<PAGE>
--------------------------------------------------------------------------------
Semi-Annual
Report
[GRAPHICS] June 30, 2000
(unaudited)
--------------------------------------------------------------------------------
Pilgrim Mutual Funds
--------------------------------------------------------------------------------
PILGRIM
INTERNATIONAL
FUND, INC.
----------------------------------------------------
Investment Objective: Long-term Capital Appreciation
<PAGE>
Chairman's Message
-------------------------------------------------------------------------------
Dear Shareholders:
Welcome to the Pilgrim Mutual Funds family. We are pleased to present the
Semi-Annual Report for Pilgrim International Fund, Inc. (formerly Lexington
International Fund, Inc.).
On July 26, 2000, ReliaStar Financial Corp. ("ReliaStar") acquired Lexington
Management Corporation and all of its subsidiaries. In conjunction with the
acquisition, Pilgrim Investments, Inc., a subsidiary of ReliaStar, was
appointed to the role of Investment Adviser to the Fund. As a shareholder in
the Pilgrim family of funds, you now have access to more funds with varying
investment objectives. As a Lexington Fund shareholder as of July 26th, you
can now exchange into any Pilgrim Fund A shares without paying a sales load.
Our fund family has 41 varying types of mutual funds which provide more core
investment choices 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 experienceSM.
If you have any questions regarding your account, or any other Pilgrim Fund
you can access, please call us at 800-992-0180 or visit our website at
www.pilgrimfunds.com.
Sincerely,
/s/ Robert W. Stallings
Robert W. Stallings
Chairman and Chief Executive Officer
Pilgrim Group, Inc.
August, 2000
<PAGE>
Dear Shareholders:
-------------------------------------------------------------------------------
The Pilgrim International Fund, Inc. (formerly Lexington International Fund,
Inc.) declined 4.1%* during the second quarter. First half returns were barely
changed with a 0.1%* gain. This compares favorably to the average
international fund. According to Lipper, Inc., the average international fund
return for the second quarter declined by 5.3% while the first half return was
negative 4.6%. The unmanaged Morgan Stanley Capital International EAFE index
declined 4.0%** for the latest quarter and was down 4.1%** for the first half.
Although the year 2000 got off to a strong start, the environment for
equities continued to deteriorate, interest rates in both the United States
and Europe continued to move higher. Rising commodity prices, particularly
oil, have raised the fear of inflation and pressured margins on many
businesses. Inevitably, stocks suffered a sharp correction beginning in March.
Telecom stocks, along with technology and media companies suffered the
sharpest declines given their stellar performance in 1999. Some of the worst
performing markets during the first half were Ireland -18.5%, New Zealand -
18.3%, and Singapore -23.1%. Many emerging markets experienced even greater
declines. Given the sharp correction, the outlook for equities has improved.
Economic activity appears to be slowing in Europe and most importantly, the
United States. As a result, the pressure on central banks to continue to raise
interest rates has at least been partially alleviated. However, with slower
economic growth, investors face an increasing risk of profit shortfalls. Stock
selection will be the key deterrent to performance. There are several
opportunities available to investors. Financial stocks should benefit from an
easing of interest rate pressures. Equally, Hong Kong, which is highly
interest rate sensitive, looks appealing, especially with the added benefit of
an improving Chinese economic outlook and expected entry into the World Trade
Organization. Mexico should continue to benefit from a clean and free
presidential election, strong oil prices, and high exposure to the US economy.
Finally, the Japanese economy has shown some signs of life although admittedly
muted. Restructuring continues in both Europe and Japan and those companies
committed to improving shareholder returns are likely to perform well.
The Lexington International Fund remains well diversified with Europe
comprising approximately 60% of the holdings. The Japanese equity weighting is
slightly below 20%. The Fund continues to emphasize companies with relatively
high earnings visibility, which is becoming increasingly important as world
growth slows. Technology and telecom shares are well represented, but
weightings have been reduced to lower portfolio risk. Energy stocks are also
attractive, as oil prices should remain around the $25 per barrel level.
Slightly under 10% of the Fund is invested in oil and oil related stocks.
Technology remains a long-term theme, but valuation and execution of business
plans have become an issue. As quality technology companies reach our price
points, they will be added to the portfolio. The main economic risks remain;
rising inflation and/or a hard economic landing in the U.S.
As you are aware, Lexington Global Asset Managers, Inc., the parent company
of Lexington Management Corporation was acquired by ReliaStar Financial Corp.
(NYSE:RLR) the parent company of Pilgrim Investments, Inc., an investment
management and mutual fund company with $17 billion of assets under
management.
On May 1, ReliaStar announced that it agreed to be acquired by ING Groep
N.V. ("ING Group") in a transaction that, subject to certain approvals, is
expected to close in the third quarter of this year. ING Group is a global
financial institution that is active in the field of insurance, banking, and
asset management in more than 60 countries.
1
<PAGE>
We wish to thank you for your continued support.
Sincerely,
/s/Richard Saler
Richard T. Saler
Portfolio Manager
August, 2000
* 33.58%, 17.11%, and 13.50% are the one, five year, and since commencement
(01/03/94) average annual standard total returns, respectively, for the
period ended June 30, 2000. Investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than at their original cost. International investing has
special risks, including currency fluctuations and political instability.
Total return represents past performance and is not predictive of future
results. There is no guarantee that the Fund can achieve its objective.
** All country and regional returns are from the corresponding Morgan Stanley
Capital International Indices. Returns are dollar based with all dividends
reinvested.
2
<PAGE>
Pilgrim International Fund, Inc.
Statement of Net Assets
(Including the Portfolio of Investments)
June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
Number of Value
Shares Security (Note 1)
--------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS: 88.3%
Australia: 1.7%
60,900 Foster's Brewing Group, Ltd............................ $ 171,858
63,800 Telstra Corporation, Ltd............................... 259,720
-----------
431,578
-----------
Canada: 1.3%
20,000 Industrial Alliance Life Insurance Company/2/ ......... 330,708
-----------
Denmark: 2.5%
2,200 Novo Nordisk A/S "B"................................... 375,989
3,800 Tele Danmark A/S....................................... 256,844
-----------
632,833
-----------
France: 11.8%
2,400 Alcatel................................................ 158,052
1,760 Atos SA................................................ 165,337
3,430 Axa.................................................... 542,513
385 Cross Systems.......................................... 56,835
2,400 Rexel SA............................................... 185,199
7,200 Schlumberger, Ltd...................................... 537,300
1,300 Sidel S.A.............................................. 105,862
3,680 Societe Generale/1/ ................................... 222,239
920 Sodifrance/1/ ......................................... 26,457
8,244 Total Fina SA.......................................... 633,242
4,330 Vivendi................................................ 383,731
-----------
3,016,767
-----------
Germany: 5.4%
660 Allianz AG............................................. 240,098
2,750 Aventis SA............................................. 197,709
9,200 Commerbank AG.......................................... 327,186
4,511 Deutsche Bank AG....................................... 372,313
1,600 Siemens AG............................................. 241,564
-----------
1,378,870
-----------
Hong Kong: 5.3%
26,000 Cheung Kong (Holdings), Ltd............................ 287,683
27,000 Hang Seng Bank, Ltd.................................... 256,317
916,000 I-Cable Communications, Ltd............................ 355,470
226,000 Mandarin Oriental International, Ltd................... 150,290
410,000 South China Morning Post (Holdings), Ltd............... 318,216
-----------
1,367,976
-----------
Ireland: 1.5%
116,900 Jefferson Smurfit Group................................ 201,706
23,500 Ryanair Holdings plc/1/ ............................... 171,204
-----------
372,910
-----------
</TABLE>
<TABLE>
<CAPTION>
Number of Value
Shares Security (Note 1)
--------------------------------------------------------------------------------
<C> <S> <C>
Israel: 2.0%
2,000 Mercury Interactive Corporation........................ $ 193,563
5,800 Teva Pharmaceutical Industries, Ltd. (ADR)............. 321,719
-----------
515,282
-----------
Italy: 1.4%
12,400 Banca Fideuram Spa..................................... 187,807
11,000 Mediolanum Spa......................................... 179,678
-----------
367,485
-----------
Japan: 18.8%
68,000 Bunka Shutter Company, Ltd............................. 173,533
25,000 Daifuku Company, Ltd................................... 277,879
145,000 Hitachi Zosen Corporation.............................. 131,567
2,000 Hoya Corporation....................................... 179,582
28,000 Isetan Company, Ltd.................................... 344,040
2,000 Jafco Company, Ltd..................................... 327,027
4 Japan Telecom Company, Ltd............................. 173,911
14,000 MARUI Company, Ltd..................................... 268,616
150,000 Mitsui Engineer & Shipbuilding Company, Ltd............ 143,193
15 Nippon Telegraph & Telephone Corporation............... 199,903
4,800 Nissin Company, Ltd.................................... 262,227
5 NTT Docomo, Inc........................................ 135,631
4,000 Pasona Softbank, Inc................................... 109,639
9,200 Rinnai Corporation..................................... 205,649
800 Rohm Company, Ltd...................................... 234,401
480 Shohkoh Fund & Company, Ltd............................ 108,429
600 Softbank Corporation................................... 81,662
3,200 Sony Corporation....................................... 299,429
75,000 Sumitomo Realty and Development Company, Ltd........... 338,133
19,000 The Fuji Bank, Ltd..................................... 144,743
10,000 The Nikko Securities Company, Ltd...................... 99,242
9,000 The Nomura Securities Company, Ltd..................... 220,744
31,000 Toto, Ltd.............................................. 238,503
25,000 Yamato Kogyo Company, Ltd.............................. 115,783
-----------
4,813,466
-----------
Mexico: 1.1%
67,000 Grupo Financiero Bancomer, S.A. de C.V. - O Shares..... 281,799
-----------
</TABLE>
3
<PAGE>
Pilgrim International Fund, Inc.
Statement of Net Assets
(Including the Portfolio of Investments)
June 30, 2000 (unaudited) (continued)
<TABLE>
<CAPTION>
Number of Value
Shares Security (Note 1)
--------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (continued):
Netherlands: 6.7%
12,500 ABN AMRO Holding NV................................... $ 307,467
11,800 Koninklijke (Royal) Philips Electronics N.V........... 558,781
6,000 Randstad Holding N.V.................................. 222,872
5,800 Unilever NV........................................... 267,149
8,400 Unique International NV............................... 202,109
3,700 Versatel Telecom International NV..................... 156,058
-----------
1,714,436
-----------
New Zealand: 1.3%
315,000 Fletcher Challenge Building........................... 335,131
-----------
Norway: 1.6%
24,500 Petroleum Geo-Services ASA/1/ ........................ 419,920
-----------
Philippines: 0.7%
9,700 Philippine Long Distance.............................. 173,901
-----------
Portugal: 1.7%
13,501 EDP-Electricidade de Portugal, S.A.................... 246,155
18,200 Portugal Telecom S.A.................................. 205,169
-----------
451,324
-----------
Singapore: 1.7%
37,000 Chartered Semiconductor Manufacturing, Ltd............ 323,139
34,000 NatSteel Electronics, Ltd............................. 104,223
-----------
427,362
-----------
Sweden: 1.9%
5,600 Framtidsfabriken AB................................... 77,576
134,422 Swedish Match AB...................................... 416,873
-----------
494,449
-----------
Switzerland: 5.1%
1,870 Charles Voegele Holding AG/1/ ........................ 369,155
133 Nestle AG............................................. 267,053
141 Novartis AG........................................... 224,065
29 Roche Holding AG...................................... 283,211
1,080 UBS AG................................................ 158,739
-----------
1,302,223
-----------
Turkey: 0.5%
16,932,000 Akbank T.A.S.......................................... 131,054
-----------
</TABLE>
<TABLE>
<CAPTION>
Number of
Shares or
Principal Value
Amount Security (Note 1)
-------------------------------------------------------------------------------
<C> <S> <C>
United Kingdom: 14.3%
11,200 Barclays plc................................. $ 278,582
38,400 Cadbury Schweppes plc........................ 252,301
8,700 Capita Group plc/1/ ......................... 212,974
5,100 Colt Telecom Group plc/1/ ................... 169,860
212,800 Corus Group plc.............................. 310,882
29,200 Diageo plc................................... 262,141
7,500 Glaxo Welcome plc............................ 218,796
13,500 Kingston Communication (Hull) plc............ 132,845
23,500 Lloyds TSB Group plc......................... 221,998
19,200 PizzaExpress plc............................. 183,121
24,100 Provident Financial plc...................... 253,571
15,800 Reed International plc....................... 137,538
37,300 Regent Inns plc.............................. 78,491
17,460 Rio Tinto plc................................ 285,473
19,600 Scottish & Newcastle plc..................... 160,083
55,426 Vodafone AirTouch plc........................ 224,038
30,500 Whitbread plc................................ 274,735
-----------
3,657,429
-----------
TOTAL COMMON STOCKS
(cost $20,880,130).......................... 22,616,903
-----------
PREFERRED STOCK: 1.0%
Germany: 1.0%
5,730 Rhoen-Klinikum AG
(cost $198,042)............................. 255,411
-----------
GOVERNMENT OBLIGATION: 3.7%
Germany: 3.7%
$1,092,000 Bundesbank Deutschland Republic Bond, 3.75%
due 01/04/09
(cost $1,117,926)........................... 942,311
-----------
TOTAL INVESTMENTS: 93.0% (cost $22,196,098+)
(Note 1).................................... 23,814,625
Other assets in excess of liabilities: 7.0%.. 1,796,196
-----------
TOTAL NET ASSETS: 100.0% (equivalent to
$13.46 per share on 1,902,951 shares
outstanding)................................ $25,610,821
===========
</TABLE>
--------
/1/Non-income producing security.
/2/Restricted security.
ADR - American Depository Receipt.
+ Aggregate cost for Federal income tax purposes is $22,213,908.
4
<PAGE>
Pilgrim International Fund, Inc.
Statement of Net Assets
(Including the Portfolio of Investments)
June 30, 2000 (unaudited) (continued)
At June 30, 2000, the composition of the Fund's net assets by industry
concentration was as follows:
<TABLE>
<S> <C>
Aerospace/Engineering....... 1.1%
Banking..................... 8.6
Capital Equipment........... 1.5
Consumer Durable Goods...... 4.9
Consumer Non-durable Goods.. 6.0
Electrical and Electronics.. 7.6
Energy Sources.............. 5.5
Entertainment............... 1.3
Financial Services.......... 12.7
</TABLE>
<TABLE>
<S> <C>
Health and Personal Care... 7.6%
Materials.................. 6.6
Mulit-Industry............. 1.5
Services................... 15.3
Telecommunications......... 7.7
Transportation............. 0.7
Utilities.................. 0.7
Other assets in excess of
liabilities............... 10.7
-----
Total Net Assets........... 100.0%
=====
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
5
<PAGE>
Pilgrim International Fund, Inc.
Statement of Assets and Liabilities
June 30, 2000 (unaudited)
<TABLE>
<S> <C>
Assets
Investments, at value (cost $22,196,098) (Note 1)................. $23,814,625
Cash.............................................................. 1,771,740
Receivable for investment securities sold......................... 42,731
Receivable for fund shares sold................................... 478,800
Dividends and interest receivable................................. 74,196
-----------
Total Assets................................................... 26,182,092
-----------
Liabilities
Due to Lexington Management Corporation (Note 2).................. 21,130
Payable for fund shares redeemed.................................. 478,018
Accrued expenses.................................................. 72,123
-----------
Total Liabilities.............................................. 571,271
-----------
Net Assets (equivalent to $13.46 per share on 1,902,951 shares
outstanding) (Note 4)............................................ $25,610,821
===========
Net Assets consist of:
Capital stock -- authorized 1,000,000,000 shares, $.001 par value
per share........................................................ $ 1,903
Additional paid-in-capital........................................ 18,933,144
Undistributed net investment income............................... 232,525
Accumulated net realized gain on investments and foreign currency
transactions..................................................... 4,827,261
Unrealized appreciation of investments and foreign currency
translations of other assets and liabilities..................... 1,615,988
-----------
Total Net Assets............................................... $25,610,821
===========
</TABLE>
Pilgrim International Fund, Inc.
Statement of Operations
Six months ended June 30, 2000 (unaudited)
<TABLE>
<S> <C> <C>
Investment Income
Dividends............................................ $ 242,036
Interest............................................. 59,488
----------
301,524
Less: foreign tax expense............................ 27,488
----------
Total investment income.............................. $ 274,036
Expenses
Investment advisory fee (Note 2)..................... 129,239
Custodian expenses................................... 19,416
Transfer agent and shareholder servicing expenses
(Note 2)............................................ 16,178
Distribution expenses (Note 3)....................... 2,529
Printing and mailing expenses........................ 7,837
Audit fees........................................... 8,974
Directors' fees and expenses......................... 44,472
Accounting expenses (Note 2)......................... 9,893
Registration fees.................................... 5,772
Computer processing fees............................. 5,119
Professional fees.................................... 6,220
Other expenses....................................... 6,110
----------
Total expenses....................................... 261,759
----------
Net investment income................................ 12,277
Realized and Unrealized Gain (Loss) on Investments
(Note 5)
Net realized gain (loss) on:
Investments.......................................... 3,229,256
Foreign currency transactions........................ (4,585)
----------
Net realized gain................................... 3,224,671
Net change in unrealized appreciation of:
Investments.......................................... (3,166,164)
Foreign currency translation of other assets and
liabilities......................................... 2,539
----------
Net change in unrealized appreciation............... (3,163,625)
----------
Net realized and unrealized gain...................... 61,046
----------
Increase in Net Assets resulting from Operations...... $ 73,323
==========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
6
<PAGE>
Pilgrim International Fund, Inc.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six months ended
June 30, 2000 Year ended
(unaudited) December 31, 1999
---------------- -----------------
<S> <C> <C>
Operations:
Net investment income (loss)................ $ 12,277 $ (46,900)
Net realized gain from investments and
foreign currency transactions.............. 3,224,671 6,719,640
Net change in unrealized appreciation of
investments and foreign currency
translation................................ (3,163,625) 2,440,717
----------- ------------
Net increase in net assets resulting from
operations............................... 73,323 9,113,457
----------- ------------
Distributions to Shareholders: (Note 1)
Distributions to shareholders from net
investment income.......................... -- (46,770)
Distributions to shareholders from net
realized gains from security transactions.. -- (5,598,256)
----------- ------------
Decrease from distributions............... -- (5,645,026)
----------- ------------
Capital Share Transactions: (Note 4)
Proceeds from sale of shares................ 9,917,495 5,619,698
Reinvested dividends and distributions...... -- 4,382,040
Cost of shares repurchased.................. (9,684,195) (12,165,686)
----------- ------------
Net increase (decrease) from capital share
transactions............................. 233,300 (2,163,948)
----------- ------------
Net increase in net assets.................. 306,623 1,304,483
Net Assets:
Beginning of period......................... 25,304,198 23,999,715
----------- ------------
End of period (including undistributed net
investment income of $232,525 and $220,248
in 2000 and 1999, respectively)............ $25,610,821 $ 25,304,198
=========== ============
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
7
<PAGE>
Pilgrim International Fund, Inc.
Notes to Financial Statements
June 30, 2000 (unaudited) and December 31, 1999
1.Significant Accounting Policies
Pilgrim International Fund, Inc. (formerly Lexington International Fund, Inc.)
(the "Fund") is an open-end diversified management investment company
registered under the Investment Company Act of 1940, as amended. The Fund's
investment objective is to seek long-term growth of capital through investment
in common stocks and equivalents of companies domiciled in foreign countries.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements:
Investments Securities transactions are accounted for on a trade date
basis. Realized gains and losses from investment transactions are reported on
the identified cost basis. Securities traded on a recognized stock exchange
are valued at the last sales price reported by the exchange on which the
securities are traded. If no sales price is recorded, the mean between the
last bid and asked prices is used. Securities traded on the over-the-counter
market are valued at the mean between the last current bid and asked prices.
Short-term securities having a maturity of 60 days or less are stated at
amortized cost, which approximates market value. Securities for which market
quotations are not readily available and other assets are valued by Fund
management in good faith under the direction of the Fund's Board of Directors.
All investments quoted in foreign currencies are valued in U.S. dollars on the
basis of the foreign currency exchange rates prevailing at the close of
business. Dividend income and distributions to shareholders are recorded on
the ex-dividend date. Interest income, adjusted for amortization of premiums
and accretion of discounts, is accrued as earned.
Foreign Currency Transactions Foreign currencies (and receivables and
payables denominated in foreign currencies) are translated into U.S. dollar
amounts at current exchange rates. Translation gains or losses resulting from
changes in exchange rates and realized gains and losses on the settlement of
foreign currency transactions are reported in the statement of operations. In
addition, the Fund may enter into forward foreign exchange contracts in order
to hedge against foreign currency risk in the purchase or sale of securities
denominated in foreign currency. The Fund may also enter into such contracts
to hedge against changes in foreign currency exchange rates on portfolio
positions. These contracts are marked to market daily, by recognizing the
difference between the contract exchange rate and the current market rate as
unrealized gains or losses. Realized gains or losses are recognized when
contracts are closed and are reported in the statement of operations.
The Fund authorizes its custodian to place and maintain equity securities in a
segregated account of the Fund having a value equal to the aggregate amount of
the Fund's commitments under forward foreign currency contracts entered into
with respect to position hedges.
Federal Income Taxes It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to "regulated investment
companies" and to distribute all of its taxable income to its shareholders.
Therefore, no provision for Federal income taxes is required.
Distributions Dividends from net investment income and net realized capital
gains are normally declared and paid annually, but the Fund may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code. The character of income and gains
to be distributed are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles. At December
31, 1999, reclassifications were made to the Fund's capital accounts to
reflect permanent book/tax differences and income and gains available for
distribution under income tax regulations. Net investment income, net realized
gains and net assets were not affected by this change.
Use of Estimates The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increases and decreases in net assets
from operations during the reporting period. Actual results could differ from
those estimates.
2.Investment Advisory Fee and Other Transactions with Affiliate
The Fund paid an investment advisory fee to Lexington Management Corporation
("LMC") at an annual rate of 1.00% of the Fund's average daily net assets. For
2000, the adviser has voluntarily agreed to limit the total expenses of the
Fund (excluding interest, taxes, brokerage commissions, 12b-1 fees, and
extraordinary expenses but including management fees and operating expenses)
to an annual rate of 2.50% of the Fund's average daily net assets. No
reimbursement was required for the six months ended June 30, 2000.
8
<PAGE>
Pilgrim International Fund, Inc.
Notes to Financial Statements
June 30, 2000 (unaudited) and December 31, 1999 (continued)
2.Investment Advisory Fee and Other Transactions with Affiliate (continued)
The Fund reimbursed LMC for certain expenses, including accounting and
shareholder servicing costs of $19,756 which were incurred by the Fund, but
paid by LMC.
3.Distribution Plan
The Fund had a Distribution Plan (the "Plan") which allowed payments to
finance activities associated with the distribution of the Fund's shares. The
Plan provided that the Fund may pay distribution fees on a reimbursement
basis, including payments to Lexington Funds Distributor, Inc. ("LFD"), the
Fund's distributor, in amounts not exceeding 0.25% per annum of the Fund's
average daily net assets. Total distribution expenses for the six months ended
June 30, 2000, were $2,529 and are set forth in the statement of operations.
4.Capital Stock
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
Six months ended
June 30, 2000 Year ended
(unaudited) December 31, 1999
--------------------- ----------------------
Shares Amount Shares Amount
-------- ----------- -------- ------------
<S> <C> <C> <C> <C>
Shares sold.................... 729,917 $ 9,917,495 416,856 $ 5,619,698
Shares issued on reinvestment
of dividends.................. -- -- 329,563 4,382,040
-------- ----------- -------- ------------
729,917 9,917,495 746,419 10,001,738
Shares redeemed................ (708,140) (9,684,195) (933,028) (12,165,686)
-------- ----------- -------- ------------
Net increase (decrease)........ 21,777 $ 233,300 (186,609) $ (2,163,948)
======== =========== ======== ============
</TABLE>
5.Investment Transactions
The cost of purchases and proceeds from sales of securities for the six months
ended June 30, 2000, excluding short-term securities, were $15,676,410 and
$15,814,475 respectively.
At June 30, 2000, the aggregate gross unrealized appreciation for all
securities in which there is an excess of value over tax cost amounted to
$3,337,140 and aggregate gross unrealized depreciation for all securities in
which there is an excess of tax cost over value amounted to $1,736,423.
6.Investment and Concentration Risks
The Fund's investments in foreign securities may involve risks not present in
domestic investments. Since foreign securities may be denominated in a foreign
currency and involve settlement and pay interest or dividends in foreign
currencies, changes in the relationship of these foreign currencies to the
U.S. dollar can significantly affect the value of the investments and earnings
of the Fund. Foreign investments may also subject the Fund to foreign
government exchange restrictions, expropriation, taxation or other political,
social or economic developments, all of which could affect the market and/or
credit risk of the investments.
In addition to the risks described above, risks may arise from forward foreign
currency contracts as a result of the potential inability of counterparties to
meet the terms of their contracts.
9
<PAGE>
Pilgrim International Fund, Inc.
Notes to Financial Statements
June 30, 2000 (unaudited) and December 31, 1999 (continued)
7.Restricted Security
The following security was purchased under Rule 144a of the Securities Act of
1933 and unless registered under the Act or exempted from registration, may be
sold only to qualified institutional investors. The Fund currently limits
investments in restricted securities to 15% of the Fund's net assets, at
market value at the time of purchase.
<TABLE>
<CAPTION>
Acquisition Market Percent of
Security Date Shares Value Net Assets
-------- ----------- ------ -------- ----------
<S> <C> <C> <C> <C>
Industrial Alliance Life Insurance
Company............................... 01/01/00 20,000 $330,708 1.3%
======== ====
</TABLE>
8.Subsequent Events
Effective on July 26, 2000, Lexington Global Assets Managers, Inc. was
acquired by ReliaStar Financial Corp. ("ReliaStar"). In conjunction with the
acquisition and following approval by the Fund's Board of Directors and
shareholders, Pilgrim Investments, Inc., an indirect, wholly owned subsidiary
of ReliaStar, was appointed to the role of investment adviser to the Fund
effective July 26, 2000. Pilgrim Securities, Inc., also an indirect, wholly
owned subsidiary of ReliaStar, was appointed distributor to the Fund on that
date.
On May 1, 2000, ReliaStar Financial Corp. (NYSE:RLR), the indirect parent
company of Pilgrim Investments, Inc., Adviser to the Funds, and Pilgrim
Securities, Inc., Distributor to the Funds, entered into an agreement under
which it will be acquired by ING Groep N.V. (NYSE:ING). ING Groep N.V. is a
global financial institution active in the field of insurance, banking, and
asset management in more than 60 countries, with almost 90,000 employees.
Completion of the acquisition is contingent upon, among other things, approval
by the Directors/Trustees of the Pilgrim Funds and certain shareholder and
regulatory approvals. The closing of the acquisition is expected to occur
during the third quarter of 2000.
10
<PAGE>
Pilgrim International Fund, Inc.
Financial Highlights
Selected per share data for a share outstanding throughout the period:
<TABLE>
<CAPTION>
Six months ended Year ended December 31,
June 30, 2000 ----------------------------------
(unaudited) 1999 1998 1997 1996
---------------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period................ $13.45 $11.61 $10.10 $10.86 $10.60
------- ------- ------- ------- -------
Income (loss) from
investment operations:
Net investment income
(loss).................. 0.01 (0.01) 0.17 0.07 (0.02)
Net realized and
unrealized gain on
investments and foreign
currencies.............. -- 5.46 1.74 0.10 1.45
------- ------- ------- ------- -------
Total income from
investment operations.... 0.01 5.45 1.91 0.17 1.43
------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment income....... -- (0.03) (0.06) (0.13) (0.20)
Distributions from net
realized gains.......... -- (3.58) (0.34) (0.80) (0.97)
------- ------- ------- ------- -------
Total distributions....... -- (3.61) (0.40) (0.93) (1.17)
------- ------- ------- ------- -------
Net asset value, end of
period................... $13.46 $13.45 $11.61 $10.10 $10.86
======= ======= ======= ======= =======
Total return.............. 0.05%* 47.85% 19.02% 1.61% 13.57%
Ratio to average net
assets:
Expenses, before
reimbursement........... 2.03%* 1.98% 2.25% 2.15% 2.45%
Expenses, net of
reimbursement........... 2.03%* 1.98% 1.75% 1.75% 2.45%
Net investment income
(loss), before
reimbursement........... 0.09%* (0.21%) (0.16%) 0.13% (0.39%)
Net investment income
(loss).................. 0.09%* (0.21%) 0.35% 0.53% (0.39%)
Portfolio turnover rate... 130.12%* 143.82% 143.67% 122.56% 113.55%
Net assets, end of period
(000's omitted).......... $25,611 $25,304 $24,000 $19,949 $18,891
</TABLE>
--------
*Annualized.
11
<PAGE>
PILGRIM INTERNATIONAL FUND, INC.
Investment Adviser
Pilgrim Investments, Inc.
40 North Central Avenue
Suite 1200
Phoenix, Arizona 85004-4408
Distributor
Pilgrim Securities, Inc.
40 North Central Avenue
Suite 1200
Phoenix, Arizona 85004-4408
www.lexingtonfunds.com
All Shareholder requests for services of any kind should be sent to:
Transfer Agent
Lexington Funds
c/o DST Systems, Inc.
P.O. Box 219368
Kansas City, Missouri 64121-6368
Or call toll free
Service and Sales: 1-800-526-0056
This report has been prepared for the information of the shareholders of Pilgrim
International Fund, Inc. and is authorized for distribution to the public only
if it is accompanied or preceded by a currently effective prospectus which sets
forth expenses and other material information. LEX284-SAR6/00
