SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                              ---------------------

                                    FORM 10-Q



[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                  For the quarterly period ended March 31, 1998
                                                ---------------

                         Commission File Number 0-19799
                                                -------


                       PILGRIM AMERICA CAPITAL CORPORATION
                       -----------------------------------

             (Exact name of Registrant as specified in its charter)


           Delaware                                     86-0670679
-------------------------------             ------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)


             40 North Central Avenue, Suite 1200, Phoenix, AZ 85004
             ------------------------------------------------------
              (Address of principal executive offices)    (Zip Code)


Registrant's telephone number, including area code     (602) 417-8100
                                                  ---------------------



         Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

         Indicate the number of shares  outstanding of each of the  Registrant's
classes of common stock, as of the latest practicable date.



           5,743,777 Shares of Common Stock outstanding on May 7, 1998
           -----------------------------------------------------------
<PAGE>
                                      INDEX



<TABLE>
<CAPTION>
 PART I.  FINANCIAL INFORMATION                                                                     Page
                                                                                                    ----
<S>              <C>                                                                                 <C> 
      Item 1.    Financial Statements

                 (a)    Condensed Consolidated Financial Statements...........................       3

                 (b)    Notes to Condensed Consolidated Financial Statements..................       6


      Item 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations...................................................................       9

PART II.  OTHER INFORMATION

      Item 4.    Submission of Matters to a Vote of Security Holders..........................      12


      Item 6.    Exhibits and Reports on Form 8-K.............................................      12

      Signatures..............................................................................      13
</TABLE>
                                       2
<PAGE>
ITEM 1. FINANCIAL STATEMENTS


PILGRIM AMERICA CAPITAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
                                                                            March 31,    September 30,
                                                                              1998           1997
------------------------------------------------------------------------------------------------------
                                                                                         
<S>                                                                         <C>            <C>
Assets                                                                                   
    Cash and cash equivalents                                               $    404       $    219
    Investments                                                                5,456          3,127
    Accounts receivable                                                        1,398            458
    Notes receivable                                                           3,990          3,976
    Costs assigned to management contracts acquired, less                                
         accumulated amortization of $3,878 and $3,233                        28,385         29,030
    Furniture, fixtures and equipment, less accumulated                                  
         depreciation of $465 and $370                                           756            532
    Deferred taxes                                                             4,204          6,420
    Deferred acquisition costs, less accumulated amortization                            
         of $1,619 and $772                                                   15,608          5,891
    Other assets                                                               1,934            994
                                                                            --------       --------
Total assets                                                                $ 62,135       $ 50,647
                                                                            ========       ========
------------------------------------------------------------------------------------------------------
                                                                                         
Liabilities and stockholders' equity                                                     
Liabilities:                                                                             
    Net liabilities of discontinued operations                              $    210       $    230
    Notes payable                                                             14,825          5,475
    Accrued compensation                                                         875          1,285
    Accounts payable and accrued expenses                                      2,130          1,904
                                                                            --------       --------
                Total liabilities                                             18,040          8,894
                                                                            --------       --------
                                                                                         
                                                                                         
Stockholders' equity:                                                                    
    Common stock, $.01 par value, 10,000,000 shares authorized, 8,076,022                
         shares issued, with 5,743,777 and 5,799,495 shares outstanding                  
         at March 31, 1998 and September 30, 1997                                 54             54
    Less:  Treasury stock, 2,332,245 and 2,276,595 shares at                             
          March 31, 1998 and September 30, 1997                               (9,376)        (8,623)
    Additional paid-in capital                                                48,795         48,795
    Unrealized gain on investments, net of tax                                    51            538
    Retained earnings                                                          4,571            989
                                                                            --------       --------
                 Total stockholders' equity                                   44,095         41,753
                                                                            --------       --------
Total liabilities and stockholders' equity                                  $ 62,135       $ 50,647
                                                                            ========       ========
------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
                                       3
<PAGE>
Pilgrim America Capital Corporation
Condensed Consolidated Statement of Operations
(dollars in thousands, except  share amounts)
<TABLE>
<CAPTION>
                                               Three months ended              Six months ended
                                                    March 31,                      March 31,
------------------------------------------------------------------------------------------------------
                                              1998           1997             1998            1997
------------------------------------------------------------------------------------------------------
<S>                                       <C>             <C>              <C>             <C>        
Revenues
   Management and administrative fees     $     6,211     $     4,244      $    11,935     $     8,174
   Distribution fees                            1,546             552            2,680           1,018
   Investment and other income                  1,548             274            2,246             538
                                          -----------     -----------      -----------     -----------
          Total revenues                        9,305           5,070           16,861           9,730
                                          -----------     -----------      -----------     -----------
------------------------------------------------------------------------------------------------------

Expenses
     General and administrative                 2,975           1,868            5,287           3,791
     Selling                                    2,229           1,211            3,829           2,455
     Amortization and depreciation                823             569            1,622           1,097
                                          -----------     -----------      -----------     -----------
          Total expenses                        6,027           3,648           10,738           7,343
                                          -----------     -----------      -----------     -----------

     Earnings before taxes                      3,278           1,422            6,123           2,387

    Tax expense (benefit)                       1,363          (6,589)           2,541          (6,589)
                                          -----------     -----------      -----------     -----------

Net earnings                              $     1,915     $     8,011      $     3,582     $     8,976
                                          ===========     ===========      ===========     ===========
------------------------------------------------------------------------------------------------------

Basic:
Net earnings                              $      0.33     $      1.38      $      0.62     $      1.55
                                          ===========     ===========      ===========     ===========
Shares used in per share calculation        5,763,182       5,790,195        5,781,539       5,790,195
                                          ===========     ===========      ===========     ===========

Diluted:
Net earnings                              $      0.29     $      1.31      $      0.54     $      1.49
                                          ===========     ===========      ===========     ===========
Shares used in per share calculation        6,598,157       6,099,492        6,593,027       6,009,071
                                          ===========     ===========      ===========     ===========

------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
                                       4
<PAGE>
PILGRIM AMERICA CAPITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
<TABLE>
<CAPTION>
                                                                      For the Six Months
                                                                        Ended March 31,
-------------------------------------------------------------------------------------------
                                                                      1998          1997
-------------------------------------------------------------------------------------------

<S>                                                                 <C>           <C>     
Cash flows from operating activities
Net earnings                                                        $  3,582      $  8,976
Adjustments to reconcile net earnings to net cash
    used in operating activities:
    Amortization and depreciation                                      1,622         1,097
    Increase  in accounts receivable                                    (954)          (60)
    Decrease in operating liabilities                                   (184)       (3,299)
    Increase in deferred acquisition costs due to subscriptions      (10,924)       (2,146)
    Decrease in deferred acquisition costs due to redemptions            325            85
    (Increase) decrease in deferred tax asset                          2,541        (6,789)
    Increase  in other operating assets                                 (950)         (279)
                                                                    --------      --------
Net cash used in operating activities                                 (4,942)       (2,415)
                                                                    --------      --------
-------------------------------------------------------------------------------------------

Cash flows from investing activities
    Investment in Pilgrim America Funds                                 (708)          (54)
    Sale of  Pilgrim America Funds                                     2,327          --
    Other investments purchased                                       (4,750)         --
    Sales of furniture, fixtures and equipment                             7             8
    Purchases of furniture, fixtures and equipment                      (326)          (31)
    Cash provided by (used in) discontinued operations                   (20)        2,099
                                                                    --------      --------
Net cash provided by (used in) investing activities                   (3,470)        2,022
                                                                    --------      --------
-------------------------------------------------------------------------------------------

Cash flows from financing activities
    Repurchase of treasury stock                                        (753)         --
    Term debt borrowing                                                9,350           315
                                                                    --------      --------
    Net cash provided by  financing activities                         8,597           315
                                                                    --------      --------
    Net increase (decrease)  in cash and cash equivalents                185           (78)
    Cash and cash equivalents, beginning of period                       219           238
                                                                    --------      --------
Cash and cash equivalents, end of period                            $    404      $    160
                                                                    ========      ========
-------------------------------------------------------------------------------------------

Supplemental disclosures
    Interest paid                                                   $    230      $    212
-------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
                                       5
<PAGE>
                       PILGRIM AMERICA CAPITAL CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



(1)  BASIS OF FINANCIAL STATEMENT PRESENTATION

Principles of Consolidation.  The accompanying  condensed consolidated financial
statements of the Company were prepared in accordance  with  generally  accepted
accounting   principles  for  interim   financial   information   and  with  the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes  required by generally accepted
accounting  principles  for  complete  financial  statements.  In the opinion of
management, all adjustments considered necessary for fair presentation have been
included.  Operating  results  for the six months  ended  March 31, 1998 are not
necessarily  indicative of the results which may be expected for the fiscal year
ending September 30, 1998. For additional information, refer to the consolidated
financial  statements  for the fiscal  year ended  September  30, 1997 which are
included in the Company's Form 10-K.

The condensed  consolidated  financial  statements  include the Company's wholly
owned subsidiary,  Pilgrim America Group,  Inc. ("PAG") and PAG's  subsidiaries,
Pilgrim America Investments,  Inc., a registered investment advisor, and Pilgrim
America  Securities,  Inc., a registered  broker/dealer  (collectively  "Pilgrim
America").  The condensed  consolidated  financial  statements  also include the
Company's wholly-owned mortgage banking subsidiaries,  Express America TC, Inc.,
EAMC Liquidation Corp.  ("EAMC"),  and EAMC's wholly-owned  subsidiaries,  Wesav
Investment Corporation and Wesav Investment Inc.-2.

The  activities  of  the  Company  consist  primarily  of  providing  investment
management and related  services to various  open-end and closed-end  investment
companies  operating  under the Pilgrim and Pilgrim America names (the "Funds").
The results of  operations  reported  in the  condensed  consolidated  financial
statements reflect these investment management activities.

Reclassifications.  Certain  reclassifications  have been  made to prior  period
financial statements to conform with current period presentation.

Costs Assigned to Management  Contracts  Acquired.  Costs assigned to management
contracts acquired represents the fair value of the investment management rights
acquired  through the  acquisition  in April 1995 of such  management  contracts
("the  Acquisition")  and also  represents  the  excess  of the  purchase  price
(including  liabilities  assumed) over the fair value of net assets acquired and
resulting  costs from the  Acquisition.  These amounts are being  amortized on a
straight-line basis over 25 years.

The  Company   analyzes   costs  assigned  to  management   contracts   acquired
periodically  to determine  whether any impairment in value has occurred.  Based
upon  anticipated  future income from  operations,  in the opinion of management
there has been no impairment.

Deferred  Acquisition  Costs.  The  Company  pays  commissions  of up to 4.0% to
authorized  broker-dealers at the time that Fund shares with contingent deferred
sales charges are sold.  These  payments are  capitalized  and amortized  over a
six-year period,  which is the period during which the contingent deferred sales
charge is effective.

The Company periodically analyzes the recoverability of its Deferred Acquisition
Costs by  comparison  of the carrying  amount of the net future cash flows to be
received.  If  necessary  a  valuation  allowance  is  recorded  to reflect  the
difference between the carrying amount and the estimated future cashflows.
                                       6
<PAGE>
                       PILGRIM AMERICA CAPITAL CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



Income Tax Deferred tax assets and  liabilities  are  initially  recognized  for
temporary  differences  between the consolidated  financial  statement  carrying
amount and the tax bases of assets and  liabilities  which will result in future
deductible amounts and operating loss and tax credit carryforwards.  A valuation
allowance is then  established  to reduce the deferred tax asset to the level at
which it is "more likely than not" that the tax benefits  will be realized.  The
Company  recorded an income tax benefit  during the three months ended March 31,
1997 as a result  of a  change  in the  valuation  allowance  for the  Company's
deferred  tax  asset.  The  change  in the  valuation  allowance  resulted  from
management's determination that it is more likely than not that the deferred tax
asset will be realized.

Net  Earnings  Per Common  Share.  Effective  December  31,  1997,  the  Company
implemented  Financial  Accounting  Standard No. 128 "Earnings per Share".  This
statement  provides  accounting  and reporting  standards for earnings per share
(EPS),  simplifies the requirement  for calculating  EPS, and is compatible with
international accounting standards.  This statement replaces the presentation of
primary  EPS with a  presentation  of basic EPS.  The  statement  requires  dual
presentation  of  basic  and  diluted  EPS  by  entities  with  complex  capital
structures.  Basic EPS includes no dilution  and is computed by dividing  income
available to common  stockholders by the weighed average number of common shares
outstanding  for the period.  Diluted EPS  reflects  the  potential  dilution of
securities  that could share in the  earnings  of any  entity,  similar to fully
diluted EPS.

Prior  periods  EPS have been  restated  to  conform  with the  requirements  of
Statement No. 128.

Additionally,  the share and the net  earnings  per share data  reported for the
quarters  and six months  ended March 31, 1997 and 1998,  have been  restated to
give retroactive  recognition to a 50% stock dividend accounted for as a 3 for 2
stock split, approved on April 6, 1998 by the Company's Board of Directors.
                                       7
<PAGE>
                       PILGRIM AMERICA CAPITAL CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table is an illustration of the  reconciliation  of the numerators
and  denominators  of the basic and diluted EPS  computations of the company for
the quarters and six months ended March 31, 1998:
<TABLE>
<CAPTION>
                                                   1998                                   1997
                               --------------------------------------- -----------------------------------------
                                   Income         Shares     Per Share    Income         Shares       Per Share
Quarter ended March 31,          Numerator     Denominator     Amount    Numerator     Denominator      Amount
-------------------------      ------------- --------------- --------- ------------- --------------- -----------
<S>                              <C>            <C>           <C>       <C>            <C>            <C>      
   Net earnings                  $1,915,000                             $8,011,000

   Basic EPS
      Earnings available to
        common stockholders       1,915,000      5,763,182    $   0.33   8,011,000      5,790,195     $    1.38
                                                              ========                                =========
   Effect of Dilutive
         Securities
      Stock Options                    --          834,975                    --          309,297
                                 ----------     ----------              ----------     ----------               

   Diluted EPS
      Earnings available to
         common stockholders     $1,915,000      6,598,157    $   0.29  $8,011,000      6,099,492     $    1.31
                                 ==========      =========    ========  ==========      =========     =========

Six months ended March 31,
--------------------------

   Net earnings                  $3,582,000                             $8,976,000

   Basic EPS
      Earnings available to
         common stockholders      3,582,000      5,781,539    $   0.62   8,976,000      5,790,195     $    1.55
                                                              ========                                =========
   Effect of Dilutive
     Securities
      Stock Options                    --          811,488                    --          218,876
                                 ----------     ----------              ----------     ----------

   Diluted EPS
      Earnings available to
         common stockholders     $3,582,000     $6,593,027    $   0.54  $8,976,000     $6,009,071     $    1.49
                                 ==========     ==========    ========  ==========     ==========     =========
</TABLE>

Private Account  Management Fee On November 13, 1997, the Company entered into a
transaction  with a non-issuer  to manage  approximately  $509 million of assets
("Private  Account").  The Company earns an annual 0.50% management fee on these
assets,  and the Company may be entitled to an  additional  performance  fee. As
part of the transaction, the Company has acquired a $5 million equity investment
in the Private Account.
                                       8
<PAGE>
Item 2.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS.

General

The Company is a holding company that,  through its  wholly-owned  subsidiaries,
provides  investment  management and related services for seven open-end and one
closed-end  funds (each a "Fund" and collectively the "Pilgrim America Funds" or
the  "Funds").  The Company is now  involved in Private  Asset  management.  The
Company  closed its second  Private  Account  transaction  on April 28, 1998 for
approximately  $400  million.  The  Company  also  acquired a $5 million  equity
investment in association with the closing of this Private Account.

Results of Operations

The following  table presents  comparative  quarterly data regarding Fund assets
under management and Fund sales for the four quarters ended March 31, 1998:
<TABLE>
<CAPTION>
                                                               Pilgrim America Funds
                                                           Selected Fund Data (Unaudited)
                                                                     ($000,000)
                                          -------------------------------------------------------------
                                             March 31,       December 31,   September 30,     June 30,
                                               1998            1997(1)          1997            1997
                                          -------------      -----------    -------------    ----------
<S>                                         <C>              <C>              <C>            <C>       
Open-End Funds:                           
    Beginning Assets                        $  1,153.3       $    676.0       $    600.0     $    515.5
    Direct Sales                                 307.8            175.1             66.3           60.4
    Direct Redemptions                           (48.9)           (62.9)           (22.0)         (30.8)
    Exchanges In (Out)(2)                         (4.1)            (1.0)             5.9           (1.1)
    Investment Activities(3)                     100.0            366.1             25.8           56.0
                                            ----------       ----------       ----------     ----------
    Ending Assets                              1,508.1          1,153.3            676.0          600.0
                                                                                             
Closed-End Funds:                                                                            
    Beginning Assets                           1,453.8          1,702.0          1,688.9        1,622.5
    Investment Activities(3)                      19.4           (248.2)            13.1           66.4
                                            ----------       ----------       ----------     ----------
    Ending Assets                              1,473.2          1,453.8          1,702.0        1,688.9
                                                                                             
Private Accounts: (4)                                                                        
    Beginning Assets                             587.3            230.5           --             --
    Additions                                    282.7            356.8            230.5         --
                                            ----------       ----------       ----------     ----------
    Ending Assets                                870.0            587.3            230.5         --
Ending Assets Under                                                                          
    Management                              $  3,851.3       $  3,194.4       $  2,608.5     $  2,288.9
                                            ==========       ==========       ==========     ==========
</TABLE>

(1)  The  Board  of  Directors  of  Pilgrim  America  Bank and  Thrift  Fund and
     shareholders  approved  converting  the Fund from a  closed-end  Fund to an
     open-end Fund at a meeting on October 31, 1997.
(2)  Net exchanges from (to) the Company's sponsored money market fund.
(3)  Investment activities include net investment income,  realized gain/(loss),
     change  in  appreciation/(depreciation)  and   net  cash  distributions  to
     shareholders.  Investment  activities for  closed-end  funds include assets
     acquired using borrowed funds and removal of Bank and Thrift to an open-end
     Fund in October 1997.
(4)  The Private account activity  includes assets under  management  during the
     period assets were being accumulated.
                                       9
<PAGE>
Quarter Ended March 31, 1998 compared to the Quarter Ended March 31, 1997

Net earnings  for the March 31, 1998  quarter  amounted to $1.9 million or $0.29
per share  compared to net  earnings of $8.0  million or $1.31 per share for the
quarter  ended March 31,  1997.  Net earnings for the March 31, 1997 quarter end
included a tax  benefit  of $6.6  million  relating  to prior  operating  losses
compared to March 31, 1998 quarter end which did not include any tax benefit.

Revenues. Revenues for the March 31, 1998 quarter increased by $4.2 million over
revenues for the March 31, 1997 quarter.  This increase  primarily resulted from
an increase in management and  administrative  fees of $2.0 million.  Management
and  administrative  fees are based on assets under  management  which  averaged
$3.41 billion during the current  quarter and $2.07 billion during the March 31,
1997 quarter.

The  conversion of the Pilgrim  America Bank and Thrift Fund to an open-end Fund
in October  1997,  along with higher sales of open-end  funds during the current
quarter as  compared to the March 31,  1997  quarter  resulted in an increase in
distribution  fees of $1.0 million compared to the quarter ended March 31, 1997.
Distribution fees are realized from the sale of certain fund shares.

Investment  and other  income for the March 31, 1998  quarter  increased by $1.3
million,  primarily  as a  result  of a gain  recognized  on the  sale  of  cash
investments  made  initially by the Company of the Pilgrim  America Funds at the
time the funds were established.

Expenses.  Total expenses,  excluding  amortization  and  depreciation,  for the
current  quarter  increased  by $2.1  million  compared  to the March  31,  1997
quarter.  This  increase  in expenses  was  primarily a result of an increase in
general  and  administrative  expenses  of $1.1  million  due to an  increase in
personnel costs primarily resulting from an increase in staff and a $1.0 million
increase in selling expense primarily the result of the increase in sales of the
Company's Funds.

Amortization  and  depreciation  expenses  increased by $254,000 between the two
quarters  primarily as a result of an increase in the  amortization  of deferred
acquisition costs.  Deferred  acquisition costs are commissions paid on the sale
of certain fund shares.  These  commissions are capitalized and amortized over a
six-year period.


Six Months Ended March 31, 1998 compared to the Six Months Ended March 31, 1997

Net earnings for the six months ended March 31, 1998 were $3.6 million, or $0.54
per share  compared to a net earnings of $9.0 million or $1.49 per share for the
six months ended March 31, 1997. Net earnings for the six months ended March 31,
1997  included a $6.6  million tax  benefit  related to prior  operating  losses
compared to the six months  ended March 31, 1998  quarter  which did not include
any tax benefit.

Revenues.  Revenues  for the six months  ended March 31, 1998  increased by $7.1
million over  revenues for the six months  ended March 31, 1997.  This  increase
primarily  resulted from an increase in management  and  administrative  fees of
$3.8  million.  Management  and  administrative  fees are based on assets  under
management which averaged $2.94 billion during the first half of Fiscal 1998 and
$2.07 billion during the first half of Fiscal 1997.

The  conversion of the Pilgrim  America Bank and Thrift Fund to an open-end Fund
in October 1997, along with higher sales of open-end funds during the first half
of Fiscal 1998 as compared to the first half of Fiscal 1997 resulted in increase
in distribution  fees of $1.7 million compared to the six months ended March 31,
1997. Distribution fees are realized from the sale of certain fund shares.

Investment and other income for the six months ended March 31, 1998 increased by
$1.7 million primarily as a gain recognized on the sale of cash investments made
initially by the Company in the Pilgrim America Funds at the time the funds were
established.
                                       10
<PAGE>
Expenses.  Total expenses,  excluding  amortization and depreciation for the six
months ended March 31, 1998 increased by $2.9 million compared to the six months
ended March 31, 1997.  This  increase in expenses  was  primarily a result of an
increase of $1.5 million in general and administrative expensed primarily due to
an increase in personnel costs primarily resulting from an increase in staff and
a $1.4 million increase in selling expenses primarily a result of an increase in
sales of the Company's Funds.

Amortization  and  depreciation  expenses  increased by $525,000 between the two
reporting  periods  primarily as a result of an increase in the  amortization of
deferred  acquisition costs.  Deferred acquisition costs are commissions paid on
the sale of certain fund shares. These commissions are capitalized and amortized
over a six-year period.

Liquidity

The Company's  principal  liquidity  needs arise in connection  with general and
administrative  expenses,  selling expenses,  including  commissions paid by the
Company  in  connection  with  the  selling  shares  of its  funds,  and  equity
investment  requirements  in  connection  with  the  Company's  Private  Account
management. The Company's principal liquidity and capital resources include cash
flow from the  operations and  borrowings  available  under a $35 million credit
agreement ("the Credit Agreement").  In the first six months of fiscal 1998, the
Company had net cash flows used in operating activity of $4.9 million,  net cash
flows used in  investing  activities  of $3.5  million,  of which the  Company's
discontinued  operations  used  $20,000,  and had  cash  provided  by  financing
activities of $8.6 million,  which was net of $753,000 used to repurchase shares
of the Company's stock.


The Company  intends to continue  funding its investment  management  operations
with cash provided by operations and with  borrowings  obtained under the Credit
Agreement.  The Company's  Credit Agreement was amended and restated on March 2,
1998 and allows the Company or the  Company's  wholly owned  subsidiary  Pilgrim
America  Group,  Inc  ("PAG") to borrow up to $35 million to be used for various
purposes  including (i) general corporate  working capital;  (ii) acquisition of
investment  management  contracts;  (iii)  financing of commissions  paid by the
Company in connection with sales of Fund shares subject to a contingent deferred
sales  charge,  (iv)  financing  Private  Account  equity  investments  and  (v)
repurchasing Company stock. The agreement contains  restrictive  covenants which
require PAG and the Company to maintain  certain  financial ratios and prohibits
"restrictive  payments" (including dividends and other payments) from PAG to the
Company.  Borrowings under the credit agreement are  collateralized by assets of
PAG and its wholly-owned  subsidiaries  and guaranteed by the Company.  At March
31, 1998 the Company had borrowings of approximately  $14.8 million  outstanding
under  the  Credit  Agreement,   and  approximately   $20.2  million  additional
borrowings available.


The Company,  through its wholly owned discontinued mortgage subsidiaries,  owns
mortgage loans and foreclosed  real estate.  The Company's  investments in these
loans and  foreclosed  real  estate are  funded  with the  Company's  borrowings
available under the Credit  Agreement.  Any increase in repurchase loan activity
due to the  Company's  discontinued  operations,  beyond that  forecasted by the
Company, may have an adverse effect of the Company's liquidity.

On August 5, 1997, the Company's Board of Directors approved  repurchasing up to
750,000   shares  of  its  common  stock  from  time  to  time  in  open  market
transactions.  The Company will use cash generated from operations or borrowings
obtained under the Credit  Agreement to repurchase  the shares.  As of March 31,
1998, the Company had repurchased 55,650 shares pursuant to this authorization.
                                       11
<PAGE>
                           PART II - OTHER INFORMATION

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

The Company's  annual meeting of stockholders was held of February 24, 1998, for
the purposes of electing two directors to the Company's Board of Directors, each
to serve a three year term. At the meeting,  a quorum being present,  votes cast
in the election of directors were as follows:


   Nominee         Vote For     Vote Against    Vote Withheld   Broker Non Votes

John Cotton       3,127,634          0             3,050               0
Paul Renze        3,127,634          0             3,050               0


Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

         10.1  Second Amendment to Second Amended and Restated Credit Agreement,
               dated March 2, 1998,  between PAG, and the Company and First Bank
               National Association.

         27.0  Financial Data Schedules


(b)      Reports on Form 8-K.

         None

         After the quarter  ended March 31, 1998,  the Company filed one Current
         Report on Form 8-K relating to an event on April 6, 1998, which was the
         date the Company's  Board of Directors  authorized a 50% stock dividend
         to be accounted for as a 3 for 2 stock split.
                                       12
<PAGE>
                                   SIGNATURES




         Pursuant to the  requirements of Section 13 of the Securities  Exchange
Act of 1934,  the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.




                                   PILGRIM AMERICA CAPITAL CORPORATION



Date:  May 7, 1998                  \S\ James R. Reis
                                   ---------------------------------------------
                                   James R. Reis
                                   Vice-Chairman and Chief Financial Officer
                                   (Principle Accounting Officer)
                                       13