Securities Act File No. 333-29803
Securities Act File No. 333-61831
PILGRIM PRIME RATE TRUST
Supplement Dated May 3, 2000 to
Prospectus Dated June 18, 1999
ACQUISITION OF RELIASTAR FINANCIAL CORP. BY ING GROEP N.V.
On May 1, 2000, ReliaStar Financial Corp. (NYSE: RLR), the indirect parent
company of Pilgrim Investments, Inc., Adviser to Pilgrim Prime Rate Trust (the
"Trust"), and Pilgrim Securities, Inc., Distributor to the Trust, entered into
an agreement under which it will be acquired by ING Group (NYSE: ING). ING Group
is a global financial institution active in the field of insurance, banking, and
asset management in more than 60 countries, with almost 90,000 employees.
Completion of the acquisition is contingent upon, among other things, approval
by the Directors/Trustees of the Pilgrim Funds and certain shareholder and
regulatory approvals. The closing of the acquisition is expected to occur during
the third quarter of 2000.
Pilgrim Investments and Pilgrim Securities are expected to remain intact after
the transaction. Pilgrim Investments does not currently anticipate that there
will be any changes in the investment personnel primarily responsible for
management of the Trust as a result of the acquisition.
The advisory contract between the Trust and Pilgrim Investments may terminate
automatically at the time of the acquisition. As a result, it is expected that
the Board of the Trust will consider approval of a new advisory contract between
the Trust and Pilgrim Investments, and that shareholder approval of this
contract will be sought at a meeting to be scheduled in the near future.
BOARD APPROVAL OF AMENDMENT TO THE TRUST'S AGREEMENT AND DECLARATION OF TRUST,
FUNDAMENTAL INVESTMENT POLICIES, INVESTMENT MANAGEMENT AGREEMENT AND
ADMINISTRATION AGREEMENT
At a meeting held on April 27, 2000, the Board of Trustees of the Trust
determined to amend the Trust's Agreement and Declaration of Trust and
fundamental investment policies to permit the Trust to issue one or more
preferred classes or series of shares. The amendments will become effective upon
approval by the shareholders of the Trust. A meeting of the shareholders of the
Trust to consider the amendments is scheduled to occur in August, 2000. If the
shareholders approve the amendments, the Board of Trustees may consider whether
the Trust should offer a preferred class of shares of the Trust.
In addition, at the same meeting, the Board of Trustees approved an amendment to
the Investment Management Agreement between the Trust and Pilgrim Investments,
Inc., to change the management fee from an annual rate of .80% of the daily net
assets of the Trust plus the proceeds of any outstanding borrowings to .80% of
"managed assets." This change is subject to approval by the shareholders of the
Trust, and will be considered at the meeting scheduled for August, 2000. The
Board also approved an amendment to the Administration Agreement between the
Trust and Pilgrim Group, Inc. (the "Administrator"). The amendment increases the
fees that the Trust pays to the Administrator from a rate of .15% of the first
$800 million of average daily net assets plus borrowings and .10% of such
amounts over $800 million, to .25% of "managed assets." "Managed assets" means
the Trust's average daily gross asset value, minus the sum of the Trust's
accrued and unpaid dividends on any outstanding preferred shares and accrued
liabilities (other than liabilities for the principal amount of any borrowings
incurred, commercial paper or notes issued by the Trust and the liquidation
preference of any outstanding preferred shares). Determining the fees as a
function of managed assets has the effect of compensating the Investment Manager
and Administrator for services on assets derived from the proceeds of an
offering of preferred shares. The change in the fee for the Administration
Agreement is effective as of May 1, 2000.
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