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
                                     Class Q

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.


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.