SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-----------------------
FORM 11-K
Annual Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
Pilgrim America Capital Corporation
(Mark One):
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996].
For the fiscal year ended December 31, 1997
-----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED].
For the transition period from ____________ to _____________
Commission file number 0-19799
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below: Pilgrim America Capital Corporation 401(k)
Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office: Pilgrim America Capital Corporation,
Two North Renaissance Square, 40 North Central Avenue, 12th Floor, Phoenix,
Arizona 85004-4424
<PAGE>
REQUIRED INFORMATION
Financial Statements
--------------------
Item 1. Audited Statement of Financial Condition
------------------------------------------------
The Audited Statements of Net Assets Available for Benefits as of
December 31, 1997 and 1996 attached to this Report on Form 11-K as page
2 of Exhibit A are incorporated by reference herein.
Item 2. Audited Statement of Income and Changes
-----------------------------------------------
The Audited Statements of Changes in Net Assets Available for Benefits
for the years ended December 31, 1997 and 1996 attached to this Report
on Form 11-K as page 3 of Exhibit A are incorporated by reference
herein.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit
plan) have duly caused this annual report to be signed on its behalf by
the undersigned hereunto duly authorized.
Pilgrim America Capital Corporation
401 (k) Plan
Date: June 25, 1998 /s/ James R. Reis
-----------------
James R. Reis
Vice Chairman
2
<PAGE>
EXHIBIT INDEX
-------------
Exhibit A Pilgrim America Capital Corporation 401(k) Plan
Exhibit B Consent of KPMG Peat Marwick LLP
3
<PAGE>
EXHIBIT A
PILGRIM AMERICA CAPITAL
CORPORATION 401(k) PLAN
Financial Statements and Supplemental Schedules
December 31, 1997 and 1996
(With Independent Auditors' Report Thereon)
<PAGE>
PILGRIM AMERICA CAPITAL CORPORATION
401(k) PLAN
Index
-----
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report 1
Statements of Net Assets Available for Benefits - December 31, 1997 and 1996 2
Statements of Changes in Net Assets Available for Benefits -
Years ended December 31, 1997 and 1996 3
Notes to Financial Statements 4
Schedule
--------
Line 27a - Schedule of Assets Held for Investment Purposes - December 31, 1997 1
Line 27d - Schedule of Reportable Transactions - Year ended December 31, 1997 2
</TABLE>
<PAGE>
KPMG Peat Marwick LLP
725 South Figueroa Street
Los Angeles, CA 90017
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Pilgrim America Capital Corporation 401(k) Plan:
We have audited the accompanying statements of net assets available for benefits
of the Pilgrim America Capital Corporation 401(k) Plan (the Plan) as of December
31, 1997 and 1996 and the related statements of changes in net assets available
for benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Pilgrim
America Capital Corporation 401(k) Plan as of December 31, 1997 and 1996 and the
changes in net assets available for benefits for the years then ended in
conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes and reportable transactions are presented for purposes
of additional analysis and are not a required part of the basic financial
statements but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. These supplemental schedules are the
responsibility of the Plan's management. The supplemental schedules have been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated, in all material
respects, in relation to the basic financial statements taken as a whole.
/s/ KPMG Peat Marwick LLP
Los Angeles, California
April 30, 1998
1
<PAGE>
PILGRIM AMERICA CAPITAL CORPORATION
401(k) PLAN
Statements of Net Assets Available for Benefits
December 31, 1997 and 1996
1997 1996
---------- ----------
Assets:
Investments at fair value:
Pilgrim America Capital Corporation common stock $1,078,306 $ 183,995
Pooled separate accounts 53,062 103,226
Mutual funds 1,054,156 886,785
---------- ----------
2,185,524 1,174,006
---------- ----------
Employer's contribution receivable 5,921 7,035
Employees' contribution receivable 6,625 7,874
---------- ----------
12,546 14,909
---------- ----------
Dividends receivable 802 --
Interest receivable 142 --
---------- ----------
2,199,014 1,188,915
Accrued expenses 21,988 --
---------- ----------
Net assets available for benefits $2,177,026 $1,188,915
========== ==========
See accompanying notes to financial statements.
2
<PAGE>
PILGRIM AMERICA CAPITAL CORPORATION
401(k) PLAN
Statements of Changes in Net Assets Available for Benefits
Years ended December 31, 1997 and 1996
1997 1996
---------- ----------
Additions to net assets attributed to:
Interest $ 1,445 $ 1,257
Dividends 29,317 27,611
Net appreciation in fair value of investments 646,300 142,084
---------- ----------
677,062 170,952
---------- ----------
Contributions:
Employer 257,692 276,620
Employee 288,430 316,023
Rollovers -- 43,887
---------- ----------
546,122 636,530
---------- ----------
Total additions 1,223,184 807,482
---------- ----------
Deductions from net assets attributed to:
Benefits paid to terminated participants 167,518 510,849
Administrative expenses 67,555 40,484
Other, refunds -- 92,084
---------- ----------
Total deductions 235,073 643,417
---------- ----------
Net increase 988,111 164,065
Net assets available for benefits:
Beginning of year 1,188,915 1,024,850
---------- ----------
End of year $2,177,026 $1,188,915
========== ==========
See accompanying notes to financial statements.
3
<PAGE>
PILGRIM AMERICA CAPITAL CORPORATION
401(k) PLAN
Notes to Financial Statements
December 31, 1997 and 1996
(1) Description of the Plan
General
The Pilgrim America Capital Corporation 401(k) Plan (the Plan) is a
qualified defined contribution plan covering substantially all full-time
employees of Pilgrim America Capital Corporation and its subsidiaries
(the Company). The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA). The following description
of the Plan provides only general information. Participants should refer
to the Plan agreement for a more complete description of the Plan's
provisions.
Eligibility
Employees are eligible to participate in the Plan after attaining age 21
and completing a minimum service requirement as detailed in the Plan
agreement.
Participant Loans
Participants may borrow against their vested salary deferral account
balances, with a minimum loan amount of $1,000 and the maximum loan
amount of $50,000 or 50% of their vested salary deferral account
balances. Interest is to be charged on participant loans at a rate
commensurate with the prevailing interest rate charged on similar
commercial loans under like circumstances by persons in the business of
lending money.
Participant Accounts
Each participant's account is credited with the participant's
contribution (salary deferral) and an allocation of (a) the Company's
contribution and (b) Plan earnings. The first allocation is based on
participant deferred contributions, and the second allocation is based on
account balances. The benefit to which a participant is entitled is the
benefit that can be provided from the participant's account.
Employer Contributions
Matching contributions are made by the Company at an amount equal to 100%
of the employee's contributions with the amount limited to the lesser of
7% of the employee's annual compensation or $9,500.
Employee Contributions
Employee contributions are made to the Plan on a pretax basis. Such
contributions are limited to the lesser of 10% of the employee's annual
compensation or the maximum allowable annual amount under Internal
Revenue Service regulations, which was $9,500 in 1997 and 1996.
4
<PAGE>
PILGRIM AMERICA CAPITAL CORPORATION
401(k) PLAN
Notes to Financial Statements, Continued
Investment Funds
Participants direct the investment of their accounts among the available
investment options. The following is a description of each investment
option as of December 31, 1997:
o Pilgrim America Capital Corporation common stock - investment in
the common stock of the Company.
o Cortland Trust Money Market - an open-end diversified money market
fund managed by Cortland Trust, Inc. designed for investors who
seek a high level of current income while preserving capital and
liquidity by investing a minimum of 80% of the fund's assets in
U.S. Government obligations, bank investments, trust instruments,
corporate commercial trust instruments and other instruments
maturing in 13 months or less.
o Pilgrim Government Securities Income Fund - an open-end mutual
fund designed for investors who seek a high level of current
income while preserving capital and liquidity by investing a
minimum of 70% of the fund's assets in U.S. Government
obligations.
o Pilgrim America High Yield Fund - an open-end mutual fund designed
for investors who seek a high level of current income with capital
appreciation as a secondary objective by investing in high-yield
fixed income securities.
o Pilgrim America MagnaCap Fund - an open-end mutual fund designed
for investors who seek long-term growth of capital with income as
a secondary consideration while preserving their capital by
investing in common stocks.
o Pilgrim America Asia-Pacific Equity Fund - an open-end mutual fund
designed for investors who seek long-term capital appreciation by
investing in equity securities listed on stock exchanges in
countries in the Asia-Pacific region or issued by companies based
in this region.
o Pilgrim America MidCap Value Fund - an open-end mutual fund
designed for investors who seek long-term capital appreciation by
investing mainly in, but not limited to, equity securities issued
by companies with middle market capitalizations (between $200
million and $5 billion).
o Pilgrim America LargeCap Value Fund - an open-end mutual fund
designed for investors who seek long-term capital appreciation by
investing mainly in, but not limited to, equity securities issued
by companies with large market capitalizations (over $5 billion).
o Pilgrim America Bank & Thrift Fund - an open-end management
investment company designed for investors who seek long-term
capital appreciation with income as a secondary objective by
investing primarily in the equity securities of national- and
state-chartered banks other than money-center banks, thrifts, the
holding or parent companies of such depository institutions and in
savings accounts of mutual thrifts.
o Pilgrim America Prime Rate Trust - a closed-end management
investment company designed for investors who seek a high level of
current income while preserving capital by investing in a
portfolio of senior, collateralized corporate loans whose interest
rates float with the prime lending rate or London Inter-Bank
Offered Rate (LIBOR).
o First American Prime Obligation Class C Institutional Account - a
sweep vehicle money market account designed to hold contributions
until they can be invested into one or more of the investment
funds discussed above. The account is not used as a
participant-directed investment option.
5
<PAGE>
PILGRIM AMERICA CAPITAL CORPORATION
401(k) PLAN
Notes to Financial Statements, Continued
Vesting
Participants are immediately vested in their salary deferral and
voluntary contributions plus the earnings thereon. Vesting in the
remainder of their account is based on years of continuous service as
follows:
Completed years Percentage
of service vested
----------------- ----------
One 33.33%
Two 66.67
Three 100.00
Participants become 100% vested upon death, permanent disablement or
attaining age 65.
Payment of Benefits
On termination of service, participants with vested account balances may
choose to have their benefits paid in a lump sum or in monthly amounts
over a period of time specified by the Plan agreement.
Forfeitures
The nonvested portion of a terminated employee's account is placed in a
segregated account and is considered forfeited after the participant
incurs five consecutive years in which they work 500 hours or less. Upon
forfeiture, the amounts in the segregated account plus the earnings
thereon are to be used to reduce future employer contributions or applied
to administrative expenses of the Plan. As of December 31, 1997 and 1996,
amounts held in the segregated accounts awaiting potential forfeiture
totaled $50,477 and $71,344, respectively.
Administrative Expenses
Expenses of the Plan are to be borne by the Plan unless assumed by the
Company. The Plan applied $45,567 and $40,484 of forfeiture accounts
against administrative expenses for the years ended December 31, 1997 and
1996, respectively.
(2) Summary of Significant Accounting Policies
Basis of Accounting
The accompanying financial statements have been prepared using the
accrual basis of accounting. Benefits payable to participants are
included as a component of the Plan's net assets available for benefits.
Investments
Investments in Pilgrim America Capital Corporation common stock and
mutual funds are valued at quoted market prices. Investments in pooled
accounts are valued at their participation unit share of the total pooled
funds as determined by the custodian, which approximates fair value.
6
<PAGE>
PILGRIM AMERICA CAPITAL CORPORATION
401(k) PLAN
Notes to Financial Statements, Continued
Purchases and sales of securities are recorded on a trade-date basis.
Dividend income is recorded on the ex-dividend date. Net appreciation
(depreciation) in the fair value of investments includes both realized
and unrealized gains and losses.
Use of Estimates
The Plan administrator has made a number of estimates and assumptions
relating to the reporting of net assets and changes therein to prepare
these financial statements in conformity with generally accepted
accounting principles.
Actual results could differ from these estimates.
(3) Reconciliation of Financial Statements to Form 5500
The following is a reconciliation of net assets available for benefits
from the financial statements to Form 5500:
<TABLE>
<CAPTION>
December 31
--------------------------
1997 1996
----------- -----------
<S> <C> <C>
Net assets available for benefits per the financial statements $ 2,177,026 $ 1,188,915
Amounts allocated to withdrawing participants (8,914) (17,455)
----------- -----------
Net assets available for benefits per Form 5500 $ 2,168,112 $ 1,171,460
=========== ===========
</TABLE>
The following is a reconciliation of benefits paid to participants
according to the financial statements to Form 5500:
<TABLE>
<CAPTION>
Year ended December 31
----------------------
1997 1996
-------- --------
<S> <C> <C>
Benefits paid to participants per the financial statements $167,518 $510,849
Add amounts allocated to withdrawing participants 8,914 17,455
-------- --------
Benefits paid to participants per the Form 5500 $176,432 $528,304
======== ========
</TABLE>
Amounts allocated to withdrawing participants are recorded on Form 5500
for benefit claims that have been processed and approved for payment
prior to December 31 but not yet paid as of that date.
7
<PAGE>
PILGRIM AMERICA CAPITAL CORPORATION
401(k) PLAN
Notes to Financial Statements, Continued
(4) Investments
The following represents the changes in net assets of the Plan during
1997:
<TABLE>
<CAPTION>
Pilgrim Pilgrim
America Pilgrim America
Capital Cortland Government Pilgrim Pilgrim Asia-
Corporation Trust Securities America America Pacific
common Money Income High Yield MagnaCap Equity
stock Market Fund Fund Fund Fund
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Additions:
Interest $ -- 9 1 76 120 169
Dividends -- 3,853 208 6,682 1,198 --
Net appreciation (depreciation) in fair
value of investments 554,989 -- 82 4,005 55,421 (100,443)
Contributions:
Employer -- 514 1,199 14,502 32,376 41,916
Employee -- 637 1,689 14,801 37,567 44,495
---------- ---------- ---------- ---------- ---------- ----------
-- 1,151 2,888 29,303 69,943 86,411
---------- ---------- ---------- ---------- ---------- ----------
554,989 5,013 3,179 40,066 126,682 (13,863)
---------- ---------- ---------- ---------- ---------- ----------
Deductions:
Benefits paid 42,905 7,802 -- 7,982 18,094 30,052
Administrative expenses -- 67,240 -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
42,905 75,042 -- 7,982 18,094 30,052
---------- ---------- ---------- ---------- ---------- ----------
Transfers - participant elected 382,227 (1,767) (120) (26,282) (22,285) (46,080)
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) 894,311 (71,796) 3,059 5,802 86,303 (89,995)
Beginning of year 183,995 103,282 1,848 63,108 189,427 215,538
---------- ---------- ---------- ---------- ---------- ----------
End of year $1,078,306 31,486 4,907 68,910 275,730 125,543
========== ========== ========== ========== ========== ==========
<CAPTION>
Pilgrim Pilgrim Pilgrim
America America Pilgrim America First
MidCap LargeCap America Bank & American
Value Value Prime Thrift Prime
Fund Fund Rate Trust Fund Obligation Total
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Additions:
Interest 184 109 -- -- 777 1,445
Dividends -- 312 7,960 9,104 -- 29,317
Net appreciation (depreciation) in fair
value of investments 40,741 23,894 5,549 62,062 -- 646,300
Contributions:
Employer 52,189 25,435 -- 479 89,082 257,692
Employee 61,329 28,443 -- 562 98,907 288,430
---------- ---------- ---------- ---------- ---------- ----------
113,518 53,878 -- 1,041 187,989 546,122
---------- ---------- ---------- ---------- ---------- ----------
154,443 78,193 13,509 72,207 188,766 1,223,184
---------- ---------- ---------- ---------- ---------- ----------
Deductions:
Benefits paid 28,551 30,257 1,001 779 95 167,518
Administrative expenses -- -- -- -- 315 67,555
---------- ---------- ---------- ---------- ---------- ----------
28,551 30,257 1,001 779 410 235,073
---------- ---------- ---------- ---------- ---------- ----------
Transfers - participant elected (74,356) (64,931) (1,232) 41,308 (186,482) --
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) 51,536 (16,995) 11,276 112,736 1,874 988,111
Beginning of year 153,050 145,235 73,701 52,589 7,142 1,188,915
---------- ---------- ---------- ---------- ---------- ----------
End of year 204,586 128,240 84,977 165,325 9,016 2,177,026
========== ========== ========== ========== ========== ==========
</TABLE>
All the investments are participant-directed, except for the First American
Prime Obligation.
8
<PAGE>
PILGRIM AMERICA CAPITAL CORPORATION
401(k) PLAN
Notes to Financial Statements, Continued
The following represents the changes in net assets of the Plan during
1996:
<TABLE>
<CAPTION>
(1)
Guaranteed
Interest,
U.S. Stock,
Money Market, (2)
Real Estate, Pilgrim (2) Pilgrim
Bond and America (2) Pilgrim (2) (2) America
Mortgage, Capital Cortland Government Pilgrim Pilgrim Asia-
International Corporation Trust Securities America America Pacific
Stock and Stock common Money Income High Yield MagnaCap Equity
Index Accounts stock Market Fund Fund Fund Fund
--------------- ----------- --------- ---------- ---------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions:
Interest $ -- -- -- -- -- -- --
Dividends -- -- 15,205 122 4,901 3,774 418
Net appreciation (depreciation)
in fair value of investments -- 52,793 -- (90) 2,846 24,300 5,674
Contributions:
Employer -- -- 10,285 1,412 16,021 62,267 64,186
Employee -- -- 10,285 1,978 18,426 75,972 69,854
Rollovers -- -- -- -- -- 6,437 25,098
--------- --------- --------- --------- --------- --------- ---------
-- -- 20,570 3,390 34,447 144,676 159,138
--------- --------- --------- --------- --------- --------- ---------
-- 52,793 35,775 3,422 42,194 172,750 165,230
--------- --------- --------- --------- --------- --------- ---------
Deductions:
Benefits paid -- 522 442,307 451 952 40,408 13,991
Administrative expenses -- -- 40,189 -- -- -- --
Other - refunds -- -- 37,983 -- 4,311 24,938 14,771
--------- --------- --------- --------- --------- --------- ---------
-- 522 520,479 451 5,263 65,346 28,762
--------- --------- --------- --------- --------- --------- ---------
Transfers - participant elected (720,708) 131,724 587,986 (4,348) 3,852 (115,348) 52,053
--------- --------- --------- --------- --------- --------- ---------
Net increase
(decrease) (720,708) 183,995 103,282 (1,377) 40,783 (7,944) 188,521
Beginning of year 720,708 -- -- 3,225 22,325 197,371 27,017
--------- --------- --------- --------- --------- --------- ---------
End of year $ -- 183,995 103,282 1,848 63,108 189,427 215,538
========= ========= ========= ========= ========= ========= =========
<CAPTION>
(2) (2) (2)
Pilgrim Pilgrim (2) Pilgrim (2)
America America Pilgrim America First
MidCap LargeCap America Bank & American
Value Value Prime Thrift Prime
Fund Fund Rate Trust Fund Obligation Total
------- -------- ---------- ------ ---------- -----
<S> <C> <C> <C> <C> <C> <C>
Additions:
Interest -- -- -- -- 1,257 1,257
Dividends 796 462 1,915 18 -- 27,611
Net appreciation (depreciation)
in fair value of investments 27,309 16,314 2,963 9,975 -- 142,084
Contributions:
Employer 40,795 40,315 2,008 6,209 33,122 276,620
Employee 45,886 47,007 2,167 6,966 37,482 316,023
Rollovers 6,176 6,176 -- -- -- 43,887
--------- --------- --------- --------- --------- ---------
92,857 93,498 4,175 13,175 70,604 636,530
--------- --------- --------- --------- --------- ---------
120,962 110,274 9,053 23,168 71,861 807,482
--------- --------- --------- --------- --------- ---------
Deductions:
Benefits paid 5,288 6,487 26 387 30 510,849
Administrative expenses -- -- -- 175 120 40,484
Other - refunds 7,809 2,272 -- -- -- 92,084
--------- --------- --------- --------- --------- ---------
13,097 8,759 26 562 150 643,417
--------- --------- --------- --------- --------- ---------
Transfers - participant elected 4,899 29,802 64,674 29,983 (64,569) --
--------- --------- --------- --------- --------- ---------
Net increase
(decrease) 112,764 131,317 73,701 52,589 7,142 164,065
Beginning of year 40,286 13,918 -- -- -- 1,024,850
--------- --------- --------- --------- --------- ---------
End of year 153,050 145,235 73,701 52,589 7,142 1,188,915
========= ========= ========= ========= ========= =========
</TABLE>
All the investments are participant-directed, except for the First American
Prime Obligation.
(1) Represents a pooled separate account(s).
(2) Represents a mutual fund.
9
<PAGE>
PILGRIM AMERICA CAPITAL CORPORATION
401(k) PLAN
Notes to Financial Statements, Continued
(5) Investments Over 5%
The following investments comprise over 5% of the Plan's net assets at
December 31, 1997 and 1996, respectively:
December 31
-----------------------
1997 1996
---------- ----------
Pilgrim America Capital Corporation common stock $1,078,306 $ 183,995
Cortland Trust Money Market Fund -- 103,226
Pilgrim America Prime Rate Trust -- 73,701
Pilgrim America Bank & Thrift Fund 164,284 --
Pilgrim America MagnaCap Fund 274,273 187,509
Pilgrim America High Yield Fund -- 62,648
Pilgrim Asia-Pacific Equity Fund 125,018 212,271
Pilgrim America MidCap Value Fund 203,380 150,042
Pilgrim America LargeCap Value Fund 127,430 142,674
========== ==========
(6) Income Taxes
The Internal Revenue Service has determined and informed the Company by a
letter dated November 14, 1996 that the Plan is designed in accordance
with applicable sections of the Internal Revenue Code. The Plan has been
amended since receiving the determination letter. However, the plan
administrator and the Plan's tax counsel believe that the Plan is
designed and is currently being operated in compliance with the
applicable requirements of the Internal Revenue Code.
(7) Plan Termination
Although it has not expressed any intent to do so, the Company has the
right under the Plan agreement to discontinue its contributions at any
time and to terminate the Plan, subject to the provisions of ERISA. In
the event of Plan termination, participants will become 100% vested in
their accounts.
10
<PAGE>
Schedule 1
PILGRIM AMERICA CAPITAL CORPORATION
401(k) PLAN
Line 27a - Schedule of Assets Held for Investment Purposes
December 31, 1997
<TABLE>
<CAPTION>
Number
Identity of issuer, borrower, of shares Current
lessor or similar party Description held Cost value
- ------------------------------------ --------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
*Pilgrim America Capital Corporation Common stock 52,923 $ 485,833 $1,078,306
Cortland Trust Money Market Fund 53,061 53,062 53,062
*First Trust National Association First American Prime Obligation Class C 2,049 2,049 2,049
*Pilgrim America Group, Inc. Prime Rate Trust 8,113 78,131 84,175
*Pilgrim America Group, Inc. Bank & Thrift Fund 6,350 112,402 164,284
*Pilgrim America Group, Inc. MagnaCap Fund 17,649 282,392 274,273
*Pilgrim America Group, Inc. High Yield Fund 9,841 66,228 68,688
*Pilgrim America Group, Inc. Government Securities Income Fund 376 4,762 4,859
*Pilgrim America Group, Inc. Asia-Pacific Equity Fund 20,630 219,297 125,018
*Pilgrim America Group, Inc. MidCap Value Fund 13,088 177,598 203,380
*Pilgrim America Group, Inc. LargeCap Value Fund 9,625 124,158 127,430
---------- ----------
$1,605,912 $2,185,524
========== ==========
</TABLE>
* Party in interest.
See accompanying independent auditors' report.
<PAGE>
Schedule 2
PILGRIM AMERICA CAPITAL CORPORATION
401(k) PLAN
Line 27d - Schedule of Reportable Transactions
Year ended December 31, 1997
<TABLE>
<CAPTION>
Expenses
incurred in
Identity of Description Purchase Selling connection with
party involved of assets price price transaction
- ----------------------------------- ----------------------------------- ---------- --------- ---------------
<S> <C> <C> <C> <C>
Pilgrim America Capital Corporation Common stock $ 342,343 -- --
Common stock -- 3,179 --
Cortland Trust Money Market 4,994 -- --
Money Market -- 54,763 --
First Trust National Association First American Prime 1,195,265 -- --
Obligation Class C Money Market -- 1,195,825 --
Pilgrim America Group, Inc. Mutual Fund accounts:
High Yield Fund 56,539 -- --
High Yield Fund -- 54,508 --
MagnaCap Fund 154,894 -- --
MagnaCap Fund -- 123,550 --
Asia-Pacific Equity Fund 96,272 -- --
Asia-Pacific Equity Fund -- 83,106 --
MidCap Value Fund 128,577 -- --
MidCap Value Fund -- 115,991 --
LargeCap Value Fund 74,321 -- --
LargeCap Value Fund -- 113,466 --
Bank & Thrift Fund 70,785 -- --
Bank & Thrift Fund -- 20,964 --
<CAPTION>
Current value
Identity of Description Cost of on transaction Net gain
party involved of assets securities date or (loss)
- ----------------------------------- ----------------------------------- ---------- -------------- ---------
<S> <C> <C> <C> <C>
Pilgrim America Capital Corporation Common stock -- 342,343 --
Common stock 2,211 3,179 968
Cortland Trust Money Market -- 4,994 --
Money Market 54,763 54,763 --
First Trust National Association First American Prime -- 1,195,265 --
Obligation Class C Money Market 1,195,825 1,195,825 --
Pilgrim America Group, Inc. Mutual Fund accounts:
High Yield Fund -- 56,539 --
High Yield Fund 51,219 54,508 3,289
MagnaCap Fund -- 154,894 --
MagnaCap Fund 44,530 123,550 79,020
Asia-Pacific Equity Fund -- 96,272 --
Asia-Pacific Equity Fund 77,725 83,106 5,381
MidCap Value Fund -- 128,577 --
MidCap Value Fund 87,909 115,991 28,082
LargeCap Value Fund -- 74,321 --
LargeCap Value Fund 82,346 113,466 31,120
Bank & Thrift Fund -- 70,785 --
Bank & Thrift Fund 5,557 20,964 15,407
</TABLE>
See accompanying independent auditors' report.
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EXHIBIT B
KPMG Peat Marwick LLP
725 South Figueroa Street
Los Angeles, CA 90017
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Pilgrim America Capital Corporation:
We consent to incorporation by reference in the Registration Statement No.
333-06597 on Form S-8 of Pilgrim America Capital Corporation of our report dated
April 30, 1998 relating to the statements of net assets available for benefits
of the Pilgrim America Capital Corporation 401(k) Plan as of December 31, 1997
and 1996 and the related statements of changes in net assets available for
benefits for each of the years in the two-year period ended December 31, 1997
and related schedules, which report appears in the December 31, 1997 annual
report on Form 11-K of the Pilgrim America Capital Corporation 401(k) Plan.
/s/ KPMG Peat Marwick LLP
Los Angeles, California
June 25, 1998
