Securities Act File No. 33-67852
                                               Securities Act File No. 002-34552
                                               Securities Act File No. 333-33445
                                                  Securities Act File No. 33-847


                            PILGRIM U.S. EQUITY FUNDS
                          PILGRIM EQUITY & INCOME FUNDS

                         Supplement dated August 1, 2001
               to the Class A, B, C, M and T U.S. Equity Funds and
                        Equity & Income Funds Prospectus
                                dated May 1, 2001


1.   CHANGE IN SUB-ADVISER FOR PILGRIM RESEARCH ENHANCED INDEX FUND

     Effective August 1, 2001,  Aeltus  Investment  Management,  Inc. became the
sub-adviser to the Pilgrim Research Enhanced Index Fund.

     The information  under "Management of the Funds -- Sub-Advisers -- Research
Enhanced Index Fund" on page 48 of the Prospectus is replaced with the following
text:

     Aeltus Investment Management,  Inc. ("Aeltus") serves as Sub-Adviser to the
     Pilgrim Research Enhanced Index Fund. Founded in 1972, Aeltus is registered
     as an investment adviser.  Aeltus is an indirect wholly-owned subsidiary of
     ING Group, and is an affiliate of ING Pilgrim.  Aeltus has acted as adviser
     or  sub-adviser  to mutual  funds since 1994 and has managed  institutional
     accounts  since 1972. As of June 30, 2001,  Aeltus managed over $41 billion
     in  assets.  Its  principal  office is located  at 10 State  House  Square,
     Hartford, Connecticut 06103-3602.

     Hugh T. M.  Whelan and  Douglas E. Cote  share the  responsibility  for the
     day-to-day management of the Pilgrim Research Enhanced Index Fund.

     Mr.  Whelan has served as  co-manager  of the Fund since August 1, 2001. At
     Aeltus,  he  has  served  as a  quantitative  equity  analyst  since  1999.
     Previously,  Mr.  Whelan was a  quantitative  portfolio  manager in Aeltus'
     fixed income group, specializing in corporate securities since 1994.

     Mr.  Cote has served as  co-manager  of the Fund since  August 1, 2001.  At
     Aeltus,  Mr. Cote has served as a  quantitative  equity analyst since 1996.
     Previously,   Mr.  Cote  was   responsible   for  developing   quantitative
     applications for Aeltus' equity department.

2.   CHANGES IN INVESTMENT STRATEGIES OF PILGRIM RESEARCH ENHANCED INDEX FUND

     Effective  August 1, 2001, the disclosure on page 8 of the Prospectus under
"Investment Strategy" is deleted in its entirety and replaced with the following
disclosure:

     The Fund  invests at least 80% of its net assets in stocks  included in the
     Standard & Poor's Composite Stock Price Index (S&P 500 Index).  The S&P 500
     Index is an unmanaged  index that measures the performance of securities of
     approximately  500  large-capitalization  companies  whose  securities  are
     traded on major U.S. stock markets.

     In  managing  the Fund,  the  portfolio  managers  attempt to  achieve  the
     investment  objective  by  overweighting  those stocks in the S&P 500 Index
     that  the  portfolio  managers  believe  will  outperform  the  index,  and
     underweighting  (or avoiding  altogether)  those stocks that the  portfolio
     managers  believe  will   underperform  the  index.  In  determining  stock
     weightings,  the portfolio managers use internally  developed  quantitative
     computer models to evaluate various criteria such as the financial strength
     of each company and its potential for strong, sustained earnings growth. At
     any  one  time,  the  portfolio  managers  generally  include  in the  Fund
     approximately 400 of the stocks included in the S&P 500 Index. Although the
     Fund  will not hold all the  stocks  in the S&P 500  Index,  the  portfolio
     managers  expect  that  there  will  be a  close  correlation  between  the
     performance  of the Fund and that of the S&P 500 Index in both  rising  and
     falling markets, as the Fund is designed to have risk characteristics (e.g.
     price-to-earnings  ratio,  dividend yield,  volatility)  which  approximate
     those of the S&P 500 Index.

     The Fund may also  invest in  certain  higher-risk  investments,  including
     derivatives (generally,  these investments will be limited to S&P 500 Index
     options and futures on the S&P 500 Index).

3.   CHANGE IN PORTFOLIO MANAGERS FOR PILGRIM MAGNACAP FUND

     Effective June 18, 2001, the following  disclosure  replaces the disclosure
under "Management of the Funds -- MagnaCap Fund" on page 47 of the Prospectus:

     Thomas  Jackson,  Senior Vice  President and Senior  Portfolio  Manager for
     value equity strategies at ING Pilgrim,  has served as Portfolio Manager of
     MagnaCap  Fund since June 2001.  Prior to joining ING Pilgrim in June 2001,
     Mr. Jackson was a Managing Director at Prudential  Investments  (April 1990
     through  December  2000).  Prior to April 1990,  Mr.  Jackson was  Co-Chief
     Investment  Officer and Managing Director at Century Capital Associates and
     Red Oak Advisors Inc.

     Howard Kornblue, Senior Vice President and Senior Portfolio Manager for ING
     Pilgrim,  has served as Auxiliary  Portfolio Manager of MagnaCap Fund since
     June  2001.  From  January  2001 to  present,  Mr.  Kornblue  has served as
     Director  of Value  Strategies  at ING  Pilgrim.  Mr.  Kornblue  served  as
     Portfolio Manager of MagnaCap Fund from 1989 until January 2001.

4.   CHANGE IN NAME FOR PILGRIM BANK AND THRIFT FUND

     Effective  May 21,  2001,  Pilgrim Bank and Thrift Fund changed its name to
Pilgrim  Financial  Services  Fund.  References  in the  Prospectus to "Bank and
Thrift Fund" are each replaced by "Financial Services Fund."

5.   CHANGE IN DESCRIPTION OF INVESTMENT  OBJECTIVE,  INVESTMENT  STRATEGY,  AND
     RISKS FOR PILGRIM BANK AND THRIFT FUND

     Effective  May  21,  2001,  the  following   disclosure  will  replace  the
disclosure under "Pilgrim Bank and Thrift Fund " on page 26 of the Prospectus:

     PILGRIM FINANCIAL SERVICES FUND

     OBJECTIVE

     The Fund seeks long-term capital appreciation.

     INVESTMENT STRATEGY

     The Fund invests, under normal market conditions, at least 65% of its total
     assets in equity securities of companies engaged in financial services. The
     equity  securities in which the Fund invests are normally common stock, but
     may also include preferred stock, warrants, and convertible securities.

     Financial services companies may include the following: banks; bank holding
     companies;   investment  banks;  trust  companies;   insurance   companies;
     insurance brokers; finance companies; securities broker-dealers; electronic
     trading  networks;  investment  management  firms;  custodians of financial
     assets;  companies engaged in trading,  dealing,  or managing  commodities;
     companies that invest  significantly in or deal in, financial  instruments;
     government-sponsored  financial  enterprises;  thrifts and  savings  banks;
     mortgage  companies;   title  companies;   conglomerates  with  significant
     interests in  financial  services  companies;  foreign  financial  services
     companies; companies that process financial transactions; administrators of
     financial products or services; companies that render services primarily to
     other financial services companies; companies that produce, sell, or market
     software or hardware related to financial  services or products or directed
     to  financial  services  companies;  and other  companies  whose  assets or
     earnings  can  be  significantly   affected  by  financial  instruments  or
     services.

     The Fund may  invest  the  remaining  35% of its  assets  in equity or debt
     securities  of  financial  services  companies  or  companies  that are not
     financial services companies, and in money market instruments. The Fund may
     also invest in savings  accounts of mutual  thrifts that may allow the Fund
     to participate in potential future stock conversions of the thrift.

     RISKS

     You could lose money on an investment in the Fund. The Fund may be affected
     by the following risks, among others:

     Price  Volatility  - the  value of the Fund  changes  as the  prices of its
     investments go up or down. Equity securities face market,  issuer and other
     risks,  and  their  values  may  go  up  or  down,  sometimes  rapidly  and
     unpredictably. Market risk is the risk that securities may decline in value
     due  to  factors  affecting  securities  markets  generally  or  particular
     industries.  Issuer  risk is the risk  that the  value  of a  security  may
     decline  for  reasons  relating  to the  issuer,  such  as  changes  in the
     financial  condition of the issuer.  While equity  securities may offer the
     potential  for greater  long-term  growth than most debt  securities,  they

     generally  have  higher  volatility.  The  Fund may  invest  in  small-  to
     medium-sized companies,  which may be more susceptible to price swings than
     larger companies because they have fewer financial resources,  more limited
     product  and market  diversification  and many are  dependent  on a few key
     managers.

     Market  Trends - from  time to time,  the  stock  market  may not favor the
     growth-oriented  securities in which the Fund invests.  Rather,  the market
     could favor value-oriented stocks, or may not favor equities at all.

     Risks of Concentration - because the Fund's investments are concentrated in
     financial  services  industries,  the value of the Fund may be  subject  to
     greater  volatility than a fund with a portfolio that is less concentrated.
     If securities of financial services companies as a group fall out of favor,
     the  Fund   could   underperform   funds   that   have   greater   industry
     diversification.

     Changes in Interest Rates - because the profitability of financial services
     companies may be largely dependent on the availability and cost of capital,
     which fluctuates significantly in response to changes in interest rates and
     general economic  conditions,  the value of the Fund's  securities may fall
     when interest rates rise.

     Illiquid  Securities - if a security is illiquid,  the Fund might be unable
     to sell the security at a time when the Adviser might wish to sell, and the
     security  could  have the effect of  decreasing  the  overall  level of the
     Fund's liquidity.  Further, the lack of an established secondary market may
     make it more difficult to value illiquid securities,  which could vary from
     the amount the Fund could realize upon disposition.

     Risks of Foreign  Investing - foreign  investments may be riskier than U.S.
     investments for many reasons, including changes in currency exchange rates,
     unstable  political  and economic  conditions,  a lack of adequate  company
     information, differences in the way securities markets operate, less secure
     foreign  banks or  securities  depositories  than  those in the  U.S.,  and
     foreign controls on investment.

     Debt Securities - the value of debt securities may fall when interest rates
     rise. Debt  securities with longer  maturities tend to be more sensitive to
     changes in interest  rates,  usually  making them more  volatile  than debt
     securities with shorter maturities.

6.   REOPENING OF PILGRIM SMALLCAP OPPORTUNITIES FUND

     Pilgrim  SmallCap  Opportunities  Fund was  closed  to new  investors  from
February 29, 2000 to May 10, 2001. On May 9, 2001,  the Board of Trustees of the
Fund voted to reopen the Fund effective May 10, 2001. All references to the Fund
being closed to new investors are hereby deleted from the Prospectus.

               PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE