Corp. 4,826,900
74,800 @ Ariba Inc. 9,452,850
246,680 @ AT&T - Liberty Media Corp. 4,440,240
32,100 Baker Hughes, Inc. 1,105,765
55,200 Baxter Int'l, Inc. 4,536,750
57,192 @ BEA Systems Inc. 4,103,526
55,300 Bristol-Myers Squibb Co. 3,369,844
57,541 Chase Manhattan Corp. 2,618,116
107,500 @ CIENA Corp. 11,300,938
183,700 @ Cisco Systems, Inc. 9,896,838
250,066 Citigroup, Inc. 13,159,723
158,000 Comcast Corp. 6,438,500
59,400 @ Comverse Technology Inc. 6,637,950
109,899 Corning, Inc. 8,407,273
106,500 EMC Corp-Mass 9,485,156
168,000 Enron Corp. 13,786,500
62,800 @ Extreme Networks 5,208,475
68,200 @ Fannie Mae 5,251,400
160,703 Gap, Inc. 4,148,146
124,400 @ Genentech, Inc. 10,263,000
158,000 HCA -- The Healthcare Co. 6,310,125
33,600 @ Idec Pharmaceuticals Corp. 6,589,800
116,619 @ JDS Uniphase Corp. 9,489,871
45,200 Juniper Networks, Inc. 8,814,000
81,040 Merck & Co., Inc. 7,288,535
77,443 @ Microsoft Corp. 5,333,887
259,400 @ Oracle Corp. 8,560,200
129,172 Pfizer, Inc. 5,578,616
80,500 @ Qualcomm, Inc. 5,241,305
286,700 Santa Fe Int'l Corp. 10,464,550
55,456 Schering-Plough Corp. 2,866,382
78,100 Schlumberger Ltd. 5,945,362
139,200 @ Siebel Systems, Inc. 14,607,300
106,500 @ Sun Microsystems, Inc. 11,808,187
41,000 Transocean Sedco Forex, Inc. 2,173,000
76,287 UnitedHealth Group, Inc. 8,343,891
76,788 @ Veritas Software Corp. 10,828,307
180,800 @ Weatherford Int'l, Inc. 6,599,200
-------------
Total United States 297,059,821
-------------
Total Common Stocks
(Cost $519,946,830) 567,374,621
-------------
Preferred Stocks: 0.84%
BRAZIL: 0.38%
382,810 Banco Bradesco SA $ 2,366,243
-------------
Total Brazil 2,366,243
-------------
GERMANY: 0.46%
14,400 SAP AG 2,902,335
-------------
Total Germany 2,902,335
-------------
Total Preferred Stocks
(Cost $6,218,446) 5,268,578
-------------
Total Long-Term Investments
(Cost $526,165,276) 572,643,199
-------------
--------------------------------------------------------------------------------
Principal
Amount Value
--------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS: 7.94%
COMMERCIAL PAPER: 7.94%
$25,200,000 Federal National Mortgage Association
Notes, 6.430%, due 11/02/00 $ 25,195,499
25,000,000 Nestle Capital Corp. Years 1 & 2,
6.350%, due 11/01/00 25,000,000
-------------
Total Short-Term Investments
(Cost $50,195,499) 50,195,499
-------------
Total Investments in Securities
(Cost $ 576,360,775)* 98.57% $ 622,838,698
Other Assets and Liabilities-Net 1.43% 9,052,133
------ -------------
Net Assets 100.00% $ 631,890,831
====== =============
----------
@ Non-income producing security
ADR -- American Depository Receipt
* Cost for federal income tax purposes is $578,375,834. Net unrealized
appreciation consists of:
Gross Unrealized Appreciation $ 72,403,674
Gross Unrealized Depreciation (27,940,810)
------------
Net Unrealized Appreciation $ 44,462,864
============
See Accompanying Notes to Financial Statements
44
<PAGE>
Pilgrim
Worldwide
Growth Fund
PORTFOLIO OF INVESTMENTS as of October 31, 2000 (Continued)
--------------------------------------------------------------------------------
Percentage of
Industry Net Assets
--------------------------------------------------------------------------------
Aerospace/Defense 0.38%
Airlines 0.26%
Auto Parts & Equipment 0.10%
Banks 5.65%
Beverages 0.49%
Biotechnology 2.92%
Building Materials 0.75%
Chemicals 0.33%
Computers 7.88%
Diversified Financial Services 3.31%
Electric 2.53%
Electrical Components & Equipment 0.48%
Electronics 3.28%
Energy -- Alternate Sources 0.31%
Engineering & Construction 0.28%
Environmental Control 0.40%
Food 2.14%
Forest Products & Paper 0.16%
Gas 1.18%
Hand/Machine Tools 0.35%
Healthcare -- Products 0.72%
Healthcare -- Services 2.32%
Holding Companies -- Diversified 0.64%
Home Furnishings 0.97%
Insurance 1.65%
Internet 2.63%
Lodging 0.31%
Media 2.87%
Mining 0.78%
Miscellaneous Manufacturing 0.79%
Oil & Gas Producers 4.86%
Oil & Gas Services 2.16%
Pharmaceuticals 7.15%
Pipelines 2.18%
Real Estate 0.93%
Retail 0.66%
Semiconductors 1.39%
Software 7.12%
Telecommunications 16.88%
Tobacco 0.44%
Short-Term Investments 7.94%
Other Assets and Liabilities, Net 1.43%
------
NET ASSETS 100.00%
======
See Accompanying Notes to Financial Statements
45
<PAGE>
Pilgrim
International
Value Fund
PORTFOLIO OF INVESTMENTS as of October 31, 2000
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
COMMON STOCK: 96.15%
BRAZIL: 8.00%
805,500 Banco Bradesco SA ADR $ 31,579,899
3,958,900 Centrais Eletricas Brasileiras SA ADR 35,161,762
1,224,200 Cia de Bebidas das Americas ADR 27,621,013
1,472,300 Petroleo Brasileiro SA ADR 39,044,660
532,786 Tele Norte Leste Participacoes SA ADR 11,787,890
191,000 Telecomunicacoes Brasileiras SA ADR 13,990,750
-------------
Total Brazil 159,185,974
-------------
CHINA: 1.17%
110,680,000 PetroChina Co., Ltd. 23,274,163
-------------
Total China 23,274,163
-------------
DENMARK: 2.05%
282,180 Den Danske Bank 40,865,340
-------------
Total Denmark 40,865,340
-------------
FRANCE: 5.49%
549,500 Alcatel SA 33,527,394
225,800 Eridania Beghin-Say 17,369,806
1,130,100 Michelin (C.G.D.E.) 32,702,011
179,492 Total Fina Elf SA 25,680,642
-------------
Total France 109,279,853
-------------
GERMANY: 6.93%
4,322,900 BASF AG 32,667,231
3,169,000 Bayerische Motoren Werke AG 38,016,964
1,092,300 Deutsche Telekom 41,016,483
515,200 E.ON AG 26,179,470
-------------
Total Germany 137,880,148
-------------
HONG KONG: 2.94%
17,970,586 First Pacific Co. 4,055,421
2,980,695 Jardine Matheson Holdings, Ltd. 16,542,857
6,146,000 Swire Pacific, Ltd. 37,905,193
-------------
Total Hong Kong 58,503,471
-------------
IRELAND: 2.92%
2,012,800 Allied Irish Banks PLC 20,496,754
1,133,300 Bank of Ireland 37,526,267
-------------
Total Ireland 58,023,021
-------------
ITALY: 3.80%
10,687,800 ENI-Ente Nazionale Idrocarburi SpA $ 57,864,501
1,529,200 Telecom Italia SpA 17,713,328
-------------
Total Italy 75,577,829
-------------
JAPAN: 15.30%
1,462,533 Bank of Tokyo-Mitsubishi, Ltd. 19,485,365
654,000 Daiichi Pharmaceutical Co., Ltd. 18,580,397
2,997,000 Daiwa House Industry Co., Ltd. 18,814,508
1,878,900 Hitachi, Ltd. 20,146,754
3,700 Japan Tobacco, Inc. 25,431,884
3,249,000 Komatsu, Ltd. 14,411,548
875,000 Matsushita Electric Industrial Co., Ltd. 25,420,428
10,636,000 Mitsubishi Heavy Industries, Ltd. 41,329,461
7,603,000 Nippon Mitsubishi Oil Corp. 40,901,444
3,099 Nippon Telegraph & Telephone Corp. 28,202,420
4,674,400 Tokio Marine & Fire Insurance Co. 51,664,084
-------------
Total Japan 304,388,293
-------------
MEXICO: 1.86%
684,060 Telefonos de Mexico SA ADR 36,896,486
-------------
Total Mexico 36,896,486
-------------
NETHERLANDS: 0.75%
328,000 Akzo Nobel N.V. 14,932,990
-------------
Total Netherlands 14,932,990
-------------
NEW ZEALAND: 0.75%
6,751,466 Telecom Corp. of New Zealand, Ltd. 14,941,184
-------------
Total New Zealand 14,941,184
-------------
PORTUGAL: 1.65%
3,684,816 Portugal Telecom SA 32,832,830
-------------
Total Portugal 32,832,830
-------------
SINGAPORE: 1.35%
2,285,191 DBS Group Holdings, Ltd. 26,933,584
-------------
Total Singapore 26,933,584
-------------
SOUTH AFRICA: 1.06%
765,000 De Beers Consolidated Mines, Ltd. 21,042,887
-------------
Total South Africa 21,042,887
-------------
SOUTH KOREA: 1.77%
1,055,000 @ Korea Electric Power Corp. ADR $ 12,857,813
120,000 @ Korea Telecom ADR 4,425,000
1,131,600 Pohang Iron & Steel Co. ADR 17,893,425
-------------
Total South Korea 35,176,238
-------------
SPAIN: 2.91%
2,002,000 Banco Bilbao Vizcaya Argentaria SA 12,492,480
2,096,000 Telefonica SA 39,966,633
294,000 Union Electrica Fenosa SA 5,436,355
-------------
Total Spain 57,895,468
-------------
SWITZERLAND: 5.26%
17,900 Nestle SA 37,092,512
165,700 Swisscom AG 42,079,467
52,476 Zurich Financial Services AG 25,397,379
-------------
Total Switzerland 104,569,358
-------------
UNITED KINGDOM: 29.46%
980,000 Allied Domecq PLC 5,065,626
6,809,000 BAE Systems PLC 38,678,294
1,265,000 BOC Group PLC 17,620,327
9,121,200 British American Tobacco PLC 63,922,142
3,645,100 British Telecommunications PLC 42,733,948
2,436,507 Cadbury Schweppes PLC 15,060,156
23,251,000 Corus Group PLC 20,916,332
6,159,012 Diageo PLC 58,131,370
2,945,600 HSBC Holdings PLC 40,979,305
3,478,800 Imperial Chemical Industries PLC 21,300,712
5,429,000 @ Innogy Holdings PLC 15,754,408
5,429,000 International Power PLC 21,898,625
19,303,898 Invensys PLC 46,074,765
14,994,750 Marks & Spencer PLC 41,772,713
1,633,500 Reckitt Benckiser PLC 21,473,338
1,330,000 Rolls-Royce PLC 3,454,274
2,824,809 Royal & Sun Alliance Insurance Group PLC 20,103,900
6,267,100 Safeway PLC 26,052,143
1,835,400 South African Breweries PLC 11,051,750
7,959,000 Unilever PLC 53,843,039
-------------
Total United Kingdom 585,887,167
-------------
See Accompanying Notes to Financial Statements
46
<PAGE>
Pilgrim
International
Value Fund
PORTFOLIO OF INVESTMENTS as of October 31, 2000 (Continued)
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
VENEZUELA: 0.73%
759,700 Compania Anonima Nacional
Telefonos de Venezuela ADR $ 14,434,300
--------------
Total Venezuela 14,434,300
--------------
Total Common Stocks
(Cost $1,849,228,137) 1,912,520,584
--------------
Total Long Term Investments
(Cost $1,849,228,137) 1,912,520,584
--------------
--------------------------------------------------------------------------------
Principal
Amount Value
--------------------------------------------------------------------------------
SHORT TERM INVESTMENTS: 6.29%
Repurchase Agreement: 6.29%
$125,011,000 State Street Bank & Trust Repurchase
Agreement, 6.450% due 11/01/00
(Collateralized by $19,415,000 U.S.
Treasury Notes, 7.500% Due 02/15/05, Value
$19,807,851, $52,798,000 U.S. Treasury
Notes, 7.500% Due 02/15/05, Value
$53,854,950, $52,798,000 U.S. Treasury
Notes, 7.500% Due 02/15/05, Value
$53,854,950) $ 125,011,000
--------------
Total Short-Term Investments
(Cost $125,011,000) 125,011,000
--------------
Total Investments in Securities
(Cost $ 1,974,239,137)* 102.44% $2,037,531,584
Other Assets and Liabilities-Net -2.44% (48,615,630)
------- --------------
Net Assets 100.00% $1,988,915,954
======= ==============
----------
@ Non-income producing security
ADR -- American Depository Receipt
* Cost for federal income tax purposes is $1,974,255,211. Net unrealized
appreciation consists of:
Gross Unrealized Appreciation $ 232,136,496
Gross Unrealized Depreciation (168,860,123)
--------------
Net Unrealized Appreciation $ 63,276,373
==============
See Accompanying Notes to Financial Statements
47
<PAGE>
Pilgrim
International
Value Fund
PORTFOLIO OF INVESTMENTS as of October 31, 2000 (Continued)
--------------------------------------------------------------------------------
Percentage of
Industry Net Assets
--------------------------------------------------------------------------------
Aerospace/Defense 2.12%
Agriculture 0.87%
Auto Manufacturers 1.91%
Auto Parts & Equipment 1.65%
Banks 11.58%
Beverages 5.12%
Chemicals 4.35%
Electric 4.58%
Electrical Components & Equipment 1.01%
Food 6.64%
Holding Companies-Diversified 2.94%
Home Builders 0.95%
Home Furnishings 1.28%
Household Products/Wares 1.08%
Insurance 4.89%
Iron/Steel 1.95%
Machinery-Construction & Mining 0.73%
Mining 1.06%
Miscellaneous Manufacturing 5.71%
Oil & Gas Producers 9.39%
Pharmaceuticals 0.93%
Retail 2.10%
Telecommunications 18.83%
Tobacco 4.49%
Short-Term Investments 6.28%
Other Assets and Liabilities, Net -2.44%
------
NET ASSETS 100.00%
======
See Accompanying Notes to Financial Statements
48
<PAGE>
Pilgrim
International
Core Growth Fund
PORTFOLIO OF INVESTMENTS as of October 31, 2000
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
COMMON STOCKS: 86.13%
BRAZIL: 0.51%
18,868 Tele Norte Leste Participacoes SA ADR $ 417,455
-------------
Total Brazil 417,455
-------------
CANADA: 7.99%
60,100 Abitibi-Consolidated, Inc. 525,875
17,500 Alberta Energy Co., Ltd. 644,435
39,000 @ Anderson Exploration, Ltd. 714,894
5,000 @ Ballard Power Systems, Inc. 537,500
27,000 @ Biovail Corp. 1,135,687
37,500 Bombardier, Inc. 587,971
14,600 @ Celestica, Inc. 1,039,921
3,600 Magna Int'l, Inc. 160,969
19,300 Nortel Networks Corp. 878,150
11,900 @ Precision Drilling Corp. 340,638
-------------
Total Canada 6,566,040
-------------
CHINA: 0.71%
2,770,000 PetroChina Co., Ltd. 582,485
-------------
Total China 582,485
-------------
DENMARK: 1.06%
4,100 Novo-Nordisk A/S 869,605
-------------
Total Denmark 869,605
-------------
FINLAND: 1.16%
11,339 Elisa Communications OYJ 314,659
15,000 Nokia OYJ ADR 641,250
-------------
Total Finland 955,909
-------------
FRANCE: 10.20%
13,000 Accor SA 526,217
11,100 Alcatel SA 677,259
8,600 Aventis SA 620,327
7,900 France Telecom 825,926
2,400 Groupe Danone 335,638
24,800 Sanofi-Synthelabo SA 1,304,808
8,900 Schneider Electric SA 579,658
20,000 Societe Television Francaise 1,091,300
19,600 ST Microelectronics NV 1,017,975
5,374 Total Fina Elf SA 768,880
17,000 @ Vivendi Environnement 634,753
-------------
Total France 8,382,741
-------------
GERMANY: 2.03%
18,400 Dresdner Bank AG $ 766,660
13,000 E.ON AG 660,584
5,500 @ Intershop Communications AG 238,032
-------------
Total Germany 1,665,276
-------------
GREECE: 0.90%
20,100 Alpha Bank SA 742,900
-------------
Total Greece 742,900
-------------
HONG KONG: 2.77%
109,000 Cheung Kong (Holdings) 1,205,443
85,800 Hutchison Whampoa 1,067,137
-------------
Total Hong Kong 2,272,580
-------------
IRELAND: 1.80%
60,500 Allied Irish Banks PLC 616,084
16,600 @ Elan Corp PLC ADR 862,162
-------------
Total Ireland 1,478,246
-------------
ISRAEL: 1.43%
19,900 Teva Pharmaceutical Industries ADR 1,176,588
-------------
Total Israel 1,176,588
-------------
ITALY: 3.39%
75,000 Alleanza Assicurazioni SPA 994,772
88,100 Edison SPA 829,855
72,900 Riunione Adriatica di Sicurta SPA 957,020
-------------
Total Italy 2,781,647
-------------
JAPAN: 13.39%
29,000 Daikin Industries 560,784
10,700 Fanuc 961,004
32,000 Fujitsu, Ltd. 570,114
2,800 Hoya Corp. 231,462
4,000 Itochu Techno-Science Corp. 950,923
12,000 Konami Corp. 1,011,777
48,000 Mitsui Fudosan 581,552
6,000 Murata Manufacturing Co., Ltd. 718,141
34,000 NEC Corp. 648,123
51,000 Nippon Sheet Glass 775,879
34 Nippon Telegraph & Telephone Corp. 309,417
31,000 Nomura Securities Co., Ltd. 657,701
23 NTT Docomo, Inc. 567,016
28,000 Pioneer Corp. 867,342
82,000 Sanyo Electric Co., Ltd. 623,746
2,700 Sony Corp. ADR 224,100
9,300 Sony Corp. 743,216
-------------
Total Japan 11,002,297
-------------
MEXICO: 0.28%
4,200 Telefonos de Mexico SA ADR $ 226,538
-------------
Total Mexico 226,538
-------------
NETHERLANDS: 6.65%
11,800 Akzo Nobel NV 537,223
29,400 @ ASM Lithography Holding NV 817,688
29,700 Koninklijke Ahold NV 862,713
14,740 Koninklijke Philips Electronics NV 588,679
14,100 Numico NV 659,286
9,400 @ Qiagen NV 402,831
13,400 Royal Dutch Petroleum Co. 794,736
15,900 Unilever NV 797,421
-------------
Total Netherlands 5,460,577
-------------
PORTUGAL: 1.44%
132,700 Portugal Telecom 1,182,397
-------------
Total Portugal 1,182,397
-------------
SINGAPORE: 1.64%
24,400 @ Flextronics Int'l, Ltd. 927,200
42,000 Singapore Airlines, Ltd. 420,885
-------------
Total Singapore 1,348,085
-------------
SOUTH KOREA: 0.48%
17,720 Korea Electric Power Corp. 395,682
-------------
Total South Korea 395,682
-------------
SPAIN: 2.63%
46,900 Altadis SA 702,458
86,300 Banco Santander Central Hispano SA 836,335
38,300 Endesa SA 624,027
-------------
Total Spain 2,162,820
-------------
SWEDEN: 3.03%
83,700 Nordic Baltic Holding AB 628,234
58,300 Svenska Handelsbanken 916,015
68,100 Telefonaktiebolaget LM Ericsson ADR 944,888
-------------
Total Sweden 2,489,137
-------------
See Accompanying Notes to Financial Statements
49
<PAGE>
Pilgrim
International
Core Growth Fund
PORTFOLIO OF INVESTMENTS as of October 31, 2000 (Continued)
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
SWITZERLAND: 3.15%
400 Nestle SA $ 828,883
300 Swatch Group AG 397,196
4,400 UBS AG 609,479
1,560 Zurich Financial Services AG 755,007
-------------
Total Switzerland 2,590,565
-------------
UNITED KINGDOM: 16.81%
56,500 BAA PLC 469,738
107,798 BAE Systems PLC 612,343
18,200 Barclays PLC 520,751
147,200 BG Group PLC 589,480
163,900 Billiton PLC 625,442
34,200 Cable & Wireless PLC 483,819
270,800 Centrica PLC 931,213
48,600 CMG PLC 802,474
84,900 Diageo PLC 801,322
67,000 @ Energis PLC 573,074
70,800 HSBC Holdings PLC 984,972
147,200 @ Lattice Group PLC 313,962
47,900 Logica PLC 1,417,115
5,800 Reuters Group PLC ADR 683,675
39,300 Rio Tinto PLC 635,799
54,100 Royal Bank of Scotland Group PLC 1,214,339
35,000 Sema Group PLC 441,814
100,900 Shell Transport & Trading Co. 811,792
3,300 @ Shire Pharmaceuticals PLC ADR 207,488
166,200 Vodafone Group PLC 691,491
-------------
Total United Kingdom 13,812,103
-------------
UNITED STATES: 2.68%
9,300 @ Amdocs, Ltd. 602,756
4,700 @ Comverse Technology, Inc. 525,225
14,100 Santa Fe Int'l Corp. 514,650
10,500 Transocean Sedco Forex, Inc. 556,500
-------------
Total United States 2,199,131
-------------
Total Common Stocks
(Cost $68,171,413) 70,760,804
-------------
PREFERRED STOCKS: 1.66%
BRAZIL: 0.75%
99,190 Banco Bradesco SA $ 613,117
-------------
Total Brazil 613,117
-------------
GERMANY: 0.91%
3,700 SAP AG 745,739
-------------
Total Germany 745,739
-------------
Total Preferred Stocks
(Cost $1,606,802) 1,358,856
-------------
Total Long-Term Investments
(Cost $69,778,215) 72,119,660
-------------
--------------------------------------------------------------------------------
Principal
Amount Value
--------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS: 3.65%
COMMERCIAL PAPER: 3.65%
$3,000,000 Nestle Capital Corp., 6.350% due 11/01/00 $ 3,000,000
-------------
Total Short-Term Investments
(Cost $3,000,000) 3,000,000
-------------
Total Investments in Securities
(Cost $72,778,215) 91.44% $ 75,119,660
Other Assets and Liabilities-Net 8.56% 7,032,954
------ -------------
Net Assets 100.00% $ 82,152,614
====== =============
----------
@ Non-income producing security
ADR -- American Depository Receipt
* Cost for federal income tax purposes is $73,497,023. Net unrealized
appreciation consists of:
Gross Unrealized Appreciation $ 6,203,935
Gross Unrealized Depreciation (4,581,298)
------------
Net Unrealized Appreciation $ 1,622,637
============
See Accompanying Notes to Financial Statements
50
<PAGE>
Pilgrim
International
Core Growth Fund
PORTFOLIO OF INVESTMENTS as of October 31, 2000 (Continued)
--------------------------------------------------------------------------------
Percentage of
Industry Net Assets
--------------------------------------------------------------------------------
Financials 17.85%
Information Technology 15.66%
Industrials 9.37%
Health Care 8.29%
Telecommunication Services 7.88%
Consumer Discretionary 7.19%
Energy 6.97%
Consumer Staples 6.07%
Utilities 5.68%
Materials 2.83%
Short-Term Investments 3.65%
Other Assets and Liabilities, Net 8.56%
------
NET ASSETS 100.00%
======
See Accompanying Notes to Financial Statements
51
<PAGE>
Pilgrim
International
SmallCap
Growth Fund
PORTFOLIO OF INVESTMENTS as of October 31, 2000
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
COMMON STOCKS: 88.53%
AUSTRIA: 0.36%
90,800 Austria Technologie & Systemtecknik AG $ 2,535,041
-------------
Total Austria 2,535,041
-------------
CANADA: 8.28%
473,200 @ Anderson Exploration, Ltd. 8,674,043
110,000 @ ATS Automation Tooling Systems 1,951,555
152,100 @ Canadian Hunter Exploration, Ltd. 3,186,383
203,700 @ Certicom Corp. 6,734,435
46,700 @ C-Mac Industries, Inc. 2,591,850
256,800 @ Cognos, Inc. 10,657,200
77,500 @ Descartes Systems Group, Inc. 3,138,750
88,000 @ Descartes Systems Group, Inc. 3,566,088
409,700 Petro-Canada, Ltd. 8,582,913
82,200 @ Pivotal Corp. 4,950,835
95,100 @ RIO Alto Exploration, Ltd. 1,612,498
294,900 @ Tesco Corp. 2,442,216
-------------
Total Canada 58,088,766
-------------
DENMARK: 5.05%
441,500 GN Store Nord 8,558,641
96,100 ISS A/S 5,917,555
112,300 NEG Micon A/S 5,826,615
279,600 Vestas Wind Systems AS 15,144,535
-------------
Total Denmark 35,447,346
-------------
FINLAND: 1.23%
394,700 @ F-Secure OYJ 2,244,115
156,500 Sampo Insurance Co., Ltd. 6,374,686
-------------
Total Finland 8,618,801
-------------
FRANCE: 6.09%
265,500 Air France 4,731,371
44,100 Altran Technologies SA 9,015,267
57,000 @ Business Objects SA ADR 4,491,422
53,500 Coflexip Stena Offshore 6,197,116
32,427 Galeries Lafayette 5,231,089
128,800 Pechiney SA 4,809,188
30,800 Rexel SA 2,143,225
71,808 Rhodia SA 886,335
59,200 @ Wavecom SA ADR 5,150,400
-------------
Total France 42,655,413
-------------
GERMANY: 9.04%
80,100 @ ADVA AG Optical Networking $ 5,879,655
88,600 @ Aixtron 11,879,387
50,900 Altana AG 6,130,058
44,400 @ D Logistics AG 3,127,262
56,700 Depfa Deutsche Pfandbriefbank AG 4,185,580
76,800 @ Direkt Anlage Bank AG 3,388,970
59,700 Merck KGAA 2,269,633
70,000 @ Schneider Technologies AG 3,498,780
374,000 @ Senator Entertainment AG 6,077,761
88,200 SGL Carbon 5,389,700
32,300 Singulus Technologies 1,301,965
101,800 @ Suess Microtec 2,863,746
60,000 Tecis Holding AG 4,338,045
59,000 @ Telesens AG 3,104,180
-------------
Total Germany 63,434,722
-------------
HONG KONG: 1.93%
4,534,000 China Resources
Enterprise 5,145,006
5,428,000 Cosco Pacific, Ltd. 4,001,923
3,719,000 New World Development 4,410,918
-------------
Total Hong Kong 13,557,847
-------------
IRELAND: 0.03%
65,500 @ Parthus Technologies 224,288
-----------
Total Ireland 224,288
-----------
ITALY: 4.84%
422,900 Arnoldo Mondadori Editore SPA 4,952,449
716,500 Autogrill SPA 7,910,368
515,500 Class Editori SPA 7,261,728
4,911,500 Parmalat Finanziaria SPA 7,085,431
1,302,700 Saipem SPA 6,787,596
-------------
Total Italy 33,997,572
-------------
JAPAN: 16.65%
1,158,000 @ All Nippon Airways $ 3,618,916
496,000 Alps Electric Co. 9,818,632
1,102,000 Citizen Watch Co., Ltd. 10,816,497
171,000 Credit Saison 3,620,126
328,000 Daiichi Pharmaceutical Co., Ltd. 9,318,609
937,000 Fujikura, Ltd. 8,260,954
496,000 Hitachi Cable, Ltd. 5,845,722
937,000 Komatsu, Ltd. 4,156,239
198,400 Meitec Corp. 8,327,655
827,000 NGK Insulators 10,951,886
386,000 Nippon Electric Glass Co., Ltd. 8,985,382
46,000 Nippon System Development 4,987,215
165,400 Nitto Denko Corp. 5,593,420
13,600 OBIC Business Consultants 1,358,567
1,158,000 OKI Electric Industry Co. 6,887,614
110,000 Ono Pharmaceutical Co., Ltd. 4,385,282
1,323,000 Sumitomo Osaka Cement Co. 5,638,042
243,000 Ushio, Inc. 4,231,316
-------------
Total Japan 116,802,074
-------------
LUXEMBOURG: 1.13%
51,200 @ Thiel Logistik AG 7,907,597
-------------
Total Luxembourg 7,907,597
-------------
MEXICO: 0.24%
370,922 @ Corporation Interamericana de
Entretenimiento SA 1,675,695
-------------
Total Mexico 1,675,695
-------------
NETHERLANDS: 0.72%
85,500 Fugro NV 5,038,968
-------------
Total Netherlands 5,038,968
-------------
NORWAY: 4.90%
361,100 @ Frontline, Ltd. 5,954,122
320,400 Schibsted ASA 4,868,671
700,000 Storebrand 4,903,545
372,800 @ TGS Nopec Geophysical Co. ASA 4,740,856
346,700 Tomra Systems ASA 13,936,750
-------------
Total Norway 34,403,944
-------------
See Accompanying Notes to Financial Statements
52
<PAGE>
Pilgrim
International
SmallCap
Growth Fund
PORTFOLIO OF INVESTMENTS as of October 31, 2000 (Continued)
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
SINGAPORE: 1.61%
772,000 Overseas Union Bank $ 3,736,264
780,000 Venture MFG (Singapore), Ltd. 7,549,963
-------------
Total Singapore 11,286,227
-------------
SOUTH KOREA: 1.10%
59,000 Hankuk Electric Glass 3,734,505
102,140 Samsung SDI Co., Ltd. 3,977,848
-------------
Total South Korea 7,712,353
-------------
SPAIN: 3.05%
158,700 Acciona SA 5,003,097
338,900 Centros Comerciales Carrefour SA 4,293,729
556,100 Grupo Dragados SA 5,403,331
323,200 Indra Sistemas SA 3,252,814
374,700 SOL Melia SA 3,427,723
-------------
Total Spain 21,380,694
-------------
SWEDEN: 2.99%
875,400 Enea Data AB 4,248,962
381,800 HIQ Int'l AB 3,094,963
147,500 JM AB 3,365,591
107,300 @ PerBio Science AB 1,089,934
162,100 @ Pyrosequencing AB 2,011,589
37,600 Svenska Cellulosa AB 774,190
1,081,900 Swedish Match AB 3,713,777
402,000 @ Telelogic AB 2,655,245
-------------
Total Sweden 20,954,251
-------------
SWITZERLAND: 9.42%
1,500 Ascom Holding AG 5,077,603
37,300 Gretag Imaging Group 6,702,214
5,690 @ Kudelski SA 7,660,102
24,280 @ Logitech Int'l SA 7,428,794
6,600 SEZ Holding AG 3,836,782
4,600 Straumann Holding AG 9,941,589
12,900 Swisslog Holding AG 7,104,473
11,020 Synthes-Stratec, Inc. 7,019,304
5,500 Tecan Group AG 5,905,096
22,700 Unaxis Holding AG 5,461,588
-------------
Total Switzerland 66,137,545
-------------
UNITED KINGDOM: 9.50%
75,600 @ Autonomy Corp. PLC $ 2,661,120
455,000 @ Baltimore Technologies PLC 3,502,265
275,300 @ Celltech Group PLC 5,472,414
1,073,800 Cookson Group PLC 2,921,305
935,900 @ Eidos PLC 3,798,847
1,216,900 Enterprise Oil PLC 9,622,847
271,000 @ Future Network PLC (The) 1,749,772
900,000 International Power PLC 3,630,275
44,582 Johnson Matthey PLC 696,265
581,100 Matalan PLC 5,480,453
495,400 @ Pharmagene PLC 1,890,445
90,940 Psion PLC 550,229
1,043,800 @ Regus PLC 4,743,416
2,132,400 Safeway PLC 8,864,322
1,193,600 Spirent PLC 11,066,540
-------------
Total United Kingdom 66,650,515
-------------
UNITED STATES: 0.40%
104,000 @ OpenTV Corp. 2,795,000
-------------
Total United States 2,795,000
-------------
Total Common Stocks
(Cost $596,448,900) 621,304,659
-------------
PREFERRED STOCKS: 3.61%
GERMANY: 3.61%
137,100 Henkel KGAA 8,296,427
45,500 MLP AG 6,158,505
1,400 Porsche AG 4,716,520
195,600 Prosieben SAT.1 Media AG 6,158,089
-------------
Total Germany 25,329,541
-------------
Total Preferred Stocks
(Cost $ 22,149,554) 25,329,541
-------------
Total Long-Term Investments
(Cost $618,598,454) 646,634,200
-------------
--------------------------------------------------------------------------------
Principal
Amount Value
--------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS: 5.64%
Repurchase Agreements: 5.64%
$39,589,000 State Street Repurchase Agreement, 6.450%
due 11/10/00 (collateralized by $30,355,000
U.S. Treasury Notes, 8.75% due 05/15/17,
value $40,382,471) $ 39,589,000
-------------
Total Short-Term Investments
(Cost $39,589,000) 39,589,000
-------------
Total Investments in Securities
(Cost $658,187,454) 97.78% $ 686,223,200
Other Assets and Liabilities-Net 2.22% 15,579,388
------ -------------
Net Assets 100.00% $ 701,802,588
====== =============
----------
@ Non-income producing security
ADR -- American Depository Receipt
* Cost for federal, Income tax purposes is $667,459,528. Net unrealized
appreciation consists of:
Gross Unrealized Appreciation $ 76,712,881
Gross Unrealized Depreciation (57,949,209)
-------------
Net Unrealized Appreciation $ 18,763,672
=============
See Accompanying Notes to Financial Statements
53
<PAGE>
Pilgrim
International
Small Cap
Growth Fund
PORTFOLIO OF INVESTMENTS as of October 31, 2000 (Continued)
--------------------------------------------------------------------------------
Percentage of
Industry Net Assets
--------------------------------------------------------------------------------
Airlines 1.19%
Auto Manufacturers 0.67%
Banks 1.13%
Biotechnology 0.71%
Building Materials 0.80%
Chemicals 1.69%
Commercial Services 1.41%
Computers 5.61%
Diversified Financial Services 2.50%
Electric 0.52%
Electrical Components & Equipment 5.60%
Electronics 7.57%
Engineering & Construction 4.59%
Entertainment 0.24%
Environmental Control 1.99%
Food 2.27%
Forest Products & Paper 0.11%
Healthcare-Products 3.26%
Holding Companies-Diversified 0.73%
Home Furnishings 0.50%
Household Products/Wares 1.18%
Housewares 0.53%
Insurance 1.61%
Lodging 0.49%
Machinery-Construction & Mining 0.59%
Machinery-Diversified 1.48%
Media 4.43%
Metal Fabricate/Hardware 0.69%
Miscellaneous Manufacturing 1.37%
Oil & Gas Producers 4.51%
Oil & Gas Services 2.87%
Pharmaceuticals 3.93%
Real Estate 0.68%
Retail 4.81%
Semiconductors 2.91%
Software 7.99%
Telecommunications 7.16%
Tobacco 0.53%
Transportation 1.29%
Short-Term Investments 5.64%
Other Assets and Liabilities, Net 2.22%
------
NET ASSETS 100.00%
======
See Accompanying Notes to Financial Statements
54
<PAGE>
Pilgrim
Emerging
Countries Fund
PORTFOLIO OF INVESTMENTS as of October 31, 2000
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
COMMON STOCKS: 90.89%
ARGENTINA: 0.43%
57,500 @ Grupo Financiero Galicia SA ADR $ 837,344
-------------
Total Argentina 837,344
-------------
BELGIUM: 1.02%
64,700 Fortis (B) 1,982,050
-------------
Total Belgium 1,982,050
-------------
BRAZIL: 11.00%
28,000 Brasil Telecom Participacoes SA ADR 1,517,250
51,200 Companhia Brasileira de Distribuicao
Grupo Pao de Acucar ADR 1,824,000
49,000 Cia de Bebidas das Americas ADR 1,105,563
193,700 Cia Paranaense de Energia ADR 1,755,406
65,000 Centrais Eletricas Brasileiras SA 1,154,269
33,030 Empresa Bras de Aeronautica ADR 955,806
101,100 Embratel Participacoes SA ADR 1,636,556
139,510 @ Petroleo Brasileiro SA ADR 4,054,509
29,200 Tele Celular Sul Participacoes SA ADR 735,475
131,909 Tele Norte Leste Participacoes SA ADR 2,918,487
50,700 @ Telesp Celular Participacoes SA ADR 1,603,387
50,175 Unibanco -- Uniao de Bancos
Brasileiros GDR 1,266,919
44,900 Votorantim Celulose e Papel SA ADR 774,525
-------------
Total Brazil 21,302,152
-------------
CHILE: 0.65%
82,200 Compania Telecomunicaciones de
Chile SA ADR 1,253,550
-------------
Total Chile 1,253,550
-------------
CHINA: 2.47%
4,200,000 Beijing Capital Int'l Airport $ 963,970
13,220,000 @ China Petroleum & Chemical Corp 2,593,486
7,600,000 Zhejiang Expressway Co. 1,227,850
-------------
Total China 4,785,306
-------------
CZECH REPUBLIC: 0.71%
36,480 @ Ceske Radiokomunikace GDR 1,368,000
-------------
Total Czech Republic 1,368,000
-------------
EGYPT: 0.20%
20,000 @ Mobinil-Egyptian Mobile Netork 395,666
-------------
Total Egypt 395,666
-------------
FRANCE: 1.95%
30,500 Alcatel SA 1,860,938
13,300 Total Fina Elf SA 1,902,885
-------------
Total France 3,763,823
-------------
GERMANY: 2.08%
6,100 Allianz AG 2,068,256
24,000 Deutsche Bank AG 1,964,951
-------------
Total Germany 4,033,207
-------------
GREECE: 2.87%
75,900 Alpha Bank SA 2,805,280
40,000 National Bank Of Greece SA 1,520,392
70,000 Hellenic Telecommunications
Organization SA 1,222,761
-------------
Total Greece 5,548,433
-------------
HONG KONG: 4.00%
749,900 @ China Mobile (Hong Kong) Ltd 4,807,668
73,000 @ China Unicom ADR 1,496,500
220,000 @ China Unicom 441,467
1,362,000 Cosco Pacific Ltd. 1,004,167
-------------
Total Hong Kong 7,749,802
-------------
HUNGARY: 1.80%
90,000 Matav Rt. ADR 2,115,000
30,000 OTP Bank Rt. GDR 1,378,500
-------------
Total Hungary 3,493,500
-------------
INDIA: 3.28%
170,000 Hindustan Lever Ltd. $ 645,053
12,400 @ Infosys Technologies Ltd. 1,897,760
330,000 Mahanagar Telephone Nigam 993,276
240,000 Reliance Industries Ltd. 1,553,122
23,900 @ Wipro Ltd. ADR 1,257,737
-------------
Total India 6,346,948
-------------
ISRAEL: 3.46%
32,600 @ AudioCodes Ltd 1,289,737
671,900 Bank Hapoalim Ltd. 1,699,636
19,650 @ Orbotech Ltd. 1,040,222
45,000 Teva Pharmaceutical Industries ADR 2,660,625
-------------
Total Israel 6,690,220
-------------
ITALY: 1.02%
134,800 Mediolanum SPA 1,975,538
-------------
Total Italy 1,975,538
-------------
JAPAN: 1.79%
87,000 Nomura Securities Co Ltd 1,845,805
20,300 Sony Corp. 1,622,288
-------------
Total Japan 3,468,093
-------------
MALAYSIA: 3.40%
500,000 MAA Holdings Bhd 1,000,000
612,000 Malayan Banking Berhad 2,448,000
125,000 Nestle (Malaysia) Berhad 661,184
500,000 Tenaga Nasional Berhad 1,618,421
600,000 United Engineers (Malaysia) 852,632
-------------
Total Malaysia 6,580,237
-------------
See Accompanying Notes to Financial Statements
55
<PAGE>
Pilgrim
Emerging
Countries Fund
PORTFOLIO OF INVESTMENTS as of October 31, 2000 (Continued)
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
MEXICO: 13.80%
105,725 Cemex SA ADR $ 2,233,441
84,635 Coca-Cola Femsa SA ADR 1,623,934
234,430 @ Corp Interamericana de
Entretenimiento SA 1,059,072
51,600 Fomento Economico Mexicano SA ADR 1,970,475
1,998,000 @ GPO Fin Banamex AC ADR 3,104,866
87,000 Grupo Elektra SA ADR 897,188
79,850 @ Grupo Iusacell S.A de C.V. ADR 1,038,050
36,435 @ Grupo Televisa SA ADR 1,972,044
148,201 Telefonos de Mexico SA ADR 7,993,591
44,100 Tubos de Acero de Mexico SA ADR 670,761
131,600 TV Azteca SA DE CV ADR 1,645,000
1,045,000 @ Walmart de Mexico/Mexico City 2,513,464
-------------
Total Mexico 26,721,886
-------------
NETHERLANDS: 1.05%
51,700 Koninklijke Philips Electronics NV 2,031,742
-------------
Total Netherlands 2,031,742
-------------
POLAND: 0.84%
15,000 @ Bank Pekao SA GDR 151,125
14,000 Prokom Software SA 551,383
185,000 Telekomunikacja Polska SA GDR 929,625
-------------
Total Poland 1,632,133
-------------
RUSSIA: 3.24%
52,000 @ Mobile Telesystems ADR 1,436,500
55,000 Lukoil-Holding ADR 2,923,250
150,000 Surgutneftegaz ADR 1,920,000
-------------
Total Russia 6,279,750
-------------
SOUTH AFRICA: 1.67%
75,500 Impala Platinum Holdings Ltd. 3,234,987
-------------
Total South Africa 3,234,987
-------------
SOUTH KOREA: 6.62%
40,000 H&CB $ 961,758
70,000 Korea Electric Power Corp. 1,563,077
200,000 LG Engineering & Construction Ltd. 728,791
22,000 Pohang Iron & Steel Co. 1,278,418
40,000 Samsung Electro-Mechanics 1,280,000
15,000 Samsung Electronics 1,879,121
42,000 Samsung Securities Co. Ltd. 760,615
45,000 Shinsegae Department Store 2,072,967
10,730 SK Telecom 2,287,495
-------------
Total South Korea 12,812,242
-------------
SWEDEN: 1.97%
613,000 Swedish Match AB 2,104,210
127,900 Telefonaktiebolaget LM Ericsson 1,702,381
-------------
Total Sweden 3,806,591
-------------
SWITZERLAND: 1.96%
929 Nestle SA 1,925,080
1,227 Novartis 1,861,387
-------------
Total Switzerland 3,786,467
-------------
TAIWAN: 2.12%
100,000 @ Taiwan Semiconductor Manufacturing Co.
Ltd. ADR 2,268,750
140,000 @ United Microelectronics ADR 1,592,500
35,000 @ Via Technologies Inc/Taiwan 251,390
-------------
Total Taiwan 4,112,640
-------------
THAILAND: 0.70%
2,607,000 @ Thai Farmers Bank 1,347,631
-------------
Total Thailand 1,347,631
-------------
TURKEY: 5.01%
65,000,000 Aksigorta 1,285,743
20,000,000 @ Anadolu Efes Biracilik Ve Malt Sanayii AS 1,172,187
109,542,700 Hurriyet Gazeteci 1,316,146
30,000,000 KOC Holding AS 1,912,130
140,000,000 Turkiye Garanti Bankasi 1,435,929
25,000,000 @ Turkcell Iletisim Hizmet AS 1,098,925
170,000,000 Yapi VE Kredi Bankasi 1,469,629
-------------
Total Turkey 9,690,689
-------------
UNITED KINGDOM: 9.78%
69,200 Barclays PLC $ 1,980,000
167,700 British Telecommunications PLC 1,966,059
209,100 Diageo PLC 1,973,575
566,565 @ Dimension Data Holdings PLC 4,877,658
63,300 Glaxo Wellcome PLC 1,822,207
168,500 Provident Financial PLC 2,149,023
143,400 Reckitt Benckiser PLC 1,885,079
548,200 Vodafone Group PLC 2,280,839
-------------
Total United Kingdom 18,934,440
-------------
UNITED STATES: 0.00%
267 @ Winbond Electronics Corp. 2,596
-------------
Total United States 2,596
-------------
Total Common Stock
(Cost $169,480,039) 175,967,663
-------------
PREFERRED STOCK: 1.29%
BRAZIL: 1.29%
18,767 Banco Itau SA 1,459,874
45,200 CVRD-Companhia Vale do Rio Doce 1,041,801
-------------
Total Brazil 2,501,675
-------------
Total Preferred Stock
(Cost $2,996,617) 2,501,675
-------------
Total Long Term Investments
(Cost $172,476,656) 178,469,338
-------------
See Accompanying Notes to Financial Statements
56
<PAGE>
Pilgrim
Emerging
Countries Fund
PORTFOLIO OF INVESTMENTS as of October 31, 2000 (Continued)
--------------------------------------------------------------------------------
Principal
Amount Value
--------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS: 11.85%
U.S. GOVERNMENT SECURITIES: 7.20%
$ 8,000,000 Federal National Mortgage Association,
6.430%, due 11/02/00 $ 7,998,571
6,000,000 U.S. Treasury Bill, 6.120%,
due 01/11/01 5,927,580
-------------
13,926,151
-------------
COMMERCIAL PAPER: 4.65%
9,000,000 Nestle Capital Corp., 6.350%,
due 11/01/00 9,000,000
-------------
Total Short-Term Investments
(Cost $22,926,151) 22,926,151
-------------
Total Investments in Securities
(Cost $ 195,402,807)* 104.03% $ 201,395,489
Other Assets and Liabilities-Net -4.03% (7,797,763)
------ -------------
Net Assets 100.00% $ 193,597,726
====== =============
----------
@ Non-income producing security
ADR -- American Depository Receipt
GDR -- Global Depository Receipt
* Cost for federal income tax purposes is $196,173,515. Net unrealized
appreciation consists of:
Gross Unrealized Appreciation $ 14,421,993
Gross Unrealized Depreciation (9,200,019)
-------------
Net Unrealized Appreciation $ 5,221,974
=============
See Accompanying Notes to Financial Statements
57
<PAGE>
Pilgrim
Emerging
Countries Fund
PORTFOLIO OF INVESTMENTS as of October 31, 2000 (Continued)
--------------------------------------------------------------------------------
Percentage of
Industry Net Assets
--------------------------------------------------------------------------------
Aerospace/Defense 0.50%
Banks 11.31%
Beverages 3.04%
Building Materials 1.16%
Chemicals 0.80%
Commercial Services 1.15%
Diversified Financial Services 3.91%
Electric 3.15%
Electrical Components & Equipment 0.97%
Electronics 2.25%
Engineering & Construction 1.32%
Entertainment 0.55%
Food 2.28%
Forest Products & Paper 0.40%
Holding Companies-Diversified 2.65%
Home Furnishings 0.84%
Household Products/Wares 1.31%
Insurance 3.26%
Iron/Steel 0.66%
Metal Fabricate/Hardware 0.35%
Mining 2.21%
Oil & Gas Producers 6.91%
Pharmaceuticals 3.27%
Retail 2.83%
Semiconductors 2.13%
Software 3.79%
Sovereign 4.13%
Telecommunications 23.96%
Tobacco 1.09%
Short-term Investments 11.85%
Other Assets and Liabilities, Net -4.03%
-------
Net Assets 100.00%
=======
See Accompanying Notes to Financial Statements
58
<PAGE>
SHAREHOLDER MEETING (Unaudited)
--------------------------------------------------------------------------------
A special meeting of shareholders of the former Lexington Funds was held in
Saddle Brook, New Jersey on July 21, 2000. A brief description of each matter
voted upon as well as the results are outline below:
<TABLE>
<CAPTION>
Shares
Shares voted against Shares Broker
voted for or withheld abstained non-vote Total
--------- ----------- --------- -------- -----
<S> <C> <C> <C> <C> <C>
1. To elect eleven (11) Directors or Trustees, as the case may
be, to hold office until the election and qualification of
their successors: (a)
Al Burton 31,106,277 2,440,203 -- -- 33,546,480
Paul S. Doherty 31,133,530 2,412,950 -- -- 33,546,480
Robert B. Goode, Jr. 31,124,988 2,421,492 -- -- 33,546,480
Alan L. Gosule 31,152,538 2,393,942 -- -- 33,546,480
Walter H. May 31,151,129 2,395,351 -- -- 33,546,480
Jock Patton 31,149,524 2,396,956 -- -- 33,546,480
David W.C. Putnam 31,144,248 2,402,232 -- -- 33,546,480
John R. Smith 31,102,788 2,443,692 -- -- 33,546,480
Robert W. Stallings 31,160,104 2,386,376 -- -- 33,546,480
John G. Turner 31,156,146 2,390,334 -- -- 33,546,480
David W. Wallace 31,096,855 2,449,625 -- -- 33,546,480
2. To approve a new Investment Management Agreement between
each Fund and Pilgrim Investments, Inc. ("Pilgrim"), an
indirect, wholly-owned subsidiary of ReliaStar Financial
Corp. ("ReliaStar"), to take effect upon the completion of
the proposed acquisition of Lexington Global Asset Managers,
Inc. by ReliaStar.
Lexington Global Corporate Leaders Fund, Inc. 1,219,941 25,630 35,074 -- 1,280,645
Lexington Global Technology Fund, Inc. (a) 1,125,427 6,521 981 -- 1,132,929
Lexington Goldfund, Inc. 9,536,260 863,506 711,559 -- 11,111,325
Lexington International Fund, Inc. 1,736,342 9,215 2,100 -- 1,747,657
Lexington Silver Fund, Inc. 4,146,057 174,069 266,322 -- 4,586,448
Lexington Small Cap Asia Growth Fund, Inc. 914,635 32,395 17,680 -- 964,710
Lexington Troika Dialog Russia Fund, Inc. 4,558,999 286,854 371,179 -- 5,217,032
Lexington Worldwide Emerging Markets Fund, Inc. 4,443,056 216,017 290,353 -- 4,949,426
Lexington Global Income Fund 2,494,958 32,717 28,729 -- 2,556,404
3. To approve a new Investment Management Agreement between
each Fund and Pilgrim to take effect upon the completion of
the proposed acquisition of ReliaStar by ING Groep N.V.
("ING").
Lexington Global Corporate Leaders Fund, Inc. 1,218,098 25,529 37,018 -- 1,280,645
Lexington Global Technology Fund, Inc. 1,125,427 6,521 981 -- 1,132,929
Lexington Goldfund, Inc. 9,502,997 881,062 727,266 -- 11,111,325
Lexington International Fund, Inc. 1,735,120 10,437 2,100 -- 1,747,657
Lexington Silver Fund, Inc. 3,997,000 319,938 269,510 -- 4,586,448
Lexington Small Cap Asia Growth Fund, Inc. 915,312 31,978 17,420 -- 964,710
Lexington Troika Dialog Russia Fund, Inc. 4,632,367 211,570 373,095 -- 5,217,032
Lexington Worldwide Emerging Markets Fund, Inc. 4,454,828 198,989 295,609 -- 4,949,426
Lexington Global Income Fund 2,494,750 32,717 28,937 -- 2,556,404
4. To ratify the selection of KPMG LLP as each Fund's
independent public accountants for the fiscal year ending
December 31, 2000:
Lexington Global Corporate Leaders Fund, Inc. 1,231,614 17,014 32,017 -- 1,280,645
Lexington Global Technology Fund, Inc. (a) 1,127,365 3,648 1,826 -- 1,132,839
Lexington Goldfund, Inc. 10,174,034 316,825 620,466 -- 11,111,325
Lexington International Fund, Inc. 1,737,672 9,041 944 -- 1,747,657
Lexington Silver Fund, Inc. 4,238,498 101,927 246,023 -- 4,586,448
Lexington Small Cap Asia Growth Fund, Inc. 925,312 21,979 17,419 -- 964,710
Lexington Troika Dialog Russia Fund, Inc. 4,753,485 107,280 356,267 -- 5,217,032
Lexington Worldwide Emerging Markets Fund, Inc. 4,586,591 113,578 249,257 -- 4,949,426
Lexington Global Income Fund 2,526,321 13,870 16,213 -- 2,556,404
</TABLE>
59
<PAGE>
SHAREHOLDER MEETING (Unaudited) Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares
Shares voted against Shares Broker
voted for or withheld abstained non-vote Total
--------- ----------- --------- -------- -----
<S> <C> <C> <C> <C> <C>
5. To approve a new Service and Distribution Plan for each Fund
which would impose on each Fund a fee on an annualized basis
of 0.25% of the average daily net assets:
Lexington Global Corporate Leaders Fund, Inc. 1,162,690 27,430 36,034 54,491 1,280,645
Lexington Global Technology Fund, Inc. (a) 1,090,298 5,616 2,222 34,703 1,132,839
Lexington Goldfund, Inc. 7,834,170 851,202 771,516 1,654,437 11,111,325
Lexington International Fund, Inc. 1,690,303 11,644 2,100 43,610 1,747,657
Lexington Silver Fund, Inc. 3,079,659 229,820 280,764 996,205 4,586,448
Lexington Small Cap Asia Growth Fund, Inc. 754,360 33,151 17,419 159,780 964,710
Lexington Troika Dialog Russia Fund, Inc. (b) 3,569,893 355,195 402,983 897,242 5,225,313
Lexington Worldwide Emerging Markets Fund, Inc. 3,473,117 249,287 320,013 907,009 4,949,426
Lexington Global Income Fund 2,144,034 23,453 35,514 353,403 2,556,404
6. To approve Amended and Restated Articles of Incorporation
for each of the following Funds, each a Maryland
corporation:
Lexington Global Corporate Leaders Fund, Inc. 1,167,060 23,681 35,413 54,491 1,280,645
Lexington Global Technology Fund, Inc. (a) 1,091,031 5,813 1,292 34,703 1,132,839
Lexington Goldfund, Inc. (c) 8,489,594 728,388 825,149 1,632,376 11,675,507
Lexington International Fund, Inc. 1,693,412 8,916 1,719 43,610 1,747,657
Lexington Silver Fund, Inc. (c) 3,247,675 202,781 284,698 979,932 4,715,086
Lexington Small Cap Asia Growth Fund, Inc. 763,483 24,027 17,420 159,780 964,710
Lexington Troika Dialog Russia Fund, Inc. (c) 3,695,817 296,281 391,927 874,197 5,258,222
Lexington Worldwide Emerging Markets Fund, Inc. (c) 3,749,363 215,444 359,735 869,508 5,194,050
</TABLE>
----------
(a) The Special Meeting of Shareholders for Lexington Global Technology Fund,
Inc. was adjourned until July 31, 2000 to transact all business as set
forth in the Proxy Statement.
(b) The Special Meeting of Shareholders for Lexington Troika Dialog Russia
Fund, Inc. was adjourned until July 31, 2000 to permit the further
solicitation of shareholders for their proxies relating to this proposal.
(c) The Special Meeting of Shareholders for Lexington Goldfund, Inc., Lexington
Silver Fund, Inc., Lexington Troika Dialog Russia Fund, Inc. and Lexington
Worldwide Emerging Markets Fund, Inc. was adjourned until August 30, 2000
to permit the further solicitation of shareholders for their proxies
relating to this proposal.
60
<PAGE>
-------
Pilgrim
Funds
-------
TAX INFORMATION (Unaudited)
--------------------------------------------------------------------------------
Dividends paid during the period ended October 31, 2000 were as follows:
Fund Name Type Per Share Amount
--------- ---- ----------------
International Value Fund(1)
All Classes STCG $ 0.1570
All Classes LTCG $ 0.5303
--------
$ 0.6873
========
International Value Fund(1)
Class A NII $ 0.1134
Class B NII $ 0.0291
Class C NII $ 0.0358
----------
(1) For the period ended October 31, 2000. NII -- Net investment income STCG --
Short-term capital gain LTCG -- Long-term capital gain
The above figure may differ from those cited elsewhere in this report due to
differences in the calculation of income and gains for Securities and Exchange
Commissions (book) purposes and Internal Revenue Service (tax) purposes.
The foreign taxes paid or withheld per share, $5,170,145 and $1,886,233 in total
and $0.04 and $0.16 per share for the International Value and Emerging Countries
Funds, respectively, represents taxes incurred by the funds from foreign
sources. Foreign taxes paid or withheld should be included in taxable income
with an offsetting deduction from gross income or as a credit for taxes paid to
foreign governments. You should consult your tax advisor regarding the
appropriate treatment of foreign taxes paid.
Shareholders are strongly advised to consult their own tax advisers with respect
to the tax consequences of their Investments in the Funds. In January 2001,
shareholders, excluding corporate shareholders, will receive an IRS Form 1099
DIV regarding the federal tax status of the dividends and distributions received
by them in calendar 2000.
61
<PAGE>
INVESTMENT MANAGER
ING Pilgrim Investments, Inc.
7337 E. Doubletree Ranch Road
Scottsdale, Arizona 85258
ADMINISTRATOR
ING Pilgrim Group, Inc.
7337 E. Doubletree Ranch Road
Scottsdale, Arizona 85258
TRANSFER AGENT
DST Systems, Inc.
P.O. Box 419368
Kansas City, Missouri 64141-6368
CUSTODIAN
Brown Brothers Harriman
40 Water Street
Boston, Massachusetts 02109-3661
LEGAL COUNSEL
Dechert
1775 Eye Street, N.W.
Washington, D.C. 20006
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1670 Broadway, Suite 1000
Denver, Colorado 80202
Prospectus containing more complete information regarding the Funds, including
charges and expenses, may be obtained by calling ING Pilgrim Securities, Inc.
Distributor at 1-800-334-3444. Please read the prospectus carefully before you
invest or send money.
INTLANQ103100-122900