N-30D 1 e-7053.txt SEMI-ANNUAL REPORT DATED 4/30/2001 [LOGO] ING PILGRIM Semi-Annual Report April 30, 2001 Classes A, B, C, and M International Equity Funds Pilgrim Worldwide Growth Pilgrim International Value Pilgrim International Pilgrim International Core Growth Pilgrim International SmallCap Growth Pilgrim Emerging Countries Pilgrim Global Communications Pilgrim Global Information Technology Pilgrim Asia-Pacific Equity Pilgrim European Equity Pilgrim Russia Precious Metals Fund Pilgrim Precious Metals ------- Pilgrim Funds ------- TABLE OF CONTENTS -------------------------------------------------------------------------------- Letter to Shareholders ........................................ 1 Portfolio Managers' Reports: International Equity Funds .................................. 2 Precious Metals Fund ........................................ 24 Index Descriptions ............................................ 26 Statements of Assets and Liabilities .......................... 28 Statements of Operations ...................................... 33 Statements of Changes in Net Assets ........................... 39 Financial Highlights .......................................... 45 Notes to Financial Statements ................................. 57 Portfolios of Investments ..................................... 77 Shareholder Meetings .......................................... 111 ------- Pilgrim Funds ------- LETTER TO SHAREHOLDERS -------------------------------------------------------------------------------- Dear Shareholder: We are pleased to present the April 30, 2001 Semi-Annual Report for the International Pilgrim Funds. 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 and Administrator changed their names to ING Pilgrim Investments, Inc., ING Pilgrim Securities, Inc. and ING Pilgrim Group, Inc., respectively, effective September 8, 2000. Subsequently, in February 2001, ING Pilgrim Group, Inc. and ING Pilgrim Investments, Inc. became ING Pilgrim Group, LLC and ING Pilgrim Investments, LLC, respectively. 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 eleven International Equity Funds and one Precious Metals Fund included in this Semi-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) Sincerely, ING Pilgrim Group, LLC June 15, 2001 1 ------------- International Equity Funds ------------- Portfolio PILGRIM WORLDWIDE GROWTH FUND Managers' Report -------------------------------------------------------------------------------- Portfolio Management Team: Mary Lisanti, Portfolio Manager; Philip A. Schwartz, Portfolio Manager; Richard T. Saler, Portfolio Manager, ING Pilgrim Investments, LLC. Goal: The Pilgrim Worldwide Growth Fund (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. Investment Strategy: U.S. Market: The Fund seeks to invest 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 to the upper 90% of the S&P 500 Index. 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: U.S. Market: US equity markets struggled over the past six months, but aggressive interest rate cuts by the Federal Reserve brought hope to investors in April. The rate of deceleration in the US economy was dramatic, as the fourth quarter 2000 GDP slowed to a 1.0% growth rate, down from an 8.2% rate in the same period in 2001. After the National Association of Purchasing Managers report showed manufacturing activity at its lowest level in a decade, the Federal Reserve surprised the markets with an interest rate cut four weeks ahead of its regularly scheduled meeting. In all, the Federal Reserve cut 200 basis points over the past four months, and while corporate profits remain weak and the economic data is giving mixed signals, there were enough signs that the market had reached a bottom in April. In this environment, equity investors had a clear preference for value stocks, and technology remained the most volatile sector. The NASDAQ Composite dropped 37.20% in the six-month period that ended in April, while the S&P 500 fell 12.07%. However, not all benchmarks fared quite that poorly, as the Dow Jones Industrials fell 2.15%, the S&P Midcap Index dipped 1.40%, and Russell 2000 Index slid 1.77%. Foreign Markets: It was a difficult six months for most of the major equity markets. Led by a fall in technology and telecom shares several markets experienced sharp declines. Swedish shares declined 25%, Canadian equities dropped 20% and Finnish shares fell 17%. A few smaller markets with low representation in technology and telecom shares enjoyed positive returns. New Zealand and Austria were among the better performing markets with returns of 21% and 13% respectively for the six-month period ended April 30, 2001. As stock prices declined bond yields declined as investors feared a looming recession. As a result government bonds outperformed stocks. Global growth continues to slow particularly in areas such as manufacturing and technology. European economies continue to weaken as the main engine, Germany, seems headed for zero growth. Due to rising inflation the European Central bank has been slow to cut interest rates. On a positive note the European economies did not experience the same degree of over investment in technology as the U.S., as a result the economic downturn may be more muted. The Japanese economy remains mired in economic quick sand. Until real reform is implemented the outlook is unlikely to improve. The recent election by the Liberal Democratic Party of a potentially reform minded prime minister is providing investors with cautious optimism. Japan offers an excellent long term opportunity if both the private and public sector can implement serious restructuring and reform. Finally, returns on foreign shares have been hindered by the strong U.S. dollar. The Euro declined 5% and the Yen 13% over the last six months. The Euro seems particularly attractive and could give European equity returns an extra boost over the longer term. Performance: For the six-month period ended April 30, 2001 the Fund's Class A shares, excluding sales charges, provided a total return of -20.97%. The Morgan Stanley Capital International World Index returned -10.3% for the same period. According to Morningstar, the average return for the world stock category was -11.7%. U.S. Market: The domestic portion of the Fund exited calendar 2000 in a more defensive position, as technology had been pared back in favor of healthcare, consumer staples, and some select utility stocks. However, as the technology sector valuations pulled back to bargain levels, we became more aggressive and added to companies that had management teams that had a track record of managing through an economic slowdown, an improving business model, and an attractive valuation. The Fund's strategy of investing in growth stocks was out of favor for most of the last six months, but the more aggressive repositioning of the portfolio showed positive results in April, which we anticipate will continue through the second half of 2001 as the economy recovers. Foreign Markets: After significant outperformance of defensive shares many of these stocks are no longer attractive. Positions in consumer nondurables have been pared back to a neutral weighting. Conversely, after a major decline in telecom shares attractive valuations have reappeared. New additions to the Fund include France Telecom and China Mobile. Selected technology shares such as Marconi in the UK have also been purchased. The Japanese weighting has risen to 19% as the odds of economic reform improve. This weighting will continue to rise if the government delivers on its reform promises. Bank shares remain an underweight as most are relatively expensive and a global economic slowdown is likely to produce a rise in loan losses. 2 Portfolio Managers' Report PILGRIM WORLDWIDE GROWTH FUND -------------------------------------------------------------------------------- Market Outlook: U.S. Market: The month of April gave some evidence to our belief that the higher end of the growth market was close to a bottom. We still believe that the current economic decline is distinct from the last two recessions of 1980-81 and 1990-1991 in that this slowdown was not caused by structural imbalances. Rather, this slowdown was caused by a decline in capital spending, centered largely around technology. Technology spending has been slowing for close to a year in the wake of the "Y2K" boom and the Internet boom and bust, and incremental data suggest that these excesses have largely been wrung out of the system. Although we entered the current economic slowdown with unprecedented speed, the aggressive rate cuts by the Federal Reserve and the lack of excess inventory in the system could imply a more rapid recovery than in the past. Unless the current economic slowdown stretches beyond the end of 2001, we believe that we are very close to the bottom -- if not beyond it. Some parts of the market, in particular technology, had priced in significantly lower growth for several years, and if the recovery plays out over the second half of the year, then the market will continue its recent good performance. We believe that this market is more similar to the 1990-1991 time frame than the 1994-1995 or 1998 corrections; the values seen at the bottom in the 1990-1991 bear market turned out to be the lows for the decade on many stocks. Thus, we are taking advantage of market volatility to initiate or add to positions in high quality growth companies. Our focus is on companies who can deliver above-average earnings growth in 2002 and beyond, and we are particularly focused on those companies who we believe are improving their business models through this downturn and have significant improvement in profitability ahead of them. Foreign Markets: The international investment landscape continues to improve. Japanese equities offer great potential if new prime minister Junichiro Koizumi can deliver on his reform promises. Japanese stocks are cheap providing companies can restructure and improve their return on capital. European equities will continue to benefit from positive long term trends such as corporate restructuring and economic globalization. If European economies continue to weaken, the European Central bank is likely to shift to a stimulative policy. The main global risk is probably the U.S. economy. Consumers continue to support the economy despite rising unemployment and a low savings rate. It seems unlikely that unemployment can keep rising sharply without consumption slowing sharply.
Average Annual Total Returns for the periods ended April 30, 2001 ----------------------------------------------------------------- Since Inception Since Inception of Class A and C of Class B 1 Year 5 Year 4/19/93 5/31/95 ------ ------ ------- ------- Including Sales Charge: Class A (1) -33.53% 14.36% 14.43% -- Class B (2) -33.29% 14.78% -- 16.29% Class C (3) -30.57% 14.98% 14.55% -- Excluding Sales Charge: Class A -29.48% 15.71% 15.27% -- Class B -29.93% 15.01% -- 16.37% Class C -29.90% 14.98% 14.55% -- MSCI World Index -16.36% 8.72% 10.57%(4) 10.43%(5)
Based on a $10,000 initial investment, the table above illustrates 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. The Fund's performance is shown both with and without the imposition of sales charges. 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) Reflects deduction of the maximum Class A sales charge of 5.75%. (2) Reflects deduction of the Class B deferred sales charge of 5%, 2% and 1%, respectively, for the 1 year, 5 year and since inception returns. (3) Reflects deduction of the Class C deferred sales charge of 1% for the 1 year return. (4) Since inception performance for the index is shown from 05/01/93. (5) Since inception performance for the index is shown from 06/01/95. 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 volatility than larger companies. Risks of foreign investing are generally intensified for investments in emerging markets. See accompanying index descriptions on page 26. 3 ------------- International Equity Funds ------------- Portfolio PILGRIM INTERNATIONAL VALUE FUND Managers' Report -------------------------------------------------------------------------------- Portfolio Management Team: Charles Brandes, CFA, Managing Partner; Jeff Busby, CFA, Managing Partner; Brandes Investment Partners, L.P. Goal: The Pilgrim International Value Fund (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. Market Overview: For much of the six-month period, international equities struggled amid worries over economic sluggishness, prospects for declining corporate profits, tumbling technology stocks, and rising oil prices. Between November 2000 and March 2001, the MSCI EAFE Index fell 14.5%. During the fourth quarter of 2000, oil prices jumped to a 10-year high, raising concerns that higher prices for crude would crimp economic growth. While oil prices jumped, the Euro hit new lows against the U.S. dollar before gaining some ground in December. In Japan, the yen fell to a nine-month low against the dollar in the fourth quarter. Worries over the stability of the banking system also weighed on investor resolve. The Nikkei Index sunk to a 16-year low during the first quarter before rebounding late in March amid reports of more accommodating stance by the central bank and new pledges to shore up the nation's banks. Late in the period, the U.S. Federal Reserve Board's aggressive interest-rate cuts contributed to a rally among technology and telecom stocks and improved investor sentiment in Japan, lifting returns for overseas stocks. The MSCI EAFE Index gained 7.0% in April, trimming its loss during the period to 8.7%. Higher oil prices had their greatest negative influence on emerging markets, where many countries are net importers of oil. In addition, because many emerging nations derive a high percentage of GDP from exports, the prospect of weaker global demand resulting from higher oil costs weighed on investor confidence. The MSCI EMF Index fell 8.4% in the period. Performance: The fund's holdings proved less vulnerable to the variety of factors cited above that dragged share prices for the broader international market lower in the period. In fact, despite a difficult environment, the fund's Class A shares, excluding sales charges, advanced 1.03% in the period. The MSCI EAFE Index gained 7.0% in April, trimming its loss during the period to 7.86%. Portfolio Specifics: Among the greatest contributors to the Fund's modest advance were gains among holdings in the United Kingdom and within the beverages & tobacco industry. The best-performing U.K. holdings were Marks & Spencer (merchandising), British American Tobacco (beverages & tobacco), and Diageo (beverages & tobacco). Declining prices for holdings in Japan and the telecommunications and electrical and electronics industries proved the greatest detriment to overall results in the period. Among the weakest-performing holdings were Alcatel (France - electrical & electronics) and telecom companies such as Telefonos de Mexico (Mexico) and British Telecom (United Kingdom). Among the best-performing holdings during the period were Sun Life Financial (Canada -- insurance), Alcatel Alsthom (France -- electrical & electronics), and British American Tobacco (United Kingdom -- beverages & tobacco). The Fund's country and industry weightings changed little during the period. Using weakness in Japan and within the telecom industry as a buying opportunity, we added selectively to existing positions or made new purchases here, increasing the Fund's exposure slightly in both areas. Market Outlook: Despite volatility in overseas equity markets, we remain optimistic in our outlook for international investing. We are confident that commitment to our strict investment discipline will continue to lead us to promising opportunities. Amid the challenges presented by slowing economic growth globally, we believe investors may continue to favor companies whose shares trade at attractive prices relative to the underlying value of the business. These are precisely the types of companies in which we tend to invest. 4 Portfolio Managers' Report PILGRIM INTERNATIONAL VALUE FUND --------------------------------------------------------------------------------
Average Annual Total Returns for the periods ended April 30, 2001 ------------------------------------------------------------ Since Inception Since Inception of Class A and C of Class B 1 Year 5 Year 03/6/95 04/18/97 ------ ------ ------- -------- Including Sales Charge: Class A (1) 0.49% 15.70% 15.62% -- Class B (2) 1.22% -- -- 16.12% Class C (3) 5.03% 16.31% 15.98% -- Excluding Sales Charge: Class A 6.59% 17.09% 16.74% -- Class B 5.90% -- -- 16.43% Class C 5.97% 16.31% 15.98% -- MSCI EAFE Inde -16.05% 4.52% 7.22%(4) 5.84%(5)
Based on a $10,000 initial investment, the table above illustrates 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. The Fund's performance is shown both with and without the imposition of sales charges. Total returns reflect the fact that the Investment Adviser has contractually agreed to waive or defer its management fees and to pay other operating expenses otherwise payable by the Fund, subject to possible later reimbursement during a three-year period. Total returns would have been lower 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) Reflects deduction of the maximum Class A sales charge of 5.75%. (2) Reflects deduction of the Class B deferred sales charge of 5% and 3%, respectively, for the 1 year and since inception returns. (3) Reflects deduction of the Class C deferred sales charge of 1% for the 1 year return. (4) Since inception performance for the index is shown from 03/01/95. (5) Since inception performance for the index is shown from 05/01/97. 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. International investing does pose special risks including currency fluctuation, economic and political risks not found in investments that are solely domestic. The risks of foreign investing are generally intensified for investing in emerging markets. See accompanying index descriptions on page 26. 5 ------------- International Equity Funds ------------- Portfolio PILGRIM INTERNATIONAL FUND Managers' Report -------------------------------------------------------------------------------- Portfolio Management Team: Richard Saler, Portfolio Manager; Philip Schwartz, C.F.A., Portfolio Manager, ING Pilgrim Investments, LLC. Goal: The Pilgrim International Fund (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 covertible securities. The Fund may invest in companies located in countries with emerging market securities when the portfolio managers believe they present attractive investment opportunities. Investment Strategy: 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 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: It was a difficult six months for most of the major equity markets. Led by a fall in technology and telecom shares several markets experienced sharp declines. Swedish shares declined 25%, Canadian equities dropped 20% and Finnish shares fell 17%. A few smaller markets with low representation in technology and telecom shares enjoyed positive returns. New Zealand and Austria were among the better performing markets with returns of 21% and 13% respectively for the six-month period ending April 30, 2001. As stock prices declined bond yields declined as investors feared a looming recession. As a result government bonds outperformed stocks. Global growth continues to slow particularly in areas such as manufacturing and technology. European economies continue to weaken as the main engine, Germany, seems headed for zero growth. Due to rising inflation, the European Central bank has been slow to cut interest rates. On a positive note the European economies did not experience the same degree of overinvestment in technology as the U.S., as a result the economic downturn may be more muted. The Japanese economy remains mired in economic quick sand. Until real reform is implemented the outlook is unlikely to improve. The recent election by the Liberal Democratic Party of a potentially reform minded prime minister is providing investors with cautious optimism. Japan offers an excellent long term opportunity if both the private and public sector can implement serious restructuring and reform. Finally, returns on foreign shares have been hindered by the strong U.S. dollar. The Euro declined 5% and the Yen 13% over the last six months. The Euro seems particularly attractive and could give European equity returns an extra boost over the longer term. Performance: For the six-month period ending April 30, 2001 the Fund's Class A shares, excluding sales charges, provided a total return of -4.96%. The Morgan Stanley Capital International EAFE provided a total return of -7.86% for the same period. According to Morningstar the average return for the Foreign Stock category was -10.4%. Portfolio Strategy: After significant outperformance of defensive shares many of these stocks are no longer attractive. Positions in consumer nondurables have been pared back to a neutral weighting. Conversely, after a major decline in telecom shares attractive valuations have reappeared. New additions to the fund include France Telecom and China Mobile. Selected technology shares such as Marconi in the UK have also been purchased. The Japanese weighting has risen to 19% as the odds of economic reform improve. This weighting will continue to rise if the government delivers on its reform promises. Bank shares remain an underweight as most are relatively expensive and a global economic slowdown is likely to produce a rise in loan losses. Market Outlook: The international investment landscape continues to improve. Japanese equities offer great potential if new prime minister Junichiro Koizumi can deliver on his reform promises. Japanese stocks are cheap providing companies can restructure and improve their return on capital. European equities will continue to benefit from positive long term trends such as corporate restructuring and economic globalization. If European economies continue to weaken the European Central bank is likely to shift to a stimulative policy. The main global risk is probably the U.S. economy. Consumers continue to support the economy despite rising unemployment and a low savings rate. It seems unlikely that unemployment can keep rising sharply without consumption slowing sharply. 6 Portfolio Managers' Report PILGRIM INTERNATIONAL FUND --------------------------------------------------------------------------------
Average Annual Total Returns for the periods ended April 30, 2001 ------------------------------------------------------------------------ Since Inception Since Inception Since Inception of Class A of Class B of Class C 1 Year 5 Year 01/03/94 08/22/00 09/15/00 ------ ------ -------- -------- -------- Including Sales Charge: Class A (1) -18.84% 8.14% 8.60% -- -- Class B (2) -- -- -- -17.88% -- Class C (3) -- -- -- -- -8.74% Excluding Sales Charge: Class A -13.90% 9.42% 9.48% -- -- Class B -- -- -- -13.94% -- Class C -- -- -- -- -7.90% MSCI EAFE Index -16.05% 4.52% 6.56%(4) -14.38%(5) -14.38%(5)
Based on a $10,000 initial investment, the table above illustrates the total return of Pilgrim International 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. The Fund's performance is shown both with and without the imposition of sales charges. Total returns reflect the fact that the Investment Adviser has contractually agreed to waive or defer its management fees and to pay other operating expenses otherwise payable by the Fund, subject to possible later reimbursement during a three-year period. Total returns would have been lower had there been no deferral to the Fund. Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. This letter contains statements that may be "forward-looking" statements. Actual results may differ materially from those projected in the "forward-looking" statements. The views expressed in this report reflect those of the portfolio manager, only through the end of the period as stated on the cover. The portfolio manager's views are subject to change at any time based on market and other conditions. Portfolio holdings are subject to change daily. (1) Reflects deduction of the maximum Class A sales charge of 5.75%. (2) Reflects deduction of the Class B deferred sales charge of 5% for the since inception return. (3) Reflects deduction of the Class C deferred sales charge of 1% for the since inception return. (4) Since inception performance for the index is shown from 01/01/94. (5) Since inception performance for the index is shown from 09/01/00. 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 accompany an investment in growth-oriented foreign equities. Currency exchange rates, international political and economic conditions and other risks affect foreign securities. The risks of foreign investing are generally intensified for investing in emerging markets. See accompanying index descriptions on page 26. 7 ------------- International Equity Funds ------------- PILGRIM INTERNATIONAL Portfolio CORE GROWTH FUND Managers' Report -------------------------------------------------------------------------------- Portfolio Management Team: Richard Saler, Portfolio Manager; Philip Schwartz, C.F.A., Portfolio Manager, ING Pilgrim Investments, LLC. Goal: The Pilgrim International Core Growth Fund (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 market securities when the portfolio managers believe they present attractive investment opportunities. Investment Strategy: The portfolio managers primarily use "bottom up" fundamental analysis to identify stocks which they believe will have earnings growth faster than that of the markets in which they are based, for at least 65% of the fund's stock positions. They also use "top-down" analysis to identify important themes or issues which may affect the investment environment in the 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: It was a difficult six months for most of the major equity markets. Led by a fall in technology and telecom shares several markets experienced sharp declines. Swedish shares declined 25%, Canadian equities dropped 20% and Finnish shares fell 17%. A few smaller markets with low representation in technology and telecom shares enjoyed positive returns. New Zealand and Austria were among the better performing markets with returns of 21% and 13% respectively for the six-month period ending April 30,2001. As stock prices declined bond yields declined as investors feared a looming recession. As a result government bonds outperformed stocks. Global growth continues to slow particularly in areas such as manufacturing and technology. European economies continue to weaken as the main engine, Germany, seems headed for zero growth. Due to rising inflation the European Central bank has been slow to cut interest rates. On a positive note the European economies did not experience the same degree of overinvestment in technology as the U.S., as a result the economic downturn may be more muted. The Japanese economy remains mired in economic quick sand. Until real reform is implemented the outlook is unlikely to improve. The recent election by the Liberal Democratic Party of a potentially reform minded prime minister is providing investors with cautious optimism. Japan offers an excellent long term opportunity if both the private and public sector can implement serious restructuring and reform. Finally, returns on foreign shares have been hindered by the strong U.S. dollar. The Euro declined 5% and the Yen 13% over the last six months. The Euro seems particularly attractive and could give European equity returns an extra boost over the longer term. Performance: For the six-month period ended April 30, 2001 the Fund's Class A shares, excluding sales charges, provided a total return of -10.86%. The Morgan Stanley Capital International EAFE index returned -7.86% for the same period. According to Morningstar the average return for the Foreign Stock category was -10.4%. Portfolio Strategy: After significant outperformance of defensive shares many of these stocks are no longer attractive. Positions in consumer nondurables have been pared back to a neutral weighting. Conversely, after a major decline in telecom shares attractive valuations have reappeared. New additions to the Fund include France Telecom and China Mobile. Selected technology shares such as Marconi in the UK have also been purchased. The Japanese weighting has risen to 19% as the odds of economic reform improve. This weighting will continue to rise if the government delivers on its reform promises. Bank shares remain an underweight as most are relatively expensive and a global economic slowdown is likely to produce a rise in loan losses. Market Outlook: The international investment landscape continues to improve. Japanese equities offer great potential if new Prime Minister Junichiro Koizumi can deliver on his reform promises. Japanese stocks are cheap providing companies can restructure and improve their return on capital. European equities will continue to benefit from positive long term trends such as corporate restructuring and economic globalization. If European economies continue to weaken the European Central bank is likely to shift to a stimulative policy. The main global risk is probably the U.S. economy. Consumers continue to support the economy despite rising unemployment and a low savings rate. Can this continue if unemployment continues to accelerate? 8 Portfolio PILGRIM INTERNATIONAL Managers' Report CORE GROWTH FUND -------------------------------------------------------------------------------- Average Annual Total Returns for the periods ended April 30, 2001 ------------------------------------ Since Inception 1 Year 02/28/97 ------ -------- Including Sales Charge: Class A (1) -26.98% 10.76% Class B (2) -26.60% 11.30% Class C (3) -23.72% 11.52% Excluding Sales Charge Class A -22.52% 12.34% Class B -23.00% 11.64% Class C -23.01% 11.52% MSCI EAFE Index -16.05% 5.84%(4) Based on a $10,000 initial investment, the table above illustrates 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. The Fund's performance is shown both with and without the imposition of sales charges. 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) Reflects deduction of the maximum Class A sales charge of 5.75%. (2) Reflects deduction of the Class B deferred sales charge of 5% and 3%, respectively, for the 1 year and since inception returns. (3) Reflects deduction of the Class C deferred sales charge of 1% for 1 year return. (4) 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. Currency exchange rates, international, political and economic conditions and other risks affect foreign securities. Risks of foreign investing are generally intensified for investments in emerging markets. See accompanying index descriptions on page 26. 9 ------------- International Equity Funds ------------- PILGRIM INTERNATIONAL Portfolio SMALLCAP GROWTH FUND Managers' Report -------------------------------------------------------------------------------- Portfolio Management Team: Randall S. Kahn, Portfolio Manager, Loretta J. Morris, Portfolio Manager, Catherine Somhegyi Nicholas, Chief Investment Officer, Nicholas-Applegate Capital Management. Goal: The Pilgrim International SmallCap Growth Fund (the "Fund") seeks to maximize long-term capital appreciation through investments in small-capitalization, non-US securities. The Fund may invest up to 35% of its total assets in U.S. issuers. Market Overview: After ticking up slightly early in 2000, stock prices in developed non-US markets tumbled in February and March, only to recover again in April. This volatility was triggered by many of the same themes troubling US investors, most notably worries about slowing global economic growth and a deceleration in corporate profitability. Negative news from many of Europe's technology and telecommunications companies weighed on investor sentiment, as did the rapid deceleration in US GDP growth. Against a backdrop of looser monetary policy, the European Central Bank opted to hold firm on interest rates at its policy meeting in April due to concerns over resurgent inflation and absent any signs that regional growth is waning. During the early months of the reporting period, Japanese equities were negatively impacted by political uncertainty over the fate of Prime Minister Mori and concerns about the state of the domestic and US economies. However, improved investor confidence resulting from the installation of new Prime Minister Junichiro Koizumi helped lift stock market returns later in the period. Recent efforts by the government to kick-start growth by reverting to a zero interest rate policy and addressing banking sector problems also supported Japanese stocks. Performance: For the six-month period ended April 30, 2001 the Fund's Class A Shares, excluding sales charges, provided a total return of -18.81% compared to the Salomon EPAC EMI (Europe, Pacific Australasia Composite Extended Market Index), which returned -4.43% for the same period. Portfolio Specifics: The reporting period saw a continuation of the major downward trend in stock prices, particularly among technology equities. In both Europe and developed Asia, the so-called "TMT" (technology, media and telecommunications) stocks were hard-hit by global economic slowdown, high debt levels and sharply reduced corporate spending on capital equipment. In response, the portfolio management team sharply reduced exposure to the technology sector. Holdings in technology issues fell from 33.98% on October 31, 2000, to 13.11% on April 30, 2001. Instead, assets were shifted to energy, commercial/industrial and producers/ manufacturing companies as we identified more attractive opportunities in these areas. Energy holdings rose from 10.68% at the beginning of the period to 15.99% at the end. Meanwhile, commercial/industrial stocks climbed from 7.56% to 12.46% and producers/manufacturing firms increased from 10.14% to 14.18%. On April 30, 2001, the Fund was significantly overweight in the energy sector and underweight in financial services and producers/ manufacturing stocks. On a country basis, the uncertain outlook in Japan led us to shift assets from Japan early in the period, then purchase Japanese equities again as the environment improved. Holdings were also trimmed in Germany, which fell from 13.10% to 7.32% of the portfolio during the reporting period. By contrast, the weighting of United Kingdom stocks nearly doubled from 9.76% of the portfolio as of November 1, 2000, to 18.16% as of April 30, 2001. Strong fundamentals and easing by England's central bank prompted this shift. As of April 30, 2001, the Fund was underweight UK and Japanese equities and overweight in Norway and Denmark. Market Outlook: Through April 30, 2001, central banks worldwide had reduced interest rates more than 40 times, and we expect additional rate reductions in the coming months. Looser monetary policy bodes well for prices of non-US, small-cap stocks. Along with lower interest rates, tax cuts in eight European countries should boost economic growth and companies' earnings prospects. In Japan, deregulation is reshaping the telecommunications, transportation and financial services industries, and many firms there are implementing cost-cutting restructuring measures. Applying our proven investment philosophy and process centered on positive and sustainable change, we continue to find and invest in companies with what we believe are solid fundamentals. 10 Portfolio PILGRIM INTERNATIONAL Managers' Report SMALLCAP GROWTH FUND -------------------------------------------------------------------------------- Average Annual Total Returns for the periods ended April 30, 2001 ----------------------------------------------------- Since Inception Since Inception of Class B of Class A & C 1 Year 5 Year 5/31/95 08/31/94 ------ ------ ------- -------- Including Sales Charge: Class A (1) -32.62% 19.63% -- 16.19% Class B (2) -32.17% 20.17% 19.93% -- Class C (3) -29.54% 20.31% -- 16.39% Excluding Sales Charge: Class A -28.50% 21.06% -- 17.23% Class B -28.88% 20.36% 20.00% -- Class C -28.88% 20.31% -- 16.39% Salomon EPAC EM Index -10.95% 0.45% 2.98%(4) 1.73%(5) Based on a $10,000 initial investment, the table above illustrates the total return of Pilgrim International SmallCap Growth Fund against the Salomon EPAC EM Index. The Index has an inherent performance advantage over the Fund since it has no cash in its portfolio, imposes no sales charges and incurs no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges. Total returns reflect the fact that the Investment 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) Reflects deduction of the maximum Class A sales charge of 5.75%. (2) Reflects deduction of the Class B deferred sales charge of 5%, 2% and 1%, respectively, for the 1 year, 5 year and since inception returns. (3) Reflects deduction of the Class C deferred sales charge of 1% for the 1 year return. (4) Since inception performance for the index is shown from 06/01/95. (5) Since inception performance for the index is shown from 09/01/94. 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 accompany an investment in growth-oriented foreign equities. Currency exchange rates, international, political and economic conditions and other risks affect foreign securities. Risks of foreign investing are generally intensified for investments in emerging markets. See accompanying index descriptions on page 26. 11 ------------- International Equity Funds ------------- Portfolio PILGRIM EMERGING COUNTRIES FUND Managers' Report -------------------------------------------------------------------------------- Portfolio Management Team: Richard Saler, Portfolio Manager; Philip Schwartz, Portfolio Manager; Jan Wim Derks, Portfolio Manager; Eric Anderson, Portfolio Manager; Bratin Sanyal, Portfolio Manager; ING Pilgrim Investments, LLC. Goal: The Pilgrim Emerging Countries Fund (the "Fund") seeks to maximize long-term capital appreciation through investments in emerging markets securities. Market Overview: The first calendar year of the new millennium proved to be a disappointing year for emerging markets equities. In 2000 the MSCI Emerging Markets Free Index was down by 31.8% in USD, lagging the world's developed markets, as represented by the MSCI World Index, which fell by 14.1%. After the stellar performance of emerging markets equities in 1999 (+66.6%) investors' hopes were high for 2000. A number of factors adversely affected the sentiment towards emerging markets equities. Firstly, technology index Nasdaq lost approximately 40% of its value, reducing investors' appetite for other risky assets like emerging markets. Secondly, oil prices reached high levels of over USD 30 per barrel not seen for a long time. Because many emerging countries by and large are big oil importers this potentially damages GDP growth. Thirdly, in the last quarter of 2000 we saw the first clear signs that the US economy was slowing down. Worries about a hard landing or even a recession started to be discounted by the equity markets. Since emerging markets are very much dependent on exports to the US, this also brought down estimates for economic growth in these countries. Lastly, some country specific problems hit the news in November 2000. In Turkey, a corruption scandal and huge outflows of foreign reserves raised doubts about the sustainability of the peg between the Turkish lira and the USD. In Argentina worries mounted that Argentina might not be able to service its debt obligations in 2001. In 2000 the Latin American region (-18.4%) outperformed Asia (-42.6%) and the group of emerging markets referred to as EMEA, standing for Europe, Middle East and Africa, fell by 23.4%. This can be explained by the low technology exposure of Latin America and the fact that the region is a net exporter of oil. Since the beginning of 2001 the picture has improved. During the first four months the MSCI Emerging Markets Free Index fell by just 1.8%. Over the same period the MSCI World Index is down by 6.8%. Four interest rate cuts of 50 basis points by the US Fed have brought back confidence that the economy will resume its long term sustainable growth rate of 3 to 4%. At the same time it increases global liquidity, which is another important driver of emerging markets equities. During the first four months of 2001 Latin America was up 2.0%, Asia was down 0.2% and EMEA was down by 12.1%. Within Latin America, Argentina remained the problem spot. New Economy Minister Cavallo has so far failed to regain the confidence of international investors that he will be able to make the economy grow again after three years of recession. In an attempt to avoid a default, the Argentine government is trying to stretch out debt payments due over the next three years. In Turkey new Economy Minister Kemal Dervis in April announced forthcoming financial support from the IMF after a political and financial crisis broke out in February. The Turkish lira initially lost approximately 35% of its value and has stabilized around those levels. The equity market rallied in April on the news of the additional IMF credit line. Malaysia and Chile announced the elimination of capital gains taxes to foreigners. As of May 31st, Greece officially is no longer considered an emerging country and will therefore be taken out of the MSCI Emerging Markets Free Index. Also the index has adopted a more free float oriented approach, which has caused small changes in the weights of this important emerging markets benchmark. Performance: For the six-month period ended April 30, 2001, the Fund's Class A Shares, excluding sales charges, provided a total return of -12.86% compared to the MSCI Emerging Markets Free Index, which returned -7.26% for the same period. Portfolio Specifics: During most of the reporting period we were substantially overweight in Latin America. Only in recent months have we decreased our overweight in Brazil as a result of possible spill-over effects from Argentina. Therefore our largest overweight in Latin America is now Mexico. Although the country is vulnerable to a slowdown in the US economy it is increasingly been seen as a safe haven and convergence play in terms of economic and financial integration with the US. We are underweight in the smaller countries in the Latin region like Argentina, Chile, Colombia, Peru and Venezuela. We have been underweight in Asia during most of the reporting period. Within Asia we were overweight in Korea and India and were neutral to underweight in Indonesia, Malaysia, Philippines and Thailand. In Taiwan we maintained a high beta portfolio of quality technology stocks. Recently we have increased our exposure to the domestic consumer sector in China on the back of strong first quarter 2001 GDP growth figures. Also we added to our positions in India, Thailand and Korea, bringing the underweight in Asia back to neutral. In EMEA we were neutral for most of the time. We gradually reduced our positions in Greece to zero. 12 Portfolio Managers' Report PILGRIM EMERGING COUNTRIES FUND -------------------------------------------------------------------------------- We maintained a neutral stance in Turkey during the market turbulence of the last few months. We kept our overweights in Russia and Hungary and our underweight position in South Africa. Market Outlook: Sentiment towards equities in general is still fragile. Global growth is still being revised downward by most economists and so are corporate earnings estimates by analysts. The IMF in its World Economic Outlook of April 2001 projects World growth to slow from 4.8% in 2000 to 3.2% in 2001. Growth expectations for the three big regions of the world economy are weak. Nevertheless, emerging economies are forecasted to grow by 5% on average in 2001. Historically emerging markets equities have done particularly well during periods of a global growth recovery and global monetary easing. With all major central banks in a monetary easing mode, at some point economic growth should resume. As soon as investors are willing to look across the valley to prospects for the next economic upturn, emerging markets equities will begin to perform. When and not if is the crucial question here. A small proportion of the Fund is invested in developed markets. In this context, the landscape continues to improve. Japanese equities offer great potential if new Prime Minister Junichiro Koizumi can deliver on his reform promises. Japanese stocks are cheap providing companies can restructure and improve their return on capital. European equities will continue to benefit from potentially positive long term trends such as corporate restructuring and economic globalization.
Average Annual Total Returns for the periods ended April 30, 2001 ------------------------------------------------------------------ Since Inception Since Inception of Class A and C of Class B 1 Year 5 Year 11/28/94 05/31/95 ------ ------ -------- -------- Including Sales Charge: Class A (1) -33.22% -0.33% 2.64% -- Class B (2) -33.07% -0.02% -- 3.19% Class C (3) -30.29% 0.36% 2.72% -- Excluding Sales Charge: Class A -29.13% 0.86% 3.58% -- Class B -29.55% 0.36% -- 3.34% Class C -29.59% 0.36% 2.72% -- MSCI EMF Index -25.73% -6.20% -5.42%(4) -3.94%(5)
Based on a $10,000 initial investment, the table above illustrates 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. The Fund's performance is shown both with and without the imposition of sales charges. Total returns reflect the fact that the Investment Adviser has contractually agreed to waive or defer its management fees and to pay other operating expenses otherwise payable by the Fund, subject to possible later reimbursement during a three-year period. Total returns would have been lower had there been no deferral to the Fund. Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. This letter contains statements that may be "forward-looking" statements. Actual results may differ materially from those projected in the "forward-looking" statements. The views expressed in this report reflect those of the portfolio manager, only through the end of the period as stated on the cover. The portfolio manager's views are subject to change at any time based on market and other conditions. Portfolio holdings are subject to change daily. (1) Reflects deduction of the maximum Class A sales charge of 5.75%. (2) Reflects deduction of the Class B deferred sales charge of 5%, 2% and 1%, respectively, for the 1 year, 5 year and since inception returns. (3) Reflects deduction of the Class C deferred sales charge of 1% for the 1 year return. (4) Since inception performance for the index is shown from 12/01/94. (5) Since inception performance for the index is shown from 06/01/95. 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 26. 13 ------------- International Equity Funds ------------- PILGRIM GLOBAL Portfolio COMMUNICATIONS FUND Manager's Report -------------------------------------------------------------------------------- Portfolio Management: Daniel Hayes, Portfolio Manager, ING Investment Management Advisors B.V. Goal: The Pilgrim Global Communications Fund (the "Fund") seeks to maximize long-term capital appreciation by investing in equity securities of communications companies located throughout the world, including the United States. Market Overview: Going into the year end 2000 the market failed to deliver anything resembling a rally, liquidity was tight, telecom spending was constrained, the spectre of bankruptcy hovered over many in the services sector. To the end of April 2001 the Communication technology Fund was down 31%. Our strategy of reducing exposure to Technology-related issues and overweighing Telecom services proved ineffective in avoiding a widespread route in all things Communication related. Infrastructure stocks took the brunt of the selling, down on average 40% year to date. Similarly, semiconductor and optical component stocks experienced declines in excess of 30%. A build up of inventory in the supply chain together with a growing realization that the Telecom services companies (the buyers of Technology) were financially constrained, helped fuel the negative sentiment surrounding the sector. The equity and debt markets were considered to be effectively closed to the Telecom Industry, thus increasing the financial stress and constraining capex budgets. Alan Greenspan signalled to the markets in early January that the easing cycle would commence, resulting in a short-lived relief rally for the technology market as a whole. Profit warnings then came from such heavyweight Technology companies as Nortel, Cisco, JDS Uniphase and Ericsson. Cost cutting, in the form of layoffs, is intensifying. Guidance from the Technology sector is at best vague, and Nortel, for example, has refused to give guidance for the rest of 2001. All of this in a backdrop of falling interest rates. The deterioration of the sector balance sheet is at the root of the majority of Technologies woes. The carriers capital constraints have effectively turned off the investment tap, and many of the issues relating to over- leveraged balance sheets cannot be resolved by a drop in short term borrowing costs. The question for the investor therefore is at what point is the sector fully discounting the negative news. We address some of these issues in the outlook. March saw a low on the Nasdaq around 1600, the basic premise of the investor at the moment is "the news can't get any worse!" Performance: For the six-month period ended April 30, 2001, the Fund's Class A shares, excluding sales charges, provided a total return of -49.59% compared to the NASDAQ Telecom Index, which returned -43.21% for the same period. Portfolio Specifics: The market remains extremely volatile, defensive positions in any one group are difficult to maintain. We have added on weakness in our positions in technology infrastructure stocks with a view to a stronger technology sector in the second half of 2001. A stronger showing from the Telecom services sector, either in the form of market fundamentals, or a new spending cycle would increase our conviction to these stocks. The weakness in the Technology sector has prompted us to generally increase weightings in Technology issues. We have added to our positions in JDSU, PMCS and ONIS and we have added to the portfolio Texas intstruments. We have removed from the Portfolio Ericsson, and increased weighting in Nokia. Market Outlook: The collapse of the Technology market owes much to the excesses of the carrier spending expansion witnessed in 1999 and 2000. Bear markets focus only on the bad news and there has been plenty of it around. There is no doubt that the Telecom services sector has to emerge strongly over the next 12 months to prove the case for continued robust spending and investment. Put simply, the buyers of technology have become fiscally constrained, much of this fiscal discipline has been imposed on them by a shut down in the access to once-free capital. At the moment however we believe that "the baby is being thrown out with the bath water". Telecommunications is a capital-intensive business, carriers can not stop spending. Certainly sector growth rates were too high but for specific companies within the sector the potential business opportunity is real. So what are the catalysts for a market recovery? Clearly supply and demand within the sector has to come back into balance. On the demand side, economic activity will be driven by the easier money environment. Consolidation in the industry is also necessary, we should also expect to see an increase in bankruptcy in the telecom sector and or acquisitions for zero equity 14 Portfolio PILGRIM GLOBAL Manager's Report COMMUNICATIONS FUND -------------------------------------------------------------------------------- premium. The underlying demand for communications services has not suddenly disappeared, they will continue to grow as a proportion of global GDP. By definition carrier business models are capital intensive, "cheap Technology" drives carrier performance, the need to invest in technology that drives down costs has never been greater. We should continue to see major shifts in capital spending away from legacy systems to next generation systems but importantly an emphasis on technology solutions that allow operators to leverage off their legacy asset base. We will continue to focus on buying stocks which we believe will offer the investor good long-term capital growth. Ultimately we believe these companies will emerge from the sector downturn in stronger shape where barriers to entry have become even higher. Average Annual Total Returns for the periods ended April 30, 2001 -------------------------------------------- Since Inception 1 Year 3/1/00 ------ ------ Including Sales Charge: Class A (1) -58.79% -59.55% Class B (2) -58.77% -59.19% Class C (3) -56.97% -57.64% Excluding Sales Charge: Class A -56.29% -57.45% Class B -56.60% -57.74% Class C -56.63% -57.64% NASDAQ Telecom Index -60.21% -63.29% Based on a $10,000 initial investment, the table above illustrates the total return of Pilgrim Global Communications Fund against the NASDAQ Telecom Index. The Index has an inherent performance advantage over the Fund since it has no cash in its portfolio, imposes no sales charges and incurs no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges. Total returns reflect the fact that the Investment 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) Reflects deduction of the maximum Class A sales charge of 5.75%. (2) Reflects deduction of the Class B deferred sales charge of 5% and 4%, respectively, for the 1 year and since inception returns. (3) Reflects deduction of the Class C deferred sales charge of 1% for the 1 year return. 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 26. 15 ------------- International Equity Funds ------------- PILGRIM GLOBAL INFORMATION Portfolio TECHNOLOGY FUND Manager's Report -------------------------------------------------------------------------------- Portfolio Management: Guy Uding, Portfolio Manager, ING Investment Management Advisors B.V. Goal: The Pilgrim Global Information Technology Fund (the "Fund") seeks to maximize long-term capital appreciation by investing in equity securities of information technology companies located throughout the world, including the United States. Market Overview: The last quarter of the year, which is traditionally the strongest couple of months, was very disappointing for the tech investor. Big bellwether tech companies such as Microsoft and Intel lowered their sales and earnings forecast blaming the overall economy. Therefore, when the FED lowered the interest rate by 2% in four steps to fight further weakening of the US economy, the market responded positively. However, investors were focusing predominately on the outlook of companies and their visibility and sustainability and therefore gains were lost. In the beginning of the year the overall expectation for the second half of the year was a fast V shape recovery which changed to a U shape during the quarter. US corporate profits had their biggest decline in a decade last quarter as consumers and businesses reduced their spending and the macro economic environment and outlook in the US is still cloudy. As consumer confidence and spending were showing signs of life after slumping at the end of last year economists are growing hopeful that the FED will engineer a soft landing for the economy by reducing interest rates and preserve the expansion. Consumer spending which accounts for roughly two thirds of the economy is still at risk however, especially as unemployment keeps rising. A lot of technology companies stated at the start of the year that they saw no evidence of a slowdown in their business because they were offering strategic important applications or were offering high ROI's. Tech companies raised their level of guidance after beating the expectations for the fourth quarter. In the second half of the reporting period however companies postponed big ticket IT projects because of the cloudy outlook and IT companies were confronted with a significant slowdown in their bookings. Also the computer storage related companies which were thought to be immune to an economic slowdown, as customers continued to generate information from doing business on the Internet were confronted with this slowdown. The network sector came under severe pressure as Communication services companies were having cash-flow problems because of their huge debts and because of their spending on the 3G licenses and the build-out of their networks. Capital expenditures came to a grinding halt and network component suppliers came under severe pressure. On top of that the growth in wireless stalled and the whole component sector was confronted with rising inventories and slowing demand. The growth in PC units, which is the dominant demand driver for semiconductors, slowed significantly because the sector lacks a killer application that requires higher speed or power. Utilization rates for the semiconductor companies fell quite fast to the historically lowest level as demand weakened and the inventory issue continued. Semiconductor companies reduced their capital spending budgets quite aggressively and cancelled their orders resulting in the lowest Book-to-bill figure ever. Although the IT fund has no exposure in this sector this had an impact on the whole semiconductor sector. Performance: For the six-month period ended April 30, 2001 the Fund's Class A shares, excluding sales charges, provided a total return of -45.46% compared to the Goldman Sachs Technology Industry Composite Index which returned -39.18% for the same period. Portfolio Specifics: The Fund reduced its exposure in the enterprise software theme and the storage sector. Valuations were high in respect to the uncertain outlook. We increased the weighting in semiconductor companies especially the PC related semiconductor companies as we received evidence that tests with Windows2000 were quite successful which we believe will drive PC growth and valuations. We increased the weighting in outsourcing companies because of its visibility going forward, as the average length of a contract is five years. Market Outlook: We expect that the Technology market will only strengthen on improvements in growth and fundamentals rather than a massive multiple expansion going forward. However some stocks overshot to the downside and represented a good investing opportunity. We take the view that this stock picking market is likely to continue for at least the near future. Clearly the macro economic outlook will continue to have a major impact on the tech sector and IT spending plans. Interest rate cuts should stimulate the economy and will probably have a positive impact on the markets. Recent data suggest that enterprises are resuming their IT spending and some IT companies are reporting growth in their orderbooks again. In the second half of the year Microsoft introduces the Xbox as well as Windows XP which is likely to fuel the semiconductor sector. 16 Portfolio PILGRIM GLOBAL INFORMATION Manager's Report TECHNOLOGY FUND -------------------------------------------------------------------------------- Average Annual Total Returns for the periods ended April 30, 2001 -------------------------------- Since Inception 1 Year 12/15/98 ------ -------- Including Sales Charge: Class A (1) -52.27% 15.78% Class B (2) -51.37% 16.71% Class C (3) -50.12% 17.89% Excluding Sales Charge: Class A -49.35% 18.69% Class B -49.66% 18.02% Class C -49.77% 17.89% Goldman Sachs Technology Industry Composite Index -49.33% 17.53%(4) Based on a $10,000 initial investment, the table above illustrates the total return of Pilgrim Global Information Technology Fund against the Goldman Sachs Technology Industry Composite Index. The Index has an inherent performance advantage over the Fund since it has no cash in its portfolio, imposes no sales charges and incurs no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges. Total returns reflect the fact that the Investment 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) Reflects deduction of the maximum Class A sales charge of 5.75%. (2) Reflects deduction of the Class B deferred sales charge of 5% and 3%, respectively, for the 1 year and since inception returns. (3) Reflects deduction of the Class C deferred sales charge of 1% for the 1 year return. (4) Since inception performance for the index is shown from 12/01/98. Principal Risk Factor(s): International investing involves special risks considerations including currency fluctuations, lower liquidity, political and economic uncertainties and differences in accounting standards. The Fund concentrates its investments in information technology-related companies and will tend to experience greater volatility than funds with more diversified portfolios. See accompanying index descriptions on page 26. 17 ------------- International Equity Funds ------------- Portfolio PILGRIM ASIA-PACIFIC EQUITY FUND Managers' Report -------------------------------------------------------------------------------- Portfolio Management Team: Richard Saler, Portfolio Manager; Philip Schwartz, C.F.A., Portfolio Manager; ING Pilgrim Investments, LLC. Goal: The Pilgrim Asia-Pacific Equity Fund (the "Fund") normally invests at least 65% of its total assets in equity securities listed on stock exchanges in countries in the Asia-Pacific region or issued by companies based in this region. Asia-Pacific countries in which the Fund invests include, but are not limited to, China, Hong Kong, Indonesia, Korea, Malaysia, Philippines, Singapore, Taiwan and Thailand, but do not include Japan or Australia. The equity securities in which the Fund may invest include common stock, convertible securities, preferred stock, warrants, American Depository Receipts, European Depository Receipts and other depository receipts. Investment Strategy: 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 market. They also use "top-down" analysis to identify important themes or issues which may affect the investment environment in different sectors or parts of the region, and to estimate local 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: It was a ragged six months for the major equity markets in the region. Hong Kong, Singapore, South Korea and Taiwan account for about 90% of the value of stocks in which foreigners can invest. Market returns ranged from a gain of just over 3% in Korea to a loss of just over 19% in Singapore. It became clear at the end of 2000 that the US economy had slowed sharply. After a bright start caused in large measure by the US Federal Reserve's 1/2% interest rate cut on January 3rd, reality set in as Asian economies braced for the effects of the US led economic slow down. A significant part of the GDP of many of these economies is the value of exports to the US. In addition, much of the slowdown in US economic activity was a reduction in business investment, especially technology. This would cause pain to many of Asia's bellwether technology companies, involved in telecommunications equipment and semiconductors. Political instability in a number of Asian countries did not help sentiment and latterly the region's businesses were threatened by a weakening Yen, since Japanese companies compete with other Asian firms in many of the world's major industries, while Japan imports large volumes of goods from the rest of Asia. Performance: For the six-month period ended April 30, 2001 the Fund's Class A shares, excluding sales charges, provided a total return of -12.81%. The MSCI Far East Free ex Japan Index returned -8.17% for the same period. Portfolio Strategy: The main element of strategy has been to maintain overweights in the telecommunications and technology sectors. We believe that, while share prices in these sectors have been hit hard by the global slowdown, especially in the US, the companies involved are world class competitors. We feel that there is at least as much risk involved in being underweight in technology and telecoms as there is in being overweight, as there is much bad news already in the market and the recovery, when it comes, could well be fast and furious. Market Outlook: The Federal Reserve has at the time of writing, reduced interest rates by 2% in the year to date and this, together with 2% to 3% GDP growth in Europe should bring an end to the global economic slow down. The main Asian economies outside of Japan look set to grow by better than 4% this year and perhaps 5% in 2002. The profit outlook for the larger well managed companies in which we tend to invest will inevitably improve and with p/e ratios currently between 10 and 15 times 12 month forward earnings. In the medium term, if, (and it is a big "if"), new Japanese prime minister Junichiro Koizumi can deliver on his reform promises, then after an initial recessionary period, Japanese demand should improve markedly, to the benefit of companies in the rest of Asia. The main global risk is probably the U.S. economy. Consumers continue to support the economy despite rising unemployment and a low savings rate. It seems unlikely that unemployment can keep rising sharply without consumption slowing sharply. Hence we expect more rate cuts by the Federal Reserve. 18 Portfolio Managers' Report PILGRIM ASIA-PACIFIC EQUITY FUND -------------------------------------------------------------------------------- Average Annual Total Returns for the periods ended April 30, 2001 ---------------------------------------- Since Inception 1 Year 5 Year 09/01/95 ------ ------ -------- Including Sales Charge: Class A(1) -44.65% -17.28% -14.49% Class B(2) -44.23% -17.21% -14.34% Class M(3) -43.26% -17.28% -14.54% Excluding Sales Charge: Class A -41.29% -16.29% -13.59% Class B -41.32% -16.87% -14.19% Class M -41.22% -16.69% -14.01% MSCI Far East Free ex-Japan Index -31.38% -12.31% -8.40% Based on a $10,000 initial investment, the table above illustrates the total return of Pilgrim Asia-Pacific Equity Fund against the MSCI Far East Free ex-Japan Index. The Index has an inherent performance advantage over the Fund since it has no cash in its portfolio, imposes no sales charges and incurs no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges. Total returns reflect the fact that the Investment 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) Reflects deduction of the maximum Class A sales charge of 5.75%. (2) Reflects deduction of the Class B deferred sales charge of 5%, 2% and 1%, respectively, for the 1 year, 5 year and since inception returns. (3) Reflects deduction of the Class M deferred sales charge of 3.50% for the 1 year return. Principal Risk Factor(s): Increased price volatility and other risks that accompany an investment in foreign equities and in securities of issuers in a single region. Currency exchange rates, international, political and economic conditions and other risks affect foreign securities. See accompanying index descriptions on page 26. 19 ------------- International Equity Funds ------------- Portfolio PILGRIM EUROPEAN EQUITY FUND Managers' Report -------------------------------------------------------------------------------- Portfolio Management Team: Frits Moolhuizen, Head of Equities, Adrian van Tiggelen, Head of European Equities, ING Investment Management Advisors B.V. Goal: The Pilgrim European Equity Fund (the "Fund") seeks growth of capital through investment in a diversified portfolio of primarily European companies. Market Overview: The TMT sector continued its fall. Technology shares were hit by earnings worries, mainly caused by evidence of slower economic growth. A number of technology companies saw demand for their products fall off a cliff and had to report earnings below expectations. Towards the end of the period, TMT shares started to recover, helped by a fourth US interest rate cut. The insurance sector lost its status as a safe haven after a severe profit warning by Zurich Financial Services. There are also worries about unit-linked products due to the fall in stock markets. Cyclical stocks were among the best relative performers as investors adopted a value bias in their selection and on expectations that a V-shape economic recovery will support the outlook for cyclicals. Performance: For the six month period ended April 30, 2001, the Fund's Class A shares, excluding sales charges, provided a total return of -10.80% compared to the FT/Europe Index which returned -7.15% for the same period. Portfolio Specifics: The high volatility in the market caused us to trade more than usual. Regular bouts of panic selling offered valuation opportunities we had to act on. On a sector level, our bottom up inspired transactions, led us to decrease the weight of banks. Especially the weight of investment banks was reduced. We increased the weight of telecom, by buying Orange and both Deutsche and France Telecom. This was driven by relative valuation developments and improving newsflow. The latest results show resilience in the core wireline operations. There is a growing confidence of a wireless margin recovery due to a reduction of pre-paid subsidies and balance sheet issues are easing. In an effort to reduce investment in next generation mobile infrastructure, telecom operators are looking for ways to share network equipment. Market Outlook: Profit growth expectations for Europe have been downgraded further to approximately 3% (after 20% in 2000). This number has been consistently going down this year from 10%+ at the end of last year. Earnings growth is now more realistic although we assess more short-term downward revisions than upward. Next year's earnings growth is still 13% at the consensus level. A further economic slowdown is definitely not foreseen in this number. Although the ECB did not cut official rates yet, it is still expected to start cutting rates as soon as a decline in inflation starts to emerge. Current monetary and/or fiscal stimulus should prevent a further slowdown in the global economy. Given this backdrop, equity valuations are fairly valued unless one expects a global recession. Although that would be possible, it is not our central scenario. We still assume that the deceleration of economic growth will be limited to 2001 and that next year will bring a limited recovery. Equity markets should anticipate this and most likely they found a bottom during March this year. We expect markets to remain volatile and nervous in the next months, with profit warnings limiting the upside and rate cuts limiting the downside. 20 Portfolio Managers' Report PILGRIM EUROPEAN EQUITY FUND -------------------------------------------------------------------------------- Average Annual Total Returns for the periods ended April 30, 2001 ------------------------------------ Since Inception 1 Year 12/15/98 ------ -------- Including Sales Charge: Class A (1) -20.78% -2.24% Class B (2) -20.32% -1.96% Class C (3) -17.22% -0.57% Excluding Sales Charge: Class A -15.94% 0.22% Class B -16.32% -0.38% Class C -16.42% -0.57% FT Europe Index -10.91% 2.84%(4) Based on a $10,000 initial investment, the table above illustrates the total return of Pilgrim European Equity Fund against the FT Europe Index. The Index has an inherent performance advantage over the Fund since it has no cash in its portfolio, imposes no sales charge and incurs no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges. Total returns reflect the fact that the Investment 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) Reflects deduction of the maximum Class A sales charge of 5.75%. (2) Reflects deduction of the Class B deferred sales charge of 5% and 3%, respectively, for the 1 year and since inception returns. (3) Reflects deduction of the Class C deferred sales charge of 1% for the 1 year return. (4) Since inception performance for the index is shown from 12/01/98. Principal Risk Factor(s): Price volatility and other risks that accompany an investment in equity securities of issuers in a single region. Currency exchange rates, international, political and economic conditions and other risks affect foreign securities. See accompanying index descriptions on page 26. 21 ------------- International Equity Funds ------------- Portfolio PILGRIM RUSSIA FUND Managers' Report -------------------------------------------------------------------------------- Portfolio Management Team: Samuel Oubadia, Senior Investment Manager -- Emerging Markets Equities, Michiel Bootsma, Investment Manager -- Emerging Markets Equities, Jan Wim Derks, Director -- Head of Emerging Markets Equities, ING Pilgrim Investments, LLC. Goal: The Pilgrim Russia Fund (the "Fund" or "LETRX") seeks to maximize long-term capital appreciation through investments in Russian securities. Market Overview: After falling sharply in the fourth quarter of 2000, the Russian equity market performed relatively well in the first few months of 2001. The first quarter of 2001 was a period when most markets saw significant declines. This is in contrast to most of last year, when the Russian market was heavily influenced by the developments in global markets -- particularly the Nasdaq. The end of 2000 was especially difficult for Russian equities, as the market was hurt by adverse developments in the Turkish stock market, and lower oil prices. (The price of oil fell sharply in December, but has since climbed back to a level that is much closer to the average price in 2000.) The relatively good performance of the Russian market since the start of 2001, can be at least be partly attributable to the moderately favorable economic outlook for 2001. Real GDP growth is expected to reach about 2.0 to 3.0%, and a budget surplus of about 1.0% of GDP is also forecasted. Foreign exchange reserves reached a record high of USD 30.0 billion at the end of April. As was the case for most of 2000, the price of oil continues to lend support to the Russian market. Most analysts have raised their forecasts for the average oil price for 2001, to $23.00 -$24.00/barrel. Earlier this year, investors were also encouraged by the Russian government's decision to honor Russia's Paris Club debt for 2001 in full. This amounts to USD 3.7 billion, of which USD 1.2 is principal and the remainder being the interest expense. Performance: For the six-month period ended April 30, 2001, the Fund Class A shares, excluding sales charges, provided a total return of 1.12% compared to -4.40% return for the Russian Trading System Index and 1.76% return for the Moscow Times Index for the same period. Portfolio Specifics: The Fund's rebound in the first four months of 2001 can be attributed to its position in the metals and mining sector, which was the market's best performing sector. Specifically, the Fund has a large position in Norilsk Nickel. The company, which produces metals such as nickel and platinum, saw its share price rise over 80% in the first quarter of 2001. This was due to a combination of factors that includes the stock's very low valuation, and the view that corporate governance is set to improve at the mining company. We have since reduced our position in Norilsk Nickel, however the company remains one of the fund's largest holdings. The oil and gas sector actually underperformed the broader market. As a result, the Fund's underweight position in the sector helped its relative performance. Nevertheless, certain oil stocks did perform well. The highlight was Yukos, which rose almost 50% in the first quarter of 2001. This is one of the Fund's largest holdings in the sector. Still, the Fund will likely maintain this underweight position in the oil sector for some time, as the sector comprises over 65% of the Russian equity universe. Market Outlook: It is quite remarkable that the Russian market performed as well as it did in the first quarter of 2001 given the incredibly poor performance of global markets. We would not have expected such a scenario at the end of last year, and we would continue to believe that this scenario is unlikely going forward. However, we do envisage a scenario where if global markets have reached their trough, the Russian market can continue to outperform other emerging markets. This was indeed the case in the month of April. With respect to structural reforms, we are expecting significant progress in two key areas in the next few months. The first of these deals with the banking system. There are three separate laws that deal with banking. The passage of these laws will give the central bank more control over monetary policy, and will also grant it more power in its supervision of Russia's commercial banks. We also expect the new land code, which will allow for private land ownership, to be implemented in the near-term. The passage of this law will overturn a key principle of the former communist system. Nevertheless, the Russian economy does face a problem in the fact that the ruble has been steadily appreciating in real terms. Indeed, the devaluation of the currency is 22 Portfolio Managers' Report PILGRIM RUSSIA FUND -------------------------------------------------------------------------------- perhaps the key factor that has brought about the turnaround in the Russian economy since the crises of 1998. The huge inflow of foreign exchange from commodity exports has kept the ruble exchange rate stable in nominal terms. However, with inflation still expected to lie in a range of 18 - 20% by the end of 2001, the ruble has appreciated to 70 - 80% of its July 1998 level by some estimates. This clearly erodes the competitive benefits that had been brought on by the weaker currency. Still, in spite of the threats posed to the Russian economy by the appreciation of the ruble, we believe we see the risks to the Russian stock market as limited. This is primarily due to the fact that valuations for Russian equities are still at a fraction of those of their emerging market peers. Furthermore, a number of individual stocks may continue to be driven by their company's adoption of corporate governance policies that are more responsive to minority shareholders. Average Annual Total Returns for the periods ended April 30, 2001 ------------------------------------------ Since Inception 1 year 3 year 07/03/96 ------ ------ -------- Including Sales Charge: Class A (1) -24.37% -18.97% -6.74% Excluding Sales Charge: Class A -19.76% -17.35% -5.59% Moscow Times Index -9.70% -33.61% 12.43%(2) Russian Tradings System Index -20.36% -42.16% -11.49%(2) Based on a $10,000 initial investment, the table above illustrates the total return of Pilgrim Russia Fund against the Moscow Times Index and Russian Tradings System Index. The indices have an inherent performance advantage over the Fund since they have no cash in their portfolio, impose no sales charge and incur no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of the maximum sales load. 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 "foward-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) Reflects deduction of the maximum Class A sales charge of 5.75%. (2) Since inception performance for the index is shown from 06/28/96. Principal Risk Factor(s): Increased price volatility and other risks that accompany an investment in equity securities of issuers in a single region. Currency exchange rates, international, political and economic conditions and other risks affect foreign securities. See accompanying index descriptions on page 26. 23 ----------- Precious Metals Fund ----------- Portfolio PILGRIM PRECIOUS METALS FUND Manager's Report -------------------------------------------------------------------------------- Portfolio Management: James Vail, C.F.A, Portfolio Manager, ING Pilgrim Investments, LLC. Goal: The Pilgrim Precious Metals Fund (the "Fund") investment objective is to attain capital appreciation and hedge against the loss of buying power of the US dollar as may be obtained through investment in gold bullion and securities of companies engaged in the mining or processing of gold and other precious metals and materials. Market Overview: The renewed interest in the precious metals sector specifically gold, which began in the fourth quarter of 2000, gathered momentum in the early part of 2001 and continues strong. The primary driver of the rise in gold bullion and gold shares is the reduction of global interest rates making the hedging practices of the gold producers less attractive financially, in essence reducing the supply of gold into the market. The lower interest rates along with weakness in the overall equity markets together with increased attention toward hard assets combine for positive fundamentals for the precious metals sector. Performance: For the six-month period ended April 30, 2001 the Fund's Class A shares, excluding sales charges, provided a total return of 24.42% compared to the 12.07% return for the S&P 500 Index and a 25.67% return for the Philadelphia Gold and Silver Index (XAU). The Fund's slight underperformance to the XAU reflects its exposure to a broad array of precious metals and not solely gold. Portfolio Specifics: In the last six months, the Fund has increased its exposure to unhedged producers including Harmony Gold, Lihir Gold, and Newmont Mining in an effort to more fully participate in higher gold prices. Further to this, we have added smaller gold producers, Iamgold and Brancote Holdings to broaden the Fund's holding in exciting developing companies. In the platinum and palladium group we added North American Palladium, a rapidly growing producer with exciting potential. While silver has lagged the other precious metals, due to its more industrial nature, we believe the Fund's holdings in the sector are well positioned to participate in any upward move in silver bullion prices. Market Outlook: We are encouraged by the renewed level of investor interest in precious metals and believe the momentum can continue. Global interest rates continue to be reduced; limiting the supply of gold entering the market creating what we believe is a new higher range of bullion prices. Platinum and palladium remain in short supply and demand continues to grow spurred by ever-stringent auto emission standards around the world. Finally, as the global economy enjoys renewed growth later in 2001 and into 2002, the demand for silver is also expect to increase. We believe the dot.com debacle has refocused a portion of investors' attention toward real assets and this bodes well for the precious metals sector. 24 Portfolio Manager's Report PILGRIM PRECIOUS METALS FUND -------------------------------------------------------------------------------- Average Annual Total Returns for the periods ended April 30, 2001 ----------------------------------- 1 Year 5 Years 10 Years ------ ------- -------- Including Sales Charge: 6.21% -16.56% -3.71% Class A (1) Excluding Sales Charge: Class A 12.56% -15.66% -3.13% S&P 500 Index -12.97% 15.56% 15.25% Gold Bullion -4.33% -32.75% -26.44% Philadelphia Gold and Silver Index 0.69% -17.40% -3.72% Based on a $10,000 initial investment, the table above illustrates the total return of Pilgrim Precious Metals Fund against the S&P 500 Index, Gold Bullion and Philadelphia Gold and Silver Index. The Indices have an inherent performance advantage over the Fund since they have no cash in their portfolio, impose no sales charges and incur no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges. Total returns reflect the fact that the Investment 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) Reflects deduction of the maximum Class A sales charge of 5.75%. Principal Risk Factor(s): Price volatility due to non-diversification and concentration in the gold/precious metals industry. The market for gold and other precious metals is widely unregulated and is located in foreign countries that have the potential for instability. Precious metals earn no income, have higher transaction/storage costs and realize gain only with an increase in market price. See accompanying index descriptions on page 26. 25 ------- 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 Philadelphia Stock Exchange Gold and Silver Index (XAU) is a capitalization-weighted index which includes the leading companies involved in the mining of gold and silver. 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. The MSCI Far East Free ex-Japan Index measures performance of securities listed on exchanges in the Far East markets excluding Japan. The Moscow Times Index is an index that measures the performance of the 50 most liquid and highly capitalized Russian stocks. The Russian Trading System Index is a capitalization weighted index that is comprised of 100 stocks traded on the Russian Trading Systems. The Gold Bullion is a commodity traded on the New York Mercantile Exchange. The S&P MidCap Index is a market value-weighted index which measures the performance of the mid-size company segment of the U.S. market. The NASDAQ Telecom Index is a capitalization-weighted index designated to measure the performance of all NASDAQ stocks in the telecommunications sector. The Goldman Sachs Technology Industry Composite Index is a modified capitalization-weighted index of selected technology stock. The FT Europe Index is average weighted by the market value of the performance of securities listed on the Stock Exchange of Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Norway, Spain, Sweden, Switzerland and United Kingdom. The Nikkei Index is a market value-weighted index calculated using all stocks listed on Japan's eight equities exchanges. All indices are unmanaged. An investor cannot invest directly in an index. 26 (THIS PAGE INTENTIONALLY LEFT BLANK) 27 ------------- International Equity Funds ------------- STATEMENTS OF ASSETS AND LIABILITIES as of April 30, 2001 (Unaudited) --------------------------------------------------------------------------------
Pilgrim Pilgrim Pilgrim Pilgrim International International Worldwide International Pilgrim Core SmallCap Growth Value International Growth Growth Fund Fund Fund Fund Fund -------------- -------------- -------------- -------------- -------------- ASSETS: Investments in securities at value* $ 460,532,640 $2,394,319,156 $ 52,082,845 $ 56,458,452 $ 531,589,161 Short-term investments at amortized cost 35,697,239 -- 2,700,000 2,900,000 -- Cash -- 108,341,041 -- -- 22,765,323 Foreign currencies at value** 1,502,038 819 314,479 354,555 -- Receivables: Investment securities sold 8,602,040 -- 2,861,945 2,877,037 9,610,193 Fund shares sold 2,257,174 17,543,382 297,725 1,202,735 3,996,616 Dividends and interest 930,047 18,130,047 201,818 252,229 1,658,968 Other -- 4,431 199 185,243 225,553 Prepaid expenses 180,336 325,858 64,236 29,369 99,245 Reimbursement due from manager 27,802 -- -- -- -- -------------- -------------- -------------- -------------- -------------- Total assets 509,729,316 2,538,664,734 58,523,247 64,259,620 569,945,059 -------------- -------------- -------------- -------------- -------------- LIABILITIES: Payable for investment securities purchased 9,190,327 32,748,346 896,857 2,875,419 15,064,333 Payable for fund shares redeemed 1,857,849 13,045,082 873,377 1,286,499 7,790,469 Payable to affiliates 655,444 3,350,136 63,351 92,976 655,564 Payable to custodian 1,853,749 -- 1,561,077 950,095 -- Other accrued expenses and liabilities 144,389 487,179 172,764 93,966 284,604 -------------- -------------- -------------- -------------- -------------- Total liabilities 13,701,758 49,630,743 3,567,426 5,298,955 23,794,970 -------------- -------------- -------------- -------------- -------------- NET ASSETS $ 496,027,558 $2,489,033,991 $ 54,955,821 $ 58,960,665 $ 546,150,089 ============== ============== ============== ============== ============== NET ASSETS WERE COMPRISED OF: Paid-in capital $ 596,370,074 $2,408,286,799 $ 63,667,060 $ 64,455,418 $ 665,742,979 Undistributed net investment income (loss) (3,099,453) 3,758,113 (57,331) (858,400) (7,981,843) Accumulated net realized gain (loss) on investments and foreign currencies (86,280,458) 16,251,523 (6,984,598) (4,178,941) (118,950,905) Net unrealized appreciation (depreciation) of investments and foreign currencies (10,962,605) 60,737,556 (1,669,310) (457,412) 7,339,858 -------------- -------------- -------------- -------------- -------------- NET ASSETS $ 496,027,558 $2,489,033,991 $ 54,955,821 $ 58,960,665 $ 546,150,089 ============== ============== ============== ============== ============== * Cost of securities $ 471,460,877 $2,333,372,723 $ 53,744,359 $ 56,902,608 $ 524,223,208 ** Cost of foreign currencies $ 1,509,139 $ 819 $ 315,940 $ 356,228 $ --
See Accompanying Notes to Financial Statements 28 STATEMENTS OF ASSETS AND LIABILITIES as of April 30, 2001 (Unaudited) --------------------------------------------------------------------------------
Pilgrim Pilgrim Pilgrim Pilgrim International International Worldwide International Pilgrim Core SmallCap Growth Value International Growth Growth Fund Fund Fund Fund Fund ------------- -------------- ------------- ------------- ------------- Class A: Net assets $ 209,600,511 $1,295,522,036 $ 50,923,012 $ 14,574,268 $ 203,830,649 Shares authorized unlimited unlimited 100,000,000 unlimited unlimited Par value $ 0.00 $ 0.01 $ 0.001 $ 0.00 $ 0.00 Shares outstanding 10,513,918 87,451,308 5,209,070 842,455 7,552,123 Net asset value and redemption price per share $ 19.94 $ 14.81 $ 9.78 $ 17.30 $ 26.99 Maximum offering price per share (5.75%)(1) $ 21.15 $ 15.72 $ 10.37 $ 18.36 $ 28.64 Class B: Net assets $ 100,342,061 $ 479,537,136 $ 2,288,304 $ 15,854,193 $ 101,393,841 Shares authorized unlimited unlimited 100,000,000 unlimited unlimited Par value $ 0.00 $ 0.01 $ 0.001 $ 0.00 $ 0.00 Shares outstanding 4,508,373 32,780,773 235,105 916,313 3,551,321 Net asset value and redemption price per share(2) $ 22.26 $ 14.63 $ 9.73 $ 17.30 $ 28.55 Maximum offering price per share $ 22.26 $ 14.63 $ 9.73 $ 17.30 $ 28.55 Class C: Net assets $ 157,943,708 $ 682,541,926 $ 1,735,323 $ 19,225,502 $ 99,758,508 Shares authorized unlimited unlimited 50,000,000 unlimited unlimited Par value $ 0.00 $ 0.01 $ 0.001 $ 0.00 $ 0.00 Shares outstanding 7,978,710 46,761,377 178,412 1,107,870 3,810,631 Net asset value and redemption price per share(2) $ 19.80 $ 14.60 $ 9.73 $ 17.35 $ 26.18 Maximum offering price per share $ 19.80 $ 14.60 $ 9.73 $ 17.35 $ 26.18 Class Q: Net assets $ 28,141,278 $ 31,432,893 $ 9,182 $ 9,306,702 $ 141,167,091 Shares authorized unlimited unlimited 50,000,000 unlimited unlimited Par value $ 0.00 $ 0.01 $ 0.001 $ 0.00 $ 0.00 Shares outstanding 1,223,130 2,119,947 941 516,469 4,941,258 Net asset value and redemption price per share $ 23.01 $ 14.83 $ 9.76 $ 18.02 $ 28.57 Maximum offering price per share $ 23.01 $ 14.83 $ 9.76 $ 18.02 $ 28.57
---------- (1) Maximum offering price is computed at 100/94.25 of net asset value. On purchases of $50,000 or more, the offering price is reduced. (2) Redemption price per share may be reduced for any applicable contingent deferred sales charge. See Accompanying Notes to Financial Statements 29 ------------- International Equity Funds ------------- STATEMENTS OF ASSETS AND LIABILITIES as of April 30, 2001 (Unaudited) --------------------------------------------------------------------------------
Pilgrim Pilgrim Pilgrim Global Emerging Global Information Countries Communications Technology Fund Fund Fund ------------- ------------- ------------- ASSETS: Investments in securities at value* $ 187,157,738 $ 36,758,979 $ 73,188,870 Short-term investments at amortized cost 7,798,464 -- 496,645 Cash -- 159,710 2,504,430 Foreign currencies at value** 4,873,877 412,237 275,273 Receivables: Investment securities sold -- -- -- Fund shares sold 1,235,297 277,130 213,559 Dividends and interest 1,136,486 8,388 18,346 Other 104,646 -- 277,058 Prepaid expenses 105,083 50,621 52,028 Reimbursement due from manager -- -- 225,610 ------------- ------------- ------------- Total Assets 202,411,591 37,667,065 77,251,819 ------------- ------------- ------------- LIABILITIES: Payable for investment securities purchased -- 412,182 -- Payable for fund shares redeemed 257,684 562,716 845,512 Payable to affiliates 188,489 64,973 104,329 Payable to custodian 2,212,402 -- -- Estimated tax liability on investments in India 1,507,830 -- -- Other accrued expenses and liabilities 1,093,428 223,395 267,439 ------------- ------------- ------------- Total Liabilities 5,259,833 1,263,266 1,217,280 ------------- ------------- ------------- NET ASSETS $ 197,151,758 $ 36,403,799 $ 76,034,539 ============= ============= ============= NET ASSETS WERE COMPRISED OF: Paid-in capital $ 279,633,362 $ 112,691,280 $ 140,367,461 Undistributed net investment income (loss) 247,771 (525,395) (981,900) Accumulated net realized gain (loss) on investments and foreign currencies (net of foreign tax on the sale of Indian investments of $1,325,478, $0, $0, $0, $0 and $0, respectively -- Note 2) (59,930,099) (54,486,660) (37,941,444) Net unrealized appreciation (depreciation) of investments and foreign currencies (net of estimated tax liability on investments in India of $182,352, $0, $0, $0, $0 and $0, respectively -- see Note 2) (22,799,276) (21,275,426) (25,409,578) ------------- ------------- ------------- NET ASSETS $ 197,151,758 $ 36,403,799 $ 76,034,539 ============= ============= ============= * Cost of securities $ 209,668,441 $ 58,035,228 $ 98,597,923 ** Cost of foreign currencies $ 4,880,885 $ 414,653 $ 275,780 Pilgrim Pilgrim Asia-Pacific European Pilgrim Equity Equity Russia Fund Fund Fund ------------- ------------- ------------- ASSETS: Investments in securities at value* $ 16,597,525 $ 24,397,094 $ 40,740,847 Short-term investments at amortized cost -- -- 4,999,413 Cash 969,093 600,549 2,126,295 Foreign currencies at value** 44,692 533,746 -- Receivables: Investment securities sold -- 147,666 3,070,263 Fund shares sold 654,000 650,331 101,380 Dividends and interest 32,526 147,035 -- Other 8,911 16 -- Prepaid expenses 25,518 15,417 23,871 Reimbursement due from manager 76,620 21,678 -- ------------- ------------- ------------- Total Assets 18,408,885 26,513,532 51,062,069 ------------- ------------- ------------- LIABILITIES: Payable for investment securities purchased -- 188,553 1,999,750 Payable for fund shares redeemed 17,282 385,594 66,554 Payable to affiliates 37,049 34,186 56,313 Payable to custodian -- -- -- Estimated tax liability on investments in India -- -- -- Other accrued expenses and liabilities 263,922 43,800 311,992 ------------- ------------- ------------- Total Liabilities 318,253 652,133 2,434,609 ------------- ------------- ------------- NET ASSETS $ 18,090,632 $ 25,861,399 $ 48,627,460 ============= ============= ============= NET ASSETS WERE COMPRISED OF: Paid-in capital $ 49,194,999 $ 27,479,674 $ 135,071,662 Undistributed net investment income (loss) (108,184) (27,485) (493,860) Accumulated net realized gain (loss) on investments and foreign currencies (net of foreign tax on the sale of Indian investments of $1,325,478, $0, $0, $0, $0 and $0, respectively -- Note 2) (25,498,378) (54,869) (72,180,035) Net unrealized appreciation (depreciation) of investments and foreign currencies (net of estimated tax liability on investments in India of $182,352, $0, $0, $0, $0 and $0, respectively -- see Note 2) (5,497,805) (1,535,921) (13,770,307) ------------- ------------- ------------- NET ASSETS $ 18,090,632 $ 25,861,399 $ 48,627,460 ============= ============= ============= * Cost of securities $ 22,095,084 $ 25,921,646 $ 54,511,154 ** Cost of foreign currencies $ 44,504 $ 540,357 $ --
See Accompanying Notes to Financial Statements 30 STATEMENTS OF ASSETS AND LIABILITIES as of April 30, 2001 (Unaudited) --------------------------------------------------------------------------------
Pilgrim Pilgrim Pilgrim Global Pilgrim Pilgrim Emerging Global Information Asia-Pacific European Pilgrim Countries Communications Technology Equity Equity Russia Fund Fund Fund Fund Fund Fund ------------ ------------ ------------ ------------ ------------ ------------ Class A: Net assets $108,049,558 $ 19,069,366 $ 45,051,937 $ 9,121,303 $ 24,146,672 $ 48,627,460 Shares authorized unlimited unlimited unlimited 24,000,000 unlimited 400,000,000 Par value $ 0.00 $ 0.001 $ 0.001 $ 0.01 $ 0.001 $ 0.001 Shares outstanding 7,591,050 5,179,365 4,534,685 2,133,340 2,587,914 6,724,855 Net asset value and redemption price per share $ 14.23 $ 3.68 $ 9.93 $ 4.28 $ 9.33 $ 7.23 Maximum offering price per share (5.75%)(1) $ 15.10 $ 3.91 $ 10.54 $ 4.54 $ 9.90 $ 7.67 Class B: Net assets $ 20,712,927 $ 14,006,996 $ 22,573,911 $ 5,328,702 $ 1,598,351 n/a Shares authorized unlimited unlimited unlimited 24,000,000 unlimited n/a Par value $ 0.00 $ 0.001 $ 0.001 $ 0.01 $ 0.001 n/a Shares outstanding 1,459,248 3,835,052 2,318,038 1,282,656 173,623 n/a Net asset value and redemption price per share(2) $ 14.19 $ 3.65 $ 9.74 $ 4.15 $ 9.21 n/a Maximum offering price per share $ 14.19 $ 3.65 $ 9.74 $ 4.15 $ 9.21 n/a Class C: Net assets $ 20,111,235 $ 3,327,437 $ 8,408,691 n/a $ 116,376 n/a Shares authorized unlimited unlimited unlimited n/a unlimited n/a Par value $ 0.00 $ 0.001 $ 0.001 n/a $ 0.001 n/a Shares outstanding 1,469,192 910,231 865,624 n/a 12,713 n/a Net asset value and redemption price per share(2) $ 13.69 $ 3.66 $ 9.71 n/a $ 9.15 n/a Maximum offering price per share $ 13.69 $ 3.66 $ 9.71 n/a $ 9.15 n/a Class M: Net assets n/a n/a n/a $ 3,640,627 n/a n/a Shares authorized n/a n/a n/a 12,000,000 n/a n/a Par value n/a n/a n/a $ 0.01 n/a n/a Shares outstanding n/a n/a n/a 872,713 n/a n/a Net asset value and redemption price per share n/a n/a n/a $ 4.17 n/a n/a Maximum offering price per share (3.50%)(3) n/a n/a n/a $ 4.32 n/a n/a Class Q: Net assets $ 48,278,038 n/a n/a n/a n/a n/a Shares authorized unlimited n/a n/a n/a n/a n/a Par value $ 0.00 n/a n/a n/a n/a n/a Shares outstanding 3,299,817 n/a n/a n/a n/a n/a Net asset value and redemption price per share $ 14.63 n/a n/a n/a n/a n/a Maximum offering price per share $ 14.63 n/a n/a n/a n/a n/a
---------- (1) Maximum offering price is computed at 100/94.25 of net asset value. On purchases of $50,000 or more, the offering price is reduced. (2) Redemption price per share may be reduced for any applicable contingent deferred sales charge. (3) Maximum offering price is computed at 100/96.50 of net asset value. On purchases of $50,000 or more, the offering price is reduced. See Accompanying Notes to Financial Statements 31 ----------- Precious Metals Fund ----------- STATEMENTS OF ASSETS AND LIABILITIES as of April 30, 2001 (Unaudited) --------------------------------------------------------------------------------
Pilgrim Precious Metals Fund -------------- ASSETS: Investments in securities at value* $ 52,715,579 Short-term investments at amortized cost 10,178,669 Cash 214,347 Foreign currencies at value** 94,176 Receivables: Funds shares sold 36,499 Dividends and interest 46,326 Prepaid expenses 46,614 ------------- Total Assets 63,332,210 ------------- LIABILITIES: Payable for investment securities purchased 2,218,331 Payable for fund shares redeemed 93,002 Payable to affiliates 76,000 Other accrued expenses and liabilities 285,544 ------------- Total Liabilities 2,672,877 ------------- NET ASSETS $ 60,659,333 ============= NET ASSETS WERE COMPRISED OF: Paid-in capital $ 153,580,330 Undistributed net investment income 250,744 Accumulated net realized loss on investments and foreign currencies (87,065,578) Net unrealized depreciation of investments and foreign currencies (6,106,163) ------------- NET ASSETS $ 60,659,333 ============= * Cost of securities $ 58,822,273 ** Cost of foreign currencies $ 93,420 Class A: Net assets $ 60,659,333 Shares authorized 428,000,000 Par value $ 0.001 Shares outstanding 21,484,648 Net asset value and redemption price per share $ 2.82 Maximum offering price per share (5.75%)(1) $ 3.00
---------- (1) Maximum offering price is computed at 100/94.25 of net asset value. On purchases of $50,000 or more, the offering price is reduced. See Accompanying Notes to Financial Statements 32 ------------- International Equity Funds ------------- STATEMENTS OF OPERATIONS (Unaudited) --------------------------------------------------------------------------------
Pilgrim Worldwide Growth Fund Pilgrim International Value Fund ----------------------------------------------- ------------------------------ Six Four Year Six Year Months Ended Months Ended Ended Months Ended Ended April 30, October 31, June 30, April 30, October 31, 2001 2000 2000 2001 2000 ------------- ------------- ------------- ------------- ------------- INVESTMENT INCOME: Dividends (net of foreign taxes) $ 1,874,767 $ 1,232,902 $ 2,256,981 24,666,250 $ 40,782,003 Interest 1,428,021 772,158 1,470,882 1,982,716 3,610,484 ------------- ------------- ------------- ------------- ------------- Total investment income 3,302,788 2,005,060 3,727,863 26,648,966 44,392,487 ------------- ------------- ------------- ------------- ------------- EXPENSES: Investment advisory and management fees 2,643,412 2,199,958 4,327,642 11,239,631 15,936,553 Distibution and service fees: Class A 379,831 296,248 519,397 1,692,578 2,119,691 Class B 539,924 451,319 776,845 2,267,100 3,859,074 Class C 873,913 791,255 1,765,308 3,191,258 4,868,323 Class Q 41,658 42,066 94,789 34,940 35,847 Transfer agent fees and expenses 525,946 320,899 628,483 935,291 1,593,655 Administrative service fees 13,937 -- -- 1,427,583 1,755,565 Custodian and fund accounting expenses 225,797 156,540 348,012 362,000 1,318,066 Printing and postage expenses 226,627 54,489 160,859 612,270 159,365 Registration fees 117,203 34,569 43,713 18,100 356,967 Professional fees 136,548 13,284 51,263 144,800 98,014 Trustee expenses 9,050 6,150 18,000 5,430 41,980 Merger expenses 56,074 -- -- -- -- Miscellaneous expenses 18,093 25,996 133,553 5,430 33,498 ------------- ------------- ------------- ------------- ------------- 5,808,013 4,392,773 8,867,864 21,936,411 32,176,598 Less: Waived and reimbursed fees/(recoupment) -- (25,414) -- -- -- ------------- ------------- ------------- ------------- ------------- Total expenses 5,808,013 4,418,187 8,867,864 21,936,411 32,176,598 ------------- ------------- ------------- ------------- ------------- Net investment income (loss) $ (2,505,225) $ (2,413,127) $ (5,140,001) $ 4,712,555 $ 12,215,889 ------------- ------------- ------------- ------------- ------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES: Net realized gain (loss) on investments $ (67,996,649) $ (1,077,591) $ 32,664,018 $ 16,095,098 $ 239,567,326 Net realized loss on foreign currencies (5,714,703) (3,632,015) (1,744,754) (53,210) (910,801) Net change in unrealized appreciation (depreciation) of investments and foreign currencies (57,438,010) (78,001,428) 91,792,764 (2,404,284) (41,147,980) ------------- ------------- ------------- ------------- ------------- Net realized and unrealized gain (loss) on investments and foreign currencies (131,149,362) (82,711,034) 122,712,028 13,637,604 197,508,545 ------------- ------------- ------------- ------------- ------------- Increase (decrease) in net assets resulting from operations $(133,654,587) $ (85,124,161) $ 117,572,027 $ 18,350,159 $ 209,724,434 ============= ============= ============= ============= =============
See Accompanying Notes to Financial Statements 33 ------------- International Equity Funds ------------- STATEMENTS OF OPERATIONS (Unaudited) --------------------------------------------------------------------------------
Pilgrim International Fund Pilgrim International Core Growth Fund ---------------------------- -------------------------------------------- Six Ten Six Four Year Months Ended Months Ended Months Ended Months Ended Ended April 30, October 31, April 30, October 31, June 30, 2001 2000 2001 2000 2000 ------------ ------------ ------------ ------------ ------------ INVESTMENT INCOME: Dividends (net of foreign taxes) $ 272,881 $ 339,999 $ 299,390 $ 297,428 $ 499,020 Interest 81,774 117,417 134,978 68,680 205,365 ------------ ------------ ------------ ------------ ------------ Total investment income 354,655 457,416 434,368 366,108 704,385 ------------ ------------ ------------ ------------ ------------ EXPENSES: Investment advisory and management fees 178,960 228,277 327,709 288,517 698,942 Distibution and service fees: Class A 43,550 24,640 29,308 26,372 66,973 Class B 4,346 38 84,713 70,469 176,856 Class C 3,665 56 105,003 89,573 198,628 Class Q -- -- 13,537 13,294 36,603 Transfer agent fees and expenses 34,002 21,910 72,148 58,126 168,428 Administrative service fees 19,706 21,803 5,611 -- -- Custodian and fund accounting expenses 20,996 50,865 101,179 72,758 194,978 Printing and postage expenses 2,534 9,559 11,222 11,439 28,436 Registration fees 34,598 18,555 28,454 11,737 78,072 Professional fees 3,620 24,777 4,525 3,075 11,733 Trustee expenses 1,810 100,827 2,534 1,722 5,000 Merger expenses 17,218 -- -- -- -- Miscellaneous expenses 1,903 8,432 2,302 2,105 55,204 ------------ ------------ ------------ ------------ ------------ 366,908 509,739 788,245 649,187 1,719,855 Less: Waived and reimbursed fees -- -- 50,175 41,295 212,567 ------------ ------------ ------------ ------------ ------------ Total expenses 366,908 509,739 738,070 607,892 1,507,288 ------------ ------------ ------------ ------------ ------------ Net investment loss $ (12,253) $ (52,323) $ (303,702) $ (241,784) $ (802,903) ------------ ------------ ------------ ------------ ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES: Net realized gain (loss) on investments $ (5,317,155) $ 2,619,862 $ (2,512,137) $ 923,712 $ 8,378,791 Net realized loss on foreign currencies (1,684,921) (53,626) (1,701,546) (1,359,550) (485,310) Net change in unrealized appreciation (depreciation) of investments and foreign currencies (852,034) (5,596,890) (2,784,278) (10,007,118) 7,236,744 ------------ ------------ ------------ ------------ ------------ Net realized and unrealized gain (loss) on investments and foreign currencies (7,854,110) (3,030,654) (6,997,961) (10,442,956) 15,130,225 ------------ ------------ ------------ ------------ ------------ Increase (decrease) in net assets resulting from operations $ (7,866,363) $ (3,082,977) $ (7,301,663) $(10,684,740) $ 14,327,322 ============ ============ ============ ============ ============
See Accompanying Notes to Financial Statements 34 ------------- International Equity Funds ------------- STATEMENTS OF OPERATIONS (Unaudited) --------------------------------------------------------------------------------
Pilgrim International SmallCap Growth Fund ----------------------------------------------- Six Four Year Months Ended Months Ended Ended April 30, October 31, June 30, 2001 2000 2000 ------------- ------------- ------------- INVESTMENT INCOME: Dividends (net of foreign taxes) $ 3,239,561 $ 798,529 $ 1,791,777 Interest 1,279,605 1,298,101 2,145,159 ------------- ------------- ------------- Total investment income 4,519,166 2,096,630 3,936,936 ------------- ------------- ------------- EXPENSES: Investment advisory and management fees 2,954,605 2,362,535 4,285,711 Distibution and service fees: Class A 401,218 330,792 565,670 Class B 555,653 453,253 806,062 Class C 564,165 486,408 808,195 Class Q 185,310 138,277 296,473 Transfer agent fees and expenses 484,746 319,534 561,375 Administrative service fees 21,720 -- -- Custodian and fund accounting expenses 344,443 234,069 494,344 Printing and postage expenses 65,522 79,286 167,665 Registration fees 108,847 46,499 83,587 Professional fees 16,109 120,947 54,085 Trustee expenses 17,919 12,177 34,991 Merger expenses -- -- -- Miscellaneous expenses 7,582 29,142 43,176 ------------- ------------- ------------- 5,727,839 4,612,919 8,201,334 Less: Waived and reimbursed fees/(recoupment) -- (15,793) -- ------------- ------------- ------------- Total expenses 5,727,839 4,628,712 8,201,334 ------------- ------------- ------------- Net investment income (loss) $ (1,208,673) $ (2,532,082) $ (4,264,398) ------------- ------------- ------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES: Net realized gain (loss) on investments $ (88,170,111) $ (4,911,433) $ 60,928,025 Net realized loss on foreign currencies (17,806,753) (8,476,248) (2,124,426) Net change in unrealized appreciation (depreciation) of investments and foreign currencies (20,751,996) (73,243,053) 73,844,281 ------------- ------------- ------------- Net realized and unrealized gain (loss) on investments and foreign currencies (126,728,860) (86,630,734) 132,647,880 ------------- ------------- ------------- Increase (decrease) in net assets resulting from operations $(127,937,533) $ (89,162,816) $ 128,383,482 ============= ============= ============= Pilgrim Emerging Countries Fund ----------------------------------------------- Six Four Year Months Ended Months Ended Ended April 30, October 31, June 30, 2001 2000 2000 ------------- ------------- ------------- INVESTMENT INCOME: Dividends (net of foreign taxes) $ 1,934,235 $ 679,961 $ 1,758,417 Interest 75,465 175,362 283,787 ------------- ------------- ------------- Total investment income 2,009,700 855,323 2,042,204 ------------- ------------- ------------- EXPENSES: Investment advisory and management fees 927,414 969,468 2,773,339 Distibution and service fees: Class A 83,059 79,524 229,824 Class B 96,348 90,642 299,848 Class C 91,816 88,953 280,795 Class Q 79,113 92,178 253,252 Transfer agent fees and expenses 120,761 131,281 517,621 Administrative service fees 7,783 -- -- Custodian and fund accounting expenses 226,071 265,723 682,516 Printing and postage expenses 43,078 34,563 81,878 Registration fees 28,476 15,170 77,620 Professional fees 18,281 12,423 39,069 Trustee expenses 7,421 5,043 15,000 Merger expenses 38,724 -- -- Miscellaneous expenses 13,826 195,725 89,734 ------------- ------------- ------------- 1,782,171 1,980,693 5,340,496 Less: Waived and reimbursed fees/(recoupment) 78,389 100,513 346,154 ------------- ------------- ------------- Total expenses 1,703,782 1,880,180 4,994,342 ------------- ------------- ------------- Net investment income (loss) $ 305,918 $ (1,024,857) $ (2,952,138) ------------- ------------- ------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES: Net realized gain (loss) on investments $ (9,602,918) $ (10,974,819) $ 39,798,714 Net realized loss on foreign currencies (1,198,781) (1,941,282) (303,058) Net change in unrealized appreciation (depreciation) of investments and foreign currencies (28,522,240) (33,354,364) (3,851,223) ------------- ------------- ------------- Net realized and unrealized gain (loss) on investments and foreign currencies (39,323,939) (46,270,465) 35,644,433 ------------- ------------- ------------- Increase (decrease) in net assets resulting from operations $ (39,018,021) $ (47,295,322) $ 32,692,295 ============= ============= =============
See Accompanying Notes to Financial Statements 35 ------------- International Equity Funds ------------- STATEMENTS OF OPERATIONS (Unaudited) --------------------------------------------------------------------------------
Pilgrim Global Communications Fund Pilgrim Global Information Technology Fund ---------------------------------- ------------------------------------------ Six Period Six Year Months Ended Ended Months Ended Ended April 30, October 31, April 30, October 31, 2001 2000(1) 2001 2000 ------------ ------------ ------------ ------------ INVESTMENT INCOME: Dividends (net of foreign taxes) $ 29,993 $ 108,409 $ 35,896 $ 79,643 Interest 7,116 145,669 22,700 285,827 ------------ ------------ ------------ ------------ Total investment income 37,109 254,078 58,596 365,470 ------------ ------------ ------------ ------------ EXPENSES: Investment advisory and management fees 283,672 735,149 647,761 1,973,710 Distibution and service fees: Class A 54,254 628,621 108,169 1,315,645 Class B 103,953 -- 148,775 -- Class C 23,795 -- 57,123 -- Transfer agent fees and expenses 48,224 386,288 87,016 723,139 Administrative service fees 44,275 -- 74,984 -- Custodian and fund accounting expenses 35,131 71,590 30,718 87,715 Printing and postage expenses -- 39,763 -- 53,805 Registration fees 62,223 57,043 62,286 79,843 Professional fees 17,341 31,144 21,266 43,001 Trustee expenses 2,869 4,634 2,872 6,622 Merger expenses -- -- 58,379 -- Miscellaneous expenses 3,731 12,367 55,492 24,568 ------------ ------------ ------------ ------------ 679,468 1,966,599 1,354,841 4,308,048 Less: Waived and reimbursed fees 116,964 758,563 299,968 1,555,108 ------------ ------------ ------------ ------------ Total expenses 562,504 1,208,036 1,054,873 2,752,940 ------------ ------------ ------------ ------------ Net investment loss $ (525,395) $ (953,958) $ (996,277) $ (2,387,470) ------------ ------------ ------------ ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES: Net realized gain (loss) on investments $(44,760,685) $ (8,310,926) $(37,851,888) $ 51,495,508 Net realized loss on foreign currencies (1,415,049) (150,765) (1,471,441) (150,091) Net change in unrealized appreciation (depreciation) of investments and foreign currencies 3,645,464 (24,920,890) (37,360,581) (7,560,553) ------------ ------------ ------------ ------------ Net realized and unrealized gain (loss) on investments and foreign currencies (42,530,270) (33,382,581) (76,683,910) 43,784,864 ------------ ------------ ------------ ------------ Increase (decrease) in net assets resulting from operations $(43,055,665) $(34,336,539) $(77,680,187) $ 41,397,394 ============ ============ ============ ============
---------- (1) Commenced operations on March 1, 2000. See Accompanying Notes to Financial Statements 36 ------------- International Equity Funds ------------- STATEMENTS OF OPERATIONS (Unaudited) --------------------------------------------------------------------------------
Pilgrim Asia-Pacific Equity Fund Pilgrim European Equity Fund ----------------------------------------- ---------------------------- Six Four Year Six Year Months Ended Months Ended Ended Months Ended Ended April 30, October 31, June 30, April 30, October 31, 2001 2000 2000 2001 2000 ----------- ----------- ----------- ----------- ----------- INVESTMENT INCOME: Dividends (net of foreign taxes) $ 96,635 $ 471,686 $ 429,859 $ 211,678 $ 511,339 Interest 35,391 15,419 74,595 17,605 12,192 ----------- ----------- ----------- ----------- ----------- Total investment income 132,026 487,105 504,454 229,283 523,531 ----------- ----------- ----------- ----------- ----------- EXPENSES: Investment advisory and management fees 97,969 96,557 413,123 168,607 388,631 Distibution and service fees: Class A 8,693 8,148 35,692 47,989 258,633 Class B 30,786 25,647 142,930 8,816 -- Class C -- -- -- 707 -- Class M 9,612 7,729 40,820 -- -- Transfer agent fees and expenses 15,675 23,241 119,865 24,900 105,836 Administrative service fees 3,439 8,549 -- 14,661 -- Custodian and fund accounting expenses 60,997 41,454 131,764 37,018 112,506 Printing and postage expenses 7,059 7,134 11,979 6,628 11,551 Registration fees 20,459 11,136 36,084 32,210 44,683 Professional fees 2,534 1,722 4,847 11,069 28,447 Trustee expenses 1,267 861 2,183 2,282 4,853 Merger expenses 50,441 -- -- -- -- Miscellaneous expenses 1,306 7,938 36,536 4,185 4,776 ----------- ----------- ----------- ----------- ----------- 310,237 240,116 975,823 359,072 959,916 Less: Waived and reimbursed fees 72,987 50,371 145,502 103,302 396,360 ----------- ----------- ----------- ----------- ----------- Total expenses 237,250 189,745 830,321 255,770 563,556 ----------- ----------- ----------- ----------- ----------- Net investment income (loss) $ (105,224) $ 297,360 $ (325,867) $ (26,487) $ (40,025) ----------- ----------- ----------- ----------- ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES: Net realized gain (loss) on investments $(1,476,241) $ (13,832) $ 7,546,867 $ 2,204,312 $ 1,333,288 Net realized loss on foreign currencies (224,630) (69,352) (47,823) (1,944,629) (73,091) Net change in unrealized depreciation of investments and foreign currencies (499,934) (8,020,905) (5,113,014) (3,049,450) (232,864) ----------- ----------- ----------- ----------- ----------- Net realized and unrealized gain (loss) on investments and foreign currencies (2,200,805) (8,104,089) 2,386,030 (2,789,767) 1,027,333 ----------- ----------- ----------- ----------- ----------- Increase (decrease) in net assets resulting from operations $(2,306,029) $(7,806,729) $ 2,060,163 $(2,816,254) $ 987,308 =========== =========== =========== =========== ===========
See Accompanying Notes to Financial Statements 37 ------------------------ International Equity and Precious Metals Funds ------------------------ STATEMENTS OF OPERATIONS (Unaudited) --------------------------------------------------------------------------------
Pilgrim Russia Fund Pilgrim Precious Metals Fund ---------------------------- ---------------------------- Six Ten Six Ten Months Ended Months Ended Months Ended Months Ended April 30, October 31, April 30, October 31, 2001 2000 2001 2000 ------------ ------------ ------------ ------------ INVESTMENT INCOME: Dividends (net of foreign taxes) $ 83,309 $ 190,496 $ 534,240 $ 994,673 Interest 118,769 492,305 189,446 113,277 ------------ ------------ ------------ ------------ Total investment income 202,078 682,801 723,686 1,107,950 ------------ ------------ ------------ ------------ EXPENSES: Investment advisory and management fees 277,489 740,035 220,947 439,593 Distibution and service fees: Class A 55,498 170,532 55,697 63,622 Transfer agent fees and expenses 47,537 64,107 40,102 117,312 Administrative service fees 44,402 35,801 24,089 11,744 Custodian and fund accounting expenses 225,164 401,625 28,960 47,369 Printing and postage expenses 18,100 28,423 24,435 70,753 Registration fees 13,113 18,630 13,238 20,166 Professional fees 12,670 45,880 5,430 37,991 Trustee expenses 3,620 131,801 1,810 102,844 Merger expenses -- -- 45,422 -- Miscellaneous expenses 14,529 46,076 2,537 71,082 ------------ ------------ ------------ ------------ 712,122 1,682,910 462,667 982,476 Less: Redemption fee proceeds (Note 4) 16,184 465,732 -- -- ------------ ------------ ------------ ------------ Total expenses 695,938 1,217,178 462,667 982,476 ------------ ------------ ------------ ------------ Net investment income (loss) $ (493,860) $ (534,377) $ 261,019 $ 125,474 ------------ ------------ ------------ ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES: Net realized gain (loss) on investments $ (3,525,259) $ 8,296,765 $ (1,916,265) $ (8,421,625) Net realized gain (loss) on foreign currencies 28,800 (118,397) (2,271,058) (2,091,095) Net change in unrealized appreciation (depreciation) of investments and foreign currencies 3,401,791 (4,834,914) 7,425,011 (10,053,228) ------------ ------------ ------------ ------------ Net realized and unrealized gain (loss) on investments and foreign currencies (94,668) 3,343,454 3,237,688 (20,565,948) ------------ ------------ ------------ ------------ Increase (decrease) in net assets resulting from operations $ (588,528) $ 2,809,077 $ 3,498,707 $(20,440,474) ============ ============ ============ ============
See Accompanying Notes to Financial Statements 38 ------------- International Equity Funds ------------- STATEMENTS OF CHANGES IN NET ASSETS (Unaudited) --------------------------------------------------------------------------------
Pilgrim Worldwide Growth Fund -------------------------------------------------------------------- Six Four Year Three Months Ended Months Ended Ended Months Ended April 30, October 31, June 30, June 30, 2001 2000 2000 1999 -------------- -------------- -------------- -------------- FROM OPERATIONS: Net investment income (loss) $ (2,505,225) $ (2,413,127) $ (5,140,001) $ (238,891) Net realized gain (loss) on investments and foreign currencies (73,711,352) (4,709,606) 30,919,264 4,825,170 Net change in unrealized appreciation (depreciation) of investments and foreign currencies (57,438,010) (78,001,428) 91,792,764 20,367,556 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations (133,654,587) (85,124,161) 117,572,027 24,953,835 FROM DIVIDENDS TO SHAREHOLDERS: Net investment income: Class A -- -- -- -- Class B -- -- -- -- Class C -- -- -- -- Class Q -- -- -- -- Net realized gain from investments (25,388,535) -- (37,665,102) -- -------------- -------------- -------------- -------------- Total distributions (25,388,535) -- (37,665,102) -- -------------- -------------- -------------- -------------- FROM CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares 235,886,447 187,453,816 664,789,596 53,831,659 Net asset value of shares issued to shareholders in reinvestment of dividends 13,156,441 -- 33,052,649 -- Net assets received in connection with reorganization (Note 14) 55,730,423 -- -- -- -------------- -------------- -------------- -------------- 304,773,311 187,453,816 697,842,245 53,831,659 Cost of shares redeemed (281,593,462) (130,618,094) (337,872,684) (106,485,390)(1) -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from capital share transactions 23,179,849 56,835,722 359,969,561 (52,653,731) -------------- -------------- -------------- -------------- Net increase (decrease) in net assets (135,863,273) (28,288,439) 439,876,486 (27,699,896) NET ASSETS: Beginning of period 631,890,831 660,179,270 220,302,784 248,002,680 -------------- -------------- -------------- -------------- End of period $ 496,027,558 $ 631,890,831 $ 660,179,270 $ 220,302,784 ============== ============== ============== ============== Undistributed net investment income (loss) $ (3,099,453) $ (587,286) $ -- $ -- ============== ============== ============== ============== Pilgrim International Value Fund -------------------------------------------------- Six Year Year Months Ended Ended Ended April 30, October 31, October 31, 2001 2000 1999 -------------- -------------- -------------- FROM OPERATIONS: Net investment income (loss) $ 4,712,555 $ 12,215,889 $ 3,580,736 Net realized gain (loss) on investments and foreign currencies 16,041,888 238,656,525 53,200,683 Net change in unrealized appreciation (depreciation) of investments and foreign currencies (2,404,284) (41,147,980) 128,073,707 -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations 18,350,159 209,724,434 184,855,126 FROM DIVIDENDS TO SHAREHOLDERS: Net investment income: Class A (8,786,838) (3,809,622) (2,447,955) Class B (742,855) (593,913) (638,225) Class C (1,348,847) (828,109) (652,956) Class Q (219,484) -- -- Net realized gain from investments (238,927,590) (53,012,739) (28,295,922) -------------- -------------- -------------- Total distributions (250,025,614) (58,244,383) (32,035,058) -------------- -------------- -------------- FROM CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares 1,286,172,586 1,843,922,647 765,122,980 Net asset value of shares issued to shareholders in reinvestment of dividends 178,574,810 44,206,140 25,417,235 Net assets received in connection with reorganization (Note 14) -- -- -- -------------- -------------- -------------- 1,464,747,396 1,888,128,787 790,540,215 Cost of shares redeemed (732,953,904) (1,091,605,981) (397,092,669) -------------- -------------- -------------- Net increase (decrease) in net assets derived from capital share transactions 731,793,492 796,522,806 393,447,546 -------------- -------------- -------------- Net increase (decrease) in net assets 500,118,037 948,002,857 546,267,614 NET ASSETS: Beginning of period 1,988,915,954 1,040,913,097 494,645,483 -------------- -------------- -------------- End of period $2,489,033,991 $1,988,915,954 $1,040,913,097 ============== ============== ============== Undistributed net investment income (loss) $ 3,758,113 $ 10,143,582 $ 3,538,149 ============== ============== ==============
---------- (1) Includes Class I redemptions of $80,662,778. See Accompanying Notes to Financial Statements 39 ------------- International Equity Funds ------------- STATEMENTS OF CHANGES IN NET ASSETS (Unaudited) --------------------------------------------------------------------------------
Pilgrim International Fund ----------------------------------------------- Six Ten Year Months Ended Months Ended Ended April 30, October 31, December 31, 2001 2000 1999 ------------- ------------- ------------- FROM OPERATIONS: Net investment income (loss) $ (12,253) $ (52,323) $ (46,900) Net realized gain (loss) on investments and foreign currencies (7,002,076) 2,566,236 6,719,640 Net change in unrealized appreciation (depreciation) of investments and foreign currencies (852,034) (5,596,890) 2,440,717 ------------- ------------- ------------- Increase (decrease) in net assets resulting from operations (7,866,363) (3,082,977) 9,113,457 FROM DIVIDENDS TO SHAREHOLDERS: Net investment income: Class A -- (1,681,140) (46,770) Class B -- -- -- Class C -- -- -- Class Q -- -- -- Net realized gain from investments (2,523,576) (159,635) (5,598,256) ------------- ------------- ------------- Total distributions (2,523,576) (1,840,775) (5,645,026) ------------- ------------- ------------- FROM CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares 50,221,218 22,887,629 5,619,698 Net asset value of shares issued to shareholders in reinvestment of dividends 2,042,015 1,011,365 4,382,040 Net assets received in connection with reorganization (Note 14) 39,847,064 -- -- ------------- ------------- ------------- 92,110,297 23,898,994 10,001,738 Cost of shares redeemed (57,582,611) (13,461,366) (12,165,686) ------------- ------------- ------------- Net increase (decrease) in net assets derived from capital share transactions 34,527,686 10,437,628 (2,163,948) ------------- ------------- ------------- Net increase (decrease) in net assets 24,137,747 5,513,876 1,304,483 NET ASSETS: Beginning of period 30,818,074 25,304,198 23,999,715 ------------- ------------- ------------- End of period $ 54,955,821 $ 30,818,074 $ 25,304,198 ============= ============= ============= Undistributed net investment income (loss) $ (57,331) $ (44,363) $ 220,248 ============= ============= ============= Pilgrim International Core Growth Fund ---------------------------------------------------------------- Six Four Year Three Months Ended Months Ended Ended Months Ended April 30, October 31, June 30, June 30, 2001 2000 2000 1999 ------------- ------------- ------------- ------------- FROM OPERATIONS: Net investment income (loss) $ (303,702) $ (241,784) $ (802,903) $ 69,633 Net realized gain (loss) on investments and foreign currencies (4,213,683) (435,838) 7,893,481 3,913,039 Net change in unrealized appreciation (depreciation) of investments and foreign currencies (2,784,278) (10,007,118) 7,236,744 4,018,188 ------------- ------------- ------------- ------------- Increase (decrease) in net assets resulting from operations (7,301,663) (10,684,740) 14,327,322 8,000,860 FROM DIVIDENDS TO SHAREHOLDERS: Net investment income: Class A (383,671) -- -- -- Class B (282,575) -- -- -- Class C (377,838) -- -- -- Class Q (252,790) -- (1,678) -- Net realized gain from investments (3,786,278) -- (2,936,042) -- ------------- ------------- ------------- ------------- Total distributions (5,083,152) -- (2,937,720) -- ------------- ------------- ------------- ------------- FROM CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares 180,208,317 66,836,057 192,088,330 35,644,077 Net asset value of shares issued to shareholders in reinvestment of dividends 3,679,161 -- 2,747,516 -- Net assets received in connection with reorganization (Note 14) -- -- -- -- ------------- ------------- ------------- ------------- 183,887,478 66,836,057 194,835,846 35,644,077 Cost of shares redeemed (194,694,612) (61,845,481) (164,147,202) (160,094,007)(1) ------------- ------------- ------------- ------------- Net increase (decrease) in net assets derived from capital share transactions (10,807,134) 4,990,576 30,688,644 (124,449,930) ------------- ------------- ------------- ------------- Net increase (decrease) in net assets (23,191,949) (5,694,164) 42,078,246 (116,449,070) NET ASSETS: Beginning of period 82,152,614 87,846,778 45,768,532 162,217,602 ------------- ------------- ------------- ------------- End of period $ 58,960,665 $ 82,152,614 $ 87,846,778 $ 45,768,532 ============= ============= ============= ============= Undistributed net investment income (loss) $ (858,400) $ 742,176 $ -- $ 69,633 ============= ============= ============= =============
---------- (1) Includes Class I redemptions of $112,851,333. See Accompanying Notes to Financial Statements 40 ------------- International Equity Funds ------------- STATEMENTS OF CHANGES IN NET ASSETS (Unaudited) --------------------------------------------------------------------------------
Pilgrim International SmallCap Growth Fund ------------------------------------------------------------------------ Six Four Year Three Months Ended Months Ended Ended Months Ended April 30, October 31, June 30, June 30, 2001 2000 2000 1999 --------------- --------------- --------------- --------------- FROM OPERATIONS: Net investment income (loss) $ (1,208,673) $ (2,532,082) $ (4,264,398) $ (217,461) Net realized gain (loss) on investments and foreign currencies (105,976,864) (13,387,681) 58,803,599 5,331,912 Net change in unrealized appreciation (depreciation) of investments and foreign currencies (20,751,996) (73,243,053) 73,844,281 11,694,205 --------------- --------------- --------------- --------------- Increase (decrease) in net assets resulting from operations (127,937,533) (89,162,816) 128,383,482 16,808,656 FROM DIVIDENDS TO SHAREHOLDERS: Net investment income: Class A (1,698,449) -- -- -- Class B (237,494) -- -- -- Class C (352,852) -- -- -- Class Q (1,030,265) -- -- -- Net realized gain from investments (47,336,342) -- (17,147,337) -- --------------- --------------- --------------- --------------- Total distributions (50,655,402) -- (17,147,337) -- --------------- --------------- --------------- --------------- FROM CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares 713,651,967 443,296,214 1,305,859,725 48,190,262 Net asset value of shares issued to shareholders in reinvestment of dividends 37,962,102 -- 15,848,417 -- Net assets received in connection with reorganization (Note 14) -- -- -- -- --------------- --------------- --------------- --------------- 751,614,069 443,296,214 1,321,708,142 48,190,262 Cost of shares redeemed (728,673,633) (370,749,870) (832,581,584) (103,559,352)(1) --------------- --------------- --------------- --------------- Net increase (decrease) in net assets derived from capital share transactions 22,940,436 72,546,344 489,126,558 (55,369,090) --------------- --------------- --------------- --------------- Net increase (decrease) in net assets (155,652,499) (16,616,472) 600,362,703 (38,560,434) NET ASSETS: Beginning of period 701,802,588 718,419,060 118,056,357 156,616,791 --------------- --------------- --------------- --------------- End of period $ 546,150,089 $ 701,802,588 $ 718,419,060 $ 118,056,357 =============== =============== =============== =============== Undistributed net investment income (loss) $ (7,981,843) $ (3,454,110) $ -- $ -- =============== =============== =============== =============== Pilgrim Emerging Countries Fund ------------------------------------------------------------------------ Six Four Year Three Months Ended Months Ended Ended Months Ended April 30, October 31, June 30, June 30, 2001 2000 2000 1999 --------------- --------------- --------------- --------------- FROM OPERATIONS: Net investment income (loss) $ 305,918 $ (1,024,857) $ (2,952,138) $ (30,573) Net realized gain (loss) on investments and foreign currencies (10,801,699) (12,916,101) 39,495,656 11,238,884 Net change in unrealized appreciation (depreciation) of investments and foreign currencies (28,522,240) (33,354,364) (3,851,223) 51,126,351 --------------- --------------- --------------- --------------- Increase (decrease) in net assets resulting from operations (39,018,021) (47,295,322) 32,692,295 62,334,662 FROM DIVIDENDS TO SHAREHOLDERS: Net investment income: Class A -- -- -- -- Class B -- -- -- -- Class C -- -- -- -- Class Q -- -- -- -- Net realized gain from investments -- -- -- -- --------------- --------------- --------------- --------------- Total distributions -- -- -- -- --------------- --------------- --------------- --------------- FROM CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares 117,604,997 66,531,341 250,385,738 38,136,033 Net asset value of shares issued to shareholders in reinvestment of dividends -- -- -- -- Net assets received in connection with reorganization (Note 14) 79,404,743 -- -- -- --------------- --------------- --------------- --------------- 197,009,740 66,531,341 250,385,738 38,136,033 Cost of shares redeemed (154,437,687) (80,132,252) (211,768,273) (199,492,674)(2) --------------- --------------- --------------- --------------- Net increase (decrease) in net assets derived from capital share transactions 42,572,053 (13,600,911) 38,617,465 (161,356,641) --------------- --------------- --------------- --------------- Net increase (decrease) in net assets 3,554,032 (60,896,233) 71,309,760 (99,021,979) NET ASSETS: Beginning of period 193,597,726 254,493,959 183,184,199 282,206,178 --------------- --------------- --------------- --------------- End of period $ 197,151,758 $ 193,597,726 $ 254,493,959 $ 183,184,199 =============== =============== =============== =============== Undistributed net investment income (loss) $ 247,771 $ (58,147) $ -- $ -- =============== =============== =============== ===============
---------- (1) Includes Class I redemptions of $73,163,306. (2) Includes Class I redemptions of $167,510,018. See Accompanying Notes to Financial Statements 41 ------------- International Equity Funds ------------- STATEMENTS OF CHANGES IN NET ASSETS (Unaudited) --------------------------------------------------------------------------------
Pilgrim Global Communications Fund Pilgrim Global Information Technology Fund ---------------------------------- ----------------------------------------------- Six Period Six Year Period Months Ended Ended Months Ended Ended Ended April 30, October 31, April 30, October 31, October 31, 2001 2000 (1) 2001 2000 1999 (2) ------------- ------------- ------------- ------------- ------------- FROM OPERATIONS: Net investment loss $ (525,395) $ (953,958) $ (996,277) $ (2,387,470) $ (469,089) Net realized gain (loss) on investments and foreign currencies (46,175,734) (8,461,691) (39,323,329) 51,345,417 3,961,443 Net change in unrealized appreciation (depreciation) of investments and foreign currencies 3,645,464 (24,920,890) (37,360,581) (7,560,553) 19,511,556 ------------- ------------- ------------- ------------- ------------- Increase (decrease) in net assets resulting from operations (43,055,665) (34,336,539) (77,680,187) 41,397,394 23,003,910 FROM DIVIDENDS TO SHAREHOLDERS: Net realized gain from investments -- -- (47,416,384) (3,661,253) -- ------------- ------------- ------------- ------------- ------------- Total distributions -- -- (47,416,384) (3,661,253) -- ------------- ------------- ------------- ------------- ------------- FROM CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares 20,676,272 150,314,667 70,140,455 158,060,941 43,110,213 Net asset value of shares issued to shareholders in reinvestment of dividends -- -- 44,100,823 3,325,715 -- Net assets received in connection with reorganization (Note 14) -- -- 5,497,157 -- -- ------------- ------------- ------------- ------------- ------------- 20,676,272 150,314,667 119,738,435 161,386,656 43,110,213 Cost of shares redeemed (37,042,601) (20,159,835) (91,980,660) (91,159,037) (711,691) ------------- ------------- ------------- ------------- ------------- Net increase (decrease) in net assets derived from capital share transactions (16,366,329) 130,154,832 27,757,775 70,227,619 42,398,522 ------------- ------------- ------------- ------------- ------------- Net increase (decrease) in net assets (59,421,994) 95,818,293 (97,338,796) 107,963,760 65,402,432 NET ASSETS: Beginning of period 95,825,793 7,500 173,373,335 65,409,575 7,143 ------------- ------------- ------------- ------------- ------------- End of period $ 36,403,799 $ 95,825,793 $ 76,034,539 $ 173,373,335 $ 65,409,575 ============= ============= ============= ============= ============= Undistributed net investment income (loss) $ (525,395) $ -- $ (981,900) $ -- $ (142) ============= ============= ============= ============= =============
---------- (1) Commenced operations on March 1, 2000. (2) Commenced operations on December 15, 1998. See Accompanying Notes to Financial Statements 42 ------------- International Equity Funds ------------- STATEMENTS OF CHANGES IN NET ASSETS (Unaudited) --------------------------------------------------------------------------------
Pilgrim Asia-Pacific Equity Fund ---------------------------------------------------------------- Six Four Months Year Year Months Ended Ended Ended Ended April 30, October 31, June 30, June 30, 2001 2000 2000 1999 ------------- ------------- ------------- ------------- FROM OPERATIONS: Net investment income (loss) $ (105,224) $ 297,360 $ (325,867) $ (83,355) Net realized gain (loss) on investments and foreign currencies (1,700,871) (83,184) 7,499,044 (6,670,421) Net change in unrealized appreciation (depreciation) of investments and foreign currencies (499,934) (8,020,905) (5,113,014) 20,223,587 ------------- ------------- ------------- ------------- Increase (decrease) in net assets resulting from operations (2,306,029) (7,806,729) 2,060,163 13,469,811 FROM DIVIDENDS TO SHAREHOLDERS: Net investment income: Class A (134,215) -- -- -- Class B (79,361) -- -- -- Class M (85,615) -- -- -- Class X -- -- -- -- Net realized gain from investments -- -- -- -- ------------- ------------- ------------- ------------- Total distributions (299,191) -- -- -- ------------- ------------- ------------- ------------- FROM CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares 43,806,980 20,603,558 103,757,205 137,827,549 Net asset value of shares issued to shareholders in reinvestment of dividends 207,237 -- -- -- Net assets received in connection with reorganization (Note 14) 2,738,406 -- -- -- ------------- ------------- ------------- ------------- 46,752,623 20,603,558 103,757,205 137,827,549 Cost of shares redeemed (44,916,861) (21,639,119) (110,675,525) (143,882,119) ------------- ------------- ------------- ------------- Net increase (decrease) in net assets derived from capital share transactions 1,835,762 (1,035,561) (6,918,320) (6,054,570) ------------- ------------- ------------- ------------- Net increase (decrease) in net assets (769,458) (8,842,290) (4,858,157) 7,415,241 NET ASSETS: Beginning of period 18,860,090 27,702,380 32,560,537 25,145,296 ------------- ------------- ------------- ------------- End of period $ 18,090,632 $ 18,860,090 $ 27,702,380 $ 32,560,537 ============= ============= ============= ============= Undistributed net investment income (loss) $ (108,184) $ 296,231 $ -- $ -- ============= ============= ============= ============= Pilgrim European Equity Fund ----------------------------------------------- Six Year Period Months Ended Ended Ended April 30, October 31, October 31, 2001 2000 1999 (1) ------------- ------------- ------------- FROM OPERATIONS: Net investment income (loss) $ (26,487) $ (40,025) $ 116,340 Net realized gain (loss) on investments and foreign currencies 259,683 1,260,197 687,271 Net change in unrealized appreciation (depreciation) of investments and foreign currencies (3,049,450) (232,864) 1,746,393 ------------- ------------- ------------- Increase (decrease) in net assets resulting from operations (2,816,254) 987,308 2,550,004 FROM DIVIDENDS TO SHAREHOLDERS: Net investment income: Class A -- (137,855) -- Class B -- (3,323) -- Class M -- -- -- Class X -- (249) -- Net realized gain from investments (1,425,757) (795,703) -- ------------- ------------- ------------- Total distributions (1,425,757) (937,130) -- ------------- ------------- ------------- FROM CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares 51,396,144 21,072,178 35,569,764 Net asset value of shares issued to shareholders in reinvestment of dividends 1,425,459 921,727 -- Net assets received in connection with reorganization (Note 14) -- -- -- ------------- ------------- ------------- 52,821,603 21,993,905 35,569,764 Cost of shares redeemed ((56,853,371) ((18,272,413) ( (7,763,403) ------------- ------------- ------------- Net increase (decrease) in net assets derived from capital share transactions (4,031,768) 3,721,492 27,806,361 ------------- ------------- ------------- Net increase (decrease) in net assets (8,273,779) 3,771,670 30,356,365 NET ASSETS: Beginning of period 34,135,178 30,363,508 7,143 ------------- ------------- ------------- End of period $ 25,861,399 $ 34,135,178 $ 30,363,508 ============= ============= ============= Undistributed net investment income (loss) $ (27,485) $ (1,262) $ 141,180 ============= ============= =============
---------- (1) Commenced operations on December 15, 1998. See Accompanying Notes to Financial Statements 43 ------------- International Equity Fund and Precious Metals Fund ------------- STATEMENTS OF CHANGES IN NET ASSETS (Unaudited) --------------------------------------------------------------------------------
Pilgrim Russia Fund -------------------------------------------- Six Ten Months Year Months Ended Ended Ended April 30, October 31, December 31, 2001 2000 1999 ------------ ------------ ------------ FROM OPERATIONS: Net investment income (loss) $ (493,860) $ (534,377) $ 1,563,372 Net realized gain (loss) on investments and foreign currencies (3,496,459) 8,178,368 (35,464,744) Net change in unrealized appreciation (depreciation) of investments and foreign currencies 3,401,791 (4,834,914) 66,709,158 ------------ ------------ ------------ Increase (decrease) in net assets resulting from operations (588,528) 2,809,077 32,807,786 FROM DIVIDENDS TO SHAREHOLDERS: Net investment income: Class A -- -- (586,463) ------------ ------------ ------------ Total distributions -- -- (586,463) ------------ ------------ ------------ FROM CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares 7,420,399 54,557,755 43,183,175 Net asset value of shares issued to shareholders in reinvestment of dividends -- -- 554,553 Redemption fee proceeds -- 390,342 167,637 Net assets received in connection with reorganization (Note 14) -- -- -- ------------ ------------ ------------ 7,420,399 54,948,097 43,905,365 Cost of shares redeemed (11,840,963) (63,131,621) (36,262,949) ------------ ------------ ------------ Net increase (decrease) in net assets derived from capital share transactions (4,420,564) (8,183,524) 7,642,416 ------------ ------------ ------------ Net increase (decrease) in net assets (5,009,092) (5,374,447) 39,863,739 NET ASSETS: Beginning of period 53,636,552 59,010,999 19,147,260 ------------ ------------ ------------ End of period $ 48,627,460 $ 53,636,552 $ 59,010,999 ============ ============ ============ Undistributed net investment income (loss) $ (493,860) $ -- $ (70,843) ============ ============ ============ Pilgrim Precious Metals Fund -------------------------------------------- Six Ten Months Year Months Ended Ended Ended April 30, October 31, December 31, 2001 2000 1999 ------------ ------------ ------------ FROM OPERATIONS: Net investment income (loss) $ 261,019 $ 125,474 $ (15,134) Net realized gain (loss) on investments and foreign currencies (4,187,323) (10,512,720) (25,588,891) Net change in unrealized appreciation (depreciation) of investments and foreign currencies 7,425,011 (10,053,228) 32,389,359 ------------ ------------ ------------ Increase (decrease) in net assets resulting from operations 3,498,707 (20,440,474) 6,785,334 FROM DIVIDENDS TO SHAREHOLDERS: Net investment income: Class A (59,614) (15,287) -- ------------ ------------ ------------ Total distributions (59,614) (15,287) -- ------------ ------------ ------------ FROM CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares 12,135,554 15,323,872 31,794,471 Net asset value of shares issued to shareholders in reinvestment of dividends 54,488 13,994 -- Redemption fee proceeds -- -- -- Net assets received in connection with reorganization (Note 14) 14,557,739 -- 17,841,616 ------------ ------------ ------------ 26,747,781 15,337,866 49,636,087 Cost of shares redeemed (9,657,515) (27,268,213) (34,746,635) ------------ ------------ ------------ Net increase (decrease) in net assets derived from capital share transactions 17,090,266 (11,930,347) 14,889,452 ------------ ------------ ------------ Net increase (decrease) in net assets 20,529,359 (32,386,108) 21,674,786 NET ASSETS: Beginning of period 40,129,974 72,516,082 50,841,296 ------------ ------------ ------------ End of period $ 60,659,333 $ 40,129,974 $ 72,516,082 ============ ============ ============ Undistributed net investment income (loss) $ 250,744 $ 49,339 $ 12,833 ============ ============ ============
See Accompanying Notes to Financial Statements 44 FINANCIAL HIGHLIGHTS PILGRIM WORLDWIDE GROWTH FUND (UNAUDITED) -------------------------------------------------------------------------------- Selected data for a share of beneficial interest outstanding throughout each period.
Class A --------------------------------------------------------------------------------------- Six Four Three Months Months Year Months Ended Ended Ended Ended Year Ended March 31, April 30, October 31, June 30, June 30, ----------------------------------------- 2001 2000(6)(7) 2000 1999(1) 1999 1998 1997 1996 -------- -------- -------- -------- -------- -------- -------- -------- Per Share Operating Performance: Net asset value, beginning of period $ 26.36 29.98 23.58 21.39 19.33 16.88 16.57 14.29 Income from investment operations: Net investment income (loss) $ (0.12) (0.07) (0.15) -- (0.02) 0.04 (0.16) (0.07) Net realized and unrealized gain (loss) on investments $ (5.23) (3.55) 9.62 2.19 5.78 5.33 2.20 2.86 Total from investment operations $ (5.35) (3.62) 9.47 2.19 5.76 5.37 2.04 2.79 Less distributions from: Net investment income $ -- -- -- -- 0.06 -- -- 0.12 Net realized gains on investments $ 1.07 -- 3.07 -- 3.64 2.92 1.73 0.39 Total distributions $ 1.07 -- 3.07 -- 3.70 2.92 1.73 0.51 Net asset value, end of period $ 19.94 26.36 29.98 23.58 21.39 19.33 16.88 16.57 Total Return(3): % (20.97) (12.07) 42.43 10.24 33.56 34.55 12.51 19.79 Ratios/Supplemental Data: Net assets, end of period (000's) $ 209,601 246,590 235,341 66,245 49,134 38,647 24,022 23,481 Ratios to average net assets: Net expenses after expense reimbursement(recoupment)(4)(5) % 1.86 1.61 1.67 1.75 1.86 1.86 1.85 1.85 Gross expenses prior to expense reimbursement(recoupment)(4) % 1.86 1.61 1.67 1.75 2.02 2.21 2.17 2.17 Net investment loss after expense reimbursement(recoupment)(4)(5) % (0.61) (0.71) (0.79) (0.03) (0.62) (0.69) (0.93) (0.35) Portfolio turnover rate % 148 71 169 57 247 202 182 132 Class B --------------------------------------------------------------------------------------- Six Four Three Months Months Year Months May 31, Ended Ended Ended Ended Year Ended March 31, 1995(2) to April 30, October 31, June 30, June 30, ------------------------------ March 31, 2001 2000(6)(7) 2000 1999(1) 1999 1998 1997 1996 -------- -------- -------- -------- -------- -------- -------- -------- Per Share Operating Performance: Net asset value, beginning of period $ 29.52 33.66 26.64 24.21 20.10 16.02 14.34 12.50 Income from investment operations: Net investment income (loss) $ (0.15) (0.15) (0.28) (0.03) (0.08) (0.17) (0.14) (0.05) Net realized and unrealized gain (loss) on investments $ (5.91) (3.99) 10.76 2.46 6.25 5.44 1.82 1.89 Total from investment operations $ (6.06) (4.14) 10.48 2.43 6.17 5.27 1.68 1.84 Less distributions from: Net investment income $ -- -- -- -- 0.01 -- -- -- Net realized gains on investments $ 1.20 -- 3.46 -- 2.05 1.19 -- -- Total distributions $ 1.20 -- 3.46 -- 2.06 1.19 -- -- Net asset value, end of period $ 22.26 29.52 33.66 26.64 24.21 20.10 16.02 14.34 Total Return(3): % (21.25) (12.27) 41.54 10.04 32.74 34.03 11.72 14.72 Ratios/Supplemental Data: Net assets, end of period (000's) $ 100,342 126,756 130,988 27,938 18,556 10,083 5,942 1,972 Ratios to average net assets: Net expenses after expense reimbursement(recoupment)(4)(5) % 2.51 2.26 2.32 2.40 2.51 2.51 2.50 2.50 Gross expenses prior to expense reimbursement(recoupment)(4) % 2.51 2.26 2.32 2.40 2.67 2.70 4.81 9.50 Net investment loss after expense reimbursement(recoupment)(4)(5) % (1.27) (1.37) (1.44) (0.68) (1.31) (1.37) (1.62) (1.28) Portfolio turnover rate % 148 71 169 57 247 202 182 132 Class C ---------------------------------------------------------------------------------- Six Four Three Months Months Year Months Ended Ended Ended Ended Year Ended March 31, April 30, October 31, June 30, June 30, ----------------------------------------- 2001 2000(6)(7) 2000 1999(1) 1999 1998 1997 1996 -------- -------- -------- -------- -------- -------- -------- -------- Per Share Operating Performance: Net asset value, beginning of period $ 26.26 29.92 23.69 21.52 19.05 16.92 16.76 14.44 Income from investment operations: Net investment loss $ (0.15) (0.13) (0.33) (0.04) (0.20) (0.19) (0.28) (0.21) Net realized and unrealized gain (loss) on investments $ (5.24) (3.53) 9.65 2.21 5.83 5.41 2.23 2.92 Total from investment operations $ (5.39) (3.66) 9.32 2.17 5.63 5.22 1.95 2.71 Less distributions from: Net investment income $ -- -- -- -- 0.01 -- -- 0.01 Net realized gains on investments $ 1.07 -- 3.09 -- 3.15 3.09 1.79 0.38 Total distributions $ 1.07 -- 3.09 -- 3.16 3.09 1.79 0.39 Net asset value, end of period $ 19.80 26.26 29.92 23.69 21.52 19.05 16.92 16.76 Total Return(3): % (21.22) (12.23) 41.48 10.08 32.73 33.72 11.81 18.95 Ratios/Supplemental Data: Net assets, end of period (000's) $ 157,944 213,843 239,432 111,250 98,470 84,292 70,345 71,155 Ratios to average net assets: Net expenses after expense reimbursement(recoupment)(4)(5) % 2.51 2.26 2.32 2.40 2.51 2.51 2.50 2.50 Gross expenses prior to expense reimbursement(recoupment)(4) % 2.51 2.26 2.32 2.40 2.67 2.77 2.61 2.57 Net investment loss after expense reimbursement (recoupment)(4)(5) % (1.27) (1.37) (1.44) (0.68) (1.28) (1.34) (1.57) (0.99) Portfolio turnover rate % 148 71 169 57 247 202 182 132
---------- (1) Effective May 24, 1999, ING Pilgrim Investments LLC., became the Investment Manager of the Fund, concurrently Nicholas-Applegate Capital Management was appointed as sub-advisor and the Fund changed its fiscal year-end to June 30. (2) Commencement of offering of shares. (3) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized. (4) Annualized for periods less than one year. (5) The Investment Manager has agreed to limit expenses excluding interest, taxes, brokerage and extraordinary expenses, subject to possible reimbursement to ING Pilgrim Investments, LLC. within three years. (6) Effective October 1, 2000, ING Pilgrim Investments, LLC, 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 45 FINANCIAL PILGRIM INTERNATIONAL VALUE FUND (UNAUDITED) HIGHLIGHTS -------------------------------------------------------------------------------- Selected data for a share of beneficial interest outstanding throughout each period.
Class A -------------------------------------------------------------------------- Six Months Ended Year Ended October 31, April 30, -------------------------------------------------------- 2001 2000 1999 1998 1997 1996 -------- -------- -------- -------- -------- -------- Per Share Operating Performance: Net asset value, beginning of period $ 16.68 14.75 11.88 10.90 9.05 8.10 Income from investment operations: Net investment income (loss) $ 0.05 0.15 0.08 0.11 (0.09) 0.14 Net realized and unrealized gains on investments $ 0.10 2.58 3.58 0.96 2.30 0.85 Total from investment operations $ 0.15 2.73 3.66 1.07 2.21 0.99 Less distributions from: Net investment income $ 0.14 0.11 0.12 -- 0.14 0.04 Net realized gains on investments $ 1.88 0.69 0.67 0.09 0.22 -- Total distributions $ 2.02 0.80 0.79 0.09 0.36 0.04 Net asset value, end of period $ 14.81 16.68 14.75 11.88 10.90 9.05 Total Return(2): % 1.03 18.56 32.55 9.86 27.59 12.15 Ratios/Supplemental Data: Net assets, end of period (000's) $ 1,295,522 920,591 451,815 211,018 60,539 16,777 Ratios to average net assets: Net expenses after expense reimbursement (3)(4) % 1.61 1.64 1.68 1.74 1.80 1.85 Gross expenses prior to expense reimbursement(3) % 1.61 1.64 1.68 1.74 2.07 2.82 Net investment income (loss) after expense reimbursement(3)(4) % 0.77 1.14 0.92 1.62 0.46 1.52 Portfolio turnover rate % 7 34 29 32 26 74 Class B -------------------------------------------------------------- Six Months Ended Year Ended October 31, April 30, -------------------------------------------- 2001 2000 1999 1998 1997(1) -------- -------- -------- -------- -------- Per Share Operating Performance: Net asset value, beginning of period $ 16.43 14.57 11.76 10.87 10.00 Income from investment operations: Net investment income (loss) $ -- 0.07 0.01 0.07 (0.02) Net realized and unrealized gains on investments $ 0.11 2.51 3.51 0.91 0.89 Total from investment operations $ 0.11 2.58 3.52 0.98 0.87 Less distributions from: Net investment income $ 0.03 0.03 0.04 -- -- Net realized gains on investments $ 1.88 0.69 0.67 0.09 -- Total distributions $ 1.91 0.72 0.71 0.09 -- Net asset value, end of period $ 14.63 16.43 14.57 11.76 10.87 Total Return(2): % 0.74 17.69 31.55 9.16 8.70 Ratios/Supplemental Data: Net assets, end of period (000's) $ 479,537 437,765 278,871 145,976 59,185 Ratios to average net assets: Net expenses after expense reimbursement (3)(4) % 2.31 2.34 2.41 2.47 2.50 Gross expenses prior to expense reimbursement(3) % 2.31 2.34 2.41 2.47 2.58 Net investment income (loss) after expense reimbursement(3)(4) % 0.04 0.45 0.18 0.69 (0.71) Portfolio turnover rate % 7 34 29 32 26 Class C --------------------------------------------------------------------------- Six Months Ended Year Ended October 31, April 30, -------------------------------------------------------- 2001 2000 1999 1998 1997 1996 -------- -------- -------- -------- -------- -------- Per Share Operating Performance: Net asset value, beginning of the period $ 16.41 14.55 11.75 10.86 8.93 8.05 Income from investment operations: Net investment income (loss) $ -- 0.07 -- 0.06 (0.06) 0.05 Net realized and unrealized gains on investments $ 0.11 2.52 3.51 0.92 2.20 0.86 Total from investment operations $ 0.11 2.59 3.51 0.98 2.14 0.91 Less distributions from: Net investment income $ 0.04 0.04 0.04 -- 0.04 0.03 Net realized gains on investments $ 1.88 0.69 0.67 0.09 0.17 -- Total distributions $ 1.92 0.73 0.71 0.09 0.21 0.03 Net asset value, end of period $ 14.60 16.41 14.55 11.75 10.86 8.93 Total Return(2): % 0.73 17.76 31.50 9.07 25.92 11.39 Ratios and Supplemental Data: Net assets, end of period (000's) $ 682,542 605,678 310,227 137,651 62,103 14,530 Ratios to average net assets: Net expenses after expense reimbursement (3)(4) % 2.31 2.34 2.41 2.47 2.50 2.50 Gross expenses prior to expense reimbursement(3) % 2.31 2.34 2.41 2.47 2.74 3.71 Net investment income (loss) after expense reimbursement(3)(4) % 0.05 0.46 0.19 0.68 (0.23) 0.62 Portfolio turnover rate % 7 34 29 32 26 74
---------- (1) Class B commenced operations on April 17, 1997. (2) Total return is calculated assuming reinvestment of all dividends and capital gains distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized. (3) Annualized for periods less than one year. (4) Expenses calculated net of advisor reimbursement See Accompanying Notes to Financial Statements 46 FINANCIAL HIGHLIGHTS PILGRIM INTERNATIONAL FUND (UNAUDITED) -------------------------------------------------------------------------------- Selected data for a share of beneficial interest outstanding throughout each period.
Class A ----------------------------------------------------------------------------------- Six Months Ten Months Ended Ended Year Ended December 31, April 30, October 31, -------------------------------------------------------- 2001 2000(4)(6) 1999 1998 1997 1996 1995 -------- -------- -------- -------- -------- -------- -------- Per Share Operating Performance: Net asset value, beginning of period $ 11.22 13.45 11.61 10.10 10.86 10.60 10.37 Income from investment operations: Net investment income (loss) $ 0.01 0.19 (0.01) 0.17 0.07 (0.02) (0.01) Net realized and unrealized gain (loss) on investments $ (0.52) (1.48) 5.46 1.74 0.10 1.45 0.61 Total from investment operations $ (0.51) (1.29) 5.45 1.91 0.17 1.43 0.60 Less distributions from: Net investment income $ -- 0.86 0.03 0.06 0.13 0.20 -- In excess of net investment income $ -- -- -- -- -- -- 0.35 Net realized gains on investments $ 0.93 0.08 3.58 0.34 0.80 0.97 0.02 Total distributions $ 0.93 0.94 3.61 0.40 0.93 1.17 0.37 Net asset value, end of period $ 9.78 11.22 13.45 11.61 10.10 10.86 10.60 Total Return(2): % (4.96) (10.22) 47.85 19.02 1.61 13.57 5.77 Ratios/Supplemental Data: Net assets, end of period (000's) $ 50,923 30,653 25,304 24,000 19,949 18,891 17,855 Ratios to average net assets: Net expenses after expense reimbursement(3)(5) % 1.99 2.23 1.98 1.75 1.75 2.45 2.45 Gross expenses prior to expense reimbursement(3) % 1.99 2.23 1.98 2.25 2.15 2.45 2.46 Net investment income (loss) after expense reimbursement(3)(5) % (0.06) (0.23) (0.21) 0.35 0.53 (0.39) (0.12) Portfolio turnover rate % 126 113 144 144 123 114 138 Class B Class C --------------------- --------------------- Six Months August 22, Six Months September 15, Ended 2000(1) to Ended 2000(1) to April 30, October 31, April, 30 October 31, 2001 2000(4) 2001 2000(4) -------- -------- -------- -------- Per Share Operating Performance: Net asset value, beginning of period $ 11.19 12.28 11.21 11.67 Income from investment operations: Net investment income (loss) $ (0.49) (0.05) (0.49) (0.04) Net realized and unrealized gain (loss) on investments $ (0.04) (1.04) (0.06) (0.42) Total from investment operations $ (0.53) (1.09) (0.55) (0.46) Less distributions from: Net investment income $ -- -- -- -- In excess of net investment income $ -- -- -- -- Net realized gains on investments $ 0.93 -- 0.93 -- Total distributions $ 0.93 -- 0.93 -- Net asset value, end of period $ 9.73 11.19 9.73 11.21 Total Return(2): % (5.17) (8.88) (5.35) (3.94) Ratios/Supplemental Data: Net assets, end of period (000's) $ 2,288 80 1,735 85 Ratios to average net assets: Net expenses after expense reimbursement(3)(5) % 2.74 2.76 2.72 2.96 Gross expenses prior to expense reimbursement(3) % 2.74 2.76 2.72 2.96 Net investment income (loss) after expense reimbursement(3)(5) % (0.08) (7.02) (0.24) (3.97) Portfolio turnover rate % 126 113 126 113
---------- (1) Commencement of offering of shares. (2) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized. (3) Annualized for periods less than one year. (4) The Fund changed its fiscal year-end from December 31 to October 31. (5) The Investment Manager has agreed to limit expenses excluding interest, taxes, brokerage and extraordinary expenses. (6) Effective July 26, 2000 Pilgrim Investments, LLC became the Investment Manager of the Fund. See Accompanying Notes to Financial Statements 47 FINANCIAL PILGRIM INTERNATIONAL CORE GROWTH FUND (UNAUDITED) HIGHLIGHTS -------------------------------------------------------------------------------- Selected data for a share of beneficial interest outstanding throughout each period.
Class A ------------------------------------------------------------------------------- Six Four Three Months Months Year Months February 28, Ended Ended Ended Ended Year Ended March 31, 1997(1) to April 30, October 31, June 30, June 30, ------------------- March 31, 2001 2000(6)(7) 2000 1999(2) 1999 1998 1997 -------- -------- -------- -------- -------- -------- -------- Per Share Operating Performance: Net asset value, beginning of period $ 20.92 23.84 18.92 17.71 17.01 12.73 12.50 Income from investment operations: Net investment income (loss) $ (0.03) (0.03) (0.17) 0.04 (0.01) (0.02) -- Net realized and unrealized gain (loss) on investments $ (2.14) (2.89) 6.25 1.17 1.02 4.56 0.23 Total from investment operations $ (2.17) (2.92) 6.08 1.21 1.01 4.54 0.23 Less distributions from: Net investment income $ 0.41 -- -- -- 0.18 -- -- Net realized gains on investments $ 1.04 -- 1.16 -- 0.13 0.26 -- Total distributions $ 1.45 -- 1.16 -- 0.31 0.26 -- Net asset value, end of period $ 17.30 20.92 23.84 18.92 17.71 17.01 12.73 Total Return(3): % (10.86) (12.25) 32.83 6.83 5.90 36.10 1.76 Ratios/Supplemental Data: Net assets, end of period (000's) $ 14,574 23,588 23,003 12,409 21,627 12,664 2 Ratios to average net assets: Net expenses after expense reimbursement(4)(5) % 1.91 1.76 1.85 1.77 1.89 1.96 1.95 Gross expenses prior to expense reimbursement(4) % 2.07 1.90 2.16 1.86 2.13 3.02 4,579.78 Net investment income (loss) after expense reimbursement(4)(5) % (0.63) (0.48) (0.83) 0.50 (0.51) (0.45) -- Portfolio turnover rate % 102 73 200 67 214 274 76 Class B ------------------------------------------------------------------------------- Six Four Three Months Months Year Months February 28, Ended Ended Ended Ended Year Ended March 31, 1997(1) to April 30, October 31, June 30, June 30, ------------------- March 31, 2001 2000(6)(7) 2000 1999(2) 1999 1998 1997 -------- -------- -------- -------- -------- -------- -------- Per Share Operating Performance: Net asset value, beginning of period $ 20.88 23.83 19.08 17.89 17.10 12.68 12.50 Income from investment operations: Net investment income (loss) $ (0.11) (0.09) (0.30) -- (0.16) (0.11) -- Net realized and unrealized gain (loss) on investments $ (2.12) (2.86) 6.21 1.19 1.05 4.66 0.18 Total from investment operations $ (2.23) (2.95) 5.91 1.19 0.89 4.55 0.18 Less distributions from: Net investment income $ 0.31 -- -- -- 0.03 -- -- Net realized gains on investments $ 1.04 -- 1.16 -- 0.07 0.13 -- Total distributions $ 1.35 -- 1.16 -- 0.10 0.13 -- Net asset value, end of period $ 17.30 20.88 23.83 19.08 17.89 17.10 12.68 Total Return(3): % (11.13) (12.38) 31.62 6.65 5.24 35.31 1.44 Ratios/Supplemental Data: Net assets, end of period (000's) $ 15,854 19,116 21,543 12,034 11,033 7,942 1 Ratios to average net assets: Net expenses after expense reimbursement(4)(5) % 2.60 2.41 2.50 2.36 2.53 2.61 2.59 Gross expenses prior to expense reimbursement(4) % 2.75 2.56 2.81 2.45 2.77 3.04 16,000.25 Net investment income (loss) after expense reimbursement(4)(5) % (1.25) (1.16) (1.48) (0.09) (1.13) (1.32) -- Portfolio turnover rate % 102 73 200 67 214 274 76 Class C ------------------------------------------------------------------------------- Six Four Three Months Months Year Months February 28, Ended Ended Ended Ended 1997(1) to April 30, October 31, June 30, June 30, Year Ended March 31, March 31, 2001 2000(6)(7) 2000 1999(2) 1999 1998 1997 -------- -------- -------- -------- -------- -------- -------- Per Share Operating Performance: Net asset value, beginning of period $ 20.96 23.93 19.14 17.94 17.16 12.68 12.50 Income from investment operations: Net investment loss $ (0.11) (0.08) (0.27) -- (0.05) (0.07) -- Net realized and unrealized gain (loss) on investments $ (2.13) (2.89) 6.22 1.20 0.94 4.55 0.18 Total from investment operations $ (2.24) (2.97) 5.95 1.20 0.89 4.48 0.18 Less distributions from: Net investment income $ 0.33 -- -- -- 0.11 -- -- Net realized gains on investments $ 1.04 -- 1.16 -- -- -- -- Total distributions $ 1.37 -- 1.16 -- 0.11 -- -- Net asset value, end of period $ 17.35 20.96 23.93 19.14 17.94 17.16 12.68 Total Return(3): % (11.14) (12.41) 31.73 6.69 5.22 35.25 1.44 Ratios/Supplemental Data: Net assets, end of period (000's) $ 19,226 25,501 26,734 11,936 10,400 3,517 43 Ratios to average net assets: Net expenses after expense reimbursement(4)(5) % 2.59 2.41 2.50 2.36 2.55 2.61 2.41 Gross expenses prior to expense reimbursement(4) % 2.74 2.56 2.81 2.45 2.79 5.10 25.55 Net investment income (loss) after expense reimbursement(4)(5) % (1.22) (1.16) (1.48) (0.09) (1.19) (1.27) (0.07) Portfolio turnover rate % 102 73 200 67 214 274 76
---------- (1) Commencement of operations. (2) Effective May 24, 1999, ING Pilgrim Investments, LLC, became the Investment Manager of the Fund, concurrently Nicholas-Applegate Capital Management was appointed as sub-advisor and the Fund changed its fiscal year-end to June 30. (3) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized. (4) Annualized for periods less than one year. (5) The Investment Manager has agreed to limit expenses, excluding, interest, taxes, brokerage and extraordinary expenses, subject to possible reimbursement to ING Pilgrim Investments, LLC within three years. (6) Effective October 1, 2000, ING Pilgrim Investments, LLC, 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 48 FINANCIAL HIGHLIGHTS PILGRIM INTERNATIONAL SMALLCAP GROWTH FUND (UNAUDITED) -------------------------------------------------------------------------------- Selected data for a share of beneficial interest outstanding throughout each period.
Class A -------------------------------------------------------------------------------------- Six Four Three Months Months Year Months Ended Ended Ended Ended Year Ended March 31, April 30, October 31, June 30, June 30, ----------------------------------------- 2001 2000(1) 2000 1999(2) 1999 1998 1997 1996 -------- -------- -------- -------- -------- -------- -------- -------- Per Share Operating Performance: Net asset value, beginning of period $ 36.08 40.94 23.80 21.03 19.29 14.92 13.15 11.51 Income from investment operations: Net investment income (loss) $ (0.26) (0.10) (0.18) (0.03) 0.02 (0.15) 0.04 (0.02) Net realized and unrealized gain (loss) on investments $ (8.83) (4.76) 19.38 2.80 3.21 5.36 1.88 1.79 Total from investment operations $ (9.09) (4.86) 19.20 2.77 3.23 5.21 1.92 1.77 Less distributions from: Net investment income $ -- -- -- -- -- -- 0.01 0.13 Net realized gains on investments $ -- -- 2.06 -- 1.49 0.84 0.14 -- Total distributions $ -- -- 2.06 -- 1.49 0.84 0.15 0.13 Net asset value, end of period $ 26.99 36.08 40.94 23.80 21.03 19.29 14.92 13.15 Total Return(4): % (18.81) (11.90) 82.89 13.17 17.26 36.31 14.67 15.46 Ratios/Supplemental Data: Net assets, end of period (000's) $ 203,831 273,393 278,480 37,490 25,336 11,183 5,569 1,056 Ratios to average net assets: Net expenses after expense reimbursement (recoupment)(5)(6) % 1.73 1.67 1.67 1.84 1.94 1.96 1.95 1.95 Gross expenses prior to expense reimbursement (recoupment)(5) % 1.73 1.67 1.67 1.86 2.08 2.75 3.76 10.06 Net investment loss after expense reimbursement (recoupment)(5)(6) % (0.24) (0.80) (0.76) (0.69) (0.82) (1.56) (1.05) (0.27) Portfolio turnover rate % 70 56 164 44 146 198 206 141 Class B -------------------------------------------------------------------------------------- Six Four Three Months Months Year Months Ended Ended Ended Ended Year Ended March 31, April 30, October 31, June 30, June 30, ----------------------------------------- 2001 2000(1) 2000 1999(2) 1999 1998 1997 1996 -------- -------- -------- -------- -------- -------- -------- -------- Per Share Operating Performance: Net asset value, beginning of period $ 38.05 43.27 25.33 22.43 20.16 15.89 13.96 12.50 Income from investment operations: Net investment income (loss) $ (0.18) (0.20) (0.37) (0.07) (0.20) (0.15) (0.15) (0.02) Net realized and unrealized gain (loss) on investments $ (9.32) (5.02) 20.50 2.97 3.46 5.56 2.09 1.48 Total from investment operations $ (9.50) (5.22) 20.13 2.90 3.26 5.41 1.94 1.46 Less distributions from: Net investment income $ -- -- -- -- -- -- 0.01 -- Net realized gains on investments $ -- -- 2.19 -- 0.99 1.14 -- -- Total distributions $ -- -- 2.19 -- 0.99 1.14 0.01 -- Net asset value, end of period $ 28.55 38.05 43.27 25.33 22.43 20.16 15.89 13.96 Total Return(4): % (18.99) (12.05) 81.63 12.93 16.55 35.73 13.96 11.68 Ratios/Supplemental Data: Net assets, end of period (000's) $ 101,394 126,861 132,028 19,331 16,158 12,033 5,080 1,487 Ratios to average net assets: Net expenses after expense reimbursement (recoupment)(5)(6) % 2.39 2.32 2.32 2.49 2.59 2.61 2.60 2.60 Gross expenses prior to expense reimbursement (recoupment)(5) % 2.39 2.32 2.32 2.51 2.73 2.98 4.89 16.15 Net investment loss after expense reimbursement (recoupment)(5)(6) % (0.89) (1.46) (1.41) (1.34) (1.45) (2.20) (1.66) (0.64) Portfolio turnover rate % 70 56 164 44 146 198 206 141 Class C -------------------------------------------------------------------------------------- Six Four Three Months Months Year Months Ended Ended Ended Ended Year Ended March 31, April 30, October 31, June 30, June 30, ----------------------------------------- 2001 2000(1) 2000 1999(2) 1999 1998 1997 1996 -------- -------- -------- -------- -------- -------- -------- -------- Per Share Operating Performance: Net asset value, beginning of period $ 34.93 39.71 23.34 20.60 18.53 14.87 13.05 11.32 Income from investment operations: Net investment income (loss) $ (0.24) (0.18) (0.31) (0.06) (0.10) (0.11) (0.16) 0.01 Net realized and unrealized gain (loss) on investments $ (8.51) (4.60) 18.69 2.80 3.09 5.09 1.98 1.72 Total from investment operations $ (8.75) (4.78) 18.38 2.74 2.99 4.98 1.82 1.73 Less distributions from: Net investment income $ -- -- -- -- -- -- -- -- Net realized gains on investments $ -- -- 2.01 -- 0.92 1.32 -- -- Total distributions $ -- -- 2.01 -- 0.92 1.32 -- -- Net asset value, end of period $ 26.18 34.93 39.71 23.34 20.60 18.53 14.87 13.05 Total Return(4): % (19.01) (12.04) 80.89 13.31 16.55 35.63 13.98 15.30 Ratios/Supplemental Data: Net assets, end of period (000's) $ 99,759 136,830 144,068 18,354 13,226 8,014 3,592 933 Ratios to average net assets: Net expenses after expense reimbursement (recoupment)(5)(6) % 2.39 2.32 2.32 2.49 2.59 2.61 2.60 2.60 Gross expenses prior to expense reimbursement (recoupment)(5) % 2.39 2.32 2.32 2.51 2.73 3.38 3.95 16.15 Net investment loss after expense reimbursement (recoupment)(5)(6) % (0.91) (1.46) (1.41) (1.34) (1.45) (2.18) (1.67) (1.02) Portfolio turnover rate % 70 56 164 44 146 198 206 141
---------- (1) The Fund changed its fiscal year-end from June 30 to October 31. (2) Effective May 24, 1999, ING Pilgrim Investments, LLC, became the Investment Manager of the Fund, concurrently Nicholas-Applegate Capital Management was appointed as sub-advisor and the Fund changed its fiscal year-end to June 30. (3) Commencement of offering of shares. (4) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized. (5) Annualized for periods less than one year. (6) The Investment Manager has agreed to limit expenses excluding interest, taxes, brokerage and extraordinary expenses, subject to possible reimbursement to ING Pilgrim Investments, LLC within three years. See Accompanying Notes to Financial Statements 49 FINANCIAL PILGRIM EMERGING COUNTRIES FUND (UNAUDITED) HIGHLIGHTS -------------------------------------------------------------------------------- Selected data for a share of beneficial interest outstanding throughout each period.
Class A --------------------------------------------------------------------------------------- Six Four Three Months Months Year Months Ended Ended Ended Ended Year Ended March 31, April, 30 October 31, June 30, June 30, ----------------------------------------- 2001 2000(6)(7) 2000 1999(2) 1999 1998 1997 1996 -------- -------- -------- -------- -------- -------- -------- -------- Per Share Operating Performance: Net asset value, beginning of period $ 16.33 20.17 16.74 13.43 17.39 17.20 14.03 11.00 Income from investment operations: Net investment income (loss) $ 0.02 (0.24) (0.20) (0.05) (0.06) 0.03 (0.06) (0.04) Net realized and unrealized gain (loss) on investments $ (2.12) (3.60) 3.63 3.36 (3.81) 1.22 3.51 3.15 Total from investment operations $ (2.10) (3.84) 3.43 3.31 (3.87) 1.25 3.45 3.11 Less distributions from: Net investment income $ -- -- -- -- 0.02 -- -- 0.02 Net realized gains on investments $ -- -- -- -- 0.07 1.06 0.28 0.06 Total distributions $ -- -- -- -- 0.09 1.06 0.28 0.08 Net asset value, end of period $ 14.23 16.33 20.17 16.74 13.43 17.39 17.20 14.03 Total Return(3): % (12.86) (19.04) 20.49 24.65 (22.23) 8.06 24.79 28.43 Ratios/Supplemental Data: Net assets, end of period (000's) $ 108,050 59,541 75,311 53,483 47,180 71,014 38,688 4,718 Ratios to average net assets: Net expenses after expense reimbursement(4)(5) % 2.22 2.23 2.19 2.13 2.27 2.26 2.25 2.25 Gross expenses prior to expense reimbursement(4) % 2.33 2.38 2.34 2.66 2.56 2.48 3.08 6.72 Net investment income (loss) after expense reimbursement(4)(5) % 0.54 (1.31) (1.15) (1.30) (0.25) 0.55 (1.14) (0.35) Portfolio turnover rate % 24 94 211 67 213 243 176 118 Class B --------------------------------------------------------------------------------------- Six Four Three Months Months Year Months Ended Ended Ended Ended Year Ended March 31, April 30, October 31, June 30, June 30, ----------------------------------------- 2001 2000(6)(7) 2000 1999(2) 1999 1998 1997 1996 -------- -------- -------- -------- -------- -------- -------- -------- Per Share Operating Performance: Net asset value, beginning of period $ 16.41 20.30 16.98 13.64 17.64 17.29 14.02 12.50 Income from investment operations: Net investment income (loss) $ (0.01) (0.23) (0.35) (0.07) (0.22) (0.07) (0.11) (0.04) Net realized and unrealized gain (loss) on investments $ (2.21) (3.66) 3.67 3.41 (3.70) 1.26 3.47 1.56 Total from investment operations $ (2.22) (3.89) 3.32 3.34 (3.92) 1.19 3.36 1.52 Less distributions from: Net investment income $ -- -- -- -- -- -- -- -- Net realized gains on investments $ -- -- -- -- 0.08 0.84 0.09 -- Total distributions $ -- -- -- -- 0.08 0.84 0.09 -- Net asset value, end of period $ 14.19 16.41 20.30 16.98 13.64 17.64 17.29 14.02 Total Return(3): % (13.10) (19.16) 19.55 24.49 (22.23) 7.47 24.00 12.16 Ratios/Supplemental Data: Net assets, end of period (000's) $ 20,713 22,707 30,322 26,342 22,338 38,796 24,558 3,557 Ratios to average net assets: Net expenses after expense reimbursement(4)(5) % 2.91 2.98 2.84 2.75 2.91 2.91 2.90 2.90 Gross expenses prior to expense reimbursement(4) % 3.02 3.12 2.99 3.28 3.20 3.06 3.66 7.58 Net investment income (loss) after expense reimbursement(4)(5) % (0.14) (1.01) (1.80) (1.92) (0.80) (0.20) (1.77) (1.05) Portfolio turnover rate % 24 94 211 67 213 243 176 118 Class C --------------------------------------------------------------------------------------- Six Four Three Months Months Year Months Ended Ended Ended Ended Year Ended March 31, April, 30 October 31, June 30, June 30, ----------------------------------------- 2001 2000(6)(7) 2000 1999(2) 1999 1998 1997 1996 -------- -------- -------- -------- -------- -------- -------- -------- Per Share Operating Performance: Net asset value, beginning of period $ 15.81 19.56 16.35 13.14 16.98 16.81 13.71 10.79 Income from investment operations: Net investment loss $ (0.01) (0.22) (0.32) (0.07) (0.27) (0.12) (0.10) (0.05) Net realized and unrealized gain (loss) on investments $ (2.11) (3.53) 3.53 3.28 (3.49) 1.26 3.37 2.97 Total from investment operations $ (2.12) (3.75) 3.21 3.21 (3.76) 1.14 3.27 2.92 Less distributions from: Net investment income $ -- -- -- -- -- -- -- -- Net realized gains on investments $ -- -- -- -- 0.08 0.97 0.17 -- Total distributions $ -- -- -- -- 0.08 0.97 0.17 -- Net asset value, end of period $ 13.69 15.81 19.56 16.35 13.14 16.98 16.81 13.71 Total Return(3): % (13.16) (19.17) 19.63 24.43 (22.21) 7.47 23.94 27.30 Ratios/Supplemental Data: Net assets, end of period (000's) $ 20,111 22,456 29,610 24,230 19,246 36,986 29,376 4,345 Ratios to average net assets: Net expenses after expense reimbursement(4)(5) % 2.91 2.98 2.84 2.75 2.90 2.91 2.90 2.90 Gross expenses prior to expense reimbursement(4) % 3.02 3.09 2.99 3.28 3.19 3.09 3.12 6.23 Net investment loss after expense reimbursement(4)(5) % (0.15) (0.95) (1.80) (1.92) (0.77) (0.26) (1.75) (1.06) Portfolio turnover rate % 24 94 211 67 213 243 176 118
---------- (1) Commencement of offering of shares. (2) Effective May 24, 1999, ING Pilgrim Investments, LLC, became the Investment Manager of the Fund, concurrently Nicholas-Applegate Capital Management was appointed as sub-advisor and the Fund changed its fiscal year-end to June 30. (3) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized. (4) Annualized for periods less than one year. (5) The Investment Manager has agreed to limit expenses excluding interest, taxes, brokerage and extraordinary expenses, subject to possible reimbursement to ING Pilgrim Investments, LLC within three years. (6) Effective October 1,2000, ING Pilgrim Investments, LLC, 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 50 FINANCIAL HIGHLIGHTS PILGRIM GLOBAL COMMUNICATIONS FUND (UNAUDITED) -------------------------------------------------------------------------------- Selected data for a share of beneficial interest outstanding throughout each period.
Class A Class B Class C ------------------------ ------------------------ ------------------------ Six Months Six Months Six Months Ended Period Ended Ended Period Ended Ended Period Ended April 30, October 31, April 30, October 31, April 30, October 31, 2001(5) 2000(1) 2001 2000(1) 2001 2000(1) ------- ------- ------- ------- ------- ------- Per Share Operating Performance: Net asset value, beginning of period $ 7.30 10.00 7.27 10.00 7.28 10.00 Income from investment operations: Net investment loss $ (0.05) (0.06) (0.06) (0.09) (0.06) (0.09) Net realized and unrealized loss on investments $ (3.57) (2.64) (3.56) (2.64) (3.56) (2.63) Total from investment operations $ (3.62) (2.70) (3.62) (2.73) (3.62) (2.72) Net asset value, end of period $ 3.68 7.30 3.65 7.27 3.66 7.28 Total Return(2) % (49.59) (27.00) (49.79) (27.30) (49.72) (27.20) Ratios/Supplemental Data: Net assets, end of period (000's) $ 19,069 55,459 14,007 31,035 3,327 7,603 Ratios to average net assets: Net expenses after expense reimbursement (3)(4) % 1.69 1.37 2.37 2.01 2.36 2.01 Gross expenses prior to expense reimbursement(3) % 2.06 2.56 2.82 2.81 2.83 2.81 Net investment loss after expense reimbursement(3)(4) % (1.56) (1.02) (2.23) (1.67) (2.22) (1.68) Portfolio turnover rate % 61 60 61 60 61 60
---------- (1) The Fund commenced operations on March 1, 2000. (2) Total return is calculated assuming reinvestment of all dividend and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized. (3) Annualized for periods less than one year. (4) The Investment Manager has agreed to limit expenses excluding interest, taxes, brokerage and extraordinary expenses. (5) Effective April 30, 2001, ING Pilgrim Investments, LLC became the Investment Manager of the Fund. See Accompanying Notes to Financial Statements 51 FINANCIAL PILGRIM GLOBAL INFORMATION TECHNOLOGY FUND (UNAUDITED) HIGHLIGHTS -------------------------------------------------------------------------------- Selected data for a share of beneficial interest outstanding throughout each period.
Class A Class B ------------------------------ ------------------------------- Six Months Year Ended Six Months Year Ended Ended October 31, Ended October 31, April 30, ------------------ April 30, ------------------ 2001(5) 2000 1999(1) 2001 2000 1999(1) ------- ------- ------- ------- ------- ------- Per Share Operating Performance: Net asset value beginning of period $ 26.62 17.38 10.00 26.33 17.28 10.00 Income from investment operations: Net investment income (loss) $ (0.14) (0.33) (0.13) 0.06 (0.41) (0.08) Net realized and unrealized gain (loss) on investments $ (9.16) 10.41 7.51 (9.26) 10.30 7.36 Total from investment operations $ (9.30) 10.08 7.38 (9.20) 9.89 7.28 Less distributions from: Net realized gains on investments $ 7.39 0.84 -- 7.39 0.84 -- Total distributions $ 7.39 0.84 -- 7.39 0.84 -- Net asset value, end of period $ 9.93 26.62 17.38 9.74 26.33 17.28 Total Return(2) % (45.46) 58.61 73.80 (45.60) 57.82 72.80 Ratios/Supplemental Data: Net assets, end of period (000's) $ 45,052 108,763 54,798 22,574 37,915 5,964 Ratios to average net assets: Net expenses after expense reimbursement(3)(4) % 1.77 1.53 1.57 2.48 2.17 2.25 Gross expenses prior to expense reimbursement(3) % 2.35 2.65 2.95 3.07 2.89 3.22 Net investment loss after expense reimbursement(3)(4) % (1.66) (1.30) (1.29) (2.36) (1.94) (2.04) Portfolio turnover rate % 73 77 57 73 77 57 Class C ------------------------------- Six Months Year Ended Ended October 31, April 30, ------------------ 2001 2000 1999(1) ------- ------- ------- Per Share Operating Performance: Net asset value beginning of period $ 26.32 17.28 10.00 Income from investment operations: Net investment income (loss) $ (0.07) (0.42) (0.05) Net realized and unrealized gain (loss) on investments $ (9.15) 10.30 7.33 Total from investment operations $ (9.22) 9.88 7.28 Less distributions from: Net realized gains on investments $ 7.39 0.84 -- Total distributions $ 7.39 0.84 -- Net asset value, end of period $ 9.71 26.32 17.28 Total Return(2) % (45.73) 57.77 72.80 Ratios/Supplemental Data: Net assets, end of period (000's) $ 8,409 18,486 2,102 Ratios to average net assets: Net expenses after expense reimbursement(3)(4) % 2.47 2.17 2.24 Gross expenses prior to expense reimbursement(3) % 3.06 2.89 3.20 Net investment loss after expense reimbursement(3)(4) % (2.36) (1.94) (2.05) Portfolio turnover rate % 73 77 57
---------- (1) The Fund commenced operations on December 15, 1998. (2) Total return is calculated assuming reinvestment of all dividend and capital gain distribution at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized. (3) Annualized for periods less than one year. (4) The Investment Manager has agreed to limit expenses excluding interest, taxes, brokerage and extraordinary expenses. (5) Effective April 30, 2001, ING Pilgrim Investments LLC became the Investment Manager of the Fund. See Accompanying Notes to Financial Statements 52 FINANCIAL HIGHLIGHTS PILGRIM ASIA-PACIFIC EQUITY FUND (UNAUDITED) -------------------------------------------------------------------------------- Selected data for a share of beneficial interest outstanding throughout each period.
Class A ------------------------------------------------------------------------ Six Four Months Months September 1, Ended Ended Year Ended June 30, 1995(1) to April 30, October 31, ------------------------------------- June 30, 2001 2000(5) 2000 1999 1998 1997 1996 ------- ------- ------- ------- ------- ------- ------- Per Share Operating Performance: Net asset value, beginning of period $ 4.99 7.23 7.22 4.46 10.93 10.35 10.00 Income from investment operations: Net investment income (loss) $ (0.03) 0.08 (0.05) -- 0.03 0.02 0.03 Net realized and unrealized gain (loss) on investments $ (0.59) (2.32) 0.06 2.76 (6.50) 0.58 0.34 Total from investment operations $ (0.62) (2.24) 0.01 2.76 (6.47) 0.60 0.37 Less distributions from: Net investment income $ 0.09 -- -- -- -- -- -- In excess of net investment income $ -- -- -- -- -- -- 0.02 Tax return of capital $ -- -- -- -- -- 0.02 -- Total distributions $ 0.09 -- -- -- -- 0.02 0.02 Net asset value, end of period $ 4.28 4.99 7.23 7.22 4.46 10.93 10.35 Total Return(2): % (12.81) (30.98) 0.14 61.88 (59.29) 5.78 3.76 Ratios/Supplemental Data: Net assets, end of period (000's) $ 9,121 8,471 11,726 14,417 11,796 32,485 18,371 Ratios to average net assets: Net expenses after expense reimbursement(3)(4) % 2.62 2.05 2.11 2.00 2.00 2.00 2.00 Gross expenses prior to expense reimbursement(3) % 3.56 2.71 2.55 2.98 2.80 2.54 3.47 Net investment income (loss) after expense reimbursement(3)(4) % (0.93) 4.28 (0.56) 0.01 0.38 0.00 0.33 Portfolio turnover rate % 27 13 138 111 81 38 15 Class B ------------------------------------------------------------------------ Six Four Months Months September 1, Ended Ended Year Ended June 30, 1995(1) to April 30, October 31, ------------------------------------- June 30, 2001 2000(5) 2000 1999 1998 1997 1996 ------- ------- ------- ------- ------- ------- ------- Per Share Operating Performance: Net asset value, beginning of period $ 4.80 6.97 7.02 4.37 10.83 10.31 10.00 Income from investment operations: Net investment income (loss) $ (0.07) 0.07 (0.11) (0.04) (0.03) (0.07) (0.01) Net realized and unrealized gain (loss) on investments $ (0.53) (2.24) 0.06 2.69 (6.43) 0.59 0.32 Total from investment operations $ (0.60) (2.17) (0.05) 2.65 (6.46) 0.52 0.31 Less distributions from: Net investment income $ 0.05 -- -- -- -- -- -- In excess of net investment income $ -- -- -- -- -- -- -- Tax return of capital $ -- -- -- -- -- -- -- Total distributions $ 0.05 -- -- -- -- -- -- Net asset value, end of period $ 4.15 4.80 6.97 7.02 4.37 10.83 10.31 Total Return(2): % (12.60) (31.13) (0.71) 60.64 (59.65) 5.04 3.19 Ratios/Supplemental Data: Net assets, end of period (000's) $ 5,329 7,678 12,228 12,959 9,084 30,169 17,789 Ratios to average net assets: Net expenses after expense reimbursement(3)(4) % 3.49 2.80 2.86 2.75 2.75 2.75 2.75 Gross expenses prior to expense reimbursement(3) % 4.43 3.45 3.30 3.73 3.55 3.29 4.10 Net investment income (loss) after expense reimbursement(3)(4) % (1.75) 3.48 (1.31) (0.74) (0.39) (0.79) (0.38) Portfolio turnover rate % 27 13 138 111 81 38 15 Class M ------------------------------------------------------------------------ Six Four Months Months September 1, Ended Ended Year Ended June 30, 1995(1) to April 30, October 31, ------------------------------------- June 30 2001 2000(5) 2000 1999 1998 1997 1996 ------- ------- ------- ------- ------- ------- ------- Per Share Operating Performance: Net asset value, beginning of period $ 4.85 7.04 7.07 4.40 10.86 10.32 10.00 Income from investment operations: Net investment income (loss) $ (0.03) 0.07 (0.11) (0.02) -- (0.05) -- Net realized and unrealized gain (loss) on investments $ (0.56) (2.26) 0.08 2.69 (6.46) 0.59 0.33 Total from investment operations $ (0.59) (2.19) (0.03) 2.67 (6.46) 0.54 0.33 Less distributions from: Net investment income $ 0.09 -- -- -- -- -- -- In excess of net investment income $ -- -- -- -- -- -- 0.01 Total distributions $ 0.09 -- -- -- -- -- 0.01 Net asset value, end of period $ 4.17 4.85 7.04 7.07 4.40 10.86 10.32 Total Return(2): % (12.49) (31.11) (0.42) 60.68 (59.48) 5.26 3.32 Ratios/Supplemental Data: Net assets, end of period (000's) $ 3,641 2,711 3,749 5,184 4,265 11,155 6,476 Ratios to average net assets: Net expenses after expense reimbursement(3)(4) % 2.99 2.53 2.61 2.50 2.50 2.50 2.50 Gross expenses prior to expense reimbursement(3) % 3.88 3.18 3.05 3.48 3.30 3.04 3.88 Net investment income (loss) after expense reimbursement(3)(4) % (1.49) 3.72 (1.06) (0.49) (0.07) (0.55) (0.16) Portfolio turnover rate % 27 13 138 111 81 38 15
---------- (1) Commencement of operations. (2) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized. (3) Annualized for periods less than one year. (4) The Investment Manager has agreed to limit expenses excluding interest, taxes, brokerage and extraordinary expenses, subject to possible reimbursement to ING Pilgrim Investments, LLC. within three years. (5) The Fund changed it fiscal year-end from June 30 to October 31. See Accompanying Notes to Financial Statements 53 FINANCIAL PILGRIM EUROPEAN EQUITY FUND (UNAUDITED) HIGHLIGHTS -------------------------------------------------------------------------------- Selected data for a share of beneficial interest outstanding throughout each period.
Class A Class B ------------------------------- ------------------------------- Six Months Year Ended Six Months Year Ended Ended October 31, Ended October 31, April 30, ------------------ April 30, ------------------ 2001(5) 2000 1999(1) 2001 2000 1999(1) ------- ------- ------- ------- ------- ------- Per Share Operating Performance: Net asset value, beginning of period $ 10.95 10.95 10.00 10.83 10.89 10.00 Income from investment operations: Net investment income (loss) $ (0.01) (0.01) 0.04 (0.04) (0.08) 0.00(5) Net realized and unrealized gain (loss) on investments $ (1.12) 0.34 0.91 (1.09) 0.33 0.89 Total from investment operations $ (1.13) 0.33 0.95 (1.13) 0.25 0.89 Less distributions from: Net investment income $ -- 0.05 -- -- 0.03 -- Net realized gains on investments $ 0.49 0.28 -- 0.49 0.28 -- Total distributions $ 0.49 0.33 -- 0.49 0.31 -- Net asset value, end of period $ 9.33 10.95 10.95 9.21 10.83 10.89 Total Return(2) % (10.80) 2.93 9.50 (10.92) 2.14 8.90 Ratios/Supplemental Data: Net assets, end of period (000's) $ 24,146 31,985 28,746 1,598 1,117 849 Ratios to average net assets: Net expenses after expense reimbursement(3)(4) % 1.89 1.63 1.61 2.59 2.28 2.27 Gross expenses prior to expense reimbursement(3) % 2.59 2.83 3.06 3.31 3.08 3.35 Net investment income (loss) after expense reimbursement(3)(4) % (0.14) (0.09) 0.48 (0.78) (0.75) (0.08) Portfolio turnover rate % 47 61 63 47 61 63 Class C ------------------------------- Six Months Year Ended Ended October 31, April 30, ------------------ 2001 2000 1999(1) ------- ------- ------- Per Share Operating Performance: Net asset value, beginning of period $ 10.77 10.89 10.00 Income from investment operations: Net investment income (loss) $ (0.05) (0.06) (0.01) Net realized and unrealized gain (loss) on investments $ (1.08) 0.27 0.90 Total from investment operations $ (1.13) 0.21 0.89 Less distributions from: Net investment income $ -- 0.05 -- Net realized gains on investments $ 0.49 0.28 -- Total distributions $ 0.49 0.33 -- Net asset value, end of period $ 9.15 10.77 10.89 Total Return(2) % (10.98) 1.76 8.90 Ratios/Supplemental Data: Net assets, end of period (000's) $ 116 188 62 Ratios to average net assets: Net expenses after expense reimbursement(3)(4) % 2.56 2.28 2.26 Gross expenses prior to expense reimbursement(3) % 3.30 3.08 3.34 Net investment income (loss) after expense reimbursement(3)(4) % (0.85) (0.68) (0.15) Portfolio turnover rate % 47 61 63
---------- (1) The Fund commenced operations on December 15, 1998. (2) Total return is calculated assuming reinvestment of all dividend and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized. (3) Annualized for periods less than one year. (4) The Investment Manager has agreed to limit expenses excluding interest, taxes, brokerage and extraordinary expenses. (5) Effective April 30, 2001, ING Pilgrim Investments LLC became the Investment Manager of the Fund. See Accompanying Notes to Financial Statements 54 FINANCIAL HIGHLIGHTS PILGRIM RUSSIA FUND (UNAUDITED) -------------------------------------------------------------------------------- Selected data for a share of beneficial interest outstanding throughout each period.
Class A ----------------------------------------------------------------- Six Ten Months Months Ended Ended Year Ended December 31, April 30, October 31, ---------------------------------------- 2001 2000(4)(6) 1999 1998 1997 1996(1) ------- ------- ------- ------- ------- ------- Per Share Operating Performance: Net asset value, beginning of period $ 7.15 6.74 2.64 17.50 11.24 12.12 Income from investment operations: Net investment income (loss) $ (0.07) (0.07) 0.18 0.15 (0.01) (0.05) Net realized and unrealized gain (loss) on investments $ 0.15 0.48 3.99 (14.70) 7.57 (0.51) Total from investment operations $ 0.08 0.41 4.17 (14.55) 7.56 (0.56) Less distributions from: Net investment income $ -- -- (0.07) (0.07) -- -- Net realized gains on investments $ -- -- -- (0.24) (1.30) (0.32) Total distributions $ -- -- (0.07) (0.31) (1.30) (0.32) Net asset value, end of period $ 7.23 7.15 6.74 2.64 17.50 11.24 Total Return(2): % 1.12 6.08 159.76 (82.99) 67.50 (9.01) Ratios/Supplemental Data: Net assets, end of period (000's) $ 48,627 53,637 59,011 19,147 137,873 13,846 Ratios to average net assets: Net expenses after redemption fee proceeds and expense reimbursement(3)(5) % 3.14 1.40 2.23 1.84 1.85 2.65 Gross expenses prior to redemption fee proceeds and expense reimbursement(3) % 3.21 2.85 3.32 2.64 2.89 5.07 Net investment income (loss) after redemption fee proceeds and expense reimbursement(3)(5) % (2.23) (0.90) 4.39 1.36 (0.11) (1.27) Portfolio turnover rate % 13 52 91 66 67 116
---------- (1) The Fund's commencement of operations was June 3, 1996 with the investment of its initial capital. The Fund's registration statement with the Securities and Exchange Commission became effective on July 3, 1996. Financial results prior to the effective date of the Fund's registration statement are not presented in this Financial Highlights Table. (2) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges.Total return for less than one year is not annualized. (3) Annualized for periods less than one year. (4) The Fund changed its fiscal year-end from December 31 to October 31. (5) The Investment Manager has agreed to limit expenses excluding, interest, taxes, brokerage and extraordinary expenses. (6) Effective July 26, 2000 Pilgrim Investments, LLC. became the Investment Manager of the Fund. See Accompanying Notes to Financial Statements 55 FINANCIAL PILGRIM PRECIOUS METALS FUND (UNAUDITED) HIGHLIGHTS -------------------------------------------------------------------------------- Selected data for a share of beneficial interest outstanding throughout each period.
Class A ---------------------------------------------------------------------- Six Ten Months Months Ended Ended Year Ended December 31, April 30, October 31, ----------------------------------------------- 2001 2000(3)(4) 1999 1998 1997 1996 1995 ------- ------- ------- ------- ------- ------- ------- Per Share Operating Performance: Net asset value, beginning of period $ 2.27 3.29 3.03 3.24 5.97 6.24 6.37 Income from investment operations: Net investment income (loss) $ 0.01 0.01 (0.01) -- -- 0.02 -- Net realized and unrealized gain (loss) on investments $ 0.54 (1.03) 0.27 (0.21) (2.52) 0.50 (0.12) Total from investment operations $ 0.55 (1.02) 0.26 (0.21) (2.52) 0.52 (0.12) Less distributions from: Net investment income $ -- -- -- -- 0.21 0.79 0.01 Total distributions $ -- -- -- -- 0.21 0.79 0.01 Net asset value, end of period $ 2.82 2.27 3.29 3.03 3.24 5.97 6.24 Total Return(1): % 24.42 (30.98) 8.58 (6.39) (42.98) 7.84 (1.89) Ratios/Supplemental Data: Net assets, end of period (000's) $ 60,659 40,130 72,516 50,841 53,707 109,287 135,779 Ratios to average net assets: Expenses (2) % 2.08 2.18 1.94 1.74 1.65 1.60 1.70 Net investment income (loss) (2) % 1.17 0.28 (0.02) 0.08 0.17 (0.32) 0.07 Portfolio turnover rate % 52 27 79 29 38 31 40
---------- (1) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized. (2) Annualized for periods less than one year. (3) The Fund changed its fiscal year-end from December 31 to October 31. (4) Effective July 26, 2000, Pilgrim Investments, Inc. became the Investment Manager of the Fund. See Accompanying Notes to Financial Statements 56 ------- Pilgrim Funds ------- NOTES TO FINANCIAL STATEMENTS as of April 30, 2001 (Unaudited) -------------------------------------------------------------------------------- NOTE 1 -- ORGANIZATION Organization. The Pilgrim Funds are comprised of Pilgrim Mutual Funds ("PMF"), Pilgrim Advisory Funds, Inc. ("PAF"), Pilgrim Mayflower Trust ("PMT"), Pilgrim Funds Trust ("PFT", formerly ING Funds Trust), Pilgrim International Fund ("International"), Pilgrim Russia Fund ("Russia", formerly Pilgrim Troika Dialog Russia Fund), Pilgrim Precious Metals Fund ("Precious Metals", formerly Pilgrim Goldfund 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 four Portfolios in this semi-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"). PAF is a Maryland Corporation organized in 1995 with three separate series (Portfolios). The one Portfolio in this semi-annual report is Pilgrim Asia-Pacific Equity Fund. PMT is a Massachusetts business trust organized in 1992 with three separate series (Portfolios). The one Portfolio in this semi-annual report is Pilgrim International Value Fund. PFT is a Delaware business trust established July 30, 1998 and consists of twelve separately managed portfolios. Three of the Portfolios in this report are Pilgrim Global Communications Fund ("Global Communications", formerly ING Global Communications Fund), Pilgrim Global Information Technology Fund ("Global Information Technology", formerly ING Global Information Technology Fund) and Pilgrim European Equity Fund ("European Equity", formerly ING European Equity 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. The separate classes of shares differ principally in the applicable sales charges (if any), distribution fees and shareholder servicing fees and transfer agent 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. effective September 8, 2000. Effective February 26, 2001, ING Pilgrim Investments, Inc. was merged into the newly formed ING Pilgrim Investments, LLC. Effective February 27, 2001, ING Pilgrim Group, Inc. was merged into the newly formed ING Pilgrim Group, LLC ("IPG"). 57 ------- Pilgrim Funds ------- NOTES TO FINANCIAL STATEMENTS as of April 30, 2001 (Unaudited) (Continued) -------------------------------------------------------------------------------- Reorganizations. Before a shareholder approved reorganization effective July 24, 1998, the funds 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 market 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 58 ------- Pilgrim Funds ------- NOTES TO FINANCIAL STATEMENTS as of April 30, 2001 (Unaudited) (Continued) -------------------------------------------------------------------------------- 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 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. None of the Funds had open futures contracts at April 30, 2001. E. Distributions to Shareholders. The Funds record distributions to their shareholders on ex-date. Each Fund pays dividends and capital gains, if any annually. 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. 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 59 ------- Pilgrim Funds ------- NOTES TO FINANCIAL STATEMENTS as of April 30, 2001 (Unaudited) (Continued) -------------------------------------------------------------------------------- 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 Global Communications 5,873,328 October 2008 Asia-Pacific Equity 23,797,507 October 2007 to 2008 Russia 62,419,331 October 2006 to 2007 Precious Metals 81,765,466 October 2001 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. Deferred Organization Expenses. Expenses incurred in connection with the organization and registration of Asia-Pacific Equity Fund under the Investment Company Act of 1940 and the Securities Act of 1933 are being amortized by the Fund over a period of five years from the date of commencement of its operations. J. 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. K Other. Certain prior year amounts have been reclassified to conform with the current year presentation. NOTE 3 -- INVESTMENT TRANSACTIONS For the six-month period ended April 30, 2001, the cost of purchases and proceeds from the sales of securities, excluding short-term securities, were as follows: Purchases Sales ------------ ------------ Worldwide Growth $731,714,072 $710,099,478 International Value 616,186,218 147,625,040 International 78,369,644 46,436,728 International Core Growth 63,384,670 73,179,077 International SmallCap Growth 432,744,404 423,366,935 Emerging Countries 37,263,922 77,424,581 Global Communications 34,931,869 50,729,293 Global Information Technology 74,939,661 94,530,313 Asia-Pacific Equity 7,181,848 4,324,525 European Equity 13,687,170 18,325,227 Russia 5,467,709 12,618,705 Precious Metals 34,435,207 20,275,336 NOTE 4 -- REDEMPTION FEE INCOME -- RUSSIA A fee is charged on the redemption of shares equal to 2% of the redemption price of shares of the Fund held less than 365 days that are being redeemed. Redemption fee proceeds will be applied to the Fund's aggregate expenses allocable to providing custody and redemption services, including transfer agent fees, postage, printing, 60 ------- Pilgrim Funds ------- NOTES TO FINANCIAL STATEMENTS as of April 30, 2001 (Unaudited) (Continued) -------------------------------------------------------------------------------- telephone costs and employment costs relating to the handling and processing of redemptions. Any excess fee proceeds will be added to the Fund's capital. Total redemption fee proceeds for the six months ended April 30, 2001 were $16,184, for Russia. The amount available for offset against Fund expenses was $16,184, for Russia and is set forth in the statement of operations. NOTE 5 -- INVESTMENT MANAGEMENT AND ADMINISTRATIVE FEES Each of the Funds, except Global Communications, Global Information Technology and European Equity has entered into an Investment Management Agreement with ING Pilgrim Investments, LLC (the "Manager", the "Investment Manager", or the "Adviser"), a wholly-owned subsidiary of ING Groep N.V. Global Communications, Global Information Technology and European Equity entered into an Investment Management Agreement with ING Mutual Funds Management, LLC. On April 30, 2001, ING Mutual Funds Management, LLC merged into ING Pilgrim Investments, LLC. All contracts, obligations and assets of ING Mutual Funds Management, LLC were assumed by ING Pilgrim Investments, LLC pursuant to the merger. The investment management agreements compensate the Manager with a fee, computed daily and payable 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 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% Global Communications 1.00% Global Information Technology 1.25% Asia-Pacific Equity 1.25% European Equity 1.15% Russia 1.25% Precious Metals 1.00% on first $50 million; 0.75% thereafter 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. On November 3, 2000, ING Pilgrim Investments, Inc. notified HSBC Asset Management (America) Inc. and HSBC Asset Management (Hong Kong) Limited (collectively, HSBC) of its intention to terminate HSBC as sub-advisor to the Asia-Pacific Equity fund effective January 1, 2001. Beginning January 2, 2001, ING Pilgrim Investments, Inc. began advising the Fund directly. On November 3, 2000, ING Pilgrim Investments, Inc. notified Troika Dialog Asset Management ("Troika") of its intention to terminate Troika as sub-advisor to the Troika Dialog Asset Management Fund effective January 1, 2001. Beginning January 2, 2001, ING Pilgrim Investments, Inc. began advising the Fund directly. IPG (the "Administrator") serves as administrator to the Funds. International Value, International Global Communications, Global Information Technology, European Equity, Russia and Precious Metals Funds paid the Administrator a fee calculated at an annual rate of 0.10% of each Fund's average daily net assets. International Value also pays an annual shareholder account servicing fee of $5.00, payable semi-annually, for each account of beneficial owners of shares. 61 ------- Pilgrim Funds ------- NOTES TO FINANCIAL STATEMENTS as of April 30, 2001 (Unaudited) (Continued) -------------------------------------------------------------------------------- NOTE 6 -- DISTRIBUTION AND SERVICE 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 ("Distribution Fees"). Pursuant to the 12b-1 Plans, the Distributor is entitled to a payment each month for actual expenses incurred in the distribution and promotion of each Fund's shares, including expenses incurred in printing prospectuses and reports used for sales purposes, expenses incurred in preparing and printing sales literature and other such distribution related expenses, including any distribution or shareholder servicing fees ("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 a combined Distribution and Service Fee based on average daily net assets at the following annual rates: 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 0.25 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 Global Communications 0.35 1.00 1.00 N/A N/A Global Information Technology 0.35 1.00 1.00 N/A N/A Asia-Pacific Equity 0.25 1.00 N/A 0.75% N/A European Equity 0.35 1.00 1.00 N/A N/A Russia 0.25 N/A N/A N/A N/A Precious Metals 0.25 N/A N/A N/A N/A During the period ended April 30, 2001, the Distributor waived 0.10% of the Distribution fee for Global Communications Fund, Global Information Technology Fund and European Equity Fund for Class A only. Prior to July 26, 2000, the former Lexington Funds 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 paid 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. Fees paid to the Distributor by class during the six months ended April 30, 2001 are shown in the accompanying Statements of Operations. 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 six months ended April 30, 2001, the Distributor earned the following amounts in sales charges: Class A Class B Class C Class M Shares Shares Shares Shares -------- -------- -------- -------- Initial Sales Charges $267,299 N/A N/A $ 261 Contingent deferred sales charges $179,748 $ 0 $321,054 N/A In addition, each of the Funds has entered into a Service Agreement with IPG whereby IPG will act as Shareholder Service Agent for each Fund. The agreement provides that IPG 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. 62 ------- Pilgrim Funds ------- NOTES TO FINANCIAL STATEMENTS as of April 30, 2001 (Unaudited) (Continued) -------------------------------------------------------------------------------- NOTE 7 -- OTHER TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES At April 30, 2001, the Funds had the following amounts recorded in payable to affiliates on the accompanying Statements of Assets and Liabilities (See Notes 5 and 6):
Accrued Accrued Shareholder Investment Accrued Services and Management Administrative Distribution Fees Fees Fees Total ---------- --------- ---------- ---------- Worldwide Growth $ 389,854 $ -- $ 265,590 $ 655,444 International Value 1,938,636 193,863 1,217,637 3,350,136 International 43,655 3,741 15,955 63,351 International Core Growth 50,187 -- 42,789 92,976 International SmallCap Growth 430,456 -- 225,108 655,564 Emerging Countries 139,829 -- 48,660 188,489 Global Communications 26,548 2,624 35,801 64,973 Global Information Technology 64,507 6,019 33,803 104,329 Asia-Pacific Equity 17,127 -- 19,922 37,049 European Equity 23,991 2,073 8,122 34,186 Russia 46,911 -- 9,402 56,313 Precious Metals 50,081 3,181 22,738 76,000
At April 30, 2001, Lion Connecticut Holdings, Inc., a wholly-owned indirect subsidiary of ING Groep N.V., held 7.7%, 11.8% and 82.9% of the shares outstanding of Global Communications, Global Information Technology and European Equity, respectively. At April 30, 2001, ING America Holdings, Inc., a wholly-owned indirect subsidiary of ING Groep N.V. held 40.7% of the shares outstanding of International. At April 30, 2001, one shareholder held 10.7% of the shares outstanding of Russia. Investment activities of these shareholders could have a material impact on the Funds. NOTE 8 -- TRANSFER AGENT FEES Effective November 1, 2000, expenses associated with services of the transfer agent were allocated to each class of shares of the funds based on average daily net assets at the following annual rates: Class A Class B Class C Class M Class Q ------- ------- ------- ------- ------- Worldwide Growth 0.210% 0.210% 0.210% N/A 0.013% International Value 0.084 0.084 0.084 N/A 0.012 International 0.280 0.280 0.280 N/A 0.300 International Core Growth 0.260 0.260 0.260 N/A 0.022 International SmallCap Growth 0.210 0.210 0.210 N/A 0.013 Emerging Countries 0.270 0.270 0.270 N/A 0.014 Global Communications 0.190 0.190 0.190 N/A N/A Global Information Technology 0.160 0.160 0.160 N/A N/A Asia-Pacific Equity 0.250 0.250 N/A 0.250 N/A European Equity 0.170 0.170 0.170 N/A N/A Russia 0.250 N/A N/A N/A N/A Precious Metals 0.180 N/A N/A N/A N/A For the six months ended April 30, 2001, transfer agent fees and expenses were:
Class A Class B Class C Class M Class Q Total ------- ------- ------- ------- ------- ----- Worldwide Growth $227,464 $113,189 $183,133 $ -- $ 2,160 $525,946 International Value 478,825 190,540 268,252 -- 1,674 935,291 International 32,520 797 680 -- 5 34,002 International Core Growth 21,725 22,009 27,225 -- 1,189 72,148 International SmallCap Growth 240,352 116,524 118,243 -- 9,627 484,746 Emerging Countries 65,414 26,078 24,853 -- 4,416 120,761 Global Communications 26,415 17,747 4,062 -- -- 48,224 Global Information Technology 52,190 25,159 9,667 -- -- 87,016 Asia-Pacific Equity 6,932 6,196 -- 2,547 -- 15,675 European Equity 23,270 1,510 120 -- -- 24,900 Russia 47,537 -- -- -- -- 47,537 Precious Metals 40,102 -- -- -- -- 40,102
63 ------- Pilgrim Funds ------- NOTES TO FINANCIAL STATEMENTS as of April 30, 2001 (Unaudited) (Continued) -------------------------------------------------------------------------------- NOTE 9 -- EXPENSE LIMITATIONS 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 2.75 3.50 3.50 N/A 2.75 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 Global Communications(1) 1.70 2.45 2.45 N/A N/A Global Information Technology(2) 1.95 2.70 2.70 N/A N/A Asia-Pacific Equity 2.00 2.75 N/A 2.50% N/A European Equity(3) 1.90 2.65 2.65 N/A N/A Russia 3.35 4.10 N/A N/A N/A Precious Metals 2.75 N/A N/A N/A N/A Each Fund will at a later date reimburse the Investment Manager for management fees waived and other expenses assumed by the Investment Manager during the previous 36 months, but only if, after such reimbursement, the Fund's expense ratio does not exceed the percentage described above. Waived and reimbursed fees and any recoupment by the Investment Manager of such waived and reimbursed fees are reflected on the accompanying Statements of Operations for each Fund. (1) Prior to March 1, 2001, the expense limitation rates for Class A, Class B and Class C were 1.53%, 2.18% and 2.18%, respectively. (2) Prior to March 1, 2001, the expense limitation rates for Class A, Class B and Class C were 1.59%, 2.24% and 2.24%, respectively. (3) Prior to March 1, 2001, the expense limitation rates for Class A, Class B and Class C were 1.62%, 2.27% and 2.27%, respectively. NOTE 10 -- LINE OF CREDIT Worldwide Growth, International Value, International, International Core Growth, International SmallCap Growth, Emerging Countries, Asia-Pacific Equity, Russia and Precious Metals, in addition to certain other funds managed by the Adviser, have entered into an unsecured committed revolving line of credit agreement (the "Credit Agreement") with State Street Bank and Trust Company for an aggregate amount of $125,000,000. The proceeds may be used only to: (1) temporarily finance the purchase and sale of securities; (2) finance the redemption of shares of an investor in the Funds; and (3) enable the Funds to meet other emergency expenses as defined in the Credit Agreement. The Funds to which the line of credit is available pay a commitment fee equal to 0.08% per annum on the daily unused portion of the committed line amount payable quarterly in arrears. During the period ended April 30, 2001, the Funds did not have any loans outstanding. 64 ------- Pilgrim Funds ------- NOTES TO FINANCIAL STATEMENTS as of April 30, 2001 (Unaudited) (Continued) -------------------------------------------------------------------------------- NOTE 11 -- CAPITAL SHARES Transactions in capital shares and dollars were as follows:
Class A Shares ---------------------------------------------------------------- Six Months Four Months Three Months Ended Ended Year Ended Ended April 30, October 31, June 30, June 30, 2001 2000 2000 1999 ------------- ------------- ------------- ------------- Worldwide Growth Fund (Number of Shares) Shares sold 7,090,696 4,005,399 14,001,807 1,172,285 Shares issued in merger 1,796,396 -- -- -- Shares issued as reinvestment of dividends 229,882 -- 422,437 86 Shares redeemed (7,958,130) (2,499,778) (9,384,459) (660,100) ------------- ------------- ------------- ------------- Net increase in shares outstanding 1,158,844 1,505,621 5,039,785 512,271 ============= ============= ============= ============= Worldwide Growth Fund ($) Shares sold $ 155,313,598 $ 116,318,819 $ 404,667,268 $ 26,425,907 Shares issued in merger 36,578,702 -- -- -- Shares issued as reinvestment of dividends 5,578,642 -- 10,797,545 -- Shares redeemed (171,397,696) (73,218,592) (273,872,546) (14,957,153) ------------- ------------- ------------- ------------- Net increase $ 26,073,246 $ 43,100,227 $ 141,592,267 $ 11,468,754 ============= ============= ============= ============= Class B Shares ---------------------------------------------------------------- Six Months Four Months Three Months Ended Ended Year Ended Ended April 30, October 31, June 30, June 30, 2001 2000 2000 1999 ------------- ------------- ------------- ------------- Worldwide Growth Fund (Number of Shares) Shares sold 533,816 631,926 2,987,911 353,077 Shares issued in merger 309,706 -- -- -- Shares issued as reinvestment of dividends 113,034 -- 192,099 -- Shares redeemed (741,470) (230,519) (336,704) (70,889) ------------- ------------- ------------- ------------- Net increase in shares outstanding 215,086 401,407 2,843,306 282,188 ============= ============= ============= ============= Worldwide Growth Fund ($) Shares sold $ 13,794,222 $ 20,649,472 $ 95,993,252 $ 9,019,106 Shares issued in merger 7,048,872 -- -- -- Shares issued as reinvestment of dividends 3,071,140 -- 5,534,613 -- Shares redeemed (17,659,463) (7,450,350) (10,888,095) (1,811,055) ------------- ------------- ------------- ------------- Net increase $ 6,254,771 $ 13,199,122 $ 90,639,770 $ 7,208,051 ============= ============= ============= ============= Class C Shares ---------------------------------------------------------------- Six Months Four Months Three Months Ended Ended Year Ended Ended April 30, October 31, June 30, June 30, 2001 2000 2000 1999 ------------- ------------- ------------- ------------- Worldwide Growth Fund (Number of Shares) Shares sold 2,371,709 1,218,370 3,546,660 316,937 Shares issued in merger 597,885 -- -- -- Shares issued as reinvestment of dividends 126,940 -- 554,745 -- Shares redeemed (3,262,535) (1,075,019) (797,116) (195,915) ------------- ------------- ------------- ------------- Net increase (decrease) in shares outstanding (166,001) 143,351 3,304,289 121,022 ============= ============= ============= ============= Worldwide Growth Fund ($) Shares sold $ 51,473,588 $ 34,976,677 $ 103,794,801 $ 7,199,228 Shares issued in merger 12,102,849 -- -- -- Shares issued as reinvestment of dividends 3,066,876 -- 14,207,022 -- Shares redeemed (69,309,722) (31,067,826) (22,853,219) (4,443,951) ------------- ------------- ------------- ------------- Net increase (decrease) $ (2,666,409) $ 3,908,851 $ 95,148,604 $ 2,755,277 ============= ============= ============= ============= Class Q Shares ---------------------------------------------------------------- Six Months Four Months Three Months Ended Ended Year Ended Ended April 30, October 31, June 30, June 30, 2001 2000 2000 1999 ------------- ------------- ------------- ------------- Worldwide Growth Fund (Number of Shares) Shares sold 621,671 458,143 1,816,105 430,631 Shares issued in merger -- -- -- -- Shares issued as reinvestment of dividends 51,494 -- 85,463 -- Shares redeemed (921,859) (562,214) (873,920) (180,058) ------------- ------------- ------------- ------------- Net increase (decrease) in shares outstanding (248,694) (104,071) 1,027,648 250,573 ============= ============= ============= ============= Worldwide Growth Fund ($) Shares sold $ 15,305,039 $ 15,506,281 $ 60,334,275 $ 11,187,418 Shares issued in merger -- -- -- -- Shares issued as reinvestment of dividends 1,439,783 -- 2,513,469 -- Shares redeemed (23,226,581) (18,881,326) (30,258,824) (4,610,453) ------------- ------------- ------------- ------------- Net increase (decrease) $ (6,481,759) $ (3,375,045) $ 32,588,920 $ 6,576,965 ============= ============= ============= =============
65 ------- Pilgrim Funds ------- NOTES TO FINANCIAL STATEMENTS as of April 30, 2001 (Unaudited) (Continued) --------------------------------------------------------------------------------
Class A Shares ----------------------------------------------------- Six Months Ended Year Ended Year Ended April 30, October 31, October 31, 2001 2000 1999 --------------- --------------- --------------- International Value Fund (Number of Shares) Shares sold 65,331,976 83,175,007 37,389,180 Shares issued as reinvestment of dividends 6,119,480 1,328,930 1,139,195 Shares redeemed (39,201,447) (59,935,901) (25,654,229) --------------- --------------- --------------- Net increase in shares outstanding 32,250,009 24,568,036 12,874,146 =============== =============== =============== International Value Fund ($) Shares sold $ 983,908,355 $ 1,354,284,766 $ 491,487,619 Shares issued as reinvestment of dividends 89,770,937 21,993,188 13,398,457 Shares redeemed (585,162,059) (975,073,293) (331,576,463) --------------- --------------- --------------- Net increase $ 488,517,233 $ 401,204,661 $ 173,309,613 =============== =============== =============== Class B Shares ----------------------------------------------------- Six Months Ended Year Ended Year Ended April 30, October 31, October 31, 2001 2000 1999 --------------- --------------- --------------- International Value Fund (Number of Shares) Shares sold 6,130,779 9,796,492 8,274,008 Shares issued as reinvestment of dividends 2,432,469 622,312 520,861 Shares redeemed (2,425,485) (2,916,805) (2,066,590) --------------- --------------- --------------- Net increase in shares outstanding 6,137,763 7,501,999 6,728,279 =============== =============== =============== International Value Fund ($) Shares sold $ 90,078,012 $ 157,186,306 $ 111,215,626 Shares issued as reinvestment of dividends 35,344,304 10,213,421 6,044,049 Shares redeemed (35,630,107) (46,780,828) (26,329,963) --------------- --------------- --------------- Net increase $ 89,792,209 $ 120,618,899 $ 90,929,712 =============== =============== =============== Class C Shares ----------------------------------------------------- Six Months Ended Year Ended Year Ended April 30, October 31, October 31, 2001 2000 1999 --------------- --------------- --------------- International Value Fund (Number of Shares) Shares sold 13,856,844 19,178,129 12,104,834 Shares issued as reinvestment of dividends 3,490,628 732,571 515,060 Shares redeemed (7,501,996) (4,309,599) (3,018,495) --------------- --------------- --------------- Net increase in shares outstanding 9,845,476 15,601,101 9,601,399 =============== =============== =============== International Value Fund ($) Shares sold $ 203,242,905 $ 307,905,636 $ 162,419,735 Shares issued as reinvestment of dividends 50,603,358 11,999,531 5,974,729 Shares redeemed (109,674,513) (68,808,206) (39,186,243) --------------- --------------- --------------- Net increase $ 144,171,750 $ 251,096,961 $ 129,208,221 =============== =============== =============== Class Q Shares ----------------------------------------------------- Six Months Ended Year Ended Year Ended April 30, October 31, October 31, 2001 2000 1999 --------------- --------------- --------------- International Value Fund (Number of Shares) Shares sold 603,498 1,548,084 913,289 Shares issued as reinvestment of dividends 194,697 -- -- Shares redeemed (169,859) (56,473) (1,321) --------------- --------------- --------------- Net increase in shares outstanding 628,336 1,491,611 911,968 =============== =============== =============== International Value Fund ($) Shares sold $ 8,943,314 $ 24,545,939 $ 13,989,768 Shares issued as reinvestment of dividends 2,856,211 -- -- Shares redeemed (2,487,225) (943,654) (21,126) --------------- --------------- --------------- Net increase $ 9,312,300 $ 23,602,285 $ 13,968,642 =============== =============== =============== Class A Shares -------------------------------------------------- Six Months Ten Months Year Ended Ended Ended April 30, October 31, December 31, 2001 2000 1999 ---------------- ---------------- ---------------- International Fund (Number of Shares) Shares sold 4,330,496 1,779,250 416,856 Shares issued in merger 3,637,387 -- -- Shares issued as reinvestment of dividends 196,293 81,693 329,564 Shares redeemed (5,687,685) (1,009,539) (933,028) --------------- --------------- --------------- Net increase (decrease) in shares outstanding 2,476,491 851,404 (186,608) =============== =============== =============== International Fund ($) Shares sold $ 48,216,269 $ 22,592,548 $ 5,619,698 Shares issued in merger 35,904,902 -- -- Shares issued as reinvestment of dividends 2,031,656 1,011,365 4,382,040 Shares redeemed (56,263,071) (13,336,314) (12,165,686) --------------- --------------- --------------- Net increase (decrease) $ 29,889,756 $ 10,267,599 $ (2,163,948) =============== =============== =============== Class B Shares Class C Shares Class Q Shares -------------------------- -------------------------- -------------- Six Months Period Six Months Period Period Ended Ended Ended Ended Ended April 30, October 31, April 30, October 31, April 30, 2001 2000(1) 2001 2000(2) 2000(3) ----------- ----------- ----------- ----------- ----------- International Fund (Number of Shares) Shares sold 88,686 17,961 41,391 7,588 1,840 Shares issued in merger 238,867 -- 161,005 -- 1,110 Shares issued as reinvestment of dividends 270 -- 733 -- -- Shares redeemed (99,898) (10,781) (32,305) -- (2,009) ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in shares outstanding 227,925 7,180 170,824 7,588 941 =========== =========== =========== =========== =========== International Fund ($) Shares sold $ 1,253,446 $ 206,897 $ 648,966 $ 88,184 $ 102,537 Shares issued in merger 2,348,731 -- 1,582,478 -- 10,953 Shares issued as reinvestment of dividends 2,787 -- 7,572 -- -- Shares redeemed (987,429) (125,052) (312,374) -- (19,737) ----------- ----------- ----------- ----------- ----------- Net increase (decrease) $ 2,617,535 $ 81,845 $ 1,926,642 $ 88,184 $ 93,753 =========== =========== =========== =========== ===========
---------- (1) Commenced operations on August 22, 2000. (2) Commenced operations on September 15, 2000. (3) Commenced operations on February 26, 2001. 66 ------- Pilgrim Funds ------- NOTES TO FINANCIAL STATEMENTS as of April 30, 2001 (Unaudited) (Continued) --------------------------------------------------------------------------------
Class A Shares ---------------------------------------------------------------- Six Months Four Months Year Three Months Ended Ended Ended Ended April 30, October 31, June 30, June 30, 2001 2000 2000 1999 ------------- ------------- ------------- ------------- International Core Growth Fund (Number of Shares) Shares sold 5,039,758 1,609,319 5,045,863 1,699,541 Shares issued as reinvestment of dividends 51,993 -- 33,304 -- Shares redeemed (5,376,958) (1,446,511) (4,770,319) (2,264,636) ------------- ------------- ------------- ------------- Net increase (decrease) in shares outstanding (285,207) 162,808 308,848 (565,095) ============= ============= ============= ============= International Core Growth Fund ($) Shares sold $ 90,992,011 $ 35,660,867 $ 121,096,575 $ 30,866,314 Shares issued as reinvestment of dividends 985,770 -- 740,357 -- Shares redeemed (97,866,778) (32,390,856) (114,696,068) (41,080,307) ------------- ------------- ------------- ------------- Net increase (decrease) $ (5,888,997) $ 3,270,011 $ 7,140,864 $ (10,213,993) ============= ============= ============= ============= Class B Shares ---------------------------------------------------------------- Six Months Four Months Year Three Months Ended Ended Ended Ended April 30, October 31, June 30, June 30, 2001 2000 2000 1999 ------------- ------------- ------------- ------------- International Core Growth Fund (Number of Shares) Shares sold 168,938 177,101 458,137 47,812 Shares issued as reinvestment of dividends 49,923 -- 30,801 -- Shares redeemed (218,217) (165,362) (215,896) (33,706) ------------- ------------- ------------- ------------- Net increase (decrease) in shares outstanding 644 11,739 273,042 14,106 ============= ============= ============= ============= International Core Growth Fund ($) Shares sold $ 3,123,367 $ 4,037,626 $ 11,335,788 $ 888,899 Shares issued as reinvestment of dividends 949,044 -- 689,313 -- Shares redeemed (4,027,002) (3,765,765) (5,138,991) (610,199) ------------- ------------- ------------- ------------- Net increase (decrease) $ 45,409 $ 271,861 $ 6,886,110 $ 278,700 ============= ============= ============= ============= Class C Shares ---------------------------------------------------------------- Six Months Four Months Year Three Months Ended Ended Ended Ended April 30, October 31, June 30, June 30, 2001 2000 2000 1999 ------------- ------------- ------------- ------------- International Core Growth Fund (Number of Shares) Shares sold 4,690,679 1,025,108 1,618,402 113,784 Shares issued as reinvestment of dividends 4,491 -- 33,214 -- Shares redeemed (4,844,305) (925,675) (1,158,306) (69,740) ------------- ------------- ------------- ------------- Net increase (decrease) in shares outstanding (149,135) 99,433 493,310 44,044 ============= ============= ============= ============= International Core Growth Fund ($) Shares sold $ 84,138,231 $ 23,241,494 $ 39,015,970 $ 2,117,597 Shares issued as reinvestment of dividends 857,981 -- 745,659 -- Shares redeemed (87,570,759) (21,161,483) (27,691,220) (1,298,517) ------------- ------------- ------------- ------------- Net increase (decrease) $ (2,574,547) $ 2,080,011 $ 12,070,409 $ 819,080 ============= ============= ============= ============= Class Q Shares ---------------------------------------------------------------- Six Months Four Months Year Three Months Ended Ended Ended Ended April 30, October 31, June 30, June 30, 2001 2000 2000 1999 ------------- ------------- ------------- ------------- International Core Growth Fund (Number of Shares) Shares sold 103,526 165,852 780,577 93,649 Shares issued as reinvestment of dividends 44,970 -- 24,738 -- Shares redeemed (272,908) (193,498) (615,038) (228,977) ------------- ------------- ------------- ------------- Net increase (decrease) in shares outstanding (124,412) (27,646) 190,277 (135,328) ============= ============= ============= ============= International Core Growth Fund ($) Shares sold $ 1,954,708 $ 3,896,070 $ 20,639,997 $ 1,771,267 Shares issued as reinvestment of dividends 886,366 -- 572,187 -- Shares redeemed (5,230,073) (4,527,377) (16,620,923) (4,253,651) ------------- ------------- ------------- ------------- Net increase (decrease) $ (2,388,999) $ (631,307) $ 4,591,261 $ (2,482,384) ============= ============= ============= =============
67 ------- Pilgrim Funds ------- NOTES TO FINANCIAL STATEMENTS as of April 30, 2001 (Unaudited) (Continued) --------------------------------------------------------------------------------
Class A Shares ---------------------------------------------------------------- Six Months Four Months Year Three Months Ended Ended Ended Ended April 30, October 31, June 30, June 30, 2001 2000 2000 1999 ------------- ------------- ------------- ------------- International SmallCap Growth Fund (Number of Shares) Shares sold 17,417,679 7,284,746 18,367,774 1,367,921 Shares issued as reinvestment of dividends 433,341 -- 169,910 -- Shares redeemed (17,877,248) (6,508,231) (13,311,135) (997,179) ------------- ------------- ------------- ------------- Net increase (decrease) in shares outstanding (26,228) 776,515 5,226,549 370,742 ============= ============= ============= ============= International SmallCap Growth Fund ($) Shares sold $ 508,001,984 $ 281,224,096 $ 753,445,372 $ 30,182,958 Shares issued as reinvestment of dividends 13,864,436 -- 5,544,302 -- Shares redeemed (524,963,440) (252,360,434) (552,362,495) (22,024,759) ------------- ------------- ------------- ------------- Net increase (decrease) $ (3,097,020) $ 28,863,662 $ 206,627,179 $ 8,158,199 ============= ============= ============= ============= Class B Shares ---------------------------------------------------------------- Six Months Four Months Year Three Months Ended Ended Ended Ended April 30, October 31, June 30, June 30, 2001 2000 2000 1999 ------------- ------------- ------------- ------------- International SmallCap Growth Fund (Number of Shares) Shares sold 748,191 647,440 2,668,131 98,528 Shares issued as reinvestment of dividends 189,033 -- 85,395 -- Shares redeemed (719,995) (364,779) (465,407) (55,682) ------------- ------------- ------------- ------------- Net increase (decrease) in shares outstanding 217,229 282,661 2,288,119 42,846 ============= ============= ============= ============= International SmallCap Growth Fund ($) Shares sold $ 24,067,427 $ 27,240,137 $ 110,600,703 $ 2,333,350 Shares issued as reinvestment of dividends 6,411,985 -- 2,953,812 -- Shares redeemed (22,507,425) (15,204,196) (20,315,971) (1,302,925) ------------- ------------- ------------- ------------- Net increase (decrease) $ 7,971,987 $ 12,035,941 $ 93,238,544 $ 1,030,425 ============= ============= ============= ============= Class C Shares ---------------------------------------------------------------- Six Months Four Months Year Three Months Ended Ended Ended Ended April 30, October 31, June 30, June 30, 2001 2000 2000 1999 ------------- ------------- ------------- ------------- International SmallCap Growth Fund (Number of Shares) Shares sold 2,210,407 1,025,749 4,361,314 146,271 Shares issued as reinvestment of dividends 207,388 -- 80,888 -- Shares redeemed (2,524,466) (736,411) (1,600,661) (34,123) ------------- ------------- ------------- ------------- Net increase (decrease) in shares outstanding (106,671) 289,338 2,841,541 112,148 ============= ============= ============= ============= International SmallCap Growth Fund ($) Shares sold $ 62,041,195 $ 38,976,927 $ 174,228,168 $ 3,168,229 Shares issued as reinvestment of dividends 6,452,890 -- 2,568,991 -- Shares redeemed (71,341,273) (28,136,442) (63,584,070) (740,072) ------------- ------------- ------------- ------------- Net increase (decrease) $ (2,847,188) $ 10,840,485 $ 113,213,089 $ 2,428,157 ============= ============= ============= ============= Class Q Shares ---------------------------------------------------------------- Six Months Four Months Year Three Months Ended Ended Ended Ended April 30, October 31, June 30, June 30, 2001 2000 2000 1999 ------------- ------------- ------------- ------------- International SmallCap Growth Fund (Number of Shares) Shares sold 3,820,777 2,318,401 6,375,425 529,877 Shares issued as reinvestment of dividends 331,546 -- 154,058 -- Shares redeemed (3,524,876) (1,788,278) (4,450,408) (269,090) ------------- ------------- ------------- ------------- Net increase (decrease) in shares outstanding 627,447 530,123 2,079,075 260,787 ============= ============= ============= ============= International SmallCap Growth Fund ($) Shares sold $ 119,541,361 $ 95,855,054 $ 267,585,482 $ 12,505,725 Shares issued as reinvestment of dividends 11,232,791 -- 4,781,312 -- Shares redeemed (109,861,495) (75,048,798) (196,319,048) (6,328,290) ------------- ------------- ------------- ------------- Net increase (decrease) $ 20,912,657 $ 20,806,256 $ 76,047,746 $ 6,177,435 ============= ============= ============= =============
68 ------- Pilgrim Funds ------- NOTES TO FINANCIAL STATEMENTS as of April 30, 2001 (Unaudited) (Continued) --------------------------------------------------------------------------------
Class A Shares ---------------------------------------------------------------- Six Months Four Months Year Three Months Ended Ended Ended Ended April 30, October 31, June 30, June 30, 2001 2000 2000 1999 ------------- ------------- ------------- ------------- Emerging Countries Fund (Number of Shares) Shares sold 4,427,587 2,018,292 7,123,710 1,064,600 Shares issued in merger 5,116,118 -- -- -- Shares issued as reinvestment of dividends -- -- -- -- Shares redeemed (5,599,435) (2,106,144) (6,583,130) (1,382,928) ------------- ------------- ------------- ------------- Net increase (decrease) in shares outstanding 3,944,270 (87,852) 540,580 (318,328) ============= ============= ============= ============= Emerging Countries Fund ($) Shares sold $ 84,495,797 $ 37,136,028 $ 142,495,750 $ 16,015,629 Shares issued in merger 71,829,257 -- -- -- Shares issued as reinvestment of dividends -- -- -- -- Shares redeemed (85,537,913) (39,399,667) (131,430,829) (20,693,691) ------------- ------------- ------------- ------------- Net increase (decrease) $ 70,787,141 $ (2,263,639) $ 11,064,921 $ (4,678,062) ============= ============= ============= ============= Class B Shares --------------------------------------------------------- Six Months Four Months Year Three Months Ended Ended Ended Ended April 30, October 31, June 30, June 30, 2001 2000 2000 1999 ----------- ----------- ----------- ------------ Emerging Countries Fund (Number of Shares) Shares sold 65,651 72,083 261,876 82,535 Shares issued in merger 262,850 -- -- -- Shares issued as reinvestment of dividends -- -- -- -- Shares redeemed (252,932) (181,835) (320,122) (168,473) ----------- ----------- ----------- ----------- Net increase (decrease) in shares outstanding 75,569 (109,752) (58,246) (85,938) =========== =========== =========== =========== Emerging Countries Fund ($) Shares sold $ 2,031,535 $ 1,296,696 $ 5,287,628 $ 1,322,669 Shares issued in merger 3,700,055 -- -- -- Shares issued as reinvestment of dividends -- -- -- -- Shares redeemed (3,790,493) (3,310,448) (6,237,718) (2,572,889) ----------- ----------- ----------- ----------- Net increase (decrease) $ 1,941,097 $(2,013,752) $ (950,090) $(1,250,220) =========== =========== =========== =========== Class C Shares ------------------------------------------------------------ Six Months Four Months Year Three Months Ended Ended Ended Ended April 30, October 31, June 30, June 30, 2001 2000 2000 1999 ------------ ------------ ------------ ------------ Emerging Countries Fund (Number of Shares) Shares sold 529,222 80,835 395,139 116,572 Shares issued in merger 286,653 -- -- -- Shares issued as reinvestment of dividends -- -- -- -- Shares redeemed (767,105) (174,804) (363,300) (99,525) ------------ ------------ ------------ ------------ Net increase (decrease) in shares outstanding 48,770 (93,969) 31,839 17,047 ============ ============ ============ ============ Emerging Countries Fund ($) Shares sold $ 7,626,900 $ 1,412,550 $ 7,854,682 $ 1,744,612 Shares issued in merger 3,875,431 -- -- -- Shares issued as reinvestment of dividends -- -- -- -- Shares redeemed (10,642,535) (3,092,478) (6,755,539) (1,481,896) ------------ ------------ ------------ ------------ Net increase (decrease) $ 859,796 $ (1,679,928) $ 1,099,143 $ 262,716 ============ ============ ============ ============ Class Q Shares ------------------------------------------------------------ Six Months Four Months Year Three Months Ended Ended Ended Ended April 30, October 31, June 30, June 30, 2001 2000 2000 1999 ------------ ------------ ------------ ------------ Emerging Countries Fund (Number of Shares) Shares sold 1,521,308 1,364,617 4,383,749 1,208,239 Shares issued in merger -- -- -- -- Shares issued as reinvestment of dividends -- -- -- -- Shares redeemed (3,509,898) (1,825,785) (3,235,471) (459,541) ------------ ------------ ------------ ------------ Net increase (decrease) in shares outstanding (1,988,590) (461,168) 1,148,278 748,698 ============ ============ ============ ============ Emerging Countries Fund ($) Shares sold $ 23,450,765 $ 26,686,067 $ 94,747,678 $ 19,053,123 Shares issued in merger -- -- -- -- Shares issued as reinvestment of dividends -- -- -- -- Shares redeemed (54,466,746) (34,329,659) (67,344,187) (7,234,180) ------------ ------------ ------------ ------------ Net increase (decrease) $(31,015,981) $ (7,643,592) $ 27,403,491 $ 11,818,943 ============ ============ ============ ============
69 ------- Pilgrim Funds ------- NOTES TO FINANCIAL STATEMENTS as of April 30, 2001 (Unaudited) (Continued) --------------------------------------------------------------------------------
Class A Shares Class B Shares ---------------------------- ------------------------------- Six Months Period Six Months Period Ended Ended Ended Ended April 30, October 31, April 30, October 31, 2001 2000(1) 2001 2000(1) ------------ ------------ ------------ ------------ Global Communications Fund (Number of Shares) Shares sold 3,831,134 9,006,166 497,711 (3) 4,936,462 Shares issued as reinvestment of dividends -- -- -- -- Shares redeemed (6,247,050) (1,413,239) (932,339) (667,032) ------------ ------------ ------------ ------------ Net increase (decrease) in shares outstanding (2,415,916) 7,592,927 (434,628) 4,269,430 ============ ============ ============ ============ Global Communications Fund ($) Shares sold $ 16,757,898 $ 86,861,183 $ 3,561,179 (3) $ 47,927,080 Shares issued as reinvestment of dividends -- -- -- -- Shares redeemed (29,386,005) (11,731,420) (4,459,826) (5,583,505) ------------ ------------ ------------ ------------ Net increase (decrease) $(12,628,107) $ 75,129,763 $ (898,647) $ 42,343,575 ============ ============ ============ ============ Class C Shares Class X Shares(2) ---------------------------- ------------------------------- Six Months Period Period Period Ended Ended Ended Ended April 30, October 31, April 30, October 31, 2001 2000(1) 2001 2001(1) ------------ ------------ ------------ ------------ Global Communications Fund (Number of Shares) Shares sold 75,470 1,370,070 327 252,896 Shares issued as reinvestment of dividends -- -- -- -- Shares redeemed (209,045) (326,514) (237,608)(3) (15,870) ------------ ------------ ------------ ------------ Net increase (decrease) in shares outstanding (133,575) 1,043,556 (237,281) 237,036 ============ ============ ============ ============ Global Communications Fund ($) Shares sold $ 354,834 $ 13,221,011 $ 2,361 $ 2,305,393 Shares issued as reinvestment of dividends -- -- -- -- Shares redeemed (1,017,424) (2,714,001) (2,179,346)(3) (130,909) ------------ ------------ ------------ ------------ Net increase (decrease) $ (662,590) $ 10,507,010 $ (2,176,985) $ 2,174,484 ============ ============ ============ ============
---------- (1) Fund commenced operations on March 1, 2000. (2) Effective November 17, 2000, Class X shares are no longer being offered for sale. (3) Amounts reflect 237,383 of Class X shares, valued at $2,177,790, that were converted into Class B shares on November 17, 2000. 70 ------- Pilgrim Funds ------- NOTES TO FINANCIAL STATEMENTS as of April 30, 2001 (Unaudited) (Continued) --------------------------------------------------------------------------------
Class A Shares -------------------------------------------- Six Months Year Period Ended Ended Ended April 30, October 31, October 31, 2001 2000 1999(1) ------------ ------------ ------------ Global Information Technology Fund (Number of Shares) Shares sold 4,049,168 3,430,072 3,191,651 Shares issued in merger 614,620 -- -- Shares issued as reinvestment of dividends 1,734,108 115,782 -- Shares redeemed (5,948,681) (2,613,877) (38,396) ------------ ------------ ------------ Net increase (decrease) in shares outstanding 449,215 931,977 3,153,255 ============ ============ ============ Global Information Technology Fund ($) Shares sold $ 59,254,898 $ 95,688,028 $ 34,340,200 Shares issued in merger 5,497,157 -- -- Shares issued as reinvestment of dividends 27,711,067 2,671,739 -- Shares redeemed (77,546,444) (77,708,627) (542,965) ------------ ------------ ------------ Net increase (decrease) $(14,916,678) $ 20,651,140 $ 33,797,235 ============ ============ ============ Class B Shares ----------------------------------------------- Six Months Year Period Ended Ended Ended April 30, October 31, October 31, 2001 2000 1999(1) ------------ ------------ ------------ Global Information Technology Fund (Number of Shares) Shares sold 551,516(3) 1,321,762 349,185 Shares issued in merger -- -- -- Shares issued as reinvestment of dividends 740,185 15,652 -- Shares redeemed (413,502) (242,629) (4,369) ------------ ------------ ------------ Net increase (decrease) in shares outstanding 878,199 1,094,785 344,816 ============ ============ ============ Global Information Technology Fund ($) Shares sold $ 9,304,337(3) $ 36,086,827 $ 4,934,897 Shares issued in merger -- -- -- Shares issued as reinvestment of dividends 11,620,904 369,198 -- Shares redeemed (5,030,742) (6,737,097) (61,977) ------------ ------------ ------------ Net increase (decrease) $ 15,894,499 $ 29,718,928 $ 4,872,920 ============ ============ ============ Class C Shares -------------------------------------------- Six Months Year Period Ended Ended Ended April 30, October 31, October 31, 2001 2000 1999(1) ------------ ------------ ------------ Global Information Technology Fund (Number of Shares) Shares sold 101,284 769,591 123,393 Shares issued in merger -- -- -- Shares issued as reinvestment of dividends 304,136 7,474 -- Shares redeemed (242,190) (196,294) (2,008) ------------ ------------ ------------ Net increase (decrease) in shares outstanding 163,230 580,771 121,385 ============ ============ ============ Global Information Technology Fund ($) Shares sold $ 1,581,220 $ 20,725,083 $ 1,826,104 Shares issued in merger -- -- -- Shares issued as reinvestment of dividends 4,768,852 166,554 -- Shares redeemed (3,239,659) (5,276,898) (27,703) ------------ ------------ ------------ Net increase (decrease) $ 3,110,413 $ 15,614,739 $ 1,798,401 ============ ============ ============ Class X Shares(2) -------------------------------------------- Six Months Year Period Ended Ended Ended April 30, October 31, October 31, 2001 2000 1999(1) ----------- ----------- ----------- Global Information Technology Fund (Number of Shares) Shares sold -- 210,415 153,449 Shares issued in merger -- -- -- Shares issued as reinvestment of dividends -- 5,015 -- Shares redeemed (311,818)(3) (50,855) (6,206) ----------- ----------- ----------- Net increase (decrease) in shares outstanding (311,818) 164,575 147,243 =========== =========== =========== Global Information Technology Fund ($) Shares sold $ -- $ 5,561,003 $ 2,009,012 Shares issued in merger -- -- -- Shares issued as reinvestment of dividends -- 118,224 -- Shares redeemed (6,163,815)(3) (1,436,415) (79,046) ----------- ----------- ----------- Net increase (decrease) $(6,163,815) $ 4,242,812 $ 1,929,966 =========== =========== ===========
---------- (1) Fund commenced operations on December 15, 1998. (2) Effective November 17, 2000, Class X Shares are no longer being offered for sale. (3) Amounts reflect 310,202 of Class X Shares, valued at $6,120,851 that were converted into Class B shares on November 17, 2000. 71 ------- Pilgrim Funds ------- NOTES TO FINANCIAL STATEMENTS as of April 30, 2001 (Unaudited) (Continued) --------------------------------------------------------------------------------
Class A Shares ---------------------------------------------------------------- Six Months Four Months Year Year Ended Ended Ended Ended April 30, October 31, June 30, June 30, 2001 2000 2000 1999 ------------- ------------- ------------- ------------- Asia-Pacific Equity Fund (Number of Shares) Shares sold 4,514,253 2,793,903 9,625,972 25,333,718 Shares issued in merger 2,738,406 -- -- -- Shares issued as reinvestment of dividends 22,377 -- -- -- Shares redeemed (6,839,565) (2,717,440) (10,000,540) (25,985,521) ------------- ------------- ------------- ------------- Net increase (decrease) in shares outstanding 435,471 76,463 (374,568) (651,803) ============= ============= ============= ============= Asia-Pacific Equity Fund ($) Shares sold $ 30,057,416 $ 17,553,287 $ 71,934,635 $ 120,602,739 Shares issued in merger 2,738,406 -- -- -- Shares issued as reinvestment of dividends 110,543 -- -- -- Shares redeemed (30,630,651) (17,612,355) (75,845,503) (124,586,962) ------------- ------------- ------------- ------------- Net increase (decrease) $ 2,275,714 $ (59,068) $ (3,910,868) $ (3,984,223) ============= ============= ============= ============= Class B Shares ---------------------------------------------------------------- Six Months Four Months Year Year Ended Ended Ended Ended April 30, October 31, June 30, June 30, 2001 2000 2000 1999 ------------- ------------- ------------- ------------- Asia-Pacific Equity Fund (Number of Shares) Shares sold 362,745 286,379 2,243,981 2,652,841 Shares issued in merger -- -- -- Shares issued as reinvestment of dividends 12,550 -- -- -- Shares redeemed (691,291) (441,432) (2,335,887) (2,886,015) ------------ ------------ ------------ ------------ Net increase (decrease) in shares outstanding (315,996) (155,053) (91,906) (233,174) ============ ============ ============ ============ Asia-Pacific Equity Fund ($) Shares sold $ 1,555,510 $ 1,779,638 $ 16,295,675 $ 13,490,585 Shares issued in merger -- -- -- -- Shares issued as reinvestment of dividends 60,115 -- -- -- Shares redeemed (3,079,730) (2,748,440) (17,125,978) (14,427,377) ------------ ------------ ------------ ------------ Net increase (decrease) $ (1,464,105) $ (968,802) $ (830,303) $ (936,792) ============ ============ ============ ============ Class M Shares ---------------------------------------------------------------- Six Months Four Months Year Year Ended Ended Ended Ended April 30, October 31, June 30, June 30, 2001 2000 2000 1999 ------------- ------------- ------------- ------------- Asia-Pacific Equity Fund (Number of Shares) Shares sold 2,673,331 263,666 2,025,542 692,204 Shares issued in merger -- -- -- -- Shares issued as reinvestment of dividends 7,605 -- -- -- Shares redeemed (2,366,775) (237,827) (2,226,145) (927,629) ------------ ------------ ------------ ------------ Net increase (decrease) in shares outstanding 314,161 25,839 (200,603) (235,425) ============ ============ ============ ============ Asia-Pacific Equity Fund ($) Shares sold $ 12,194,054 $ 1,270,633 $ 15,526,895 $ 3,734,225 Shares issued in merger -- -- -- -- Shares issued as reinvestment of dividends 36,579 -- -- -- Shares redeemed (11,206,480) (1,278,324) (17,704,044) (4,867,780) ------------ ------------ ------------ ------------ Net increase (decrease) $ 1,024,153 $ (7,691) $ (2,177,149) $ (1,133,555) ============ ============ ============ ============
72 ------- Pilgrim Funds ------- NOTES TO FINANCIAL STATEMENTS as of April 30, 2001 (Unaudited) (Continued) --------------------------------------------------------------------------------
Class A Shares Class B Shares -------------------------------------------- ----------------------------------------------- Six Months Year Period Six Months Year Period Ended Ended Ended Ended Ended Ended April 30, October 31, October 31, April 30, October 31, October 31, 2001 2000 1999(1) 2001 2000 1999(1) ------------ ------------ ------------ ------------ ------------ ------------ European Equity Fund (Number of Shares) Shares sold 5,074,782 1,758,487 3,358,479 98,490(3) 50,379 78,820 Shares issued as reinvestment of dividends 127,559 76,223 -- 8,297 1,839 -- Shares redeemed (5,536,392) (1,537,388) (734,074) (36,368) (27,021) (1,051) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in shares outstanding (334,051) 297,322 2,624,405 70,419 25,197 77,769 ============ ============ ============ ============ ============ ============ European Equity Fund ($) Shares sold $ 50,381,581 $ 20,170,939 $ 34,004,254 $ 1,010,322(3) $ 529,521 $ 826,835 Shares issued as reinvestment of dividends 1,332,992 878,229 -- 85,626 21,091 -- Shares redeemed (55,630,710) (17,910,649) (7,742,471) (338,132) (260,463) (11,090) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) $ (3,916,137) $ 3,138,519 $ 26,261,783 $ 757,816 $ 290,149 $ 815,745 ============ ============ ============ ============ ============ ============ Class C Shares Class X Shares(2) ------------------------------------- ------------------------------------------ Six Months Year Period Six Months Year Period Ended Ended Ended Ended Ended Ended April 30, October 31, October 31, April 30, October 31, October 31, 2001 2000 1999(1) 2001 2000 1999(1) ---------- ---------- ---------- ---------- ---------- ---------- European Equity Fund (Number of Shares) Shares sold 431 15,141 5,439 -- 16,513 65,838 Shares issued as reinvestment of dividends 666 214 -- -- 1,740 -- Shares redeemed (5,859) (3,557) -- (77,908)(3) (5,259) (924) --------- --------- --------- --------- --------- --------- Net increase (decrease) in shares outstanding (4,762) 11,798 5,439 (77,908) 12,994 64,914 ========= ========= ========= ========= ========= ========= European Equity Fund ($) Shares sold $ 4,241 $ 177,212 $ 56,964 $ -- $ 194,506 $ 681,711 Shares issued as reinvestment of dividends 6,841 2,455 -- -- 19,952 -- Shares redeemed (58,650) (40,853) -- (825,879)(3) (60,448) (9,842) --------- --------- --------- --------- --------- --------- Net increase (decrease) $ (47,568) $ 138,814 $ 56,964 $(825,879) $ 154,010 $ 671,869 ========= ========= ========= ========= ========= =========
---------- (1) Fund commenced operations on December 15, 1998. (2) Effective November 17, 2000, Class X shares are no longer being offered for sale. (3) Amounts reflect 77,838 of Class X shares, valued at $825,084, that were converted into Class B shares on November 17, 2000. 73 ------- Pilgrim Funds ------- NOTES TO FINANCIAL STATEMENTS as of April 30, 2001 (Unaudited) (Continued) --------------------------------------------------------------------------------
Class A Shares -------------------------------------------- Six Months Ten Months Year Ended Ended Ended April 30, October 31, December 31, 2001 2000 1999 ------------ ------------ ------------ Russia Fund (Number of Shares) Shares sold 1,093,407 6,948,006 9,870,288 Shares issued as reinvestment of dividends -- -- 146,380 Shares redeemed (1,865,812) (8,205,646) (8,524,306) ------------ ------------ ------------ Net increase (decrease) in shares outstanding (772,405) (1,257,640) 1,492,362 ============ ============ ============ Russia Fund ($) Shares sold $ 7,420,399 $ 54,557,755 $ 43,183,175 Shares issued as reinvestment of dividends -- -- 554,533 Redemption fee proceeds -- 390,342 167,637 Shares redeemed (11,840,963) (63,131,621) (36,262,949) ------------ ------------ ------------ Net increase (decrease) $ (4,420,564) $ (8,183,524) $ 7,642,396 ============ ============ ============ Class A Shares -------------------------------------------- Six Months Ten Months Year Ended Ended Ended April 30, October 31, December 31, 2001 2000 1999 ------------ ------------ ------------ Precious Metals Fund (Number of Shares) Shares sold 2,088,048 5,296,727 10,050,258 Shares issued in merger 5,620,303 -- -- Shares issued as reinvestment of dividends 24,110 5,467 6,190,600 Shares redeemed (3,960,604) (9,603,010) (10,982,141) ------------ ------------ ------------ Net increase (decrease) in shares outstanding 3,771,857 (4,300,816) 5,258,717 ============ ============ ============ Precious Metals Fund ($) Shares sold $ 12,135,554 $ 15,323,872 $ 31,794,471 Shares issued in merger 14,557,739 -- -- Shares issued as reinvestment of dividends 54,488 13,994 17,841,616 Shares redeemed (9,657,515) (27,268,213) (34,746,635) ------------ ------------ ------------ Net increase (decrease) $ 17,090,266 $(11,930,347) $ 14,889,452 ============ ============ ============
74 ------- Pilgrim Funds ------- NOTES TO FINANCIAL STATEMENTS as of April 30, 2001 (Unaudited) (Continued) -------------------------------------------------------------------------------- NOTE 12 -- CHANGE IN FUND'S YEAR-END Effective October 31, 2000 Worldwide Growth, International Core Growth, International SmallCap Growth, Emerging Countries and Asia-Pacific Equity changed their fiscal year-end from June 30 to October 31. Effective October 31, 2000, International, Russia, and Precious Metals changed their fiscal year-end from December 31 to October 31. This change was done to facilitate the administration of the Funds. NOTE 13 -- ILLIQUID SECURITIES Pursuant to guidelines adopted by the Fund's Board of Directors, the following securities have been deemed to be illiquid. The Funds currently limit investment in illiquid securities to 15% of the Fund's net assets, at market value, at time of purchase.
Initial Percent Acquisition of Net Fund Security Shares Date Value Assets ---- -------- ------ ---- ----- ------ Asia-Pacific Asia World Online 124,700 12/15/99 $ 48,175 0.27% ========== ==== Russia Aviastar 65,000,000 06/25/97 42,193 0.09% Bashinformsvyaz 6,831,400 06/09/97 259,593 0.53% Electrosvyaz of Rostov Region 1,100 03/29/00 148,500 0.30% Gostiny Dvor 7,000 10/06/97 119 0.00% Novosibirsk Region Electrosv 185,102 04/29/97 323,929 0.67% Rosneftegazstroy ADR 53,845 08/31/00 34,396 0.07% Samson 23,800 07/09/97 5,636 0.01% Slavneft-Megionneftegaz 145,982 04/06/00 321,160 0.66% Taganrog Metallurgical Plant 46,000 07/10/97 75,971 0.16% Transneft 1,800 07/27/97 279,000 0.57% Tyumentelecom Pfd 279,099 02/06/97 86,521 0.18% Udmurtneft 4,000 02/25/97 102,000 0.21% ---------- ---- $1,679,018 3.45% ========== ====
NOTE 14 -- REORGANIZATIONS On February 23, 2001, March 23, 2001 and April 27, 2001, certain Funds, as listed below (each an :"Acquiring Fund"), acquired the assets and certain liabilities of other Funds, also listed below (each an "Acquired Fund"), in a tax-free reorganization in exchange for shares of the Acquiring Fund, pursuant to a plan of reorganization approved by the Acquired Fund's shareholders. The number and value of shares issued by the Acquiring Fund are presented in Note 11 -- Capital Shares. Net assets and unrealized appreciation/(depreciation) as of the reorganization date were as follows:
Acquired Fund Total net Total net Unrealized assets of assets of appreciation/ Acquiring Acquired Acquired Fund Acquiring Fund (depreciation) Fund Fund (000's) (000's) (000's) ---- ---- ------- ------- ------- Worldwide Growth Global Corporate Leaders $10,838 $489,351 $ 1,710 Global Brand Names 44,892 489,351 (1,860) International International Equity 39,847 16,254 (6,927) Emerging Countries Emerging Markets Value 10,380 121,887 (1,352) Emerging Markets Equity 6,473 134,612 (1,893) Worldwide Emerging Markets 62,552 121,887 (15,060) Global Information Technology Global Technology 5,497 63,045 (7,103) Asia-Pacific Equity SmallCap Asia Growth 2,738 11,985 (1,237) Precious Metals Silver 14,558 41,263 (7,171)
The net assets of Worldwide Growth, International, Emerging Countries, Global Information Technology, Asia-Pacific Equity and Precious Metals after the acquisitions were approximately $545,081,000, $56,101,000, $194,819,000, $68,542,000, $14,723,000 and $55,821,000, respectively. 75 ------- Pilgrim Funds ------- NOTES TO FINANCIAL STATEMENTS as of April 30, 2001 (Unaudited) (Continued) -------------------------------------------------------------------------------- NOTE 15 -- FOREIGN TAXES WITHHELD For the periods indicated below the Funds had foreign taxes withheld which have been deducted from dividend income: Six Months Periods Ended Ended April 30, October 31, 2001 2000 ---------- ---------- Worldwide Growth $ 175,884 $ 100,499 (1) International Value 3,036,129 5,170,145 (2) International 34,915 39,256 (3) International Core Growth 38,869 -- (1) International SmallCap Growth 492,681 101,407 (1) Emerging Countries 160,763 56,592 (1) Global Communications 3,868 8,276 (2) Global Information Technology 1,813 4,239 (2) Asia-Pacific Equity 16,567 15,944 (1) European Equity 27,768 65,374 (2) Russia 14,147 7,123 (3) Precious Metals 9,980 31,502 (3) ---------- (1) For the period July 1, 2000 thru October 31, 2000 (2) For the year ended October 31, 2000 (3) For the period January 1, 2000 thru October 31, 2000 76 Pilgrim Worldwide Growth Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) -------------------------------------------------------------------------------- Shares Value ------ ----- COMMON STOCK: 91.53% AUSTRALIA: 0.31% 530,000 Foster's Brewing Group Ltd. $ 1,332,971 21,800 News Corporation Ltd. 207,145 ------------ Total Australia 1,540,116 ------------ BELGIUM: 0.46% 88,300 Fortis (B) 2,271,981 ------------ Total Belgium 2,271,981 ------------ BRAZIL: 1.08% 174,800 Tele Norte Leste Participacoes SA ADR 3,055,504 19,300 Telecomunicacoes Brasileiras SA ADR 988,932 54,900 Unibanco -- Uniao de Bancos Brasileiros GDR 1,320,345 ------------ Total Brazil 5,364,781 ------------ CANADA: 2.23% 56,000 Alberta Energy Co. Ltd. 2,754,427 116,000 @ Anderson Exploration Ltd. 2,643,229 28,500 @ C-Mac Industries, Inc. 920,550 125,400 Nortel Networks Corp. 1,918,620 280,000 Placer Dome, Inc. 2,833,600 ------------ Total Canada 11,070,426 ------------ CHINA: 0.48% 10,700,000 PetroChina Co. Ltd. 2,291,191 5,000 PetroChina Co. Ltd. ADR 107,750 ------------ Total China 2,398,941 ------------ DENMARK: 0.42% 55,000 Novo-Nordisk A/S 2,091,851 ------------ Total Denmark 2,091,851 ------------ FINLAND: 0.54% 34,120 Nokia OYJ 1,129,182 140,000 Sonera OYJ 1,548,961 ------------ Total Finland 2,678,143 ------------ FRANCE: 5.58% 44,100 Aventis SA $ 3,415,851 20,730 Axa 2,446,228 820 Cap Gemini SA 118,517 34,800 France Telecom 2,531,857 105,100 @ Infogrames Entertainment 2,190,442 30,390 L'Oreal 2,212,358 18,500 Louis Vuitton Moet Hennessy 1,142,423 277,400 @ Orange SA 2,923,943 59,133 Sodexho Alliance SA 2,911,849 21,370 TotalFinaElf SA 3,185,370 31,000 Valeo SA 1,430,247 45,713 Vivendi Universal 3,165,619 ------------ Total France 27,674,704 ------------ GERMANY: 2.84% 9,800 Adidas-Salomon AG 594,655 14,700 Allianz AG 4,232,316 1,711 DaimlerChrysler AG 85,681 65,854 Deutsche Bank AG 5,375,465 52,800 E.ON AG 2,658,556 22,800 Volkswagen AG 1,132,841 ------------ Total Germany 14,079,514 ------------ HONG KONG: 2.83% 476,000 Cheung Kong Holdings 5,294,653 108,900 @ China Mobile Hong Kong Ltd. ADR 2,757,348 1,372,000 Hong Kong Exchanges and Clearing Ltd. 2,462,880 325,800 Hutchison Whampoa 3,498,622 ------------ Total Hong Kong 14,013,503 ------------ IRELAND: 0.88% 32,450 @ Elan Corp. PLC ADR 1,627,368 258,945 @ Ryanair Holdings PLC 2,715,633 ------------ Total Ireland 4,343,001 ------------ ISRAEL: 1.25% 64,250 @ Check Point Software Technologies 4,030,403 40,250 Teva Pharmaceutical Industries ADR 2,191,613 ------------ Total Israel 6,222,016 ------------ ITALY: 0.39% 199,400 Edison SPA 1,926,633 ------------ Total Italy 1,926,633 ------------ JAPAN: 8.47% 21,000 Canon, Inc. $ 824,263 98,000 Dai Nippon Printing Co. Ltd. 1,331,623 40,600 Fanuc Ltd. 2,270,433 13,000 Fuji Photo Film Co. Ltd. 523,935 28,000 Honda Motor Co. Ltd. 1,126,209 31,000 Hoya Corp. 2,032,129 5,000 Ito-Yokado Co. Ltd. 278,801 85,000 Marui Co. Ltd. 1,148,100 120,000 Matsushita Electric Industrial Co. Ltd. 2,000,566 292 @ Mitsubishi Tokyo Finance Group, Inc. 2,977,542 185,000 Mitsui Fudosan Co. Ltd. 1,834,055 795,000 Nippon Steel Corp. 1,466,920 160 Nippon Telegraph & Telephone Corp. 1,016,469 322,000 Nomura Securities Co. Ltd. 6,801,440 89 NTT Docomo, Inc. 1,829,482 23,300 Otsuka Kagu Ltd. 1,678,226 104,000 Pioneer Corp. 3,105,734 140,000 Sekisui House Ltd. 1,204,386 67,100 Sony Corp. 5,017,634 42,800 Tokyo Electron Ltd. 3,117,388 13,200 Toyota Motor Corp. 439,056 ------------ Total Japan 42,024,391 ------------ MEXICO: 0.43% 1,140,000 Grupo Financiero Banamex Accival SA 2,134,730 ------------ Total Mexico 2,134,730 ------------ NETHERLANDS: 3.04% 3,100 Aegon NV 103,418 59,925 @ ASM Lithography Holding NV 1,584,420 239,600 @ ASM Lithography Holding NV ADR 6,485,972 13,000 Gucci Group NV ADR 1,183,650 45,000 Heineken NV 2,333,689 56,800 Royal Dutch Petroleum Co. 3,396,677 ------------ Total Netherlands 15,087,826 ------------ See Accompanying Notes to Financial Statements 77 Pilgrim Worldwide Growth Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) (Continued) -------------------------------------------------------------------------------- Shares Value ------ ----- SINGAPORE: 1.14% 210,800 @ Flextronics Intl. Ltd. $ 5,668,412 ------------ Total Singapore 5,668,412 ------------ SOUTH KOREA: 0.23% 64,720 Korea Electric Power Corp. 1,117,980 ------------ Total South Korea 1,117,980 ------------ SPAIN: 1.32% 183,000 Altadis SA 2,273,135 130,300 @ Sogecable SA 2,936,460 76,300 @ Telefonica SA 1,291,662 521 @ Telefonica SA ADR 26,185 ------------ Total Spain 6,527,442 ------------ SWEDEN: 1.02% 220,100 Europolitan Holdings AB 1,716,849 348,200 Swedish Match AB 1,524,393 131,000 Telefonaktiebolaget LM Ericsson 842,330 152,000 Telefonaktiebolaget LM Ericsson ADR 978,159 ------------ Total Sweden 5,061,731 ------------ SWITZERLAND: 2.96% 1,017 Nestle SA 2,105,694 2,007 Novartis 3,118,928 613 @ Roche Holding AG 4,402,675 264 @ Syngenta AG 13,376 18,920 UBS AG 2,879,142 6,100 Zurich Financial Services AG 2,169,467 ------------ Total Switzerland 14,689,282 ------------ THAILAND: 0.28% 467,000 @ Siam City Cement 1,411,741 ------------ Total Thailand 1,411,741 ------------ UNITED KINGDOM: 8.68% 214,300 BAA PLC $ 1,882,256 89,200 Barclays PLC 2,871,015 32,200 BP PLC 288,809 191,900 @ British SKY Broadcasting PLC 2,401,989 17,800 British Telecommunications PLC 142,083 171,300 Cable & Wireless PLC 1,258,305 458,752 Cadbury Schweppes PLC 2,828,416 410,400 Capita Group PLC 2,903,098 3,541,900 Corus Group PLC 3,622,683 220,314 Diageo PLC 2,316,421 287,600 @ Energis PLC 1,497,540 268,000 HSBC Holdings PLC 3,401,975 168,600 Marconi PLC 987,642 137,800 Pizzaexpress PLC 1,636,929 119,800 Provident Financial PLC 1,379,560 88,500 Reckitt Benckiser PLC 1,207,124 283,100 Reed International PLC 2,806,475 87,600 Rio Tinto PLC 1,774,416 122,325 Royal Bank of Scotland Group PLC 2,833,023 1,649,930 Vodafone Group PLC 5,009,579 ------------ Total United Kingdom 43,049,338 ------------ UNITED STATES: 44.67% 10,800 Alcoa, Inc. 447,120 94,400 @ AOL Time Warner, Inc. 4,767,200 109,200 @ Applied Materials, Inc. 5,962,320 168,800 Baker Hughes, Inc. 6,632,152 50,700 Bank of America Corp. 2,839,200 34,900 Baxter Intl., Inc. 3,181,135 104,500 @ BEA Systems, Inc. 4,268,825 44,300 Boeing Co. 2,737,740 85,800 @ Calpine Corp. 4,889,742 146,800 @ CIENA Corp. 8,082,808 8,066 Citigroup, Inc. 396,444 95,500 @ Comcast Corp. 4,193,405 174,800 Computer Associates Intl., Inc. 5,626,812 99,200 @ Comverse Technology, Inc. 6,795,200 226,000 @ Dell Computer Corp. 5,941,540 154,160 Disney (Walt) Co. 4,663,340 36,700 EL Paso Corp. 2,524,960 36,300 Electronic Data Systems Corp. 2,341,350 171,900 @ EMC Corp.-Mass. 6,807,240 3,200 Exxon Mobil Corp. 283,520 52,600 Fannie Mae $ 4,221,676 146,800 First Union Corp. 4,399,596 37,000 Ford Motor Co. 1,090,760 66,700 Freddie Mac 4,388,860 256,100 The Gap, Inc. 7,096,531 55,400 @ Gemstar-TV Guide Intl., Inc. 2,300,208 6,600 General Electric Co. 320,298 141,700 HCA -- The Healthcare Co. 5,483,790 104,900 Home Depot, Inc. 4,940,790 78,300 Intel Corp. 2,420,253 81,100 International Business Machines Corp. 9,337,854 183,400 @ Intuit, Inc. 5,876,136 18,900 Johnson & Johnson 1,823,472 136,500 @ Juniper Networks, Inc. 8,057,595 77,900 @ Lam Research Corp. 2,305,840 110,800 Lucent Technologies, Inc. 1,109,108 76,800 @ Maxim Integrated Products 3,924,480 64,000 McDonald's Corp. 1,760,000 82,100 McKesson HBOC, Inc. 2,531,964 169,700 @ Micron Technology, Inc. 7,700,986 161,100 @ Microsoft Corp. 10,914,525 6,100 Morgan Stanley Dean Witter & Co. 383,019 39,400 @ National Semiconductor Corp. 1,134,720 29,000 Northrop Grumman Corp. 2,617,250 64,700 @ Novellus Systems, Inc. 3,568,205 68,000 @ Oracle Corp. 1,098,880 10,400 Philip Morris Companies, Inc. 521,144 1,600 Schlumberger Ltd. 106,080 70,100 @ Siebel Systems, Inc. 3,195,158 111,900 Target Corp. 4,302,555 105,300 Texas Instruments, Inc. 4,075,110 151,300 Transocean Sedco Forex, Inc. 8,212,564 101,050 @ Tycom Ltd. 1,464,215 167,700 @ USA Networks, Inc. 4,200,885 80,600 @ Veritas Software Corp. 4,804,566 5,800 Wal-Mart Stores, Inc. 300,092 87,009 @ Williams Communications Group 393,281 105,800 Williams Cos., Inc. 4,461,586 28,000 Wrigley (WM.) JR Co. 1,352,680 ------------ Total United States 221,578,765 ------------ Total Common Stock (Cost $464,798,467) 454,027,248 ------------ See Accompanying Notes to Financial Statements 78 Pilgrim Worldwide Growth Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) (Continued) -------------------------------------------------------------------------------- Shares Value ------ ----- PREFERRED STOCK: 1.31% GERMANY 37,659 Henkel KGaA $ 2,372,319 64,300 Prosieben SAT.1 Media AG 1,143,856 49,900 Rhoen Klinikum AG 2,798,103 1,200 SAP AG 191,114 ------------ Total Germany 6,505,392 ------------ Total Preferred Stock (Cost $6,662,410) 6,505,392 ------------ Total Long-Term Investments (Cost $471,460,877) 460,532,640 ------------ Principal Amount Value ------ ----- SHORT-TERM INVESTMENTS: 7.20% Government Obligations: 7.20% $14,200,000 Federal National Mortgage Association Notes, 4.500%, due 05/01/01 $ 14,197,239 21,500,000 U.S. Treasury Bills, 4.140%, due 05/03/01 21,500,000 ------------ 35,697,239 ------------ Total Short-Term Investments (Cost $35,697,239) 35,697,239 ------------ Total Investments in Securities (Cost $ 507,158,116)* 100.04% $496,229,879 Other Assets and Liabilities-Net -0.04% (202,321) ------ ------------ Net Assets 100.00% $496,027,558 ====== ============ @ Non-income producing security ADR American Depostiory Receipt GDR Global Depository Receipt * Cost for federal income tax purposes is the same as for financial statement purposes. Net unrealized depreciation consists of: Gross Unrealized Appreciation $ 24,555,086 Gross Unrealized Depreciation (35,483,323) ------------ Net Unrealized Depreciation $(10,928,237) ============ See Accompanying Notes to Financial Statements 79 Pilgrim Worldwide Growth Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) (Continued) -------------------------------------------------------------------------------- Percentage of Industry Net Assets -------- ---------- Aerospace/Defense 1.08% Agriculture 0.87% Airlines 0.55% Apparel 0.36% Auto Manufacturers 0.78% Auto Parts & Equipment 0.29% Banks 5.83% Beverages 0.97% Brewery 0.47% Building Materials 0.28% Chemicals 0.00% Commercial Services 1.36% Computers 5.92% Cosmetics/Personal Care 0.45% Diversified Finanancial Services 4.93% Electric 2.13% Electronics 1.78% Engineering & Construction 0.38% Food 1.85% Healthcare -- Products 1.42% Healthcare -- Services 1.67% Holding Companies -- Diversified 0.70% Home Builders 0.24% Home Furnishings 2.04% Household Products/Wares 0.72% Insurance 1.80% Internet 0.81% Iron/Steel 1.03% Media 6.61% Medical Drugs 1.52% Mining 1.02% Miscellaneous Manufacturing 0.17% Office/Business Equip 0.17% Oil & Gas 6.03% Pharmaceuticals 1.88% Pipelines 1.41% Real Estate 1.44% Retail 4.67% Semiconductors 8.52% Software 6.72% Telecommunications 11.97% Short-Term Investments 7.20% Other Assets and Liabilities, Net -0.04% ------ Net Assets 100.00% ====== See Accompanying Notes to Financial Statements 80 Pilgrim International Value Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) -------------------------------------------------------------------------------- Shares Value ------ ----- COMMON STOCK: 96.19% BERMUDA: 0.87% 17,970,585 First Pacific Co. $ 4,124,548 3,021,555 Jardine Matheson Holdings Ltd. 17,525,019 -------------- Total Bermuda 21,649,567 -------------- BRAZIL: 6.32% 4,802,400 Banco Bradesco SA ADR 27,181,584 3,958,900 Centrais Eletricas Brasileiras SA ADR 33,639,961 1,224,200 Companhia de Bebidas das Americas ADR 29,870,480 1,472,300 Petroleo Brasileiro SA ADR 35,744,647 532,786 Tele Norte Leste Participacoes SA ADR 9,313,099 420,700 Telecomunicacoes Brasileiras SA ADR 21,556,668 -------------- Total Brazil 157,306,439 -------------- CHINA: 0.95% 110,680,000 PetroChina Company Ltd. 23,699,910 -------------- Total China 23,699,910 -------------- DENMARK: 1.83% 2,821,800 Danske Bank A/S 45,444,744 -------------- Total Denmark 45,444,744 -------------- FRANCE: 7.63% 1,628,500 Alcatel SA 53,027,342 1,485,000 Alstom 42,820,905 225,800 Eridania Beghin-Say 18,721,872 1,463,100 Michelin (C.G.D.E.) 48,563,250 179,492 TotalFinaElf SA 26,754,720 -------------- Total France 189,888,089 -------------- GERMANY: 6.33% 805,500 BASF AG 34,647,682 1,066,968 Bayerische Motoren Werke AG 35,405,361 1,438,300 Deutsche Telekom 37,263,046 999,588 E.ON AG 50,330,695 -------------- Total Germany 157,646,784 -------------- HONG KONG: 1.36% 6,146,000 Swire Pacific Ltd. 33,886,139 -------------- Total Hong Kong 33,886,139 -------------- IRELAND: 2.57% 2,012,800 Allied Irish Banks PLC 22,144,625 4,322,900 Bank of Ireland 41,768,521 -------------- Total Ireland 63,913,146 -------------- ITALY: 3.25% 6,711,300 ENI-Ente Nazionale Idrocarburi S.p.A. $ 45,969,521 3,129,200 Telecom Italia S.p.A. 34,788,077 -------------- Total Italy 80,757,598 -------------- JAPAN: 18.61% 654,000 Daiichi Pharmaceutical Co. Ltd. 14,237,527 3,937,000 Daiwa House Industry Co. Ltd. 31,670,602 1,878,900 Hitachi Ltd. 18,216,503 6,910 Japan Tobacco, Inc. 46,135,636 9,584,000 Komatsu Ltd. 54,293,691 2,798,000 Matsushita Electric Industrial Co. Ltd. 46,646,542 10,636,000 Mitsubishi Heavy Industries Ltd. 43,468,457 3,773 @ Mitsubishi Tokyo Finance Group, Inc. 38,473,515 7,603,000 Nippon Mitsubishi Oil Corp. 44,240,334 7,189 Nippon Telegraph & Telephone Corp. 45,671,225 3,327,600 Sumitomo Mitsui Banking Corp. 31,077,169 4,674,400 Tokio Marine & Fire Insurance 49,178,326 -------------- Total Japan 463,309,527 -------------- MEXICO: 3.17% 986,060 America Movil SA de CV ADR 18,143,504 1,756,160 Telefonos de Mexico SA ADR 60,763,136 -------------- Total Mexico 78,906,640 -------------- NETHERLANDS: 0.55% 328,000 Akzo Nobel NV 13,663,296 -------------- Total Netherlands 13,663,296 -------------- NEW ZEALAND: 2.06% 19,047,466 Telecom Corp. of New Zealand Ltd. 51,393,808 -------------- Total New Zealand 51,393,808 -------------- PORTUGAL: 1.44% 3,684,816 Portugal Telecom SGPS SA 35,766,723 -------------- Total Portugal 35,766,723 -------------- SINGAPORE: 0.80% 2,285,191 DBS Group Holdings Ltd. 19,953,068 -------------- Total Singapore 19,953,068 -------------- SOUTH AFRICA: 1.29% 765,000 De Beers Consolidated Mines Ltd. 32,086,177 -------------- Total South Africa 32,086,177 -------------- SOUTH KOREA: 3.14% 3,669,900 Korea Electric Power Corp. ADR $ 34,607,157 120,000 Korea Telecom ADR 3,315,600 2,015,000 Pohang Iron & Steel Co. ADR 40,320,150 -------------- Total South Korea 78,242,907 -------------- SPAIN: 4.11% 2,873,000 Altadis SA 35,686,971 1,462,533 Banco Bilbao Vizcaya Argentaria SA 20,788,072 2,701,918 Telefonica SA 45,740,042 -------------- Total Spain 102,215,085 -------------- SWITZERLAND: 4.40% 185,700 Swisscom AG 48,275,471 172,476 Zurich Financial Services AG 61,341,148 -------------- Total Switzerland 109,616,619 -------------- UNITED KINGDOM: 24.81% 980,000 Allied Domecq PLC 6,000,092 7,647,000 BAE Systems PLC 36,208,215 1,265,000 BOC Group PLC 18,602,515 9,121,200 British American Tobacco PLC 73,981,489 5,372,100 British Telecommunications PLC 42,881,140 2,436,507 Cadbury Schweppes PLC 15,022,180 23,251,000 Corus Group PLC 23,781,307 7,015,212 Diageo PLC 73,759,196 2,945,600 HSBC Holdings PLC 37,391,254 6,040,800 Imperial Chemical Industries PLC 35,775,263 5,429,000 Innogy Holdings PLC 16,017,762 23,277,898 Invensys PLC 48,783,103 14,994,750 Marks & Spencer PLC 57,485,995 1,633,500 Reckitt Benckiser PLC 22,280,651 1,330,000 Rolls-Royce PLC 4,052,465 6,616,400 South African Breweries PLC 45,430,867 7,959,000 Unilever PLC 60,114,669 -------------- Total United Kingdom 617,568,163 -------------- VENEZUELA: 0.70% 759,700 Compania Anonima Nacional Telefonos de Venezuela ADR 17,404,727 -------------- Total Venezuela 17,404,727 -------------- Total Common Stock (Cost $2,333,372,723) 2,394,319,156 -------------- Total Long-Term Investments (Cost $2,333,372,723) 2,394,319,156 -------------- See Accompanying Notes to Financial Statements 81 Pilgrim International Value Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) (Continued) -------------------------------------------------------------------------------- Value ----- Total Investments in Securities (Cost $ 2,333,372,723)* 96.19% $2,394,319,156 Other Assets and Liabilities-Net 3.81% 94,714,835 ------ -------------- Net Assets 100.00% $2,489,033,991 ====== ============== @ Non-income producing security ADR American Depostiory Receipt * Cost for federal income tax purposes is the same as for financial statement purposes. Net unrealized appreciation consists of: Gross Unrealized Appreciation $ 253,560,211 Gross Unrealized Depreciation (192,613,778) -------------- Net Unrealized Appreciation $ 60,946,433 ============== See Accompanying Notes to Financial Statements 82 Pilgrim International Value Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) (Continued) -------------------------------------------------------------------------------- Percentage of Industry Net Assets -------- ---------- Aerospace/Defense 1.62% Agriculture 7.01% Auto Manufacturers 1.42% Auto Parts&Equipment 1.95% Banks 11.42% Beverages 6.23% Chemicals 4.13% Electrical Compo&Equip 6.14% Food 3.02% Holding Companies -- Divers 2.23% Home Builders 1.27% Home Furnishings 1.87% Household Products/Wares 0.89% Insurance 4.44% Iron/Steel 2.58% Machinery -- Diversified 3.90% Mining 1.29% Miscellaneous Manufactur 3.71% Oil & Gas 7.09% Pharmaceuticals 0.57% Retail 2.31% Telecommunications 21.10% Other Assets and Liabilities, Net 3.81% ------ NET ASSESTS 100.00% ====== See Accompanying Notes to Financial Statements 83 Pilgrim International Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) -------------------------------------------------------------------------------- Shares Value ------ ----- COMMON STOCK: 84.57% BELGIUM: 0.94% 20,050 Fortis (B) $ 515,892 ------------ Total Belgium 515,892 ------------ BRAZIL: 1.77% 39,400 Tele Norte Leste Participacoes SA ADR 688,712 11,900 Unibanco -- Uniao de Bancos Brasileiros GDR 286,195 ------------ Total Brazil 974,907 ------------ CANADA: 1.02% 55,600 Placer Dome, Inc. 562,672 ------------ Total Canada 562,672 ------------ DENMARK: 0.88% 12,800 Novo-Nordisk A/S 486,831 ------------ Total Denmark 486,831 ------------ FINLAND: 1.45% 8,640 Nokia OYJ 285,936 46,009 Sonera OYJ 509,044 ------------ Total Finland 794,980 ------------ FRANCE: 11.16% 4,500 Aventis SA 348,556 2,150 Aventis SA 165,388 6,385 @ Axa 753,457 8,200 France Telecom 596,587 27,000 @ Infogrames Entertainment 562,721 59,200 @ Orange SA 623,999 13,294 Sodexho Alliance SA 654,628 3,815 TotalFinaElf SA 568,656 6,144 TotalFinaElf SA ADR 460,186 8,900 Valeo SA 410,619 14,266 Vivendi Universal 987,919 ------------ Total France 6,132,716 ------------ GERMANY: 5.34% 2,120 Allianz AG 610,375 14,889 Deutsche Bank AG 1,215,344 25,130 Deutsche Post AG 428,541 2,380 Muenchener Rueckversicherungs AG 678,644 ------------ Total Germany 2,932,904 ------------ HONG KONG: 3.17% 24,600 @ China Mobile Hong Kong Ltd. ADR $ 622,872 292,000 Hong Kong Exchanges and Clearing Ltd. 524,170 55,200 Hutchison Whampoa 592,768 ------------ Total Hong Kong 1,739,810 ------------ IRELAND: 0.75% 39,400 @ Ryanair Holdings PLC 413,199 ------------ Total Ireland 413,199 ------------ ISRAEL: 1.39% 2,850 @ Check Point Software Technologies 178,781 1,050 @ Orbotech Ltd. 36,162 10,100 Teva Pharmaceutical Industries ADR 549,945 ------------ Total Israel 764,888 ------------ ITALY: 2.52% 28,340 Assicurazioni Generali 915,266 125,480 IntesaBci S.p.A. 470,935 ------------ Total Italy 1,386,201 ------------ JAPAN: 15.15% 50,000 Aiwa 390,483 5,000 Canon, Inc. 196,253 23,000 Dai Nippon Printing Co. Ltd. 312,524 3,000 Hoya Corp. 196,658 1,800 Jafco Co. Ltd. 212,390 20,000 Marui Co. Ltd. 270,141 29,000 Matsushita Electric Industrial Co. Ltd. 483,470 67,000 Mitsubishi Heavy Industries Ltd. 273,823 60 @ Mitsubishi Tokyo Finance Group, Inc. 611,824 62,000 Mitsui Fudosan Co. Ltd. 614,656 44,000 Nikko Securities Co. Ltd. 373,892 1,400 Nintendo Co. Ltd. 225,468 165,000 Nippon Steel Corp. 304,455 32,000 Nomura Securities Co. Ltd. 675,920 18 NTT Docomo, Inc. 370,008 9,100 Otsuka Kagu Ltd. 655,444 16,000 Pioneer Corp. 477,805 33,000 Sekisui House Ltd. 283,891 9,500 Sony Corp. 710,395 9,400 Tokyo Electron Ltd. 684,660 ------------ Total Japan 8,324,160 ------------ NETHERLANDS: 3.52% 10,400 @ ASM Lithography Holding NV $ 274,977 21,290 Royal Dutch Petroleum Co. 1,273,156 16,380 TNT Post Group NV 385,855 ------------ Total Netherlands 1,933,988 ------------ NEW ZEALAND: 0.41% 232,000 Fletcher Building Ltd. 225,277 ------------ Total New Zealand 225,277 ------------ SPAIN: 3.52% 17,750 Banco Popular Espanol 633,727 29,300 @ Sogecable SA 660,309 37,927 Telefonica SA 642,056 ------------ Total Spain 1,936,092 ------------ SWEDEN: 2.27% 39,500 Europolitan Holdings AB 308,112 23,180 Foreningssparbanken 274,607 83,922 Swedish Match AB 367,404 46,000 Telefonaktiebolaget LM Ericsson 296,022 ------------ Total Sweden 1,246,145 ------------ SWITZERLAND: 8.14% 245 Nestle SA 507,272 470 @ Novartis 730,392 179 @ Roche Holding AG 1,285,610 174 Swiss Re 342,514 7,176 UBS AG 1,092,005 1,443 Zurich Financial Services AG 513,203 ------------ Total Switzerland 4,470,996 ------------ THAILAND: 0.18% 32,800 @ Siam City Cement 99,154 ------------ Total Thailand 99,154 ------------ See Accompanying Notes to Financial Statements 84 Pilgrim International Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) (Continued) -------------------------------------------------------------------------------- Shares Value ------ ----- UNITED KINGDOM: 19.93% 35,000 Barclays PLC $ 1,126,519 87,100 BP PLC 781,221 42,900 @ British SKY Broadcasting PLC 536,974 29,135 Cable & Wireless PLC 214,015 75,983 Cadbury Schweppes PLC 468,470 57,600 Capita Group PLC 407,452 206,400 Corus Group PLC 211,108 48,778 Diageo PLC 512,861 86,000 Enterprise Oil PLC 744,289 48,650 GlaxoSmithKline PLC 1,285,398 64,200 Marconi PLC 376,076 45,000 Matalan PLC 267,790 27,600 Pizzaexpress PLC 327,861 15,500 Provident Financial PLC 178,491 19,900 Reckitt Benckiser PLC 271,432 77,000 Reed Intl. PLC 763,329 14,680 Rio Tinto PLC 297,356 29,125 Royal Bank of Scotland Group PLC 674,529 127,900 Tesco PLC 457,403 345,972 Vodafone Group PLC 1,050,453 ------------ Total United Kingdom 10,953,027 ------------ UNITED STATES: 1.06% 6,000 @ Mercury Interactive Corp. 396,900 2,800 Schlumberger Ltd. 185,640 ------------ Total United States 582,540 ------------ Total Common Stock (Cost $48,269,802) 46,476,379 ------------ PREFERRED STOCK: 1.86% GERMANY: 1.86% 8,656 Henkel KGaA 545,283 14,300 Prosieben SAT.1 Media AG 254,388 3,930 Rhoen Klinikum AG 220,372 ------------ Total Germany 1,020,043 ------------ Total Preferred Stock (Cost $1,003,201) 1,020,043 ------------ MUTUAL FUNDS: 8.35% UNITED STATES: 8.35% 134,200 iShares, Inc. (MSCI Germany Index Fund) $ 2,369,972 150,800 iShares, Inc. (MSCI Japan Index Fund) 1,691,976 31,500 iShares, Inc. (MSCI United Kingdom Index Fund) 524,475 ------------ Total Mutual Funds (Cost $4,471,356) 4,586,423 ------------ Total Long-Term Investments (Cost $53,744,359) 52,082,845 ------------ Principal Amount Value ------ ----- SHORT-TERM INVESTMENTS: 4.91% Government Obligations: 4.91% $2,700,000 Federal National Mortgage Association, 4.500%, due 05/01/01 $ 2,700,000 ------------ Total Short-Term Investments (Cost $2,700,000) 2,700,000 ------------ Total Investments in Securities (Cost $ 56,444,359)* 99.69% $ 54,782,845 Other Assets and Liabilities-Net 0.31% 172,976 ------ ------------ Net Assets 100.00% $ 54,955,821 ====== ============ @ Non-income producing security ADR American Depostiory Receipt GDR Global Depository Receipt * Cost for federal income tax purposes is the same as for financial statement purposes. Net unrealized depreciation consists of: Gross Unrealized Appreciation $ 2,057,373 Gross Unrealized Depreciation (3,718,887) ------------ Net Unrealized Depreciation $ (1,661,514) ============ See Accompanying Notes to Financial Statements 85 Pilgrim International Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) (Continued) -------------------------------------------------------------------------------- Percentage of Industry Net Assets -------- ---------- Agriculture 0.67% Airlines 0.75% Auto Parts&Equipment 0.75% Banks 11.62% Beverages 0.93% Building Materials 0.59% Commercial Services 1.31% Diversified Finan Services 4.13% Electronics 0.06% Equity Fund 8.34% Food 3.80% Healthcare 0.76% Holding Companies -- Divers 1.08% Home Builders 0.52% Home Furnishings 3.75% Household Products/Wares 1.49% Insurance 6.94% Internet 0.32% Iron/Steel 0.94% Media 5.83% Mining 1.57% Miscellaneous Manufacturing 0.50% Office/Business Equip 0.36% Oil&Gas Services 7.30% Pharmaceuticals 8.83% Real Estate 1.12% Retail 2.77% Semiconductors 1.74% Software 1.75% Telecommunications 11.98% Toys/Games/Hobbies 0.41% Transportation 1.48% Venture Capital 0.39% Short-Term Investments 4.91% Other Assets and Liabilities, Net 0.31% ------ Net Assets 100.00% ====== See Accompanying Notes to Financial Statements 86 Pilgrim International Core Growth Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) -------------------------------------------------------------------------------- Shares Value ------ ----- COMMON STOCK: 85.11% BELGIUM: 0.90% 20,500 Fortis B $ 527,470 ----------- Total Belgium 527,470 ----------- BRAZIL: 1.82% 44,600 Tele Norte Leste Participacoes SA ADR 779,608 12,200 Unibanco Uniao De Bancos Brasileiros GDR 293,410 ----------- Total Brazil 1,073,018 ----------- CANADA: 4.15% 19,500 Alberta Energy Ltd. 959,088 23,700 @ Anderson Exploration Ltd. 540,039 19,300 Nortel Networks Corp. 295,290 64,600 Placer Dome, Inc. 653,752 ----------- Total Canada 2,448,169 ----------- DENMARK: 0.91% 14,100 Novo-Nordisk A/S 536,275 ----------- Total Denmark 536,275 ----------- FINLAND: 0.98% 52,400 Sonera OYJ 579,754 ----------- Total Finland 579,754 ----------- FRANCE: 11.63% 12,400 Aventis SA 960,466 5,000 @ AXA 590,021 9,500 France Telecom 691,168 41,600 @ Infogrames Entertainment 867,007 61,200 @ Orange SA 645,080 12,230 Sodexho Alliance 602,234 5,374 Total Fina Elf SA 801,038 8,000 Valeo SA 369,096 19,254 Vivendi Universal 1,333,337 ----------- Total France 6,859,447 ----------- GERMANY: 5.36% 4,500 Allianz AG 1,295,607 15,850 Deutsche Bank AG 1,293,788 2,000 Munchener Ruckvers 570,289 ----------- Total Germany 3,159,684 ----------- HONG KONG: 4.62% 25,600 @ China Mobile Hong Kong Ltd. ADR $ 648,192 492,000 Hong King Exchanges and Clearing Ltd. 883,190 56,000 Hutchison Whampoa 601,359 2,770,000 Petrochina Co. 593,140 ----------- Total Hong Kong 2,725,881 ----------- IRELAND: 2.14% 11,400 @ Elan PLC ADR 571,710 65,805 @ RyanAir Holdings PLC 690,116 ----------- Total Ireland 1,261,826 ----------- ISRAEL: 1.74% 3,600 @ Check Point Software 225,828 14,700 Teva Pharmaceutical Industries Ltd. ADR 800,415 ----------- Total Israel 1,026,243 ----------- ITALY: 3.03% 37,200 Assic Generali 1,201,408 155,900 BCA Intesa S.p.A 585,103 ----------- Total Italy 1,786,511 ----------- JAPAN: 14.78% 56,000 Aiwa Co. 437,341 24,000 Dai Nippon Printing 326,112 8,800 Hoya Corp. 576,862 21,000 Marui Co. 283,648 34,000 Matsushita Electric Industries 566,827 68 @ Mitsubishi Tokyo Finance 693,400 48,000 Mitsui Fudoson Co. 475,863 170,000 Nippon Steel Corp. 313,681 70,000 Nomura Securities 1,478,574 23 NTT Docomo, Inc. 472,788 5,100 Otsuka Kagu Ltd. 367,337 28,000 Pioneer Corp. 836,159 35,000 Sekisui House 301,097 9,300 Sony Corp. 695,440 2,700 Sony Corp. ADR 206,955 9,400 Tokyo Electron Ltd. 684,660 ----------- Total Japan 8,716,744 ----------- NETHERLANDS: 2.46% 12,394 @ ASM Lithography Holding NV $ 327,698 18,800 Royal Dutch Petroleum Co. 1,124,252 ----------- Total Netherlands 1,451,950 ----------- SPAIN: 2.96% 47,900 @ Sogecable 1,079,482 39,200 Telefonica SA 663,606 ----------- Total Spain 1,743,088 ----------- SWEDEN: 2.01% 43,900 Europolitan Holdings AB 342,434 91,800 Swedish Match AB 401,893 68,100 Telefonaktiebolaget LM Ericsson ADR 437,883 ----------- Total Sweden 1,182,210 ----------- SWITZERLAND: 7.56% 270 Nestle SA 559,034 537 @ Novartis AG 834,511 167 @ Roche Holdings AG 1,199,424 8,600 UBS AG 1,308,701 1,560 Zurich Financial Services AG 554,815 ----------- Total Switzerland 4,456,485 ----------- THAILAND: 0.56% 109,000 Siam City Cement 329,507 ----------- Total Thailand 329,507 ----------- See Accompanying Notes to Financial Statements 87 Pilgrim International Core Growth Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) (Continued) -------------------------------------------------------------------------------- Shares Value ------ ----- UNITED KINGDOM: 16.37% 56,500 BAA PLC $ 496,255 17,900 Barclays PLC 576,134 45,100 British SKY Broadcasting PLC 564,511 34,200 Cable & Wireless PLC 251,220 78,579 Cadbury Schweppes PLC 484,476 88,100 Capita Group PLC 623,204 571,800 Corus Group PLC 584,842 50,447 Diageo PLC 530,409 67,000 @ Energis PLC 348,871 36,100 Enterprise Oil PLC 312,428 43,200 Macaroni PLC 253,061 29,600 Pizzaexpress PLC 351,619 41,300 Provident Financial PLC 475,591 20,800 Reckitt & Benckiser PLC 283,708 113,100 Reed Intl. PLC 1,121,202 20,700 Rio Tinto PLC 419,297 38,799 Royal Bank of Scotland Group PLC 898,577 355,050 Vodaphone Group PLC 1,078,016 ----------- Total United Kingdom 9,653,421 ----------- UNITED STATES: 1.13% 10,100 @ Mercury Interactive Corp. 668,115 ----------- Total United States 668,115 ----------- Total Common Stock (Cost $50,648,544) 50,185,798 ----------- PREFERRED STOCK: 2.47% GERMANY: 2.47% 9,361 Henkel KGAA $ 589,694 15,000 Prosieben SAT.1 Media AG 266,840 10,700 Rhoen Klinikum AG 599,994 ----------- Total Germany 1,456,528 ----------- Total Preferred Stock (Cost $1,490,030) 1,456,528 ----------- MUTUAL FUNDS: 8.17% UNITED STATES: 8.17% 37,500 iShares, Inc. (MSCI France Index Fund) 832,500 88,100 iShares, Inc. (MSCI Germany Index Fund) 1,555,846 177,500 iShares, Inc. (MSCI Japan Index Fund) 1,991,550 26,200 iShares, Inc. (MSCI United Kingdom Index Fund) 436,230 ----------- Total United States 4,816,126 ----------- Total Mutual Funds (Cost $4,764,034) 4,816,126 ----------- Total Long-Term Investments (Cost $56,902,608) 56,458,452 ----------- Principal Amount Value ------ ----- SHORT-TERM INVESTMENTS: 4.92% Government Obligations: 4.92% $2,900,000 Federal National Mortgage Association, 4.500%, due 05/01/01 $ 2,900,000 ----------- Total Short-Term Investments (Cost $2,900,000) 2,900,000 ----------- Total Investments in Securities (Cost $ 59,802,608)* 100.67% $59,358,452 Other Assets and Liabilities-Net -0.67% (397,787) ------ ------------ Net Assets 100.00% $58,960,665 ====== =========== @ Non-income producing security ADR American Depostiory Receipt GDR Global Depository Receipt * Cost for federal income tax purposes is the same as for financial statement purposes. Net unrealized depreciation consists of: Gross Unrealized Appreciation $ 3,334,017 Gross Unrealized Depreciation (3,778,173) ----------- Net Unrealized Depreciation $ (444,156) =========== See Accompanying Notes to Financial Statements 88 Pilgrim International Core Growth Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) (Continued) -------------------------------------------------------------------------------- Percentage of Industry Net Assets -------- ---------- Consumer Discretionary 15.29% Consumer Staples 3.83% Energy 7.35% Equity Fund 8.17% Financials 24.25% Health Care 8.32% Industrials 5.26% Information Technology 7.36% Materials 4.90% Telecommunications Services 11.02% Short-Term Investments 4.92% Other Assets and Liabilities, Net -0.67% ------ Net Assets 100.00% ====== See Accompanying Notes to Financial Statements 89 Pilgrim International SmallCap Growth Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) -------------------------------------------------------------------------------- Shares Value ------ ----- COMMON STOCK: 95.04% AUSTRALIA: 0.42% 507,700 @ Resmed, Inc. $ 2,297,358 ------------ Total Australia 2,297,358 ------------ CANADA: 10.50% 219,900 @ Anderson Exploration Ltd. 5,010,742 254,100 CAE, Inc. 4,160,557 232,300 @ Canadian Hunter Exploration Ltd. 6,730,046 154,900 @ C-Mac Industries, Inc. 5,003,270 127,500 Cominco Ltd. 2,861,826 166,100 @ Global Thermoelectric, Inc. 2,162,760 255,000 Industrial-Alliance Life Insurance Co. 5,926,758 78,100 @ Penn West Petroleum Ltd. 2,148,258 289,200 Petro-Canada 8,001,953 190,600 @ Precision Drilling Corp. 8,060,474 294,900 @ Tesco Corp. 3,455,859 197,100 TransAlta Corp. 3,554,473 18,400 @ Westjet Airlines Ltd. 245,573 ------------ Total Canada 57,322,549 ------------ DENMARK: 4.23% 107,400 Carlsberg A/S 4,825,188 113,300 @ ISS A/S 6,598,483 112,300 NEG Micon A/S 4,564,824 152,300 Vestas Wind Systems A/S 7,113,946 ------------ Total Denmark 23,102,441 ------------ FINLAND: 2.90% 494,900 M-real OYJ 3,710,395 301,600 Perlos OYJ 3,920,261 570,000 Sampo OYJ 5,967,644 200,000 Stora Enso OYJ 2,260,370 ------------ Total Finland 15,858,670 ------------ FRANCE: 10.86% 274,800 Air France $ 5,046,998 110,800 Altran Technologies SA 7,176,433 68,300 Bouygues Offshore 3,417,794 95,600 CNP Assurances 3,083,247 37,092 Coflexip Stena Offshore 5,463,040 31,300 Compagnie Francaise d'Etudes et de Construction Technip SA 4,873,798 19,900 Galeries Lafayette 3,358,224 265,700 @ Infogrames Entertainment 5,537,587 140,800 Pechiney SA 7,408,041 75,600 Rexel SA 5,540,486 13,000 Union du Credit-Bail Immobilier 2,064,631 320,000 Usinor SA 4,182,142 38,600 Vinci 2,260,358 ------------ Total France 59,412,779 ------------ GERMANY: 5.07% 27,600 Altana AG 3,305,894 44,800 AMB Aachener & Muenchener Beteiligungs AG 5,147,470 40,000 @ Babcock Borsig AG 1,518,972 43,200 Depfa Deutsche Pfandbriefbank AG 2,874,690 44,200 Hannover Rueckversicherungs AG 3,105,159 90,000 Hochtief AG 2,096,128 60,400 @ Lion Bioscience AG 1,795,262 92,400 Merck Kgaa 3,230,087 140,000 @ Schneider Technologies AG 2,856,945 60,000 Tecis Holding AG 1,762,611 ------------ Total Germany 27,693,218 ------------ HONG KONG: 0.58% 1,628,000 Hang Lung Development Co. 1,409,027 1,414,000 New World Development 1,749,596 ------------ Total Hong Kong 3,158,623 ------------ IRELAND: 2.85% 1,915,200 Anglo Irish Bank Corp. 6,304,259 99,100 @ Iona Technologies PLC ADR 4,261,300 465,200 Irish Life & Permanent PLC 5,010,981 ------------ Total Ireland 15,576,540 ------------ ITALY: 3.36% 409,500 Autogrill S.p.A. $ 4,614,277 3,647,500 @ Parmalat Finanziaria S.p.A. 5,177,991 1,302,700 Saipem S.p.A. 8,553,073 ------------ Total Italy 18,345,341 ------------ JAPAN: 15.16% 1,017,000 @ All Nippon Airways Co. Ltd. 4,090,551 1,016,000 Citizen Watch Co. Ltd. 7,293,263 103,000 Credit Saison Co. Ltd. 2,179,784 333,000 Daiichi Pharmaceutical Co. Ltd. 7,249,383 32,000 Fancl Corp. 1,838,708 405,000 Fujikura Ltd. 3,195,686 199,000 Isetan Co. Ltd. 2,013,110 650,000 Japan Energy Corp. 1,388,743 1,459,000 Kajima Corp. 5,030,017 3,380,000 Kawasaki Steel Corp. 4,212,520 1,018,000 Keio Electric Railway Co. Ltd. 5,272,690 666,000 Komatsu Ltd. 3,772,913 423,000 Konica Corp. 2,896,111 2,110,000 Mazda Motor Corp. 5,703,395 103,500 Meitec Corp. 3,769,271 38,300 Nippon System Development Co. Ltd. 2,231,700 90,800 Nitto Denko Corp. 2,961,389 105,000 Ono Pharmaceutical Co. Ltd. 3,764,415 83,000 Skylark Co. Ltd. 2,565,937 626,000 Sumitomo Realty & Development 3,439,921 74,000 Taiyo Yuden Co. Ltd. 2,066,119 568,000 Tokyu Corp. 3,263,707 87,400 World Co. Ltd. 2,496,840 ------------ Total Japan 82,696,173 ------------ LUXEMBOURG: 0.21% 262,700 @ Gemplus 1,137,433 ------------ Total Luxembourg 1,137,433 ------------ NETHERLANDS: 2.23% 85,500 Fugro NV 5,423,981 62,100 IHC Caland NV 2,865,108 20,100 @ Moolen Holding (van Der) 1,817,257 342,700 @ United Pan-Europe Communications NV 2,128,424 ------------ Total Netherlands 12,234,770 ------------ See Accompanying Notes to Financial Statements 90 Pilgrim International SmallCap Growth Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) (Continued) -------------------------------------------------------------------------------- Shares Value ------ ----- NORWAY: 5.47% 208,500 Frontline Ltd. $ 4,124,402 172,100 Gjensidige NOR Sparebank 4,747,195 812,100 Smedvig A/S 7,719,836 523,300 Storebrand 3,364,256 282,400 @ TGS Nopec Geophysical Co. ASA 4,748,305 325,200 Tomra Systems ASA 5,146,305 ------------ Total Norway 29,850,299 ------------ SPAIN: 4.16% 115,700 Acciona SA 4,095,928 66,700 Acerinox SA 1,964,762 225,500 Corporacion Mapfre Compania Internacional DE Reaseguros 4,463,671 176,400 @ Grupo Auxiliar Metalurgico (GAMESA) 4,147,539 340,000 Grupo Dragados SA 4,202,194 169,100 @ Sogecable SA 3,810,863 ------------ Total Spain 22,684,957 ------------ SWEDEN: 3.12% 111,500 JM AB 2,489,616 228,300 Svenska Cellulosa AB 4,919,491 1,319,500 Swedish Match AB 5,776,672 1,021,600 @ Tele1 Europe Holding AB 3,844,945 ------------ Total Sweden 17,030,724 ------------ SWITZERLAND: 4.55% 11,250 @ Actelion Ltd. 1,387,728 55,000 Ascom Holding AG 3,170,303 3,900 @ Kudelski SA 3,709,254 13,780 @ Logitech Intl. SA 4,209,816 5,400 SEZ Holding AG 3,392,801 10,020 Synthes-Stratec, Inc. 5,972,090 3,218 @ Tecan Group AG 3,069,885 ------------ Total Switzerland 24,911,877 ------------ UNITED KINGDOM: 18.64% 651,500 Amey PLC $ 3,748,387 809,700 @ ARM Holdings PLC 4,447,781 663,400 BBA Group PLC 2,723,613 233,500 Berkeley Group PLC 2,640,777 1,244,000 British Energy PLC 5,463,196 110,600 @ Cambridge Antibody Technology Group PLC 3,006,054 1,183,100 Capita Group PLC 8,369,043 206,100 @ Celltech Group PLC 3,567,397 935,900 @ Eidos PLC 3,909,312 730,900 Enterprise Oil PLC 6,325,595 1,547,000 FKI PLC 5,167,319 1,440,700 @ International Power PLC 6,198,223 240,000 Johnson Matthey PLC 3,330,205 5,231,100 Kidde PLC 4,864,009 2,038,400 MFI Furniture PLC 3,231,728 194,200 @ Oxford Glycosciences PLC 2,833,593 630,600 Pace Micro Technology PLC 4,952,384 430,200 Persimmon PLC 2,226,584 493,400 @ Regus PLC 2,053,904 1,723,200 Rolls-Royce PLC 5,250,531 1,128,200 Safeway PLC 5,196,728 762,075 Spirent PLC 4,491,413 158,900 @ Stolt Offshore SA ADR 2,235,723 854,600 Taylor Woodrow PLC 2,481,687 481,100 Wolseley PLC 3,076,316 ------------ Total United Kingdom 101,791,502 ------------ UNITED STATES: 0.73% 62,400 Everest Re Group Ltd. 3,984,240 ------------ Total United States 3,984,240 ------------ Total Common Stock (Cost $511,629,035) 519,089,494 PREFERRED STOCK: 2.29% GERMANY: 2.29% 101,500 Henkel KGaA 6,393,967 18,700 @ Porsche AG 6,105,700 ------------ Total Germany 12,499,667 ------------ Total Preferred Stock (Cost $ 12,594,173) 12,499,667 ------------ Value ----- Total Long-Term Investments (Cost $524,223,208) $531,589,161 ------------ Total Investments in Securities (Cost $ 524,223,208)* 97.33% $531,589,161 Other Assets and Liabilities-Net 2.67% 14,560,928 ------ ------------ Net Assets 100.00% $546,150,089 ====== ============ @ Non-income producing security ADR American Depostiory Receipt * Cost for federal income tax purposes is the same as for financial statement purposes. Net unrealized appreciation consists of: Gross Unrealized Appreciation $ 53,098,441 Gross Unrealized Depreciation (45,732,488) ------------ Net Unrealized Appreciation $ 7,365,953 ============ See Accompanying Notes to Financial Statements 91 Pilgrim International SmallCap Growth Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) (Continued) -------------------------------------------------------------------------------- Percentage of Industry Net Assets -------- ---------- Aerospace/Defense 1.72% Agriculture 1.06% Airlines 1.72% Apparel 0.46% Auto Manufacturers 2.16% Banks 2.55% Beverages 0.88% Biotechnology 1.07% Chemicals 0.54% Commercial Services 4.84% Computers 1.67% Cosmetics/Personal Care 0.34% Diversified Finan Services 3.06% Electric 2.79% Electrical Components & Equipment 3.63% Electronics 2.92% Energy-Alternate Sources 0.76% Engineering & Construction 7.94% Environmental Control 0.94% Food 1.90% Forest Products & Paper 1.99% Healthcare-Products 2.08% Home Builders 0.89% Home Furnishings 1.11% Household Products/Wares 1.17% Insurance 5.32% Iron/Steel 1.90% Machinery-Construction & Mining 0.69% Machinery-Diversified 0.40% Media 0.70% Metal Fabricate/Hardware 1.36% Mining 0.52% Miscellaneous Manufacturing 1.97% Oil&Gas 6.90% Oil&Gas Services 6.52% Pharmaceuticals 4.12% Real Estate 1.64% Retail 4.20% Semiconductors 2.15% Software 3.25% Telecommunications 3.18% Transportation 2.32% Other Assets and Liabilities - Net 2.67% ------ NET ASSETS 100.00% ====== See Accompanying Notes to Financial Statements 92 Pilgrim Emerging Countries Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) -------------------------------------------------------------------------------- Shares Value ------ ----- COMMON STOCK: 93.29% ARGENTINA: 1.01% 183,370 Grupo Financiero Galicia SA $ 273,324 43,065 Grupo Financiero Galicia SA ADR 643,822 98,900 @ Impsat Fiber Networks, Inc. 286,810 25,000 Massalin Particulares 188,821 20,000 Perez Companc SA ADR 306,000 16,330 Telecom Argentina SA ADR 257,198 ------------ Total Argentina 1,955,975 ------------ BELGIUM: 1.19% 90,900 Fortis (B) 2,338,880 ------------ Total Belgium 2,338,880 ------------ BRAZIL: 10.67% 2,200 Aracruz Celulose SA ADR $ 31,240 44,920 Brasil Telecom Participacoes SA ADR 1,928,865 4,200 Centrais Eletric DE STA CAT ADR 94,272 30,530 Centrais Eletricas Brasileiras SA ADR 259,423 17,680 Centrais Geradoras do Sul do Brasil SA ADR 141,728 11,190 Cia Energetica de Minas Gerais ADR 129,582 174,340 Cia Paranaense de Energia ADR 1,351,135 34,000 Cia Siderurgica Nacional ADR 799,000 31,460 Companhia Brasileira de Distribuicao Grupo Pao de Acucar ADR 895,037 70,540 Companhia de Bebidas das Americas ADR 1,721,176 3,300 Copene-Petroquimica do Nordeste SA ADR 43,837 2,000 CVRD-Companhia Vale do Rio Doce ADR 46,400 116,350 Embratel Participacoes SA ADR 1,055,295 30,660 Empresa Bras de Aeronautica ADR 1,373,875 155,500 Petroleo Brasileiro SA ADR 4,198,500 11,230 Petroleo Brasileiro SA ADR 272,643 11,780 Tele Celular Sul Participacoes SA ADR 229,710 3,600 Tele Centro Oeste Celular Participacoes SA ADR 30,240 127,109 Tele Norte Leste Participacoes SA ADR 2,221,863 16,985 Telemig Celular Participacoes SA ADR 645,430 34,840 Telesp Celular Participacoes SA ADR 585,312 82,410 Unibanco - Uniao de Bancos Brasileiros GDR 1,981,961 36,300 Usinas Sider de Minas Gerais-Old ADR 143,004 56,600 Votorantim Celulose e Papel SA ADR 786,740 ------------ Total Brazil 20,966,268 ------------ CHILE: 0.37% 10,900 A.F.P. Provida SA ADR $ 256,150 1,500 @ Compania Telecomunicaciones de Chile SA ADR 21,420 1,500 Distribucion Y Servicio D&S ADR 21,750 1,500 Embotelladora Andina SA ADR 20,025 14,000 Empresa Nacional de Electricidad SA ADR 156,100 35,200 Quinenco SA ADR 242,880 500 Vina Concha Y Toro ADR 20,600 ------------ Total Chile 738,925 ------------ CHINA: 3.12% 5,700,000 Beijing Capital Intl. Airport 1,403,257 719,000 Beijing Datang Power Generation Co. Ltd. 239,697 14,480,000 China Petroleum & Chemical Corp. 2,580,741 472,000 Guangdong Kelon Electric 113,779 2,500,000 Guangshen Railway Co. 387,870 532,100 Huaneng Power Intl., Inc. 307,020 1,508,000 PetroChina Co. Ltd. 322,908 1,426,000 Sinopec Beijing Yanhua Petrochemical Co. Ltd. 197,471 25,630 Sinopec Beijing Yanhua Petrochemical Co. Ltd. ADR 176,847 1,000,000 Yanzhou Coal Mining Co. Ltd. 410,309 ------------ Total China 6,139,899 ------------ EGYPT: 0.68% 85,000 @ Mobinil-Eqyptian Mobile Netork 1,333,505 ------------ Total Egypt 1,333,505 ------------ ESTONIA: 0.05% 8,400 Eesti Telekom GDR 106,680 ------------ Total Estonia 106,680 ------------ FRANCE: 1.01% 13,400 TotalFinaElf SA 1,997,377 ------------ Total France 1,997,377 ------------ GERMANY: 1.40% 9,600 Allianz AG 2,763,961 ------------ Total Germany 2,763,961 ------------ See Accompanying Notes to Financial Statements 93 Pilgrim Emerging Countries Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) (Continued) -------------------------------------------------------------------------------- Shares Value ------ ----- GREECE: 0.23% 1,200 Alpha Bank SA $ 34,432 1,700 Coca Cola Hellenic Bottling Co. SA 25,551 3,500 @ Cosmote Mobile Communications SA 30,495 13,900 Hellenic Telecommunications Organization SA 207,191 14,100 Hellenic Telecommunications Organization SA ADR 102,930 1,000 National Bank Of Greece SA 38,950 ------------ Total Greece 439,549 ------------ HONG KONG: 2.86% 110,000 Brilliance China Automotive 29,619 1,050,900 @ China Mobile Hong Kong Ltd. 5,174,325 108,900 Dairy Farm Intl. Holdings 56,628 45,900 Dairy Farm Intl. Holdings, ADR 119,340 400,679 First Pacific Co. 91,962 28,276 @ Jardine Matheson Holdings Ltd. 164,001 ------------ Total Hong Kong 5,635,875 ------------ HUNGARY: 2.18% 118,400 Matav Rt. ADR 1,977,280 4,300 Mol Magyar Olaj- es Gazipari Rt. GDR 68,800 500 @ OTP Bank Rt. ADR 23,940 47,000 OTP Bank Rt. GDR 2,250,360 ------------ Total Hungary 4,320,380 ------------ INDIA: 4.01% 63,000 @ DR. Reddy's Laboratories ADR $ 759,150 1,200 DR. Reddy's Laboratories GDR 28,738 93,700 HCL Technologies Ltd. 754,542 170,000 @ Hindustan Lever Ltd. 764,973 12,400 @ Infosys Technologies Ltd. 986,970 1,900 ITC Ltd. GDR 37,525 1,200 Larsen & Toubro Ltd. ADR 11,270 330,000 @ Mahanagar Telephone Nigam 1,059,016 188,000 Reliance Industries Ltd. 1,376,834 75,000 @ Satyam Computer Services 346,296 7,800 @ SSI Ltd. GDR 10,725 120,000 @ Videsh Sanchar Nigam Ltd. 812,085 15,375 Videsh Sanchar Nigam Ltd. ADR 207,563 20,800 Wipro Ltd. ADR 716,560 ------------ Total India 7,872,247 ------------ INDONESIA: 0.09% 22,000 Gudang Garam Tbk PT 21,716 18,000 Indosat Tbk PT ADR 125,820 91,000 Ramayana Lestari Sentosa Tbk PT 20,593 53,500 Telekomunikasi Tbk PT 11,069 ------------ Total Indonesia 179,198 ------------ ISRAEL: 2.94% 678,800 Bank Hapoalim Ltd. 1,703,159 97,700 Bank Leumi Le-Israel 205,896 325,200 Bezeq 460,300 8,640 ECI Telecom Ltd. 58,925 15,610 Koor Industries Ltd. ADR 126,753 20,700 @ Orbotech Ltd. 712,908 46,900 Teva Pharmaceutical Industries ADR 2,553,705 ------------ Total Israel 5,821,646 ------------ ITALY: 0.37% 56,800 Mediolanum S.p.A. $ 731,243 ------------ Total Italy 731,243 ------------ JAPAN: 2.48% 124,000 Nomura Securities Co. Ltd. 2,619,188 30,200 Sony Corp. 2,258,309 ------------ Total Japan 4,877,497 ------------ LUXEMBOURG: 0.12% 24,960 Quilmes Industrial SA ADR 233,126 ------------ Total Luxembourg 233,126 ------------ MALAYSIA: 2.94% 5,000 British American Tobacco (Malaysia) Bhd 45,724 666,666 MAA Holdings Bhd 733,333 600,000 Malayan Banking Berhad 1,547,368 225,000 Nestle (Malaysia) Berhad 1,184,211 34,000 Tanjong PLC 55,474 700,000 Tenaga Nasional Berhad 1,786,842 600,000 United Engineers (Malaysia) 445,263 ------------ Total Malaysia 5,798,215 ------------ See Accompanying Notes to Financial Statements 94 Pilgrim Emerging Countries Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) (Continued) -------------------------------------------------------------------------------- Shares Value ------ ----- MEXICO: 13.59% 132,660 America Movil SA de C.V. ADR $ 2,440,944 461,000 @ Carso Global Telecom SA 933,450 102,500 Cemex SA 471,544 35,035 Cemex SA ADR 811,761 60,650 Coca-Cola Femsa SA ADR 1,182,675 164,000 @ Corp Interamericana de Entretenimiento SA 575,417 39,850 Fomento Economico Mexicano SA ADR 1,522,270 14,300 @ Grupo Carso SA 35,518 115,830 Grupo Elektra SA GDR 1,065,636 2,300,800 Grupo Financiero Banamex Accival SA 4,308,410 900,000 @ Grupo Financiero BBVA Bancomer 721,166 14,470 Grupo Financiero Inbursa SA ADR 239,367 103,860 @ Grupo Iusacell SA de C.V. ADR 846,459 18,900 Grupo Modelo SA 51,842 42,600 @ Grupo Televisa SA ADR 1,620,078 13,950 Panamerican Beverages, Inc. 252,635 139,660 Telefonos de Mexico SA ADR 4,832,236 61,030 Tubos de Acero de Mexico SA ADR 818,412 155,735 TV Azteca SA de C.V. ADR 1,178,914 1,199,400 Walmart de Mexico/Mexico City 2,888,404 ------------ Total Mexico 26,797,138 ------------ PANAMA: 0.12% 7,300 Banco Latinoamericano de Exportaciones 240,900 ------------ Total Panama 240,900 ------------ PHILIPPINES: 0.11% 10,000 Philippine Long Distance Telephone ADR 133,000 3,993,595 @ RFM Corp. 76,142 ------------ Total Philippines 209,142 ------------ POLAND: 2.42% 183,000 Bank Pekao SA GDR $ 3,111,000 29,300 Polski Koncern Naftowy Orlen 137,534 7,100 Telekomunikacja Polska SA ADR 37,985 275,000 Telekomunikacja Polska SA GDR 1,471,250 ------------ Total Poland 4,757,769 ------------ RUSSIA: 4.15% 54,800 Lukoil-Holding ADR 2,268,172 74,800 @ Mobile Telesystems ADR 2,146,760 20,360 OAO Gazprom ADR 144,963 193,200 Surgutneftegaz ADR 2,179,296 135,500 @ Unified Energy System GDR 1,456,625 ------------ Total Russia 8,195,816 ------------ SINGAPORE: 0.11% 25,416 DBS Group Holdings Ltd. 221,919 ------------ Total Singapore 221,919 ------------ SOUTH AFRICA: 5.28% 406,400 ABSA Group Ltd. 1,778,949 1,600 Anglo American Platinum Corp. 71,731 5,300 De Beers Consolidated Mines Ltd./De Beers Centenary AG GDR 222,296 24,900 FirstRand Ltd. 25,520 41,100 Impala Platinum Holdings Ltd. 1,970,548 96,800 Iscor Ltd. 294,137 2,649,000 @ Metropolis Transactive Holdings Ltd. 26,391 65,700 Nedcor Ltd. 1,202,727 3,860,000 @ Paradigm Capital Holdings Ltd. 16,824 870,000 Pick'n Pay Stores Ltd. 1,143,026 1,200,000 Sanlam Ltd. 1,442,092 211,600 Sappi Ltd. 1,931,542 23,800 Sasol Ltd. 213,400 2,085,100 @ Union Alliance Media Ltd. 72,706 ------------ Total South Africa 10,411,889 ------------ SOUTH KOREA: 11.45% 68,000 H&CB $ 1,293,394 100,000 Hyundai Motor Co. 1,564,161 111,000 Kookmin Bank 1,314,806 31,980 Korea Electric Power Corp. ADR 301,571 30,300 Korea Telecom ADR 837,189 31,395 LG Electronics 333,736 290,000 LG Engineering & Construction Ltd. 1,508,352 32,000 Pohang Iron & Steel Co. 2,381,169 3,320 Pohang Iron & Steel Co. ADR 66,433 59,000 Samsung Electro-Mechanics 1,865,869 20,000 Samsung Electronics 3,477,601 68,000 @ Samsung Securities Co. Ltd. 1,786,484 52,250 Shinsegae Co. Ltd. 3,154,043 15,730 SK Telecom 2,705,274 ------------ Total South Korea 22,590,082 ------------ SWEDEN: 0.61% 187,000 Telefonaktiebolaget LM Ericsson 1,203,393 ------------ Total Sweden 1,203,393 ------------ SWITZERLAND: 2.49% 1,959 @ Novartis 3,044,335 262 @ Roche Holding AG 1,881,730 ------------ Total Switzerland 4,926,065 ------------ TAIWAN: 4.59% 221,060 Asustek Computer, Inc. GDR 1,014,665 13,872 China Steel Corp. ADR 159,251 982 @ Cosmo Electronics Corp. 1,021 38,010 HON HAI Precision Industry GDR 516,937 7,600 Synnex Technology Intl. Corp. GDR 65,740 155,183 @ Taiwan Semiconductor Manufacturing Co. Ltd. ADR 3,761,636 206,900 @ United Microelectronics ADR 2,273,831 35,000 @ Via Technologies, Inc. 329,883 754,000 Winbond Electronics Corp. 884,901 5,275 @ Winbond Electronics Corp. GDR 62,773 ------------ Total Taiwan 9,070,638 ------------ See Accompanying Notes to Financial Statements 95 Pilgrim Emerging Countries Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) (Continued) -------------------------------------------------------------------------------- Shares Value ------ ----- THAILAND: 1.08% 50,500 Advanced Info Service Public Co. Ltd. $ 511,084 9,300 BEC World PLC 46,449 3,107,000 @ Thai Farmers Bank 1,582,426 ------------ Total Thailand 2,139,959 ------------ TURKEY: 4.54% 90,000,000 Aksigorta 1,060,672 30,000,000 Anadolu Efes Biracilik Ve Malt Sanayii AS 1,492,798 12,400,000 Arcelik 170,493 40,000,000 KOC Holding AS 1,711,043 253,333,327 Sabanci Holding 1,260,585 60,680,000 Turkcell Iletisim Hizmet AS 1,032,964 203,800,000 @ Turkiye Garanti Bankasi 1,049,690 252,578,371 Yapi VE Kredi Bankasi 1,168,630 ------------ Total Turkey 8,946,875 ------------ UNITED KINGDOM: 4.29% 61,200 Barclays PLC 1,969,799 176,465 @ Dimension Data Holdings PLC 818,595 183,900 Provident Financial PLC 2,117,706 133,500 South African Breweries PLC 909,396 47,000 South African Breweries PLC 322,721 774,500 Vodafone Group PLC 2,351,566 ------------ Total United Kingdom 8,489,783 ------------ VENEZUELA: 0.48% 64,130 Compania Anonima Nacional Telefonos de Venezuela ADR $ 1,469,218 ------------ Total Venezuela 1,469,218 ------------ Total Common Stock (Cost $206,030,745) 183,921,032 ------------ PREFERRED STOCK: 1.57% BRAZIL: 1.57% 24,600,000 Banco Itau SA 1,989,582 42,530 CVRD-Companhia Vale do Rio Doce 989,160 ------------ Total Brazil 2,978,742 ------------ Total Preferred Stock (Cost $3,295,906) 2,978,742 ------------ MUTUAL FUNDS: 0.14% UNITED STATES: 0.14% 19,200 @ India Fund, Inc. 195,264 ------------ 8,250 Jardine Fleming India Fund, Inc. 62,700 ------------ Total United States 257,964 ------------ Total Mutual Funds (Cost $341,790) 257,964 ------------ Total Long-Term Investments (Cost $209,668,441) 187,157,738 ------------ Principal Amount Value ------ ----- SHORT-TERM INVESTMENTS: 4.12% Government Obligations: 4.12% $ 7,000,000 U.S. Treasury Bills, 4.140%, due 05/03/01 $ 6,998,619 800,000 U.S. Treasury Bills, 4.140%, due 05/03/01 799,845 ------------ 7,798,464 ------------ Total Short-Term Investments (Cost $7,798,464) 7,798,464 ------------ Total Investments in Securities (Cost $ 217,466,905)* 98.89% $194,956,202 Other Assets and Liabilities-Net 1.11% 2,195,556 ------ ------------ Net Assets 100.00% $197,151,758 ====== ============ @ Non-income producing security ADR American Depostiory Receipt GDR Global Depository Receipt * Cost for federal income tax purposes is the same as for financial statement purposes. Net unrealized depreciation consists of: Gross Unrealized Appreciation $ 12,772,087 Gross Unrealized Depreciation (35,282,791) ------------ Net Unrealized Depreciation $(22,510,704) ============ See Accompanying Notes to Financial Statements 96 Pilgrim Emerging Countries Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) (Continued) -------------------------------------------------------------------------------- Percentage of Industry Net Assets -------- ---------- Aerospace/Defense 0.73% Agriculture 0.14% Auto Manufacturers 0.84% Banks 12.03% Beverages 2.60% Building Materials 0.68% Chemicals 0.95% Computers 0.57% Construction Machinery & Equipment 0.01% Diversified Financial Services 8.27% Electric 3.30% Electrical Componenets & Equipment 0.18% Electronics 3.48% Engineering & Construction 1.77% Entertainment 0.33% Food 1.23% Forest Products & Paper 1.45% Gas 0.08% Holding Companies-Diversified 1.30% Home Furnishings 1.26% Household Products/Wares 0.40% Insurance 3.07% Internet 0.01% Investment Companies 0.20% Iron/Steel 2.03% Media 1.50% Metal Fabricate/Hardware 0.43% Mining 1.96% Oil&Gas 7.54% Packaging Products 0.02% Pharmaceuticals 4.36% Retail 4.39% Semiconductors 3.86% Software 1.92% Telecommunications 21.68% Transportation 0.20% Short-Term Investments 4.12% Other Assets and Liabilities-Net 1.11% ------ NET ASSETS 100.00% ====== See Accompanying Notes to Financial Statements 97 Pilgrim Global Communications Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) -------------------------------------------------------------------------------- Shares Value ------ ----- COMMON STOCK: 100.98% BERMUDA: 3.24% 94,200 @ Global Crossing Ltd. $ 1,180,326 ------------- Total Bermuda 1,180,326 ------------- FINLAND: 5.80% 63,750 @ Nokia OYJ 2,109,770 ------------- Total Finland 2,109,770 ------------- HONG KONG: 2.27% 167,420 @ China Mobile Hong Kong Ltd. 824,327 ------------- Total Hong Kong 824,327 ------------- JAPAN: 0.73% 13 @ NTT Docomo, Inc. 267,228 ------------- Total Japan 267,228 ------------- NETHERLANDS: 1.08% 14,800 @ Equant NV 393,282 ------------- Total Netherlands 393,282 ------------- SPAIN: 1.16% 25,000 @ Telefonica SA 423,218 ------------- Total Spain 423,218 ------------- UNITED KINGDOM: 10.64% 79,970 @ Colt Telecom Group PLC 1,103,932 32,690 @ Logica PLC 467,631 757,454 @ Vodafone Group PLC 2,299,810 ------------- Total United Kingdom 3,871,373 ------------- UNITED STATES: 76.06% 6,220 @ ADC Telecommunications, Inc. $ 46,712 28,330 @ Amdocs Ltd. 1,668,637 11,990 @ AOL Time Warner, Inc. 605,495 22,260 @ Avanex Corp. 320,767 30,650 @ Avici Systems, Inc. 309,565 40,180 @ CIENA Corp. 2,212,311 38,900 @ Cisco Systems, Inc. 660,522 27,440 @ Comcast Corp. 1,204,890 17,130 @ Comverse Technology, Inc. 1,173,405 32,240 @ Convergys Corp. 1,176,760 23,040 @ CSG Systems Intl. 1,341,158 77,060 @ JDS Uniphase Corp. 1,648,314 23,210 @ Juniper Networks, Inc. 1,370,086 67,400 @ Metromedia Fiber Network, Inc. 343,066 20,000 @ Micromuse, Inc. 990,000 17,610 Newport Corp. 664,954 37,100 @ Nextel Communications, Inc. 602,875 30,600 @ Oni Systems Corp. 1,099,458 42,860 @ Openwave Systems, Inc. 1,483,385 36,440 @ PMC - Sierra, Inc. 1,517,726 24,850 @ Qwest Communications Intl. 1,016,365 29,390 @ Redback Networks 559,586 52,940 @ RF Micro Devices, Inc. 1,555,377 9,100 Scientific-Atlanta, Inc. 525,343 53,690 @ Sprint Corp. (PCS Group) 1,376,075 33,160 @ Sycamore Networks, Inc. 315,683 18,300 Texas Instruments, Inc. 708,210 1,900 Verizon Communications, Inc. 104,633 31,820 @ Vitesse Semiconductor Corp. 1,078,698 72,300 @ WinStar Communications, Inc. 9,399 ------------- Total United States 27,689,455 ------------- Total Commom Stock (Cost $58,035,228) 36,758,979 ------------- Total Investments in Securities (Cost $ 58,035,228)* 100.98% $ 36,758,979 Other Assets and Liabilities-Net -0.98% (355,180) ------ ------------- Net Assets 100.00% $ 36,403,799 ====== ============= @ Non-income producing security * Cost for federal income tax purposes is the same as for financial statement purposes. Net unrealized depreciation consists of: Gross Unrealized Appreciation $ 901,517 Gross Unrealized Depreciation (22,177,767) ------------- Net Unrealized Depreciation $ (21,276,249) ============= See Accompanying Notes to Financial Statements 98 Pilgrim Global Communications Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) (Continued) -------------------------------------------------------------------------------- Percentage of Industry Net Assets -------- ---------- Commercial Services 3.23% Computers 3.90% Internet 4.08% Media 4.98% Semiconductors 9.08% Software 6.40% Telecommunications 69.31% Other Assets and Liabilities, Net -0.98% ------ Net Assets 100.00% ====== See Accompanying Notes to Financial Statements 99 Pilgrim Global Information Technology Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) -------------------------------------------------------------------------------- Shares Value ------ ----- COMMON STOCK: 93.98% CANADA: 1.45% 72,202 @ Nortel Networks Corp. $ 1,104,691 ------------- Total Canada 1,104,691 ------------- IRELAND: 2.30% 48,705 @ SmartForce PLC ADR 1,752,893 ------------- Total Ireland 1,752,893 ------------- JAPAN: 0.84% 13 @ NTT Data Corp. 83,956 13 @ NTT Docomo, Inc. 267,228 3,800 @ Sony Corp. 284,158 ------------- Total Japan 635,342 ------------- SWEDEN: 0.13% 14,800 @ Telefonaktiebolaget LM Ericsson 95,242 ------------- Total Sweden 95,242 ------------- UNITED KINGDOM: 5.30% 39,610 @ Amdocs Ltd. 2,333,029 124,692 @ CMG PLC 641,671 60,044 @ Logica PLC 858,930 65,200 @ Vodafone Group PLC 197,963 ------------- Total United Kingdom 4,031,593 ------------- UNITED STATES: 83.96% 120,300 @ Advanced Micro Devices $ 3,729,300 64,800 @ Analog Devices, Inc. 3,065,688 62,075 @ AOL Time Warner, Inc. 3,134,788 80,390 @ BEA Systems, Inc. 3,283,931 23,300 @ Brocade Communications System 885,167 33,818 @ CIENA Corp. 1,862,019 91,782 @ Cisco Systems, Inc. 1,558,458 46,200 @ Citrix Systems, Inc. 1,312,080 28,793 @ Computer Sciences Corp. 1,025,895 35,809 @ Convergys Corp. 1,307,029 34,218 @ Corning, Inc. 751,769 56,600 @ Cypress Semiconductor Corp. 1,279,160 47,200 @ Electronic Arts, Inc. 2,672,464 27,600 @ Electronic Data Systems Corp. 1,780,200 60,300 @ EMC Corp.-Mass. 2,387,880 37,204 @ I2 Technologies, Inc. 647,722 73,994 @ Informatica Corp. 1,868,348 40,671 @ Intel Corp. 1,257,141 26,192 @ International Business Machines Corp. 3,015,747 94,888 @ JDS Uniphase Corp. 2,029,654 17,000 @ Juniper Networks, Inc. 1,003,510 6,000 @ Lucent Technologies, Inc. 60,060 31,500 @ Micromuse, Inc. 1,559,250 53,440 @ Micron Technology, Inc. 2,425,107 50,744 @ Microsoft Corp. 3,437,906 76,119 @ Network Appliance, Inc. 1,731,722 35,179 @ Openwave Systems, Inc. 1,217,545 118,192 @ Oracle Corp. 1,909,983 107,602 @ RF Micro Devices, Inc. 3,161,347 25,000 @ SAFLINK Corp. 7,500 54,524 @ Siebel Systems, Inc. 2,485,204 81,016 @ Sun Microsystems, Inc. 1,386,994 56,540 @ Veritas Software Corp. 3,370,349 36,200 @ Vitesse Semiconductor Corp. 1,227,180 ------------- Total United States 63,838,097 ------------- Total Common Stock (Cost $96,264,391) 71,457,858 ------------- PREFERRED STOCK: 2.28% GERMANY: 2.28% 10,869 @ SAP AG $ 1,731,012 ------------- Total Germany 1,731,012 ------------- Total Preferred Stock (Cost $2,333,532) 1,731,012 ------------- Total Long-Term Investments (Cost $98,597,923) 73,188,870 ------------- Principal Amount Value ------ ----- SHORT-TERM INVESTMENTS: 0.65% Government Obligations: 0.65% $ 500,000 U.S. Treasury Bill, 4.125%, due 06/14/01 $ 496,645 ------------- Total Short-Term Investments (Cost $496,645) 496,645 ------------- Total Investments in Securities (Cost $ 99,094,568)* 96.91% $ 73,685,515 Other Assets and Liabilities-Net 3.09% 2,349,024 ------ ------------- Net Assets 100.00% $ 76,034,539 ====== ============= @ Non-income producing security ADR American Depostiory Receipt * Cost for federal income tax purposes is the same as for financial statement purposes. Net unrealized depreciation consists of: Gross Unrealized Appreciation $ 3,618,205 Gross Unrealized Depreciation (29,027,258) ------------- Net Unrealized Depreciation $ (25,409,053) ============= See Accompanying Notes to Financial Statements 100 Pilgrim Global Information Technology Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) (Continued) -------------------------------------------------------------------------------- Percentage of Industry Net Assets -------- ---------- Commercial Services 1.72% Computers 20.19% Electronics 0.01% Home Furnishings 0.38% Internet 2.45% Media 4.12% Semiconductors 17.08% Software 28.95% Telecommunications 21.36% Short-Term Investments 0.65% Other Assets and Liabilities, Net 3.09% ------ Net Assets 100.00% ====== See Accompanying Notes to Financial Statements 101 Pilgrim Asia-Pacific Equity Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) -------------------------------------------------------------------------------- Shares Value ------ ----- COMMON STOCK: 90.78% HONG KONG: 34.36% 295,000 APT Satellite Holdings Ltd. $ 121,987 70,100 @ Asia World Online 20,329 54,600 @ Asia World Online 27,846 319,000 Bank of East Asia 726,023 214,000 Beijing Datang Power Generation Co. Ltd. 71,342 19,000 Cheung Kong Holdings 211,341 276,000 China Everbright Ltd. 267,188 304,000 China Merchants Holdings Intl. Co. Ltd. 220,233 181,000 @ China Mobile Hong Kong Ltd. 891,191 450,000 China National Aviation 74,433 850,000 China Petroleum & Chemical Corp. 151,494 180,000 @ China Unicom 250,417 156,000 Citic Pacific Ltd. 449,058 70,000 Dao Heng Bank Group Ltd. 520,578 184,000 Hong Kong Exchanges and Clearing Ltd. 330,299 200 HSBC Holdings PLC 2,539 69,900 Hutchison Whampoa 750,625 495,872 @ Pacific Century CyberWorks Ltd. 170,080 70,000 Sun Hung Kai Properties Ltd. 655,212 60,000 Television Broadcasts Ltd. 303,116 ------------ Total Hong Kong 6,215,331 ------------ INDONESIA: 0.49% 90,000 Gudang Garam Tbk PT 88,836 ------------ Total Indonesia 88,836 ------------ MALAYSIA: 2.99% 85,000 Malayan Banking Berhad 219,211 103,000 Resorts World Berhad 140,947 71,000 Tenaga Nasional Berhad 181,237 ------------ Total Malaysia 541,395 ------------ SINGAPORE: 16.82% 156,000 City Developments Ltd. $ 548,270 75,035 DBS Group Holdings Ltd. 655,166 127,000 @ Neptune Orient Lines 105,310 17,650 Oversea-Chinese Banking Corp. 106,617 95,000 Singapore Airlines Ltd. 756,453 28,500 Singapore Press Holdings 327,100 545,000 Singapore Telecommunications 544,701 ------------ Total Singapore 3,043,617 ------------ SOUTH KOREA: 16.28% 13,500 H&CB 256,777 52,000 Korea Electric Power Corp. 898,254 2,500 Korea Telecom 119,590 11,530 Korea Telecom ADR 318,574 2,415 LG Home Shopping, Inc. 96,270 3,360 Samsung Electronics 584,237 10,000 Shinhan Bank 88,838 9,000 SK Corp. 94,989 2,840 SK Telecom 488,428 ------------ Total South Korea 2,945,957 ------------ TAIWAN: 15.39% 100,000 Acer, Inc. $ 64,761 20,240 Asustek Computer, Inc. 92,000 49,839 Asustek Computer, Inc. GDR 228,761 21,843 China Steel Corp. GDR 250,758 112,000 Far Eastern Textile Co. Ltd. 68,446 28,322 Far Eastern Textile Co. Ltd. GDR 172,764 32,123 HON HAI Precision Industry GDR 436,873 7,434 @ Siliconware Precision Industries ADR 27,878 16,822 Synnex Technology International Corp. GDR 145,510 16,400 @ Taiwan Semiconductor Manufacturing Co. Ltd 45,375 32,678 @ Taiwan Semiconductor Manufacturing Co. Ltd. ADR 792,124 60,000 @ United Microelectronics 95,774 33,000 @ United Microelectronics ADR 362,670 ------------ Total Taiwan 2,783,694 ------------ THAILAND: 4.45% 65,500 Advanced Info Service Public Co. Ltd. 662,892 33,600 PTT Exploration & Production Public Co. Ltd. 77,284 7,500 @ Siam Cement 64,403 ------------ Total Thailand 804,579 ------------ Total Common Stocks (Cost $21,840,576) 16,423,409 ------------ See Accompanying Notes to Financial Statements 102 Pilgrim Asia-Pacific Equity Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) (Continued) -------------------------------------------------------------------------------- Shares Value ------ ----- PREFERRED STOCK: 0.83% THAILAND: 0.83% 300,000 @ Siam Commercial Bank Ltd. $ 149,507 ------------ Total Thailand 149,507 ------------ Total Preferred Stock (Cost $254,508) 149,507 ------------ WARRANTS: 0.14% THAILAND: 0.14% 274,000 @ Siam Commercial Bank Ltd. 24,609 ------------ Total Thailand 24,609 ------------ Total Warrants (Cost $0) 24,609 ------------ Total Long Term Investments (Cost $22,095,084) 16,597,525 ------------ Value ----- Total Investments in Securities (Cost $ 22,095,084)* 91.75% $ 16,597,525 Other Assets and Liabilities-Net 8.25% 1,493,107 ------ ------------ Net Assets 100.00% $ 18,090,632 ====== ============ @ Non-income producing security ADR American Depostiory Receipt GDR Global Depository Receipt * Cost for federal income tax purposes is the same as for financial statement purposes. Net unrealized depreciation consists of: Gross Unrealized Appreciation $ 578,565 Gross Unrealized Depreciation (6,076,123) ------------ Net Unrealized Depreciation $ (5,497,559) ============ See Accompanying Notes to Financial Statements 103 Pilgrim Asia-Pacific Equity Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) (Continued) -------------------------------------------------------------------------------- Percentage of Industry Net Assets -------- ---------- Airlines 4.59% Banks 15.20% Communications Equipment 1.76% Computers & Peripherals 2.94% Construction Materials 0.36% Diversified Financials 7.45% Diversified Telecommunications 5.29% Electric Utilities 6.36% Electronic Equipment & Instruments 2.41% Hotels, Restaraunts & Leisure 0.78% Industrial Conglomerates 4.66% Internet 0.27% Internet & Catalog Retail 0.53% Marine 0.58% Media 3.48% Metals & Mining 1.39% Oil & Gas 1.79% Real Estate 7.82% Semiconductors 10.55% Textiles & Apparel 0.38% Tobacco 0.49% Wireless Telecommunications Service 12.67% Other Assets and Liabilities, Net 8.25% ------ Net Assets 100.00% ====== See Accompanying Notes to Financial Statements 104 Pilgrim European Equity Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) -------------------------------------------------------------------------------- Shares Value ------ ----- COMMON STOCK: 93.59% BELGIUM: 1.08% 577 Electrabel $ 126,245 5,788 Interbrew 154,062 ------------ Total Belgium 280,307 ------------ FINLAND: 3.42% 22,158 Nokia OYJ 733,306 7,570 Sampo OYJ 79,255 6,356 Stora Enso OYJ 71,620 ------------ Total Finland 884,181 ------------ FRANCE: 14.91% 627 Air Liquide 94,461 6,793 Alcatel SA 221,194 4,899 Aventis SA 379,461 1,439 Axa 169,808 2,560 BNP Paribas 227,590 359 Cap Gemini SA 51,887 4,290 Carrefour Supermarche 247,600 1,508 France Telecom 109,714 1,384 Groupe Danone 179,895 2,140 L'Oreal 155,790 1,446 Louis Vuitton Moet Hennessy 89,294 8,561 @ Orange SA 90,237 871 Pinault-Printemps-Redoute 149,999 2,901 Sanofi-Synthelabo SA 173,996 1,770 Schneider Electric SA 120,845 2,001 Societe Assurances Generales de France 119,040 5,448 STMicroelectronics NV 219,693 722 Suez Lyonnaise des Eaux 106,723 1,735 Thales/ex Thomson-CSF 72,274 3,799 TotalFinaElf SA 566,271 1,330 Vivendi Environnement 58,247 3,633 Vivendi Universal 251,585 ------------ Total France 3,855,604 ------------ GERMANY: 9.63% 996 Allianz AG $ 286,761 2,419 Bayer AG 101,947 1,411 Bayerische Hypo-und Vereinsbank AG 78,720 4,815 DaimlerChrysler AG 241,118 3,104 Deutsche Bank AG 253,370 3,370 @ Deutsche Post AG 57,468 5,550 Deutsche Telekom 143,788 2,433 Dresdner Bank AG 110,783 5,012 E. On AG 252,361 1,012 Muenchener Rueckversicherungs AG 288,566 1,555 SAP AG 247,100 3,330 Schering AG 166,311 3,541 Siemens AG 261,457 ------------ Total Germany 2,489,750 ------------ GREECE: 0.24% 2,123 Alpha Bank A.E. 60,917 ------------ Total Greece 60,917 ------------ IRELAND: 1.61% 11,106 Bank of Ireland 107,307 7,832 CRH PLC 132,030 3,455 @ Elan Corp. PLC 177,030 ------------ Total Ireland 416,367 ------------ ITALY: 5.92% 6,828 Assicurazioni Generali 220,516 26,972 Banca Nazionale Del Lavoro S.p.A. 85,912 36,080 Enel S.p.A. 117,804 45,961 ENI-Ente Nazionale Idrocarburi S.p.A. 314,813 10,205 San Paolo-IMI S.p.A. 142,607 10,631 Telecom Italia S.p.A. 66,309 25,928 Telecom Italia S.p.A. 288,248 28,115 TIM S.p.A. 193,324 21,592 Unicredito Italiano S.p.A. 101,918 ------------ Total Italy 1,531,451 ------------ NETHERLANDS: 8.48% 7,075 ABN Amro Holding NV $ 142,495 10,905 Aegon NV 363,797 1,590 Akzo Nobel NV 66,563 13,476 Elsevier 184,490 12,084 Fortis (NL) 313,712 3,173 Heineken Holding 121,900 9,245 Koninklijke Ahold NV 287,091 6,283 Koninklijke Philips Electronics NV 184,575 4,605 @ Libertel NV 45,557 11,134 Royal KPN NV 136,128 11,449 TNT Post Group NV 269,698 1,844 VNU NV 76,651 ------------ Total Netherlands 2,192,657 ------------ PORTUGAL: 0.41% 11,067 Portugal Telecom SGPS SA 107,422 ------------ Total Portugal 107,422 ------------ SPAIN: 4.48% 13,080 Banco Bilbao Vizcaya Argentaria SA 185,916 3,238 Banco Popular Espanol 115,606 21,608 Banco Santander Central Hispano SA 214,723 4,666 Endesa SA 78,617 9,361 Iberdrola SA 138,121 18,739 Telefonica SA 317,227 5,740 Union Electrica Fenosa SA 108,528 ------------ Total Spain 1,158,738 ------------ SWEDEN: 2.47% 23,463 Nordea AB 138,437 5,543 Nordea AB ADR 33,197 8,206 Securitas AB 159,623 11,157 Skandia Forsakrings AB 121,295 3,840 SKF AB 68,331 18,228 Telefonaktiebolaget LM Ericsson 117,302 ------------ Total Sweden 638,185 ------------ See Accompanying Notes to Financial Statements 105 Pilgrim European Equity Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) (Continued) -------------------------------------------------------------------------------- Shares Value ------ ----- SWITZERLAND: 9.28% 1 ABB Ltd. $ 72 128 Adecco SA 77,471 719 Credit Suisse Group 134,073 256 Nestle SA 530,047 326 Novartis 506,612 55 @ Roche Holding AG 395,020 95 Swiss Re 187,005 1,220 @ Syngenta AG 61,814 2,235 UBS AG 340,110 80 Zurich Financial Services AG 28,452 411 Zurich Financial Services AG (UK) 139,409 ------------ Total Switzerland 2,400,085 ------------ UNITED KINGDOM: 31.66% 8,100 Abbey National PLC $ 143,679 6,676 AstraZeneca PLC 310,758 20,668 BAE Systems PLC 97,862 8,640 Bank of Scotland PLC 99,247 8,407 Barclays PLC 270,590 19,842 BG Group PLC 78,056 83,630 BP PLC 750,097 32,875 British Telecommunications PLC 262,415 11,692 Cable & Wireless PLC 85,885 17,594 CGNU PLC 244,132 7,034 @ Colt Telecom Group PLC 97,100 24,824 @ Compass Group PLC 190,338 28,099 Diageo PLC 295,438 26,661 GlaxoSmithKline PLC 704,416 34,189 HSBC Holdings PLC 450,437 39,473 @ International Power PLC 169,822 29,262 Lloyds TSB Group PLC 304,108 20,441 Marconi PLC 119,741 25,605 National Grid Group PLC 195,960 6,308 Pearson PLC 132,918 8,502 Prudential PLC 99,486 25,017 Rentokil Initial PLC 67,995 9,681 Reuters Group PLC 141,949 15,249 Royal Bank of Scotland Group PLC 353,164 96,573 Shell Transport & Trading Co. 806,092 5,876 Standard Chartered PLC 83,216 46,542 Tesco PLC 166,446 47,306 Unilever PLC 357,304 341,780 Vodafone Group PLC 1,037,725 5,869 WPP Group PLC 70,313 ------------ Total United Kingdom 8,186,689 ------------ Total Common Stock (Cost $25,757,139) 24,202,353 ------------ PREFERRED STOCK: 0.75% GERMANY: 0.75% 829 SAP AG 132,028 577 MLP AG 62,713 ------------ Total Germany 194,741 ------------ Total Preferred Stock (Cost $164,507) 194,741 ------------ Total Long-Term Investments (Cost $25,921,646) 24,397,094 ------------ Value ----- Total Investments in Securities (Cost $ 25,921,646)* 94.34% $ 24,397,094 Other Assets and Liabilities-Net 5.66% 1,464,305 ------ ------------ Net Assets 100.00% $ 25,861,399 ====== ============ @ Non-income producing security ADR American Depostiory Receipt * Cost for federal income tax purposes is the same as for financial statement purposes. Net unrealized depreciation consists of: Gross Unrealized Appreciation $ 1,026,812 Gross Unrealized Depreciation (2,551,364) ------------ Net Unrealized Depreciation $ (1,524,552) ============ See Accompanying Notes to Financial Statements 106 Pilgrim European Equity Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) (Continued) -------------------------------------------------------------------------------- Percentage of Industry Net Assets -------- ---------- Aerospace & Defense 0.66% Air Freight & Couriers 1.27% Automobiles 0.93% Banks 16.03% Beverages 2.21% Chemicals 1.26% Commercial Services & Supplies 1.18% Communications Equipment 4.61% Construction Materials 0.51% Diversified Financials 1.34% Diversified Telecommunication 6.24% Electric Utilities 4.59% Electrical Equipment 0.47% Food & Drug Retailing 2.71% Food Products 4.13% Hotels, Restaraunts & Leisure 0.74% Household Durables 0.71% Industrial Conglomerates 1.55% Insurance 8.78% IT Consulting & Services 0.20% Machinery 0.26% Media 3.32% Multiline Retail 0.58% Multi-Utilities 0.64% Oil & Gas 9.73% Paper & Forest Products 0.28% Personal Products 0.60% Pharmaceuticals 10.88% Semiconductor Products & Services 0.85% Software 1.46% Textiles & Apparel 0.34% Wireless Telecommunication Services 5.28% Other Asets and Liabilities, Net 5.66% ------ Net Assets 100.00% ====== See Accompanying Notes to Financial Statements 107 Pilgrim Russia Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) -------------------------------------------------------------------------------- Shares Value ------ ----- COMMON STOCK: 64.38% Aerospace/Defense: 0.06% 65,000,000 @ Aviastar $ 30,095 ------------- Airlines: 1.77% 2,446,350 Aeroflot 858,669 ------------- Beverages: 3.57% 850,000 @ Sun Interbrew Ltd. GDR 1,734,595 ------------- Electric: 5.08% 9,000,000 @ Unified Energy System 960,300 40,050,000 Mosenergo 1,281,600 70,000 Mosenergo ADR 228,900 ------------- 2,470,800 ------------- Food: 0.01% 23,800 @ SAMSON 5,636 ------------- Gas: 0.51% 35,000 OAO Gazprom 249,900 ------------- Merchandising: 0.00% 7,000 @ Gostiny Dvor 119 ------------- Metal Fabricate/Hardware: 0.16% 46,000 Taganrog Metallurgical Plant 75,971 ------------- Mining: 10.61% 428,000 Norilsk Nickel 5,157,400 ------------- Oil & Gas: 24.47% 2,000 Lukoil-Holding 20,640 60,000 Lukoil-Holding ADR 2,483,400 53,845 @ Rosneftegazstroy ADR 34,396 145,982 Slavneft-Megionneftegaz 321,160 185,000 Surgutneftegaz ADR 2,086,800 223,700 Tatneft ADR 1,957,375 4,000 @ Udmurtneft 102,000 1,700,000 YUKOS 4,896,000 ------------- 11,901,771 ------------- Retail: 0.48% 235,000 Trade House GUM 213,850 10,000 Trade House GUM ADR 18,200 ------------- 232,050 ------------- Telecommunications: 17.66% 6,831,400 Bashinformsvyaz $ 259,593 24,610 Chelyabinsksvyazinform 393,760 1,100 @ Electrosvyaz of Rostov Region 148,500 129,600 @ Golden Telecom Inc. 1,198,800 85,300 Kubanelectrosvyaz 580,040 36,000 @ Mobile Telesystems ADR 934,200 189,500 Moscow City Telephone 289,935 656,000 Nizhnosvyazinform 557,600 185,102 Novosibirsk Region Electrosv 323,929 1,098,882 Rostelecom 852,183 20,000 Rostelecom ADR 94,000 238,125 Rostov Region Electrosvyaz 117,122 28,000 @ Samarasvyazinform 588,000 384,424 St. Petersburg Telephone 137,047 214,000 Tyumentelecom 111,280 10,000,000 Uralsvyazinform 70,000 42,500 Uralsvyazinform ADR 55,807 120,964 @ Vimpel-Communications ADR 1,874,942 ------------- 8,586,738 ------------- Total Common Stock (Cost $ 44,109,529) 31,303,744 ------------- PREFERRED STOCK: 19.40% Electric: 1.71% 16,000,000 Unified Energy System 832,000 ------------- Oil & Gas: 17.03% 263,750 @ Lukoil-Holding 3,046,313 70,000 Lukoil-Holding ADR 1,626,800 21,570,000 Surgutneftegaz 2,307,990 95,000 Surgutneftegaz ADR 1,021,250 1,800 @ Transneft 279,000 ------------- 8,281,353 ------------- Telecommunications: 0.66% 427,000 Nizhnosvyazinform 145,180 50,000 Rostelecom 14,875 9,300 Samarasvyazinform 60,674 110,000 St Petersburg Telephone 16,500 279,099 Tyumentelecom 86,521 ------------- 323,750 ------------- Total Preferred Stock (Cost $ 10,401,625) 9,437,103 ------------- Total Long-Term Investments (Cost $ 54,511,154) 40,740,847 ------------- Principal Amount Value ------ ----- SHORT-TERM INVESTMENTS: 10.28% U.S. Government Obligations: 10.28% $ 2,000,000 Federal National Mortgage Association, 4.500%, due 05/01/01 2,000,000 $ 2,000,000 3,000,000 U.S. Treasury Bills 4.140%, due 05/03/01 2,999,413 ------------- Total Short-term Investments (Cost $4,999,413) 4,999,413 ------------- Total Investments in Securities (Cost $ 59,510,567)* 94.06% $ 45,740,260 Other Assets and Liabilities-Net 5.94% 2,887,200 ------ ------------- Net Assets 100.00% $ 48,627,460 ====== ============= @ Non-income producing security ADR American Depostiory Receipt GDR Global Depository Receipt * Cost for federal income tax purposes is the same as for financial statement purposes. Net unrealized depreciation consists of: Gross Unrealized Appreciation $ 8,894,989 Gross Unrealized Depreciation (22,665,296) ------------- Net Unrealized Depreciation $ (13,770,307) ============= See Accompanying Notes to Financial Statements 108 Pilgrim Precious Metals Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) -------------------------------------------------------------------------------- Shares Value ------ ----- COMMON STOCK: 86.90% AUSTRALIA: 3.72% 795,122 @ Delta Gold Ltd. $ 498,927 5,000,000 @ Lihir Gold Ltd. 1,760,017 ------------ Total Australia 2,258,944 ------------ CANADA: 29.89% 293,000 @ Agnico-Eagle Mines 2,212,150 180,000 Barrick Gold Corp. 2,959,200 700,000 @ Claude Resources, Inc. 296,224 301,400 @ Gold Corp, Inc. 2,550,911 250,000 @ Great Basin Gold Ltd. 128,581 1,273,600 @ Iamgold Corp. 2,363,125 375,000 @ Ivernia West, Inc. 58,594 270,000 @ Meridian Gold, Inc. 2,223,633 113,000 @ Meridian Gold, Inc. 937,900 40,000 @ North American Palladium Ltd. 346,000 56,000 @ North American Palladium Ltd. 473,958 308,500 Placer Dome, Inc. 3,122,020 300,000 @ Silver Standard Resources, Inc. 458,984 ------------ Total Canada 18,131,280 ------------ MEXICO: 2.85% 249,016 Grupo Mexico SA de C.V. 650,776 645,000 Industrias Penoles SA 717,441 290,056 @ Sanluis 360,221 ------------ Total Mexico 1,728,438 ------------ PERU: 5.67% 157,009 Buenaventura SA 1,182,330 150,000 Buenaventura SA ADR 2,259,000 ------------ Total Peru 3,441,330 ------------ POLAND: 0.85% 51,000 KGHM Polska Miedz SA GDR 517,650 ------------ Total Poland 517,650 ------------ SOUTH AFRICA: 19.07% 27,749 Anglo American Platinum Corp. $ 1,244,040 33,749 Anglogold Ltd. 1,197,816 110,000 Anglogold Ltd. ADR 1,991,000 477,900 Gold Fields Ltd. 2,085,977 200,000 Gold Fields Ltd. ADR 888,000 306,656 Harmony Gold Mining Co. Ltd. 1,508,457 200,000 Harmony Gold Mining Co. Ltd. ADR 976,000 34,960 Impala Platinum Holdings Ltd. 1,676,164 ------------ Total South Africa 11,567,454 ------------ UNITED KINGDOM: 2.39% 200,000 @ Brancote Holdings PLC 494,953 50,000 @ Randgold Resources Ltd. GDR 225,000 9,000 @ Rio Tinto PLC ADR 727,200 ------------ Total United Kingdom 1,447,153 ------------ UNITED STATES: 22.46% 95,000 @ Apex Silver Mines Ltd. 874,000 250,600 @ Coeur D'alene Mines Corp. 313,250 204,600 @ Freeport-McMoran Copper & Gold, Inc. Class A 2,608,650 99,000 @ Freeport-McMoran Copper & Gold, Inc. 881,100 497,070 Homestake Mining Co. 3,096,747 150,000 Newmont Mining Corp. 2,734,500 101,900 @ Stillwater Mining Co. 3,115,083 ------------ Total United States 13,623,330 ------------ Total Common Stock (Cost $58,822,273) 52,715,579 ------------ WARRANTS: 0.00% 200,000 @ Claude Resources, Inc. 0 ------------ Total Warrants (Cost $0) 0 ------------ Total Long-Term Investments (Cost $58,822,273) 52,715,579 ------------ Principal Amount Value ------ ----- SHORT-TERM INVESTMENTS: 16.78% Government Obligations: 16.78% $ 2,200,000 Federal National Mortgage Association Notes, 4.500%, due 05/01/01 $ 2,200,000 2,400,000 U.S. Treasury Bills, 4.140%, due 05/03/01 2,399,529 5,600,000 U.S. Treasury Bills, 3.915%, due 05/31/01 5,579,140 ------------ Total Government Obligations 10,178,669 ------------ Total Short-Term Investments (Cost $10,178,669) 10,178,669 ------------ Total Investments in Securities (Cost $ 69,000,942)* 103.68% $ 62,894,248 Other Assets and Liabilities-Net -3.68% (2,234,915) ------ ------------ Net Assets 100.00% $ 60,659,333 ====== ============ @ Non-income producing security ADR American Depostiory Receipt GDR Global Depository Receipt * Cost for federal income tax purposes is the same as for financial statement purposes. Net unrealized depreciation consists of: Gross Unrealized Appreciation $ 4,157,637 Gross Unrealized Depreciation (10,264,331) ------------ Net Unrealized Depreciation $ (6,106,694) ============ See Accompanying Notes to Financial Statements 109 Pilgrim Precious Metals Fund PORTFOLIO OF INVESTMENTS as of April 30, 2001 (Unaudited) (Continued) -------------------------------------------------------------------------------- Percentage of Industry Net Assets -------- ---------- Auto/Truck Parts & Equipment 0.59% Diversified Minerals 1.20% Gold Mining 56.46% Metal-Diversified 5.25% Non-Ferrous Metals 3.71% Platinum 5.60% Precious Metals 6.22% Silver Mining 7.87% Short-Term Investments 16.78% Other Assets and Liabilities, Net -3.68% ------ NET ASSETS 100.00% ====== See Accompanying Notes to Financial Statements 110 SHAREHOLDER MEETING (Unaudited) -------------------------------------------------------------------------------- A special meeting of shareholders of the ING Emerging Markets Equity, ING Global Brand Names and ING International Funds, held February 22, 2001, at the offices of ING Pilgrim, 7337 East Doubletree Ranch Road, Scottsdale, AZ 85258 A brief description of each matter voted upon as well as the results are outline below:
Shares voted Shares against or Shares Broker Total voted for withheld abstained non-vote Voted --------- -------- --------- -------- ----- ING Emerging Markets Equity Fund 1. To approve an Agreement and Plan of Reorganization Providing For The Acquisition of All of the Assets and Liabilities of ING Emerging Markets Equity Fund by Pilgrim Emerging Countries Fund 1,013,888 -- 2,804 -- 1,016,692 ING Global Brand Names Fund 1. To approve an Agreement and Plan of Reoganization providing for the acquisition of all of the assets and liabilities of ING Global Brand Names Fund by Pilgrim Worldwide Growth Fund 2,680,425 5,759 30,144 -- 2,716,328 ING International Equity Fund 1. To approve an Agreement and Plan of Reorganization providing for the acquisition of all of the assets and liabilities of ING International Equity Fund by Pilgrim International Fund 2,948,830 2,005 7,167 -- 2,958,002 A special meeting of shareholders of the Pilgrim Global Corporate Leaders and Pilgrim Silver Funds, held February 23, 2001, at the offices of ING Pilgrim, 7337 East Doubletree Ranch Road, Scottsdale, AZ 85258 A brief description of each matter voted upon as well as the results are outline below: Pilgrim Global Corporate Leaders Fund 1. To approve an Agreement and Plan of Reorganization providing for the acquisition of all of the assets of Pilgrim Global Corporate Leaders Fund by Pilgrim Worldwide Growth 1,186,462 8,842 19,457 -- 1,214,761 Pilgrim Silver Fund 1. To approve an Agreement and Plan of Reorganization providing for the acquisition of all of the assets of Pilgrim Silver Fund by Pilgrim Gold Fund 3,224,879 648,368 138,652 -- 4,011,899 A special meeting of shareholders of the Pilgrim Global Technology and Pilgrim SmallCap Asia Growth Funds, held March 15, 2001, at the offices of ING Pilgrim, 7337 East Doubletree Ranch Road, Scottsdale, AZ 85258 A brief description of each matter voted upon as well as the results are outline below: Pilgrim Global Technology Fund 1. To approve an Agreement and Plan of Reorganization providing for the acquisition of all of the assets of Pilgrim Global Technology Fund by ING Global Information Technology Fund 922,823 1,564 1,289 -- 925,676 SmallCap Asia Growth 1. To approve an Agreement and Plan of Reorganization providing for the acquisition of all of the assets of Pilgrim SmallCap Asia Growth Fund by Pilgrim Asia-Pacific Equity Fund 336,508 67,620 12,052 -- 416,180
111 SHAREHOLDER MEETING (Unaudited) -------------------------------------------------------------------------------- A special meeting of shareholders of the Pilgrim Worldwide Emerging Markets and Pilgrim Emerging Markets Value Funds held April 12, 2001 at ING Pilgrim, 7337 East Doubletree Ranch Road, Scottsdale, AZ 85258 A brief description of each matter voted upon as well as the results are outline below:
Shares voted Shares against or Shares Broker Total voted for withheld abstained non-vote Voted --------- -------- --------- -------- ----- Pilgrim Worldwide Emerging Markets Fund 1. To approve an Agreement and Plan of Reorganization providing for the acquisition of all of the assets of Pilgrim Worldwide Emerging Markets Fund by Pilgrim Emerging Countries Fund 4,555,446 338,827 248,824 -- 5,143,097 Pilgrim Emerging Markets Value Fund 1. To approve an Agreement and Plan of Reorganization providing for the acquisition of all of the assets of Pilgrim Emerging Markets Value Fund by Pilgrim Emerging Countries Fund 839,915 34,840 36,462 -- 911,217 A special meeting of shareholders of the Pilgrim International SmallCap Growth Fund held April 19, 2001 at ING Pilgrim, 7337 East Doubletree Ranch Road, Scottsdale, AZ 85258 A brief description of each matter voted upon as well as the results are outline below: Pilgrim International SmallCap Fund 1. To approve a new Sub-Avisory Agreement between ING Pilgrim Investments, LLC and Nicholas-Applegate Capital Management ("NACM"), to reflect the acquisition of NACM by Allianz of America, Inc., with no change in the sub-advisory fee 16,679,209 100,683 239,319 -- 17,019,211 A special meeting of shareholders of the ING Funds Trust held March 20, 2001 at ING Pilgrim, 7337 East Doubletree Ranch Road, Scottsdale, AZ 85258 ING Global Brand Names ING International Equity ING Emerging Markets Equity ING Global Communications ING Global Information Technology ING European Equity 1. Vote on Trustees/Directors Paul S. Doherty 427,604,900 -- 2,059,716 -- 429,664,616 Alan L. Gosule 427,678,938 -- 1,985,678 -- 429,664,616 Walter H. May 427,672,061 -- 1,992,555 -- 429,664,616 Thomas J. McInerney 427,652,027 -- 2,012,589 -- 429,664,616 Jock Patton 427,622,933 -- 2,041,683 -- 429,664,616 David W.C.Putnam 427,676,810 -- 1,987,806 -- 429,664,616 Blaine E. Rieke 427,585,125 -- 2,079,491 -- 429,664,616 John G. Turner 427,662,516 -- 2,002,100 -- 429,664,616 Richard A. Wedemeyer 427,652,125 -- 2,012,491 -- 429,664,616 2. To ratify the appointment of Ernst & Young LLP as Independent Auditors of the Funds for the fiscal year ending October 31, 2001 424,894,887 514,512 4,255,217 -- 429,664,616
112 INVESTMENT MANAGER ING Pilgrim Investments, LLC 7337 E. Doubletree Ranch Road Scottsdale, Arizona 85258 ADMINISTRATOR ING Pilgrim Group, LLC 7337 E. Doubletree Ranch Road Scottsdale, Arizona 85258 DISTRIBUTOR ING Pilgrim Securities, Inc. 7337 E. Doubletree Ranch Road Scottsdale, Arizona 85258 1-800-334-3444 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 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. INTLSEMIANN043001-062901