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000 B000000 02/28/99
000 C000000 0000826020
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000 E000000 NF
000 F000000 Y
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000 H000000 N
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000 J000000 A
001 A000000 PILGRIM PRIME RATE TRUST
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001 C000000 6024178100
002 A000000 40 NORTH CENTRAL AVENUE SUITE 1200
002 B000000 PHOENIX
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008 A000001 PILGRIM INVESTMENTS, INC.
008 B000001 A
008 C000001 801-48282
008 D010001 PHOENIX
008 D020001 AZ
008 D030001 85004
008 D040001 4424
010 A000001 PILGRIM GROUP, INC.
010 C010001 PHOENIX
010 C020001 AZ
010 C030001 85004
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011 A000001 PILGRIM SECURITIES, INC.
011 B000001 8-48020
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011 C020001 AZ
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<PAGE> PAGE 2
012 A000001 PILGRIM GROUP,INC.
012 B000001 85-
012 C010001 PHOENIX
012 C020001 AZ
012 C030001 85004
012 C040001 4424
013 A000001 KPMG LLP
013 B010001 LOS ANGELES
013 B020001 CA
013 B030001 90017
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022 A000001 CHASE SECURITIES
022 B000001 13-3112953
022 C000001 284154
022 D000001 243509
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022 B000002 13-4941247
022 C000002 169955
022 D000002 191378
022 A000003 CITIBANK
022 C000003 73050
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022 A000004 BANK OF AMERICA
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022 C000005 99244
022 D000005 52466
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<PAGE> PAGE 3
022 C000006 73325
022 D000006 75372
022 A000007 GE CAPITAL
022 C000007 102510
022 D000007 42293
022 A000008 FLEET NATIONAL BANK
022 B000008 13-3217611
022 C000008 57750
022 D000008 34023
022 A000009 DLJ
022 B000009 13-2741729
022 C000009 37823
022 D000009 36369
022 A000010 MORGAN GUARANTY
022 C000010 64309
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<PAGE> PAGE 4
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<PAGE> PAGE 5
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<PAGE> PAGE 6
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070 J010000 Y
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070 K010000 N
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<PAGE> PAGE 7
070 R020000 N
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<PAGE> PAGE 8
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<PAGE> PAGE 9
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SIGNATURE MIKE J ROLAND
TITLE CHIEF FINANCIAL OFFI
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 826020
<NAME> PILGRIM PRIME RATE TRUST
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-28-1999
<PERIOD-START> MAR-01-1998
<PERIOD-END> FEB-28-1999
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 1,731,709
<INVESTMENTS-AT-VALUE> 1,725,741
<RECEIVABLES> 17,386
<ASSETS-OTHER> 1,158
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,744,285
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 539,606
<OTHER-ITEMS-LIABILITIES> 2,114
<TOTAL-LIABILITIES> 541,720
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,235,061
<SHARES-COMMON-STOCK> 130,206
<SHARES-COMMON-PRIOR> 110,764
<ACCUMULATED-NII-CURRENT> 9,888
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (36,416)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (5,968)
<NET-ASSETS> 1,202,565
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 136,460
<OTHER-INCOME> 7,068
<EXPENSES-NET> 46,147
<NET-INVESTMENT-INCOME> 97,381
<REALIZED-GAINS-CURRENT> (6,314)
<APPREC-INCREASE-CURRENT> (7,548)
<NET-CHANGE-FROM-OPS> 83,519
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 99,153
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 17,904
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 1,537
<NET-CHANGE-IN-ASSETS> 168,163
<ACCUMULATED-NII-PRIOR> 11,927
<ACCUMULATED-GAINS-PRIOR> (30,370)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 11,974
<INTEREST-EXPENSE> 28,754
<GROSS-EXPENSE> 46,419
<AVERAGE-NET-ASSETS> 1,132,637
<PER-SHARE-NAV-BEGIN> 9.34
<PER-SHARE-NII> 0.79
<PER-SHARE-GAIN-APPREC> (0.07)
<PER-SHARE-DIVIDEND> 0.82
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.24
<EXPENSE-RATIO> 2.86
<AVG-DEBT-OUTSTANDING> 490,978
<AVG-DEBT-PER-SHARE> 4.02
</TABLE>
Item 77Q1
An amendment to change the name of the Trust was filed as an exhibit to the N-2
filing on December 2, 1998 for the Trust.
Item 77Q2
Below is the information called for by Item 405 of Regulation S-K (17 CFR
229.405).
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Mr. Howard Tiffen, Portfolio Manager of Prime Rate Trust, failed to file one
Form 4 - Statement of Changes in Beneficial Ownership for two transactions.
The Board of Trustees
Pilgrim Prime Rate Trust:
In planning and performing our audit of the financial statements of Pilgrim
Prime Rate Trust for the year ended February 28, 1999, we considered the Trust's
internal control, including control activities for safeguarding securities, in
order to determine our auditing procedures for the purpose of expressing our
opinion on the financial statements and to comply with the requirements of Form
N-SAR, not to provide assurance on internal control.
The management of Pilgrim Prime Rate Trust is responsible for establishing and
maintaining internal control. In fulfilling this responsibility, estimates and
judgments by management are required to assess the expected benefits and related
costs of controls. Generally, controls that are relevant to an audit pertain to
the entity's objective of preparing financial statements for external purposes
that are fairly presented in conformity with generally accepted accounting
principles. Those controls include the safeguarding of assets against
unauthorized acquisition, use, or disposition.
Because of inherent limitations in internal control, error or fraud may occur
and not be detected. Also, projection of internal control to future periods is
subject to the risk that it may become inadequate because of changes in
conditions or that the effectiveness of the design and operation may
deteriorate.
Our consideration of internal control would not necessarily disclose all matters
in internal control that might be material weaknesses under standards
established by the American Institute of Certified Public Accountants. A
material weakness is a condition in which the design or operation of one or more
of the internal control components does not reduce to a relatively low level the
risk that misstatements caused by error or fraud in amounts that would be
material in relation to the financial statements being audited may occur and not
be detected within a timely period by employees in the normal course of
performing their assigned functions. However, we noted no matters involving
internal control and its operation, including procedures for safeguarding
securities, that we consider to be material weaknesses as defined above as of
February 28, 1999.
This report is intended solely for the information and use of management, the
Board of Trustees of Pilgrim Prime Rate Trust and the Securities and Exchange
Commission and is not intended to be and should not be used by anyone other than
these specified parties.
/s/ KPMG LLP
April 10, 1999
