Securities Act File No. 333-33445
                                               Securities Act File No.   2-91302
                                               Securities Act File No.  33-91706
                                               Securities Act File No.   2-34552
                                               Securities Act File No.  33-56094

                                  Pilgrim Funds

                         Supplement dated August 6, 1999
                      to the Prospectus dated May 24, 1999
                             Classes: A, B, C and M

Acquisition of Pilgrim Capital Corporation by ReliaStar Financial Corp.

     On July 22, 1999,  Pilgrim Capital Corp. (NYSE: PFX), the parent company of
Pilgrim  Investments,  Inc., which is the adviser to the Funds,  entered into an
agreement under which it will be acquired by ReliaStar  Financial  Corp.  (NYSE:
RLR).  ReliaStar  Financial Corp. is a  Minneapolis-based  holding company whose
subsidiaries  offer  individuals and institutions  life insurance and annuities,
employee benefits products and services, life and health reinsurance, retirement
plans,  mutual funds,  bank products and personal  finance  education.  Based on
revenues,  ReliaStar  Financial  Corp.  is the 8th  largest  publicly  held life
insurance  holding company in the United States and at March 31, 1999, had $23.2
billion  in  assets  under  management  and life  insurance  in force of  $304.7
billion.  Completion of the acquisition is contingent  upon, among other things,
approval by the Directors/Trustees and the shareholders of the Pilgrim Funds and
certain  regulatory  approvals.  The closing of the  acquisition  is expected to
occur during the fourth quarter of 1999.

     Pilgrim  Investments  as an  organization  will  survive  the  transaction.
Pilgrim Investments does not currently anticipate that there will be any changes
in the personnel  primarily  responsible for management of the Funds as a result
of the acquisition. As a result of the transaction,  Pilgrim Investments may get
access  to the  resources  and  investment  expertise  of  Northstar  Investment
Management Corporation, an investment adviser that is a subsidiary of ReliaStar.

     Under  the  provisions  of the  advisory  contracts  between  the Funds and
Pilgrim Investments,  those agreements will terminate  automatically at the time
of the acquisition.  As a result, the Board of  Directors/Trustees  on August 2,
1999 approved new advisory  contracts between the Funds and Pilgrim  Investments
which, subject to shareholder  approval,  will take effect immediately after the
acquisition.  The contracts  are  substantially  the same as those  currently in
effect. A shareholder  meeting has been scheduled in November to approve the new
agreements.


Termination of Sub-Adviser for the Pilgrim MidCap Value Fund (the "Fund")

     Effective  October 1, 1999, Cramer Rosenthal  McGlynn,  LLC ("CRM") will no
longer serve as  Sub-Adviser  of the Fund.  CRM has served as a  Sub-Adviser  to
Pilgrim Investments,  Inc., which is the Adviser for the Fund. Effective October
1, 1999,  Pilgrim  Investments  will manage  directly the  portfolio of the Fund
pursuant to its existing Investment  Management Agreement with the Fund. The fee
payable to Pilgrim  Investments  for serving as Adviser (at an annual rate of 1%
of the Fund's average daily net assets) will not change.




     The MidCap Value Fund will be managed by a team led by G. David  Underwood,
Vice  President  and Senior  Portfolio  Manager  for  Pilgrim  Investments.  Mr.
Underwood also serves as the Portfolio Manager of Pilgrim LargeCap Leaders Fund.
The other individual on the team is Robert M. Kloss.

     Effective  October 1, 1999, when Pilgrim  Investments takes over management
of the Fund, the Principal Investment  Strategies of the Fund will be revised as
follows:

     The Fund  normally  invests  as fully as  practicable  (at least 80% of its
     assets) in equity securities of medium-sized U.S. companies.  The Fund will
     normally  invest  at  least  65% of its  assets  in  equity  securities  of
     companies that meet the following disciplined criteria:

          Consistent Dividends - the company must have paid or had the financial
          capability  from its  operations  to pay a  dividend  in its last five
          fiscal years.

          Strong  Balance  Sheet - if the company  has debt that is rated,  that
          debt is rated  investment  grade  by a  nationally  recognized  rating
          agency. If the company does not have debt that is rated, the company's
          long term debt to capitalization ratio is below 25%.

          Reinvested Earnings - the company currently pays out in dividends less
          than 65% of current  earnings,  or less than the dividend  payout as a
          percentage  of current  earnings of at least half of the  medium-sized
          companies in similar industries.

          Attractive  Price - the ratio of the stock's  price to the next fiscal
          year's anticipated  earnings is less than the corresponding  ratio for
          at least half of the medium-sized companies in similar industries.

         The Fund  considers  a company  to be  medium-sized  if it has a market
         capitalization between $1 billion and $8 billion. The equity securities
         in  which  the  Fund  may  invest  include  common  stock,  convertible
         securities, preferred stock and warrants.

     The Fund's investment  objective will not be changed.  It remains long term
capital appreciation. Following the assumption of portfolio management duties by
Pilgrim Investments, significant portfolio turnover may occur in connection with
a  restructuring  of the Fund's  holdings  to reflect  the  management  style of
Pilgrim  Investments.  Such restructuring may result in transactional  costs for
the Fund, and may result in accelerated  capital gain  distributions as a result
of the turnover.


Pilgrim High Yield Fund II

     The proposed reorganization of Pilgrim High Yield Fund II into Pilgrim High
     Yield Fund that is referenced under "Principal  Investment  Strategies" has
     been canceled.