Securities Act File No. 33-59363
PILGRIM INTERNATIONAL EQUITY FUNDS
PILGRIM PRECIOUS METALS FUNDS
PILGRIM INTERNATIONAL INCOME FUND
Supplement dated December 12, 2000
to the Class A, B, C and M International Equity Funds,
Precious Metals Funds and International Income Fund Prospectus
dated November 1, 2000
1. PROPOSED FUND REORGANIZATIONS.
On November 2, 2000, the Board of Directors/Trustees of the Pilgrim Funds
approved proposals to reorganize the following Disappearing Funds into the
following Surviving Funds (the "Reorganizations"):
DISAPPEARING FUND SURVIVING FUND
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Pilgrim Emerging Markets Value Fund Pilgrim Emerging Countries Fund
Pilgrim Worldwide Emerging Markets Fund Pilgrim Emerging Countries Fund
Pilgrim Global Corporate Leaders Fund Pilgrim Worldwide Growth Fund
Pilgrim Global Technology Fund ING Global Information Technology Fund
Pilgrim Silver Fund Pilgrim Gold Fund
Pilgrim SmallCap Asia Growth Fund Pilgrim Asia-Pacific Equity Fund
Pilgrim Global Income Fund Pilgrim Strategic Income Fund
Each proposed Reorganization is subject to approval by shareholders of the
Disappearing Fund. If shareholder approval is obtained, it is expected that the
Reorganizations would take place in the first quarter of 2001.
2 CHANGE IN DESCRIPTION OF INVESTMENT STRATEGIES FOR PILGRIM WORLDWIDE GROWTH
FUND, PILGRIM INTERNATIONAL FUND, PILGRIM INTERNATIONAL CORE GROWTH FUND,
AND PILGRIM EMERGING COUNTRIES FUND.
Effective immediately, the following disclosure will replace the disclosure
under "Pilgrim Worldwide Growth Fund -- Investment Strategy" on page 6 of the
Prospectus:
Under normal conditions, the Fund invests at least 65% of its net 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 total
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.
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International Component. 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 in assets of
companies which, based upon a fundamental analysis of a company's earning
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. In conducting its fundamental analysis, the portfolio
managers focus on various factors, including valuation of the companies,
potential catalysts to stock price appreciation, quality of management, and
financial measures, especially cash flow and the cash flow return on
capital. They also use a "top-down" analysis to identify important themes
or issues which may affect the investment environment in certain regions or
sectors and to estimate regional market risks.
U.S. Component. The Fund normally invests in equity securities of large
U.S. companies that the portfolio managers feel have above-average
prospects for growth. The Fund considers a company to be large if its
market capitalization corresponds at the time of purchase to the upper 90%
of the S&P 500 Index. As of October 19th, 2000, this meant market
capitalizations in the range of $10 billion to $571 billion. Capitalization
of companies in the S&P 500 Index will change with market conditions.
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 a 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, and seek to provide a framework for identifying
the industries and companies they believe may benefit most. This "top-down"
approach is combined with rigorous fundamental research (a "bottom-up"
approach) to guide stock selection and portfolio structure.
From time to time, the Adviser reviews the allocation between U.S. stocks
and non-U.S. stocks in the portfolio, and may rebalance the portfolio using
factors that the Adviser deems appropriate.
Effective immediately, the following disclosure will replace the disclosure
under "Pilgrim International Fund -- Investment Strategy" on page 12 of the
Prospectus:
Under normal conditions, the Fund invests at least 65% of its net assets in
equity securities of issuers located in countries outside the U.S. The Fund
generally invests at least 75% of its total 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 Fund also may invest up to 35% of its assets in
securities of U.S. issuers, including investment-grade debt securities.
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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 certain regions or sectors and to estimate regional market
risks. In conducting its fundamental analysis, the portfolio managers focus
on various factors, including valuation of the companies, catalysts to
stock price appreciation, quality of management and financial measures,
especially cash flow and the cash flow return on capital.
Effective immediately, the following disclosure will replace the disclosure
under "Pilgrim International Core Growth Fund -- Investment Strategy" on page 14
of the Prospectus:
Under normal conditions, the Fund invests at least 65% of its net assets in
equity securities of issuers located in countries outside the U.S. The Fund
generally invests at least 75% of its total 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 Fund also may invest up to 35% of its assets in
securities of U.S. issuers, including investment-grade debt securities.
In pursuing the Fund's investment strategy, 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 in assets of companies which, based upon a fundamental analysis of a
company's earning 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. In conducting its fundamental analysis,
the portfolio managers focus on various factors, including valuation of the
companies, potential catalysts to stock price appreciation, quality of
management, and financial measures, especially cash flow and the cash flow
return on capital. They also use a "top-down" analysis to identify
important themes or issues which may affect the investment environment in
certain regions or sectors and to estimate regional market risks.
Effective immediately, the following disclosure will replace the disclosure
under "Pilgrim Emerging Countries Fund -- Investment Strategy" on page 20 of the
Prospectus:
The Fund invests at least 65% of its net assets in securities of issuers
located in at least three countries with emerging securities markets.
Countries with emerging securities markets are those countries which
generally are considered to be emerging market countries by the
international financial community.
The Fund may invest up to 35% of its total assets in securities of U.S. and
other developed market issuers, including investment-grade debt securities
of U.S. issuers. Under normal conditions, the Fund invests at least 75% of
its total assets in common and preferred stocks, warrants and convertible
securities.
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In selecting securities of issuers located in emerging market countries,
the Adviser uses a "bottom-up" fundamental analysis to identify companies
which it believes have good earnings growth prospects and that can be
bought at a price which seems reasonable. To help in this process, the
Adviser scores the emerging markets stocks on a wide range of quantitative
and qualitative measures, with particular attention paid to long-term and
short-term earnings growth prospects and valuation measures. The Adviser
seeks securities of emerging market issuers which are relatively liquid and
covered by professional securities analysts.
In selecting stocks in developed markets, the portfolio managers seek the
most attractive opportunities in such markets. For such securities, the
portfolio managers use "bottom-up" analysis to choose companies which 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 certain regions or sectors
and to estimate regional market risks. In their conducting their
fundamental analysis, the portfolio managers focus on various matters,
including valuation of the companies, potential catalysts to stock price
appreciation, quality of management, and financial measures, especially
cash flow and cash flow return on capital.
The Fund may also lend portfolio securities on a short-term or long-term
basis, up to 30% of its total assets.
3. CHANGE IN DESCRIPTION OF INVESTMENT STRATEGIES FOR PILGRIM SMALLCAP ASIA
GROWTH FUND.
Effective immediately, the following disclosure is added at the end of the
disclosure under "Pilgrim SmallCap Asia Growth Fund -- Investment Strategy" on
page 28 of the Prospectus:
During times that the adviser or sub-adviser believes that stocks of
smaller companies present undue risk, the Fund may adopt a defensive
investment posture, and invest in equity securities and equity equivalents
of medium and large companies in the Asia region. At a meeting held on
December 8, 2000, the adviser informed the Fund's Board of Directors that
the Fund likely will continue to be invested primarily in such securities
for the immediate future, and potentially through the reorganization of the
Fund with the Pilgrim Asia-Pacific Equity Fund, described above, to the
extent warranted by market conditions. At times that the Fund is primarily
invested in securities of medium and large companies, it will not realize
capital appreciation from a primary investment in smaller companies.
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4. REVISED BAR CHART FOR PILGRIM ASIA-PACIFIC EQUITY FUND
The bar chart for Pilgrim Asia-Pacific Equity Fund set forth on page 27
of the Prospectus under "How the Fund has Performed" is hereby replaced with the
following bar chart:
YEAR BY YEAR TOTAL RETURNS(%)(1)
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
9.46 -43.73 -15.51 74.41
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(1) These figures are for the year ended December 31 of each year. They do not
reflect sales charges and would be lower if they did.
5. CHANGE IN DESCRIPTION OF INVESTMENT STRATEGY FOR PILGRIM GOLD FUND.
Effective immediately, the following disclosure will replace the disclosure
under "Pilgrim Gold Fund" on page 32 of the Prospectus:
OBJECTIVE
The Fund's investment objective is to attain capital appreciation and hedge
against the loss of buying power of the U.S. Dollar as may be obtained
through investment in gold and securities of companies engaged in mining or
processing gold throughout the world.
INVESTMENT STRATEGY
The Fund normally invests at least 65% of the value of its total assets in
gold bullion and the equity securities of companies engaged in the
exploration, mining, processing, fabrication or distribution of gold
("gold-related companies"). The Fund may invest the remaining 35% of its
total assets in other precious metals, including silver, platinum, and
palladium, and in the equity securities of companies engaged in the
exploration, mining, processing, fabrication or distribution of other
precious metals or materials. From time to time, the Fund invests to in
silver bullion or the common stock of companies engaged in the exploration,
mining, processing, fabrication or distribution of silver ("silver-related
companies"). The Fund may also invest in other types of securities,
including convertible securities, preferred stocks, bonds, notes and
warrants, of gold-related companies, silver-related companies, or companies
related to other precious metals. The Fund intends to invest less than half
of the value of its assets directly in bullion or other direct forms of
gold, silver, and other precious metals (as opposed to securities).
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The Fund's performance and ability to meet its objective will be largely
dependent on the market value of gold, and, to a lesser degree, silver and
other precious metals. A substantial portion of the Fund's investments will
be in the securities of foreign issuers.
6. TERMINATION OF SUB-ADVISERS FOR PILGRIM ASIA-PACIFIC EQUITY FUND AND
PILGRIM TROIKA DIALOG RUSSIA FUND
Effective January 2, 2001, HSBC Asset Management (Americas), Inc., HSBC
Asset Management (Hong Kong) Limited and HSBC Asset Management (Europe)
Limited (collectively, "HSBC") will no longer serve as Sub-Advisers to the
Pilgrim Asia-Pacific Equity Fund, and Troika Dialog Asset Management
(Cayman Islands), Ltd. ("Troika") will no longer serve as Sub-Adviser to
the Pilgrim Troika Dialog Russia Fund. HSBC and Troika currently serve as
Sub-Advisers to ING Pilgrim Investments, Inc. ("ING Pilgrim"), which is the
Investment Manager for the Pilgrim Asia-Pacific Equity Fund and the Pilgrim
Troika Dialog Russia Fund (collectively, the "Funds"). Effective January 2,
2001, ING Pilgrim will directly manage these Funds under its existing
Investment Management Agreement. The fees payable to ING Pilgrim for
serving as Investment Manager will not change.
Accordingly, the information contained under "Management of the Funds --
Asia Pacific Equity Fund" and "Management of the Funds -- Troika Russia
Dialog Fund" on pages 50 and 51 of the Prospectus, respectively, is revised
to reflect that, effective January 2, 2001, the following individuals will
share responsibility for the day-to-day management of the respective Funds:
ASIA PACIFIC EQUITY FUND
Mr. Saler has over 13 years of experience in international investments. He
is Senior Vice President and Director of International Equity Investment
Strategy of ING Pilgrim and held similar positions with Lexington
Management Corporation ("LMC") prior to that firm's recent acquisition by
the parent company of ING Pilgrim. Mr. Saler is a member of an investment
management team that manages the Pilgrim Global Corporate Leaders Fund,
Lexington Emerging Markets Fund, Pilgrim Emerging Countries Fund, Pilgrim
Worldwide Emerging Markets Fund and Pilgrim International Fund. Mr. Saler
has focused on international markets since joining LMC in 1986.
Mr. Schwartz has over 13 years experience in international investments. He
is Senior Vice President and Director of International Equity Investment
Strategy of ING Pilgrim, and held the same positions with LMC prior to that
firm's recent acquisition. He is also a Chartered Financial Analyst and a
member of the New York Society of Security Analysts. Mr. Schwartz is a
member of an investment management team that manages the Pilgrim Global
Corporate Leaders Fund, Lexington Emerging Markets Fund, Pilgrim Emerging
Countries Fund, Pilgrim Worldwide Emerging Markets Fund and Pilgrim
International Fund. Prior to joining LMC in 1993, he was Vice President of
European Research Sales with Cheuvreux De Virieu in Paris and New York,
serving the institutional market. Prior to Cheuvreux, Mr. Schwartz was
affiliated with Olde and Co. and Kidder, Peabody as a stockbroker.
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TROIKA RUSSIA DIALOG FUND
Mr. Derks has over eleven years experience in international investments. He
is Vice President of ING Pilgrim. Mr. Derks is also a member of an
investment management team that manages the Lexington Emerging Markets
Fund, Pilgrim Emerging Countries Fund and Pilgrim Worldwide Emerging
Markets Fund. In addition to his role with ING Pilgrim, Mr. Derks also
serves as Director of Global Emerging Markets Equities at ING Investment
Management - Europe. Prior to joining ING Investment Management - Europe in
1997, Mr. Derks managed a Latin American equity fund with ABN AMRO.
Mr. Oubadia has seven years experience in portfolio management. He is Vice
President of ING Pilgrim. Mr. Oubadia is responsible for investments in the
emerging markets of Europe, including Russia. He joined IIM in September
1996 when he was the Senior Equity Manager at IIM's office in Prague in the
Czech Republic. He joined IIM's global emerging markets team in January
1998. Mr. Oubadia holds an MBA from Concordia University in Montreal,
Canada.
Following the assumption of portfolio management duties by ING Pilgrim,
portfolio turnover may be higher than usual in connection with the
potential restructuring of the holdings of these Funds to reflect the
management style of ING Pilgrim. Such potential restructuring may result in
transactional costs for the Funds and may result in accelerated capital
gain distributions as a result of the turnover.
7. RESIGNATION OF SUB-ADVISER FOR PILGRIM SMALLCAP ASIA GROWTH FUND
The following information supplements the disclosure concerning the Pilgrim
SmallCap Asia Growth Fund (the "Fund") in the Prospectus, as follows:
Effective January 2, 2000, ING Pilgrim will assume full investment
management responsibilities for the Fund under its existing Investment
Management Agreement and will no longer utilize the services of Insinger
Asset Management (U.S.) Inc. ("Insinger") as sub-investment adviser for the
Fund. The fees payable to ING Pilgrim for serving as investment adviser
will not change.
Accordingly, the information contained under "Management of the Funds --
Pilgrim SmallCap Asia Growth Fund" on page 50 of the Prospectus is revised
to reflect that, effective January 2, 2001, Richard T. Saler and Philip A.
Schwartz will assume and share the responsibility for the day-to-day
management of the Fund.
Mr. Saler has over 13 years of experience in international investments. He
is Senior Vice President and Director of International Equity Investment
Strategy of ING Pilgrim and held similar positions with Lexington
Management Corporation ("LMC") prior to that firm's recent acquisition by
the parent company of ING Pilgrim. Mr. Saler is a member of an investment
management team that manages the Pilgrim Global Corporate Leaders Fund,
Lexington Emerging Markets Fund, Pilgrim Emerging Countries Fund, Pilgrim
Worldwide Emerging Markets Fund and Pilgrim International Fund. Mr. Saler
has focused on international markets since joining LMC in 1986.
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Mr. Schwartz has over 13 years experience in international investments. He
is Senior Vice President and Director of International Equity Investment
Strategy of ING Pilgrim, and held the same positions with LMC prior to that
firm's recent acquisition. He is also a Chartered Financial Analyst and a
member of the New York Society of Security Analysts. Mr. Schwartz is a
member of an investment management team that manages the Pilgrim Global
Corporate Leaders Fund, Lexington Emerging Markets Fund, Pilgrim Emerging
Countries Fund, Pilgrim Worldwide Emerging Markets Fund and Pilgrim
International Fund. Prior to joining LMC in 1993, he was Vice President of
European Research Sales with Cheuvreux De Virieu in Paris and New York,
serving the institutional market. Prior to Cheuvreux, Mr. Schwartz was
affiliated with Olde and Co. and Kidder, Peabody as a stockbroker.
8. EXCHANGES
Effective November 6, 2000, the following disclosure supplements the
disclosure under "Shareholder Guide -- Transaction Policies -- Exchanges" on
page 46 of the Prospectus:
You may also exchange shares of a Fund for shares of the same class of any
ING Fund, without paying any additional sales charge. Shares subject to a
CDSC will continue to age from the date that the original shares were
purchased.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
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