-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DtYWmYZIElMaiIG7fPIOaIHheo6wjquT6gC24PuXgWvM8FwGT257r3fhcV6KwvsG EZcgWYIVg3aLSCWvnQLJVQ== 0000950147-98-000047.txt : 19980128 0000950147-98-000047.hdr.sgml : 19980128 ACCESSION NUMBER: 0000950147-98-000047 CONFORMED SUBMISSION TYPE: N-30B-2 PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960531 FILED AS OF DATE: 19980126 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PILGRIM AMERICA PRIME RATE TRUST CENTRAL INDEX KEY: 0000826020 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 956874587 STATE OF INCORPORATION: MA FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: N-30B-2 SEC ACT: SEC FILE NUMBER: 811-05410 FILM NUMBER: 98512299 BUSINESS ADDRESS: STREET 1: TWO RENAISSANCE SQ STREET 2: 40 N CENTRAL STE 1200 CITY: PHOENIX STATE: AZ ZIP: 85004-4424 BUSINESS PHONE: 6024178100 MAIL ADDRESS: STREET 1: TWO RENAISSANCE SQ STREET 2: 40 N CENTRAL STE 1200 CITY: PHOENIX STATE: AZ ZIP: 85004-4424 FORMER COMPANY: FORMER CONFORMED NAME: PILGRIM PRIME RATE TRUST DATE OF NAME CHANGE: 19920703 N-30B-2 1 FORM N 30B 2 Pilgrim America Prime Rate Trust FIRST QUARTER REPORT May 31, 1996 Pilgrim America Prime Rate Trust FIRST QUARTER REPORT May 31, 1996 ------------.----------- Table of Contents Letter to Shareholders.................................... 2 Shareholder Letter Footnotes.............................. 5 Statistics and Performance................................ 6 Performance Footnotes..................................... 8 Additional Notes and Information.......................... 9 Portfolio of Investments.................................. 12 Fund Advisor and Agents................................... 21 -----------.----------- Pilgrim America Funds 1 Pilgrim America Prime Rate Trust - -------------------------------------------------------------------------------- LETTER TO SHAREHOLDERS - -------------------------------------------------------------------------------- Dear Fellow Shareholders: During the first quarter ended May 31, 1996, Pilgrim America Prime Rate Trust (the "Trust") continued to meet its objective of generating a high level of current income while preserving capital. PERFORMANCE Distributions to shareholders during the quarter totaled $.20 per share, providing a distribution rate of 8.39% based on the average dividend adjusted month end NAV and 8.32% based on the average month end market price of the Trust's common stock.(1) This compares favorably with the prime lending rate of large commercial banks for their best customers which was 8.25% during the quarter. The Trust maintained its strong performance position in relation to its peers as measured by Lipper Analytical Services, Inc. The Trust ranks first as measured by NAV total return for the one, three and five year measurement periods ended May 31, 1996. The Trust was rated among a total of seven, six and five funds for the one, three and five year periods, respectively.(2) For the three and five year periods ended May 31, 1996, the Trust had a five star and a four star Morningstar risk-adjusted performance rating, respectively, when rated among 87 and 63 taxable bond funds. The Trust's overall rating through May 31, 1996 is four stars. Morningstar ranks funds' risk on a percentile scale of 1 (lowest) to 100 (highest). The Trust's risk scores for the three and five year periods place the Trust among the top 1% out of 30 and 25 Corporate Bond - General funds and the entire universe of 469 and 305 closed-end funds as of May 31, 1996.(3) FIRST QUARTER HIGHLIGHTS On May 2, 1996, Trust shareholders approved the recommendation of management and the Trustees to borrow up to 33 1/3% of net assets, including borrowings, primarily to acquire additional income producing investments. On May 10, 1996, the Trust entered into an agreement to borrow up to $215 million from a syndicate of major banks led by Bank of America. Subsequently, the maximum borrowing limit was increased to $255 million and, by agreement, it can be increased further to $285 million. This four year revolving credit facility has been designed to provide a spread on borrowings and Pilgrim America Funds 2 Pilgrim America Prime Rate Trust - -------------------------------------------------------------------------------- LETTER TO SHAREHOLDERS - -------------------------------------------------------------------------------- approximate the other terms of the Trust's senior loan interests. The Trust's borrowing rate under this loan agreement is .50% over LIBOR, or if lower, the federal funds rate. The Trust also will pay a .125% fee for any amount unborrowed. Management of the Trust does not intend to borrow unless it believes that shareholders will receive a return which exceeds both the costs of borrowing and the management fee to be paid to the portfolio manager for managing the assets acquired with borrowing proceeds. The Trust expects to begin borrowing under the new revolving loan agreement in June and gradually increase borrowings to acquire additional senior loan interests during July and August as appropriate opportunities arise. An additional benefit immediately available to the Trust as a result of entering into the loan agreement is the ability to substitute unused available borrowings in place of Trust assets previously set aside in short term investments to satisfy unfunded credit commitments. These previously set aside assets now can be productively invested in senior loan interests. During the period, declines and increases in the value of portfolio investments and the Trust's strong secondary market performance combined to result in no change in the Trust's NAV. While the NAV remained stable, the market price of the Trust's shares increased. At the beginning of the quarter, NAV was $9.61 and the Trust's shares price was $9.375, a market discount of 2.45%. On May 31, 1996, NAV was $9.61 and the Trust's shares closed at $9.625, a premium of 0.16%. The average market price discount of the Trust's shares compared to NAV was a low 1/2 of 1% during the quarter. We believe the narrowing of the market discount is attributable, in part, to the growing confidence of financial planners, brokers and shareholders in the stable credit quality of senior loan interests generally. Also, increased retail interest in the Trust and similar funds has provided strong market support for Trust shares. Among the Trust's new commitments are Ralph's Grocery Company, Simmons Company, Packard Bell Electronics, Inc. Glenoit Mills, Inc., and Softworld Services. During the quarter, sales or repayments included Mary Kay Cosmetics, Inc. VSI Corp., Silgan Corp., and Crown Paper Co. Non-performing senior loans amounted to 1.93% of net assets at May 31, 1996, compared to 1.58% at February 29, 1996. Trust borrowers generally are meeting their operating and financial objectives and as a result management believes that credit quality of the Trust's assets is satisfactory. Management will continue to vigorously work to reduce non-performing senior loan interests. Pilgrim America Funds 3 Pilgrim America Prime Rate Trust - -------------------------------------------------------------------------------- LETTER TO SHAREHOLDERS - -------------------------------------------------------------------------------- OUTLOOK The outlook for interest rates continues to be relatively stable. It is our belief based on the continued moderate strength of the economy, high capacity utilization rates, firm commodity prices and relatively low unemployment, that any movement in interest rates over the next few month is likely to be upward. The interest rates on the Trust's senior loan interests will adjust as short term rates change. Although the Trust's yield will change periodically, the value of the Trust's assets generally will be unaffected as a result of interest rate changes. The supply of senior loan interests has remained relatively constant. Competition from a growing number of new investors, however, has continued to put downward pressure on yields. The entire Trust management team is grateful to you for your support. As always, we look forward to your comments and questions. Sincerely, /s/ Howard Tiffen Howard Tiffen Senior Vice President and Senior Portfolio Manager Pilgrim America Investments, Inc. June 11, 1996 Pilgrim America Funds 4 Pilgrim America Prime Rate Trust - -------------------------------------------------------------------------------- SHAREHOLDER LETTER FOOTNOTES - -------------------------------------------------------------------------------- (1) The distribution rate is calculated by annualizing the dividends declared in each month and dividing the resulting annualized dividend amount by the Trust's net asset value or the NYSE closing price, as applicable at the end of the period. (2) Lipper Analytical Services, Inc. ranked the Trust for total return, without deducting sales charges and assuming reinvestment of all dividends and capital gains distributions. (3) Morningstar's taxable bond fund category includes Corporate Bond-General, Government Bond, International Bond and Multisector Bond funds. On Morningstar's risk-adjusted performance rating system, funds falling into the top 10% of all funds within their category are awarded five stars and funds in the next 22.5% receive four stars. Morningstar ratings are calculated from the fund's three, five and ten-year returns (with fee adjustment) in excess of 90-day Treasury bill returns, and a risk factor that reflects fund performance below 90-day Treasury bill returns. The ratings are subject to change every month. Morningstar ranks funds within the Corporate Bond - General category and the closed end universe for risk for the three, five and ten year periods based upon their downside volatility compared to a 90-day Treasury bill. Performance data represents past performance and is no guarantee of future results. Investment return and principal value of an investment in the Trust will fluctuate. Shares, when sold, may be worth more or less than their original cost. The views expressed in this report reflect those of the portfolio manager, only through the end of the period of the report as stated on the cover. The manager's views are subject to change at any time based on market and other conditions. Pilgrim America Funds 5 Pilgrim America Prime Rate Trust - -------------------------------------------------------------------------------- STATISTICS AND PERFORMANCE as of May 31, 1996 - -------------------------------------------------------------------------------- PORTFOLIO CHARACTERISTICS Net Assets $864,424,625 ------------------------------------------------------------------- Assets Invested in Senior Loan Interests $843,182,432* ------------------------------------------------------------------- Total Number of Senior Loan Interests 92 ------------------------------------------------------------------- Average Amount Outstanding per Loan $9,165,026 ------------------------------------------------------------------- Total Number of Industries 28 ------------------------------------------------------------------- Quarterly Portfolio Turnover Rate 23.51% ------------------------------------------------------------------- Average Loan Amount per Industry $30,113,658 ------------------------------------------------------------------- Weighted Average Days to Interest Rate Reset 39 days ------------------------------------------------------------------- Average Loan Maturity 64 months ------------------------------------------------------------------- Average Age of Loans Held in Portfolio 12 months ------------------------------------------------------------------- *Includes loans and other debt received through restructures TOP 10 INDUSTRIES AS A TOP 10 SENIOR % OF NET ASSETS LOAN INTERESTS HOLDINGS AS A % OF NET ASSETS Diversified Manufacturing 11.2% Riverwood International Corp. 3.5% Food Stores 6.8% Aviall, Inc. 2.8% Media/Broadcast 6.7% Pullman Company 2.5% Paper Products 6.3% Sky Chef's International, Inc. 2.3% Aerospace Products & Services 6.2% Graco Children's Products, Inc. 2.3% Electronic Equipment 4.9% Liberty House, Inc. 2.3% Industrial Equipment 4.6% MTF Acquisition Corp. 2.3% Industrial Services 4.6% Titanium Metals, Inc. 2.3% Metal Products 4.4% ICON Health & Fitness Co. 2.0% Industrial Chemicals 3.3% Star Markets Co., Inc. 1.9% Pilgrim America Funds 6 Pilgrim America Prime Rate Trust - -------------------------------------------------------------------------------- STATISTICS AND PERFORMANCE as of May 31, 1996 - -------------------------------------------------------------------------------- DISTRIBUTION RATES The following table sets forth the Trust's monthly dividend performance which is summarized quarterly.
SEC 30-Day SEC 30-Day Annualized Annualized Prime Yield at Yield at Distribution Distribution Quarter-ended Rate NAV(A) MKT(A) Rate at NAV(B) Rate at MKT(B) ---------------------------------------------------------------------------------------- August 31, 1995 8.75% 10.01% 10.61% 8.92% 9.45% ---------------------------------------------------------------------------------------- November 30, 1995 8.75% 9.17% 9.59% 9.02% 9.43% ---------------------------------------------------------------------------------------- February 29, 1996 8.25% 8.08% 8.17% 8.47% 8.57% ---------------------------------------------------------------------------------------- May 31, 1996 8.25% 8.26% 8.24% 8.45% 8.44% ----------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (assuming rights were exercised and excluding sales charge and commission)(C,D) NAV MKT ----------------------------------------------------------------------- Year to Date 3.18% 5.60% ----------------------------------------------------------------------- 1 Year 8.79% 17.06% ----------------------------------------------------------------------- 3 Years 8.14% 10.06% ----------------------------------------------------------------------- 5 Years 7.75%(G) N/A ----------------------------------------------------------------------- Since Trust Inception(E) 8.58%(G) N/A ----------------------------------------------------------------------- Since Initial Trading on NYSE(F) N/A 10.82% ----------------------------------------------------------------------- See performance footnotes on page 8 Pilgrim America Funds 7 Pilgrim America Prime Rate Trust - -------------------------------------------------------------------------------- PERFORMANCE FOOTNOTES - -------------------------------------------------------------------------------- (A) Yield is calculated by dividing the Trust's net investment income per share for the most recent thirty days by the net asset value (in the case of NAV) or the NYSE closing price (in the case of Market) at quarter-end. Yield calculations do not include any commissions or sales charges, and are compounded for six months and annualized for a twelve month period to derive the Trust's yield consistent with the SEC standardized yield formula for open-end investment companies. (B) The distribution rate is calculated by annualizing the dividends declared in each month and dividing the resulting annualized dividend amount by the Trust's net asset value (in the case of NAV) or the NYSE closing price (in the case of Market) at the end of the period. (C) Calculation of total return assumes a hypothetical initial investment at the net asset value (in the case of NAV) or the NYSE closing price (in the case of Market) on the last business day before the first day of the stated period, with all dividends and distributions reinvested at the actual reinvestment price. The Trust's average annual total returns on an NAV basis assuming rights were exercised with a 3% sales charge through May 31, 1996 were 7.09% and 8.17% for the five-year and since inception periods, respectively. The average annual total returns based on market price assuming rights were exercised with a brokerage commission are not presented. (D) On December 27, 1994, the Trust issued to its shareholders transferable rights which entitled the holders to subscribe for 17,958,766 shares of the Trust's common stock at the rate of one share of common stock for each four rights held. The offering was completed on January 27, 1995. (E) Inception Date - May 12, 1988. (F) Initial Trading on NYSE - March 9, 1992. (G) Reflects Partial Waiver of Fees. Performance data represents past performance and is no guarantee of future results. Investment return and principal value of an investment in the Trust will fluctuate. Shares, when sold, may be worth more or less than their original cost. Pilgrim America Funds 8 Pilgrim America Prime Rate Trust - -------------------------------------------------------------------------------- ADDITIONAL NOTES AND INFORMATION - -------------------------------------------------------------------------------- ANNUAL MEETING A special meeting of shareholders was held at the offices of the Trust on May 2, 1996. A brief description of each matter voted upon as well as the voting results are outlined below:
Shares Shares voted against Shares Broker voted for or withheld abstained non-vote Total --------- ----------- --------- -------- ----- I. Proposal for the election of Trustees: Mary A. Baldwin 53,657,033 292,252 -- -- 53,949,285 Al Burton 53,654,944 294,341 -- -- 53,949,285 Bruce S. Foerster 53,654,543 294,742 -- -- 53,949,285 Jock Patton 53,655,383 293,902 -- -- 53,949,285 Robert W. Stallings 53,657,233 292,052 -- -- 53,949,285 II. Approval of an amendment to the Trust's fundamental investment policies to expand its ability to engage in borrowing transactions to the extent permitted under the Investment Company Act of 1940, as amended: 39,452,612 4,345,127 3,641,723 6,509,823 53,949,285 III. Approval of an amendment to the Investment Management Agreement between the Trust and its Investment Manager to provide that the Trust pay the Investment Manager at the current rate schedule based on an expanded base of assets - the Trust's average daily net assets plus the proceeds of any outstanding borrowings: 37,500,301 5,903,416 4,035,745 6,509,823 53,949,285 IV. Ratification of KPMG Peat Marwick LLP as independent auditors for the Trust for the fiscal year ending February 28, 1997: 50,669,305 622,761 2,657,219 -- 53,949,285 V. Approval to transact such other business as may properly come before the special meeting of shareholders or any adjournments thereof: 49,034,353 1,336,844 3,578,088 -- 53,949,285
Pilgrim America Funds 9 Pilgrim America Prime Rate Trust - -------------------------------------------------------------------------------- ADDITIONAL NOTES AND INFORMATION - -------------------------------------------------------------------------------- WRITTEN REQUESTS Please mail all account inquiries and other comments to: Pilgrim America Prime Rate Trust Account Services c/o Pilgrim America Group, Inc. Two Renaissance Square 40 North Central Avenue, Suite 1200 Phoenix, Arizona 85004-4424 TOLL-FREE SHAREHOLDER INFORMATION Call us from 9:00 a.m. to 7:00 p.m. Eastern time on any business day for account information or other information, at 1-800-331-1080. DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN Trust shareholders are paid distributions in cash unless they elect to reinvest the payments in additional shares of the Trust, at reduced brokerage commissions, pursuant to the Dividend Reinvestment and Cash Purchase Plan. This Plan also allows shareholders to make periodic cash purchases. For a copy of the Plan, or for more information, contact our Shareholder Service Department at 1-800-331-1080. STOCK DATA The Trust's shares are traded on the New York Stock Exchange (Symbol: PPR). The Trust's name changed to Pilgrim America Prime Rate Trust and its cusip number changed to 720906 10 6 effective April 12, 1996. The Trust's NAV and market price are published weekly under the "Closed-End Funds" feature in Barron's, The New York Times, The Wall Street Journal and many other regional and national publications. Pilgrim America Funds 10 Pilgrim America Prime Rate Trust - -------------------------------------------------------------------------------- ADDITIONAL NOTES AND INFORMATION - -------------------------------------------------------------------------------- KEY FINANCIAL DATES - Calendar 1996 Dividends DECLARATION DATE EX-DATE PAYABLE DATE January 31 February 8 February 23 February 29 March 7 March 21 March 29 April 3 April 18 April 30 May 8 May 22 May 31 June 6 June 20 June 28 July 3 July 18 July 31 August 8 August 22 August 30 September 5 September 19 September 30 October 8 October 23 October 31 November 7 November 22 November 29 December 5 December 19 December 20 December 27 January 13, 1997 Record date will be two business days after each Ex-Date. These dates are subject to change. Pilgrim America Funds 11 Pilgrim America Prime Rate Trust - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS as of May 31, 1996 (Unaudited) - --------------------------------------------------------------------------------
SENIOR LOAN INTERESTS: 97.5%* Principal Amount Value - --------- ----- (Dollar weighted portfolio interest reset period is 39 days) Aerospace Products & Services: 6.2% Aviall, Inc. (aircraft parts distributor) $24,110,909 Term Loan B, maturing November 2000 $24,110,909 Dallas Airmotive, Inc. (aircraft engine maintenance) 8,000,000 Term Loan B, maturing March 2001 8,000,000 Grimes Aerospace Corp. (aerospace products) 2,477,291 Revolver, maturing December 1999 2,440,131 14,083,026 Term Loan, maturing December 1999 13,871,781 Gulfstream Delaware Corp. (aircraft manufacturer) 5,000,000 Term Loan, maturing March 1998 5,000,000 ------------ 53,422,821 ------------ Apparel Products: 2.0% Butterick Pattern Co. (sewing aids) 1,077,706 (1) Term Loan, matured May 1996 646,624 Humphreys, Inc. (belts and personal leather goods) 6,965,000 Term Loan B, maturing November 2003 6,965,000 Scovill Fasteners (metal fasteners for apparel products) 9,958,303 Term Loan B, maturing January 2003 9,958,303 ------------ 17,569,927 ------------ Communications: 1.2% Shared Technologies, Inc. (communication services) 10,000,000 Term Loan B, maturing March 2003 10,000,000 ------------ Construction Products and Services: 2.9% MTF Acquisition Corp. (paint and coating products) 19,500,000 Term Loan, maturing November 2002 19,500,000 The Presley Companies (homebuilder) 4,000,000 Revolver, maturing May 1997 4,000,000 United Building Materials, Inc. (stone and concrete products) 1,986,693 Term Loan, maturing December 1999 1,937,026 ------------ 25,437,026 ------------ Container Products: 1.2% Reid Plastics, Inc. (plastic bottle manufacturer) 10,000,000 Term Loan B, maturing January 2002 10,000,000 ------------ Diversified Manufacturing: 11.2% Cambridge Industries, Inc. (automotive plastics) 5,701,997 Term Loan B, maturing May 2002 5,701,997
Pilgrim America Funds 12 Pilgrim America Prime Rate Trust - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS as of May 31, 1996 (Unaudited) - --------------------------------------------------------------------------------
Principal Amount Value - --------- ----- Diversified Manufacturing (continued) Cambridge Industries, Inc. (continued) $6,414,682 Term Loan C, maturing November 2003 $6,414,682 2,850,985 Term Loan D, maturing May 2004 2,850,985 Graco Children's Products, Inc. (juvenile products) 19,850,000 Term Loan B, maturing June 2003 19,850,000 The Hawk Group (metal products and fabrication) 13,994,250 Term Loan B, maturing June 2002 13,994,250 KDI Corp. (defense and leisure products) 521,042 @(2) Term Loan A, maturing December 1996 325,652 13,187 @(2) Term Loan B, maturing December 1996 13,187 Pullman Company (transportation, industrial products) 3,994,719 Revolver, maturing December 1999 3,994,719 15,430,642 Term Loan A, maturing December 1999 15,430,642 2,580,600 Term Loan B, maturing December 1999 2,580,600 Rowe International, Inc. (vending machine, jukebox and currency changer) 900,000 Revolver, maturing December 1996 900,000 7,375,000 Term Loan C, maturing December 1996 6,121,250 Spalding & Evenflo Companies, Inc. (sporting goods, juvenile products) 7,955,056 Term Loan B, maturing October 2002 7,955,056 Worldwide Sports & Recreation Corp. (optics, airguns & sports products) 10,977,600 Term Loan B, maturing March 2001 10,703,160 ------------ 96,836,180 ------------ Diversified Services/Entertainment: 2.9% AMF Group (bowling centers and equipment) 7,169,811 Term Loan A, maturing May 2003 7,241,509 2,830,189 Term Loan B, maturing May 2004 2,858,491 Bankers Systems, Inc, (compliance services to banking industry) 6,912,500 Term Loan B, maturing November 2002 6,912,500 Staff Capital, L.P. (payroll and human resource services) 8,280,000 Term Loan, maturing December 1999 8,280,000 ------------ 25,292,500 ------------ Electrical Equipment: 1.1% Merkle-Korff Industries (custom industrial electric motors) 9,930,556 Term Loan B, maturing March 2003 9,930,556 ------------ Electronic Equipment: 4.9% Details, Inc. (prototype circuit boards) 7,000,000 Term Loan A, maturing February 2001 7,000,000
Pilgrim America Funds 13 Pilgrim America Prime Rate Trust - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS as of May 31, 1996 (Unaudited) - --------------------------------------------------------------------------------
Principal Amount Value - --------- ----- Electronic Equipment (continued) Dictaphone Acquisition, Inc. (dictation and recording equipment) $12,500,000 Term Loan B, maturing June 2002 $12,500,000 Elgar Electronics (electronic testing equipment) 5,000,000 Term Loan B, maturing March 2003 5,000,000 Intesys Technologies, Inc. (contract engineering and manufacturing) 8,780,488 Term Loan B, maturing December 2001 8,780,488 K-Tec Holdings (telephone and communications equipment) 3,485,634 Term Loan B, maturing March 2004 3,485,634 3,983,824 Term Loan C, maturing March 2004 3,983,824 Packard Bell Electronics, Inc. (personal computer manufacturer) 1,507,691 Revolver, maturing April 1997 1,507,691 ------------ 42,257,637 ------------ Food/Tobacco Products and Services: 1.6% Bumble Bee Seafoods, Inc. (canned seafood) 2,562,500 Term Loan A, maturing July 1996 2,562,500 3,750,000 Term Loan B, maturing July 1996 3,750,000 Edward's Baking Co. (food service bakery) 4,488,750 Term Loan B, maturing September 2002 4,488,750 Liggett Group Inc. (tobacco products) 2,500,000 Revolver, maturing March 1997 2,500,000 Tom's Foods, Inc. (snack foods) 2,162,262 (1) Term Loan, maturing December 1998 864,905 ------------ 14,166,155 ------------ Food Distribution: 1.2% Rykoff-Sexton (food distributor) 6,756,757 Term Loan B, maturing October 2002 6,756,757 3,243,243 Term Loan C, maturing October 2002 3,243,243 ------------ 10,000,000 ------------ Food Stores: 6.8% Dominick's Finer Foods, Inc. (Chicago area supermarkets) 6,218,074 Term Loan C, maturing March 2003 6,233,619 6,218,074 Term Loan D, maturing September 2003 6,233,619 New Almac's Inc. (formerly Almac's, Rhode Island supermarkets) 1,000,000 @(3) Senior Unsecured Note, maturing August 1997 390,000 40,313 @(3) Senior Unsecured Note, maturing August 1997 15,722 Ralph's Grocery Co. (Southern California supermarkets) 4,984,323 Term Loan B, maturing June 2002 4,998,176 4,987,266 Term Loan C, maturing June 2003 5,001,126 4,986,838 Term Loan D, maturing February 2004 5,000,698
Pilgrim America Funds 14 Pilgrim America Prime Rate Trust - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS as of May 31, 1996 (Unaudited) - --------------------------------------------------------------------------------
Principal Amount Value - --------- ----- Food Stores (continued) Smith's Food & Drug Co. (western states supermarkets) $5,000,000 Term Loan B, maturing November 2003 $5,000,000 5,000,000 Term Loan C, maturing November 2004 5,000,000 5,000,000 Term Loan D, maturing August 2005 5,000,000 Star Markets Co., Inc. (Boston area supermarktes) 16,332,895 Term Loan B, maturing December 2001 16,332,895 ------------ 59,205,855 ------------ Furniture & Garden Products: 1.2% Interco (furniture) 2,975,000 Term Loan B, maturing March 2003 2,975,000 Simmons Company (mattress manufacturer) 7,000,000 Term Loan B, maturing March 2003 7,000,000 ------------ 9,975,000 ------------ General Merchandise Retailing: 3.2% Liberty House, Inc. (Hawaiian department store chain) 19,850,000 Term Loan B, maturing June 2002 19,850,000 Saks and Company (general merchandise retailer) 1,413,481 Term Loan A. maturing June 1998 1,413,481 4,205,313 Term Loan B, maturing June 2000 4,205,313 2,182,887 Term Loan B3, maturing June 2000 2,182,887 ------------ 27,651,681 ------------ Health Care Services: 2.8% Covenant Care, Inc, (long-term healthcare facilities) 4,865,385 Term Loan, maturing June 1999 4,865,385 568,980 Bridge Loan, maturing March 1997 568,980 H.E.C. Investments, Inc. (health club operator) 7,000,000 Term Loan B, maturing December 2000 7,000,000 Medical Specialities (home healthcare equipment leasing) 2,933,824 Term Loan A, maturing December 2001 2,933,824 5,486,250 Term Loan B, maturing December 2001 5,486,250 Mediq/PRN Life Support Inc. (hospital equipment leasing) 3,501,149 Term Loan, maturing September 1998 3,501,149 ------------ 24,355,588 ------------ Health & Beauty Products: 3.2% ICON Health & Fitness Co. (exercise equipment) 17,437,500 Term Loan B, maturing November 2001 17,437,500 Revlon Inc. (cosmetics manufacturer) 10,000,000 Term Loan, maturing March 1999 10,000,000 ------------ 27,437,500 ------------
Pilgrim America Funds 15 Pilgrim America Prime Rate Trust - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS as of May 31, 1996 (Unaudited) - --------------------------------------------------------------------------------
Principal Amount Value - --------- ----- Industrial Chemicals: 3.3% Cedar Chemical Corp. (specialized chemicals) $9,250,000 Term Loan B, maturing October 2003 $9,250,000 Fiberite, Inc. (plastic composite manufacturer) 8,967,857 Term Loan B, maturing December 2001 8,967,857 National Propane Inc. (propane distribution) 9,916,667 Term Loan B, maturing June 2002 9,916,667 ------------ 28,134,524 ------------ Industrial Equipment: 4.6% Calmar (non-aerosol fluid dispensing systems) 2,842,857 Term Loan A, maturing September 2003 2,842,857 2,132,143 Term Loan B, maturing March 2004 2,132,143 Graphic Controls Corp, (industrial and medical charts) 9,979,439 Term Loan B, maturing September 2003 9,979,439 Intermetro Industries Inc. (storage and material transport products) 4,061,285 Term Loan B, maturing June 2001 4,061,285 457,212 Term Loan C, maturing December 2002 457,212 Jackson Products, Inc. (industrial safety equipment manufacturer) 4,973,913 Term Loan B, maturing September 2002 4,973,913 4,975,000 Term Loan C, maturing September 2003 4,975,000 Newflo Corporation (pump and valve manufacturer) 717,240 Term Loan, maturing February 1998 717,240 Schrader, Inc. (fluid/air control valve manufacturer) 9,964,286 Term Loan B, maturing November 2002 9,964,286 ------------ 40,103,375 ------------ Industrial Services: 2.8% Clean Harbors, (environmental services) 14,500,000 Term Loan, maturing May 2000 14,500,000 Primeco, Inc. (equipment rental) 9,920,000 Term Loan maturing December 2000 9,920,000 ------------ 24,420,000 ------------ Media/Broadcast: 6.7% Eller Media Company (outdoor advertising) 7,250,000 Term Loan B, maturing December 2003 7,250,000 Frontier Vision (cable television) 10,000,000 Term Loan B, maturing June 2005 10,000,000 Maryland Cable (cable television) 4,963,526 Term Loan A, maturing December 2002 4,963,526 7,788,206 Term Loan B, maturing December 2002 7,788,206
Pilgrim America Funds 16 Pilgrim America Prime Rate Trust - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS as of May 31, 1996 (Unaudited) - --------------------------------------------------------------------------------
Principal Amount Value - --------- ----- Media/Broadcast (continued) Metro-Goldwyn-Mayer, Inc. (film library) $10,000,000 Term Loan, maturing April 1997 $10,000,000 Orion Pictures Corp, (motion picture distributor) 7,911,111 Term Loan, maturing December 2000 7,911,111 Phoenix Associates Inc. (cable television) 9,916,667 Term Loan B, maturing December 1999 9,916,667 ------------ 57,829,510 ------------ Metal Products: 4.4% GS Technologies (metal products fabricator) 9,950,000 Term Loan, maturing September 2002 9,950,000 National Refractories Inc. (kiln lining materials) 800,000 Term Loan A, maturing September 1999 800,000 5,000,000 Term Loan B, maturing September 1999 5,000,000 Titanium Metals, Inc. (metal smelter) 9,500,000 Term Loan A, maturing December 1996 9,500,000 10,000,000 Term Loan B, maturing December 1996 10,000,000 Triangle Wire and Cable Inc. (metal products fabricator) 3,250,000 Revolver, maturing April 1997 3,250,000 ------------ 38,500,000 ------------ Miscellaneous Companies: 2.7% Cobblestone Golf Group, Inc. (golf course owner/operator) 10,022,221 Term Loan, maturing September 2001 10,022,221 Dade International (medical testing equipment manufacturer) 4,254,545 Term Loan B, maturing December 2002 4,254,545 5,254,545 Term Loan C, maturing December 2003 4,254,545 4,490,910 Term Loan D, maturing December 2004 4,490,910 General Acquatics, Inc. (swimming pool manufacturer) 263,291 Term Loan, maturing June 2000 263,291 ------------ 23,285,512 ------------ Paper Products: 6.3% Ampad Corp. (office supplies) 6,500,000 Term Loan B, maturing October 2002 6,500,000 4,500,000 Term Loan C, maturing October 2003 4,500,000 4,000,000 Term Loan D, maturing April 2004 4,000,000 Mail-Well Corp, (envelopes and specialty printing) 7,027,704 Term Loan B, maturing July 2003 7,027,704 Riverwood (packaging and paper products) 5,000,000 Term Loan A, maturing February 2003 5,000,000 17,857,143 Term Loan B, maturing February 2004 17,857,143
Pilgrim America Funds 17 Pilgrim America Prime Rate Trust - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS as of May 31, 1996 (Unaudited) - --------------------------------------------------------------------------------
Principal Amount Value - --------- ----- Paper Products (continued) Riverwood (continued) $7,142,857 Term Loan C, maturing August 2004 $7,142,857 Supremex, Inc. (Canadian envelope manufacturer) 2,850,683 Term Loan B, maturing July 2003 2,850,683 ------------ 54,878,387 ------------ Publishing and Information Services: 3.2% NBC Acquisition (wholesale and retail textbooks) 7,480,000 Term Loan B, maturing August 2003 7,480,000 Pierce Leahy Corp. (document storage) 3,000,000 Term Loan B, maturing September 2002 3,000,000 7,000,000 Term Loan C, maturing September 2003 7,000,000 Softworld Services (software fulfillment services) 5,000,000 Term Loan A, maturing June 2000 5,000,000 5,000,000 Term Loan B, maturing June 2001 5,000,000 ------------ 27,480,000 ------------ Restaurants: 2.6% America's Favorite Chicken Co. (food service franchisor) 12,884,853 Term Loan B, maturing November 1998 12,884,853 Friendly's Ice Cream Company (Northeastern restaurant chain) 581,489 Revolver, maturing May 1998 505,895 5,212,343 Term Loan, maturing May 1998 4,534,738 Long John Silvers Inc. (quick service seafood restaurant chain) 4,195,100 Term Loan B, maturing September 1997 4,195,100 176,693 Term Loan (PIK Note), maturing September 1997 176,693 ------------ 22,297,279 ------------ Specialty Retailing: 3.2% American Blind & Wallpaper (home furnishings retailer) 851,023 Term Loan, maturing June 1996 851,023 Camelot Music, Inc, (music stores) 4,844,340 (1) Term Loan B, maturing February 2002 3,148,821 Color Tile, Inc. (home improvement retailer) 11,937,673 (3) Term Loan A, maturing December 1998 5,461,867 8,034,885 (3) Term Loan C. maturing December 1998 6,186,861 634,478 (3) Revolver, maturing December 1996 634,478 M & H Drugs, Inc. (Midwestern retail drugstores) 2,484,184 Term Loan, maturing December 1997 2,422,080 Murray's Discount Auto Parts (auto parts retailer) 8,846,918 Term Loan B, maturing September 2001 8,846,918 ------------ 27,552,048 ------------
Pilgrim America Funds 18 Pilgrim America Prime Rate Trust - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS as of May 31, 1996 (Unaudited) - --------------------------------------------------------------------------------
Principal Amount Value - --------- ----- Textile & Leather Products: 1.2% Glenoit Mills, Inc. (specialty and decorative fabrics) $10,000,000 Term Loan B, maturing March 2003 $10,000,000 ------------ Transportation: 2.9% Cruise Ship L.L.C. (cruise ship operator) 5,250,000 Term Loan maturing July 2001 5,250,000 Sky Chef's International, Inc. (airline food service) 19,695,576 Term Loan B, maturing September 2001 19,695,576 217,795 Term Loan C, maturing September 2003 217,795 ------------ 25,163,371 ------------ Total Senior Loan Interests (Cost $852,341,106) 843,182,432 ------------ OTHER CORPORATE DEBT: 0.0% Food Stores: 0.0% 1,110,798 @(3) New Almac's Inc. (formerly Almac's, Rhode Island supermarkets) Senior Subordinated Note, December 2004 -- ------------ Total Other Corporate Debt (Cost $848,197) -- ------------ COMMON STOCK AND PREFERRED STOCK: 1.0% Shares - ------ Diversified Manufacturing: 0.0% 2,633 @(2) KDI Corp.-- common (defense and leisure products) -- ------------ Electronic Equipment: 0.2% 164,951 @(R) MICOM Communications Corp.-- common (wide area network products) 1,938,174 ------------ Miscellaneous Companies: 0.0% 26,121 @(R) General Acquatics, Inc.-- common (swimming pool manufacturer) 156,700 ------------ Restaurants: 0.5% 413,980 @(R) America's Favorite Chicken Co.-- common (quick service restaurant chain) 1,373,141 24,848 (R) America's Favorite Chicken Co.-- preferred (quick service restaurant chain) 2,484,800 17,664 @ Flagstar, Inc.-- common (family restaurants, institutional food service companies) 61,824 ------------ 3,919,765 ------------ Textiles: 0.3% 12,764 @(R) Dan River (Braelan) Corp.-- common (diversified textiles) 2,288,045 ------------ Total Common Stock and Preferred Stock (Cost $4,462,495) 8,302,684 ------------
Pilgrim America Funds 19 Pilgrim America Prime Rate Trust - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS as of May 31, 1996 (Unaudited) - --------------------------------------------------------------------------------
STOCK PURCHASE WARRANTS AND OTHER SECURITIES: 0.1% Shares Value - ------ ----- 1 @(R) Autotote Systems, Inc., Warrant representing 48,930 common shares (designer and manufacturer of wagering equipment), Expires 10/30/03 $78,924 19,000 @(R) Covenant Care, Inc., Warrants representing 19,000 common shares (long-term healthcare facilities) 17,000 1 @(R) Cruise Ship, L.L.C., Warrant representing 4,105 voting shares (cruise ship operator) 129,446 1 @(R) Cruise Ship, L.L.C., Warrant representing 4,666 non-voting shares (cruise ship operator) 147,136 26,606 @(R)(2) KDI Corp., Units of Trust (defense and leisure products) -- 1 @(R) Staff Capital, L.P., Warrant to purchase 0.5% of the Common Limited Partnership Units (payroll and human resource services), Expires 11/05/03 614,789 1 @(R) Staff Capital, L.P., Warrant to purchase 0.5% of the Preferred Limited Partnership Units (payroll and human resource services), Expires 11/05/03 61,000 45,000 @(R)(3) Victory Holding Corp., Warrants representing 45,000 common shares (Rhode Island supermarkets), Expires 12/01/01 -- ------------ Total Stock Purchase Warrants and Other Securities (Cost $61,100) 1,048,295 ------------
SHORT-TERM INVESTMENTS: 1.1% Principal Amount Value - --------- ----- U.S. Agency Discount Notes: 1.1% $9,680,000 Federal Home Loan Mortgage Corporation, 5.35%, Due 06/03/96 9,677,123 ------------ Total Short-Term Investments (Cost $9,677,123) 9,677,123 ------------ Total Investments (Cost $867,390,021) 99.7% 862,210,534 Cash and Other Assets in Excess of Liabilities - Net 0.3 2,214,091 ----- ------------ Total Net Assets 100.0% $864,424,625 ===== ============
- ---------------------------- @ Non-income producing security (R) Restricted security * Senior loan interests, while exempt from registration under the Securities Act of 1933, contain certain restrictions on resale and cannot be sold publicly. These senior loan interests bear interest (unless otherwise noted) at rates that float periodically at a margin above the Prime Rate of a U.S. bank specified in the credit agreement, LIBOR, the certificate of deposit rate, or in some cases another base lending rate. (1) The borrower is restructuring and interest is being recognized as cash payments are received. (2) The borrower filed for protection under chapter 7 of the U.S. Federal bankruptcy code and is in the process of developing a plan of liquidation. (3) The borrower filed for protection under Chapter 11 of the U.S. Federal bankruptcy code and is in the process of developing a plan of reorganization. Pilgrim America Funds 20 Pilgrim America Prime Rate Trust - -------------------------------------------------------------------------------- FUND ADVISOR AND AGENTS - -------------------------------------------------------------------------------- INVESTMENT MANAGER Pilgrim America Investments, Inc. Two Renaissance Square 40 North Central Avenue Suite 1200 Phoenix, AZ 85004-4424 SHAREHOLDER SERVICING AGENT Pilgrim America Group, Inc. Two Renaissance Square 40 North Central Avenue Suite 1200 Phoenix, AZ 85004-4424 1-800-331-1080 INSTITUTIONAL INVESTORS AND ANALYSTS Call 1-800-336-3436 Ext. 8256 TRANSFER AGENT Investors Fiduciary Trust Company c/o DST Systems, Inc. P.O. Box 419368 Kansas City, Missouri 64141 Pilgrim America Funds 21 Pilgrim America Funds Masters Series -------------- Pilgrim America Masters Asia-Pacific Equity Fund Pilgrim America Masters MidCap Value Fund Pilgrim America Masters LargeCap Value Fund Elite Series ------------ Pilgrim America MagnaCap Fund Pilgrim America High Yield Fund Pilgrim Government Securities Income Fund Pilgrim America Funds "Our goal is for every investor to have a successful investment experience." Prospectuses containing more complete information regarding the funds, including charges and expenses, may be obtained by calling Pilgrim America Securities, Inc. Distributor at 1-800-334-3444. Please read the prospectuses carefully before you invest or send money. -----END PRIVACY-ENHANCED MESSAGE-----