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, 1999
                         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.



         5,152,977 Shares of Common Stock outstanding on April 30, 1999
         --------------------------------------------------------------
<PAGE>
                                      INDEX




 PART I.  FINANCIAL INFORMATION                                          Page
                                                                         ----



    Item 1.  Financial Statements




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


             (b) Notes to Condensed Consolidated Financial Statements.... 7



    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.........17



    Item 6.  Exhibits and Reports on Form 8-K............................17



    Signatures...........................................................18

                                       2
<PAGE>
ITEM 1. FINANCIAL STATEMENTS


PILGRIM AMERICA CAPITAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)

                                                          March 31,    September
                                                            1999        30, 1998
--------------------------------------------------------------------------------


ASSETS
   Cash and cash equivalents                                $ 451         $ 763
   Investments                                             21,699        18,808
   Accounts receivable                                      2,511         1,566
   Notes receivable                                         4,139         4,136
   Costs assigned to management contracts acquired,
        less accumulated amortization of $5,168 and
        $4,523                                             27,095        27,740
   Furniture, fixtures and equipment, less accumulated
        depreciation of $671 and $536                       1,278           879
   Deferred acquisition costs, less accumulated
         amortization of $114 and $3,442                      835        26,562
   Incentive management fee receivable                      1,965         1,103
   Other assets                                             1,623         1,938
                                                       -----------   -----------
TOTAL ASSETS                                             $ 61,596      $ 83,495
                                                       ===========   ===========


--------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
   Current income taxes payable                             $ 124           $ -
   Deferred tax liability                                   1,445             -
   Notes payable                                            6,975        30,375
   Accrued compensation                                     1,671         2,763
   Accounts payable and accrued expenses                    3,461         3,793
                                                       -----------   -----------
               Total liabilities                           13,676        36,931
                                                       -----------   -----------


Stockholders' equity:
   Common stock, $.01 par value,  10,000,000 shares
       authorized, 8,085,722 and 8,081,722 shares
        issued, with 5,302,877 and 5,588,477 shares
        outstanding at March 31, 1999 and September
        30, 1998                                               81            81
   Less:  Treasury stock of 2,782,845 and 2,493,245
        at March 31, 1999 and September 30, 1998          (17,757)      (12,530)
   Additional paid-in capital                              48,804        48,790
   Retained earnings                                       16,801        10,296
   Accumulated other comprehensive earnings
        Unrealized loss on investments, net of tax             (9)          (73)
                                                       -----------   -----------
                Total stockholders' equity                 47,920        46,564
                                                       -----------   -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY               $ 61,596      $ 83,495
                                                       ===========   ===========


--------------------------------------------------------------------------------

SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                       3
<PAGE>
PILGRIM AMERICA CAPITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------

                                                        Three months ended              Six months ended
                                                             March 31,                     March 31,
                                                        1999           1998            1999          1998
                                                    ----------------------------   ---------------------------
<S>                                                      <C>            <C>            <C>           <C>
REVENUES:
   Management and administrative fees                    $ 6,788        $ 5,246        $ 13,538      $ 10,282
   Structured finance products management fees             3,102            965           6,315         1,653
   Distribution fees                                       1,263          1,546           2,486         2,680
   Commissions                                               105            554             326           815
   Investment and other income                               943            994           2,193         1,431
                                                    -------------  -------------   -------------  ------------
          Total revenues                                  12,201          9,305          24,858        16,861
                                                    -------------  -------------   -------------  ------------

EXPENSES:
     General and administrative                            3,882          2,737           7,996         4,895
     Selling                                               2,017          2,229           4,620         3,829
     Interest expense                                        168            238             334           392
     Amortization and depreciation                           429            823             860         1,622
                                                    -------------  -------------   -------------  ------------
          Total expense                                    6,496          6,027          13,810        10,738
                                                    -------------  -------------   -------------  ------------

Earnings before income taxes                               5,705          3,278          11,048         6,123

Income taxes                                               2,331          1,363           4,543         2,541
                                                    -------------  -------------   -------------  ------------

NET EARNINGS                                             $ 3,374        $ 1,915         $ 6,505       $ 3,582
                                                    =============  =============   =============  ============

Earnings per common and
common equivalent share

Basic:

Net earnings                                              $ 0.63         $ 0.33          $ 1.22        $ 0.62
                                                    =============  =============   =============  ============

Shares used in per share calculation                   5,319,620      5,763,182       5,332,394     5,781,539
                                                    =============  =============   =============  ============

Diluted:

Net earnings                                              $ 0.55         $ 0.29          $ 1.06        $ 0.54
                                                    =============  =============   =============  ============

Shares used in per share calculation                   6,127,957      6,598,157       6,122,852     6,593,027
                                                    =============  =============   =============  ============

--------------------------------------------------------------------------------------------------------------
</TABLE>

SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                       4
<PAGE>
PILGRIM AMERICA CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                             Three months ended        Six months ended
                                                                                 March 31,                 March 31,
                                                                              1999        1998         1999        1998
---------------------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>        <C>            <C>         <C>
Net earnings                                                                  $ 3,374    $ 1,915        $6,505      $3,582

Other comprehensive earnings, net of tax
              Unrealized holding gains (losses) arising during the period           1        (24)           64         (62)
              Less:  Reclassification adjustment for gains
              included in net earnings                                              -       (296)            -        (425)
                                                                            ----------  ---------    ----------  ----------

Comprehensive earnings                                                        $ 3,375    $ 1,595        $6,569      $3,095
                                                                            ==========  =========    ==========  ==========

---------------------------------------------------------------------------------------------------------------------------
</TABLE>

     SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                       5
<PAGE>
PILGRIM AMERICA CAPITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                      For the Six Months
                                                                                       Ended March 31,
----------------------------------------------------------------------------------------------------------------
                                                                                   1999                1998
----------------------------------------------------------------------------------------------------------------
<S>                                                                                 <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings                                                                        $ 6,505             $ 3,582
Adjustments to reconcile net earnings to net cash provided by
        (used in) operating activities:
        Amortization and depreciation                                                   815               1,622
        Gain on sale of investments                                                       -                (720)
        Gain on sale of deferred acquisition costs                                     (228)                  -
        Increase in accounts receivable                                                (948)             (1,270)
        Increase in incentive management fee receivable                                (862)               (386)
        Increase in deferred acquisition costs due to subscriptions                  (6,399)            (10,924)
        Decrease in deferred acquisition costs due to redemptions                         6                 325
        Net change in deferred  tax asset/current tax liability                       2,304               2,541
        Decrease in operating liabilities                                            (1,424)               (204)
        Increase in other operating assets                                             (462)               (248)
                                                                               -------------        ------------
Net cash used in operating activities                                                  (693)             (5,682)
                                                                               -------------        ------------

----------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
        Investment in Pilgrim Funds                                                       -                  12
        Sale of Pilgrim Funds                                                             -               2,327
        Investments in structured finance products                                   (4,045)             (4,750)
        Principal distributions from structured finance product investments           1,305                   -
        Sales of furniture, fixtures and equipment                                        -                   7
        Purchases of furniture, fixtures and equipment                                 (535)               (326)
                                                                               -------------        ------------
Net cash used in investing activities                                                (3,275)             (2,730)
                                                                               -------------        ------------

----------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
        Purchase of treasury stock                                                   (5,227)               (753)
        Proceeds from exercise of stock options                                          14                   -
        Proceeds from sale of deferred acquisition costs                             32,269                   -
        Term debt borrowing (repayment)                                             (23,400)              9,350
                                                                               -------------        ------------
Net cash provided by financing activities                                             3,656               8,597
                                                                               -------------        ------------
        Net  increase (decrease)  in cash and cash equivalents                         (312)                185
        Cash and cash equivalents, beginning of period                                  763                 219
                                                                               -------------        ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                              $ 451               $ 404
                                                                               =============        ============

----------------------------------------------------------------------------------------------------------------

SUPPLEMENTAL DISCLOSURES
        Interest paid                                                                 $ 778               $ 230
        Income taxes paid                                                             2,385                   -

----------------------------------------------------------------------------------------------------------------
</TABLE>

SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                       6
<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 Pilgrim America  Capital  Corporation  and its  subsidiaries  (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 three and six months  ended  March 31,  1999 are not
necessarily  indicative of the results which may be expected for the fiscal year
ending September 30, 1999. For additional information, refer to the consolidated
financial  statements  for the fiscal  year ended  September  30, 1998 which are
included in the Company's Form 10-K/A.

The condensed  consolidated  financial  statements  include the Company's wholly
owned   subsidiary,   Pilgrim  Group,   Inc.  ("PGI")  and  PGI's  wholly  owned
subsidiaries,   Pilgrim  Investments,  Inc.  ("PII"),  a  registered  investment
advisor,  and Pilgrim  Securities,  Inc.  ("PSI"),  a  registered  broker/dealer
(collectively  "Pilgrim").  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 Investments 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  (each a "Fund" and  collectively  the "Pilgrim Funds" or the "Funds")
and Structured Finance Products operating under the Pilgrim name. The results of
operations reported in the condensed  consolidated  financial statements reflect
these investment management activities.

INVESTMENTS.  The Company has  investments  in  Structured  Finance  Products in
addition to other marketable securities.

In recording  income from its investments in Structured  Finance  Products,  the
Company evaluates the Structured Finance Products' investments for impairment by
comparing  the net  present  values of  projected  future  cash  flows  with the
investments'  carrying  values.  The  investments'  cash flows and timings are a
function  of actual and  forecasted  loan and bond  defaults  and their  related
losses, trading gains and losses,  projected interest receipts and expenses, and
net cash flow allocations based on product specific indenture  requirements.  In
projecting defaults and losses, the Company reviews specific problem credits and
forecasts the anticipated  losses.  The remaining  credits in the portfolios are
forecasted using default  assumptions of 2% annually with related recovery rates
of 70% of the defaults.  Projected  interest  receipts and expenses are based on
current portfolio and market interest rates.

COSTS ASSIGNED TO MANAGEMENT  CONTRACTS  ACQUIRED.  Costs assigned to management
contracts acquired represent the fair value of the investment  management rights
acquired through the acquisition in April 1995 of such management contracts (the
"Acquisition")  and also represent 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  periodically  analyzes  costs  assigned  to  management  contracts
acquired to determine  whether any impairment in value has occurred.  Based upon
anticipated  future cash flows from  operations,  in the  opinion of  management
there has been no impairment.

DEFERRED  ACQUISITION  COSTS.  The Company  pays  commissions  of up to 4.00% to
authorized  broker-dealers  at the time that certain  Fund shares are sold.  The
commissions are recovered via distribution fees received from the related shares
and contingent deferred sales charges ("CDSC"s) received should the shareholders
redeem shares during a specified period (up to six years). Such commission costs
are  capitalized  as Deferred  Acquisition  Costs ("DAC") and amortized over the
period  that the CDSC is in effect.  On December  11,  1998,  the  Company  sold
without recourse its existing September 30, 1999 DAC asset related to certain of
the Funds'  shares (the "B Shares") and has agreed to sell DAC assets  generated
on future B Share sales thereafter through November 1999. The Company

                                       7
<PAGE>
                       PILGRIM AMERICA CAPITAL CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


funds the DAC daily and sells the asset monthly.  The purchaser of the DAC asset
is entitled to 0.75%, annualized,  in distribution fees paid from B Share assets
and all CDSCs received from any  redemptions  of the related B Shares.  Prior to
the sale of the DAC asset,  the Company  amortized  the B Share DAC asset over a
six-year period, which is the period during which the CDSC is in effect for such
Shares.


INCENTIVE MANAGEMENT FEES RECEIVABLE.  The Company receives management fees from
the  Structured  Finance  Products as follows:  (i) between 0.15% and 0.35% base
management fee which is generally senior to leveraged borrowings in the account,
(ii) between 0.20% and 0.35%  secondary  management fee which is subordinated to
certain payments on leveraged borrowings and (iii) an additional  management fee
on each  Structured  Finance  Product  ranging from 0.10% to 0.25% of annual net
assets if specified  investment  returns are met ("Incentive  Management Fees").
Incentive  Management  Fees are  typically  expected  to be  received  in future
periods.

Incentive Management Fee revenues represent the increase in the present value of
the  Incentive  Management  Fee  Receivable  for the period for each  Structured
Finance Product.

In determining the present value of the Incentive Management Fee Receivable, the
Company  projects the timing of the Incentive  Management  Fee payments based on
product specific  projected  returns to the equity  investors.  Product specific
equity  returns and their  timings are a function  of  forecasted  loan and bond
defaults and their related losses, trading gains and losses,  projected interest
receipts and expenses,  and net cash flow allocations  based on product specific
indenture  requirements.  In projecting defaults and losses, the Company reviews
specific  problem  credits and forecasts the anticipated  losses.  The remaining
credits  in the  portfolios  are  forecasted  using  default  assumptions  of 2%
annually with related recovery rates of 70% of the defaults.  Projected interest
receipts and expenses are based on current  portfolio and market interest rates.
If the projected  investor  returns are in excess of the minimums defined in the
indentures,  the Company uses a 10% discount rate to calculate the present value
of the related Incentive  Management Fee. Should the anticipated  performance of
the  Structured  Finance  Product result in a present value lower than Incentive
Management  Fees  accrued,  the  Company  would be  required  to write  down the
receivable  to its net present  value,  to reflect the  impairment of the asset.
Additionally,  volatility of investment  performance  may result in lower income
recognition in some periods.

The Incentive  Management Fee Receivable is reported separately on the Company's
condensed consolidated balance sheet.

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. Based
on  management's  analysis,  it is anticipated  that all the deferred tax assets
will be utilized,  therefore,  no valuation allowance has been established as of
March 31, 1999.

NET EARNINGS PER SHARE. Basic earnings per share ("EPS") is computed by dividing
income available to common stockholders by the weighted average number of common
shares  outstanding  for the period.  Diluted EPS is computed by dividing income
available  for common  shareholders  by the  weighted  average  number of common
shares outstanding adjusted for the effect of dilutive common stock equivalents,
including stock options, during the period.

                                       8
<PAGE>
                       PILGRIM AMERICA CAPITAL CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


The following is a reconciliation  of the basic and diluted EPS computations for
the three and six months  ended March 31, 1998 and 1999  (amounts in  thousands,
except per share amounts):

<TABLE>
<CAPTION>
                                                           Three months ended        Six months ended
                                                                March 31                 March 31
                                                            1999        1998         1999        1998
                                                           ------       ------      ------      ------
<S>                                                        <C>          <C>         <C>         <C>
Net earnings for basic and diluted EPS                     $3,374       $1,915      $6,505      $3,582
                                                           ======       ======      ======      ======

Shares of common stock and common stock equivalents:
              Average number of common
                  shares used in basic computation          5,320        5,763       5,332       5,782
              Effect of dilutive securities - options         808          835         791         811
                                                           ------       ------      ------      ------
              Average shares used in diluted computation    6,128        6,598       6,123       6,593
                                                           ======       ======      ======      ======

Net earnings per share:
              Basic                                        $ 0.63       $ 0.33      $ 1.22      $ 0.62
                                                           ======       ======      ======      ======
              Diluted                                      $ 0.55       $ 0.29      $ 1.06      $ 0.54
                                                           ======       ======      ======      ======
</TABLE>


COMPREHENSIVE INCOME. Effective October 1, 1998 the Company has adopted SFAS No.
130 "Reporting  Comprehensive  Income".  Comprehensive  income is defined as the
change in equity of a business  enterprise during a period from transactions and
other events and circumstances from non-owner  sources.  It includes all changes
to equity during a period except those resulting from  investments by owners and
distribution to owners. The SFAS requires that all items that are required to be
recognized under accounting  standards as components of comprehensive  income be
reported in a financial  statement that is displayed with the same prominence as
other  financial  statements.  The SFAS requires that an enterprise (1) classify
items of other comprehensive income by their nature in a financial statement and
(2) display the accumulated  balance of other  comprehensive  income  separately
from retained  earnings and additional  paid in capital in the equity section of
the statement of financial  condition.  No earnings per share  disclosure of the
effect of comprehensive income is required under the SFAS. The SFAS is effective
for fiscal  years  beginning  after  December 15, 1997 and  reclassification  of
financial  statements for earlier periods provided for a comparative  purpose is
required.


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 Funds,
one closed-end Fund and six Structured Finance Products.

                                       9
<PAGE>
RESULTS OF OPERATIONS
The following table presents  comparative  quarterly data regarding assets under
management, Fund share sales and increases in Structured Finance Products assets
for the four quarters ended March 31, 1999:

<TABLE>
<CAPTION>
                                                              PILGRIM FUNDS
                                                     SELECTED FUND DATA (UNAUDITED)
                                                              ($000,000)
                                        -------------------------------------------------------
                                          March 31,    December 31,   September 30,   June 30,
                                            1999           1998          1998           1998
                                        ----------     ----------     ----------     ----------
<S>                                     <C>            <C>            <C>            <C>
OPEN-END FUNDS:
    Beginning Assets                    $  1,899.9     $  1,614.3     $  1,786.3     $  1,508.1
    Direct Sales                             105.1          178.7          210.0          359.3
    Direct Redemptions                      (138.3)         (85.1)         (91.7)         (51.9)
    Exchanges In (Out)(1)                     (8.4)           2.1           (8.5)           4.1
    Investment Activities (2)                (31.2)         189.9         (281.8)         (33.3)
                                        ----------     ----------     ----------     ----------
    Ending Assets                          1,827.1        1,899.9        1,614.3        1,786.3
                                        ----------     ----------     ----------     ----------

CLOSED-END FUNDS: (5)
    Beginning Assets                       1,751.3        1,663.4        1,574.6        1,473.2
    Direct Sales (4)                          --             28.0           71.6           71.5
    Investment Activities (2)                (18.1)          59.9           17.2           29.9
                                        ----------     ----------     ----------     ----------
    Ending Assets                          1,733.2        1,751.3        1,663.4        1,574.6
                                        ----------     ----------     ----------     ----------

STRUCTURED FINANCE PRODUCTS: (6)
    Beginning Assets                       2,068.3        1,896.0        1,378.5          870.0
    Increases (3)                             98.4          172.3          517.5          508.5
                                        ----------     ----------     ----------     ----------
    Ending Assets                          2,166.7        2,068.3        1,896.0        1,378.5
                                        ----------     ----------     ----------     ----------

    Ending Assets Under Management      $  5,727.0     $  5,719.5     $  5,173.7     $  4,739.4
                                        ==========     ==========     ==========     ==========
</TABLE>


(1)  NET EXCHANGES FROM (TO) THE COMPANY'S SPONSORED MONEY MARKET FUND.
(2)  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.
(3)  INCLUDES ASSETS ACCUMULATED IN STRUCTURED FINANCE PRODUCT TRANSACTIONS THAT
     HAD NOT CLOSED AS OF THE RELATED QUARTER END DATE. SUCH  TRANSACTIONS  WERE
     IN THE RAMP UP STAGES AT THOSE DATES.
(4)  REGISTRATION STATEMENTS COVERING SECURITIES TO BE ISSUED PURSUANT TO A CASH
     PURCHASE  PLAN AND A SHELF  OFFERING FOR PRIME RATE TRUST (THE  "PROGRAMS")
     WERE  FILED  WITH  THE  SECURITIES  AND  EXCHANGE  COMMISSION  AND  ARE NOW
     EFFECTIVE.
(5)  THE COMPANY'S  CLOSED-END FUND IS ALLOWED TO BORROW UP TO 33 1/3% OF ASSETS
     FOR INVESTMENT PURPOSES.
(6)  STRUCTURED   FINANCE  PRODUCTS  ARE  CAPITALIZED   PRIMARILY  THROUGH  DEBT
     FINANCING.

QUARTER ENDED MARCH 31, 1999 TO QUARTER ENDED MARCH 31, 1998

Net earnings for the March 31, 1999 quarter amounted to $3.4 million or $.55 per
diluted share compared to net earnings of $1.9 million or $.29 per diluted share
for the quarter ended March 31, 1998.

REVENUES.  Revenues  for the March 31,  1999  quarter  were  $12.2  million,  an
increase of $2.9 million or 31% over revenues for the March 31, 1998 quarter.

Management and administrative  fees, the Company's largest revenue source,  were
$6.8 million in the current quarter, an increase of $1.6 million or 31% compared
to the March 31, 1998  quarter.  These  revenues are derived from the  Company's
open-end  and  closed-end  Funds,  which  averaged  $3.6 billion in assets under
management

                                       10
<PAGE>
during the current quarter,  an increase of $877 million or 32% over Fund assets
under management in the quarter ended March 31, 1998. Structured Finance Product
management fees increased $2.1 million or 210% over the comparable  quarter as a
result of the increase of Structured  Finance  Product month end average  assets
under management of $1.3 billion or 177%.

Distribution fees of $1.3 million for the quarter ended March 31, 1999 decreased
$283,000 or 18% compared to the quarter  ended March 31, 1998,  even though Fund
assets which  generate  distribution  fee income  increased  $553 million or 43%
during the  comparable  quarters.  The  decrease in  distribution  fee income is
attributable  to the fact that the  Company  sold its DAC asset and the  related
rights to receive 0.75% of the 1.00%  annualized  distribution  fees paid by the
Funds' B Share assets effective  September 30, 1998.  Accordingly,  no related B
share distribution fees were recorded during the current quarter.

Investment  and other  income for the March 31,  1999  quarter was  $943,000,  a
decrease of $51,000 or 5% over the March 31, 1998  quarter.  The  components  of
investment  and  other  income  consist  primarily  of  investment  income  from
Structured Finance Products and other income consisting  primarily of gains from
the sale of certain Company assets. Investment income was $812,000 for the three
months  ended  March 31,  1999,  an  increase  of $379,000 or 88% over the three
months ended March 31, 1998.  Other income of $131,000 for the three month ended
March 31, 1999,  decreased  $430,000 or 76% compared to the quarter  ended March
31,  1998.  The  decrease in other  income is  primarily  due to a $65,000  gain
recorded  for the three  months  ended  March 31,  1999 in  connection  with the
ongoing  sales  of the  DAC  asset  compared  to a  $501,000  gain  the  Company
recognized  in the March 31, 1998  quarter  due to the sale of cash  investments
made initially in the Pilgrim Funds at the time the Funds were established.  The
net effect of the increase in investment  income of $379,000 and the decrease in
other  income of  $430,000 is a $51,000 net  decrease  in  investment  and other
income.

EXPENSES.  Total expenses,  excluding  amortization,  depreciation  and interest
expense,  for the current quarter were $5.9 million,  an increase of $933,000 or
19%  compared to the March 31, 1998  quarter.  This net increase in expenses was
primarily a result of a $1.1  million  increase  in general  and  administrative
expenses due to an increase in personnel and  compensation,  a $212,000 decrease
in selling expenses  primarily  related to a decrease in the Company's costs for
sales of Pilgrim Funds and direct  expenses being  reimbursed to the Company for
distributing eleven Nicholas-Applegate retail Open-end Funds ("NACM Funds"). The
Company  entered into an agreement  during January 1999 with  Nicholas-Applegate
Capital Management ("NACM") to acquire the right to manage the NACM Funds and as
of  February  1,  1999  the  Company's  broker  dealer  subsidiary,  PSI,  began
distributing  shares of the NACM Funds. NACM has agreed to reimburse the Company
for the direct  costs of selling  shares of the NACM funds up to certain  limits
based on the expenses incurred.  The Company has reduced its selling expenses by
$986,000 for the quarter  ended March 31, 1999 for the direct costs attributable
to  distributing   the  NACM  Funds.   This   distribution   agreement  and  the
reimbursement  of expenses will remain in place until the Company  completes the
purchase of the right to manage the NACM Funds during May 1999 (see  "Subsequent
Event" below).

Interest  expense  decreased  to $168,000 in the quarter  ended March 31, 1999 a
decrease of $70,000 or 29%  compared to the quarter  ended March 31,  1998.  The
decrease in interest expense between  quarters is primarily  attributable to the
sale of the DAC asset in December  1998. The funds received in December from the
sale of the DAC asset were used to pay down debt outstanding under the Company's
Credit Agreement (see "Liquidity").

Amortization and depreciation  expenses decreased $394,000 primarily as a result
of sale of the DAC asset.  The DAC asset  consisted of  commissions  paid on the
sale  of  certain  Funds  shares.  Prior  to the  sale of the  DAC  asset  these
commissions were capitalized and amortized over a six-year period.


SIX MONTHS ENDED MARCH 31, 1999 TO SIX MONTHS ENDED MARCH 31, 1998

Net  earnings for the six months ended March 31, 1999 were $6.5 million or $1.06
per diluted share compared to $3.6 million or $.54 per diluted share for the six
months ended March 31, 1998.

REVENUES.  Revenues for the six months ended March 31, 1999 were $24.9  million,
an increase of $8.0 million or 47% over  revenues for the six months ended March
31, 1998.

                                       11
<PAGE>
Management and administrative  fees, the Company's largest revenue source,  were
$13.5  million in the  current six  months,  an increase of $3.3  million or 32%
compared to the six months ended March 31, 1998. These revenues are derived from
the Company's  open-end and  closed-end  Funds,  which  averaged $3.5 billion in
assets under management  during the first six months of the current fiscal year,
an increase of $928 million or 36% over Fund assets under  management in the six
months  ended  March  31,  1998.  Structured  Finance  Product  management  fees
increased $4.7 million or 282% over the comparable six months as a result of the
increase  of $1.5  billion  or 232% in  Structured  Finance  Products  month end
average assets under management.

Distribution  fees of $2.5  million,  for the six months  ended  March 31,  1999
decreased  $194,000 or 7% compared to the six months ended March 31, 1998,  even
though fund assets which generate distribution fee income increased $624 million
or 53% during the comparable six months. The decrease in distribution fee income
is  attributable to the Company's sale of its DAC asset on December 11, 1998 and
the related rights to receive 0.75% of the 1.00%  annualized  distribution  fees
paid by the Funds' B Share assets.  Accordingly,  no related  distribution  fees
were recorded during the current fiscal year.

Investment  and other  income for the six months  ended  March 31, 1999 was $2.2
million,  an increase  of  $762,000  or 53% over the six months  ended March 31,
1998.  The  components  of  investment  and other  income  consist  primarily of
investment  income from Structured  Finance Products and other income consisting
primarily of gains from the sale of certain  Company assets.  Investment  income
was $1.8  million  for the six months  ended  March 31, 1999 an increase of $1.2
million or 171%  compared to the six months ended March 31,  1998.  Other income
was  $352,000 for the six months ended March 31, 1999 a decrease of $ 470,000 or
57% compared to the six months ended March 31, 1998.  This decrease is primarily
due to a $228,000  gain  recorded  for the six months  ended  March 31,  1999 in
connection  with the ongoing sales of the DAC asset  compared to a $720,000 gain
the  Company  recognized  during the six months  ended March 31, 1998 due to the
sale of cash  investments  made  initially in the Pilgrim  Funds at the time the
Funds were  established.  The net effect of the increase in investment income of
$1.2  million  and the  decrease in other  income of $470,000 is a $762,000  net
increase in investment and other income.

EXPENSES.  Total expenses,  excluding  amortization,  depreciation  and interest
expense,  for the six months ended March 31, 1999 were $12.6 million an increase
of $3.9 million or 45%  compared to the six months  ended March 31,  1998.  This
increase  was  primarily  a result of a $3.1  million  increase  in general  and
administrative  expenses due to an increase in  personnel  and  compensation,  a
$791,000  increase in selling  expenses  primarily  related to a increase in the
Company's  costs for sales and marketing in the quarter ended  December 31, 1998
reduced by expense  reimbursements due to the Company for distributing shares of
the NACM Funds in the quarter ended March 31, 1999. The Company  entered into an
agreement  during January 1999 with NACM to acquire the right to manage the NACM
Funds and as of February 1, 1999 the Company's  broker dealer  subsidiary,  PSI,
began  distributing  shares of the NACM Funds.  NACM has agreed to reimburse the
Company for the direct  costs of selling  shares of the NACM funds up to certain
limits  based on the  expenses  incurred.  The  Company  has reduced its selling
expenses  for the quarter  ended March 31, 1999 by $986,000 for the direct costs
of  distributing   the  NACM  funds.   This   distribution   agreement  and  the
reimbursement  of expenses will remain in place until the Company  completes the
purchase  of right to manage  the NACM Funds  during  May 1999 (see  "Subsequent
Event" below).

Interest expense decreased to $334,000 for the six months ended March 31, 1999 a
decrease of $58,000 or 15% compared to the six months ended March 31, 1998.  The
decrease  in  interest  expense  between  the  comparable  periods is  primarily
attributable  to the sale of the DAC asset in  December  1998.  The  Company was
reimbursed by the  purchaser of the DAC asset for the interest  expense that the
Company incurred  related to borrowings  between the effective date of the sale,
September  30, 1998,  and the date the funds were received at the closing of the
transaction  in December  1998.  The funds received in December from the sale of
the DAC asset were used to pay down debt outstanding  under the Company's Credit
Agreement (see "Liquidity" below).

Amortization and depreciation  expenses decreased $762,000 primarily as a result
of the sale of the DAC asset. The DAC asset consisted of commissions paid on the
sale of  certain  Funds'  shares.  Prior  to the  sale of the  DAC  asset  these
commissions were capitalized and amortized over a six-year period.

SUBSEQUENT EVENT

 On January 28, 1999, the Company entered into an agreement  ("Agreement  Date")
with  Nicholas-Applegate  Capital Management ("NACM"),  an investment management
firm in San Diego, California to acquire the rights to

                                       12
<PAGE>
manage and distribute eleven open-end retail NACM Funds with net assets totaling
$1.4 billion.  The agreement was approved by the Fund's  trustees and is subject
to the approval of the Fund's  shareholders  and review by regulatory  agencies.
The transaction is expected to close May 21, 1999. The purchase price to be paid
at closing is approximately $23.5 million,  adjusted for sales,  redemptions and
changes in market value of the funds between the  Agreement  Date and the close.
As  of  February  1,  1999,   the  Company   became  the   distributor   of  the
Nicholas-Applegate open-end retail mutual funds.

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 sale of Fund shares,  and investments made by the
Company in connection with the management of Structured  Finance  Products.  The
Company also purchases  shares of its common stock pursuant to an  authorization
by its board of  directors.  The  Company's  principal  sources of liquidity and
capital  resources  include cash flow from  operations and borrowings  available
under a $43.3 million  credit  agreement  ("the Credit  Agreement").  During the
first six  months of fiscal  1999,  the  Company's  operations  used net cash of
$693,000  and the  Company  used  $3.3  million  of net  cash  in its  investing
activities  including $4.0 million used for the Company's equity investment in a
new Structured  Finance Product asset which was partially offset by $1.3 million
in principal  distributions received by the Company from these investments.  The
Company had a net  increase  in cash from  financing  activity  due to the $32.3
million  received from the ongoing sales of the DAC asset offset by $5.2 million
in  purchases  of the  Company's  stock and a decrease  in  borrowings  of $23.4
million.

One of the Company's  principal  uses of cash is the payment of  commissions  in
connection  with the sale of B Shares.  Such costs are capitalized as DAC assets
and are recovered  through  distribution  fees and CDSC fees received from the B
Share assets.  On December 11, 1998, the Company sold its September 30, 1998 DAC
asset for $26.5  million and agreed to sell any DAC assets  generated  through B
Share sales through  November 1999, (B Share Sales  Agreement")  with a right of
first refusal on a two-year extension thereafter. The purchaser of the DAC asset
is entitled to 0.75%, annualized,  in distribution fees paid from B Share assets
and all CDSCs  received  from any  redemptions  of the related B Shares.  If the
Company's B Shares Sales Agreement expires and the Company is unable to sell its
DAC assets or to borrow to fund  commissions,  the Company's  ability to finance
the continued sale of open-end Fund B Shares could be adversely effected.

The  Company  uses a  significant  portion  of its cash to invest in  Structured
Finance  Products  that it  manages.  The  Company  may be required to invest an
agreed upon  percentage in each new Structured  Finance  Product on the date the
transaction  closes. If the Company was unable to generate funds from operations
or to borrow  funds needed to invest in new  Structured  Finance  Products  this
could have an adverse  effect on the Company's  ability to continue to close and
manage  additional  Structured  Finance Product assets. As of March 31, 1999 the
Company had $20.1 million invested in Structured Finance Products.

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 December
22,  1998,  and allows the  Company or the  Company's  wholly  owned  subsidiary
Pilgrim Group, Inc. ("PGI") to borrow up to $43.3 million. The borrowings can 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  Structured  Finance  Product
investments  and  (v)  repurchasing   Company  stock.  The  agreement   contains
restrictive  covenants  which  require PGI and the  Company to maintain  certain
financial ratios and prohibits certain "restricted payments" including dividends
by the Company to its  shareholders.  Borrowings  under the Credit Agreement are
collateralized  by a pledge by the  Company of the stock of PGI,  by a pledge of
PGI of the stock of its wholly owned subsidiaries, by a security interest in the
assets  of the  Company,  PGI  and  PGI's  wholly  owned  subsidiaries,  Pilgrim
Investments,  Inc. ("PII") and Pilgrim  Securities,  Inc., and by a guarantee by
PGI's wholly owned subsidiary, PII.

 The Company will need approximately $25 million for the acquisition of the NACM
Funds including  related expenses and is negotiating with its current lenders as
well as others to expand its existing credit agreement.  The Company anticipates
the increase in the credit  agreement  will be by an amount  sufficient  to fund
this  acquisition  and the borrowing  facility will be in place prior to closing
the NACM acquisition.

                                       13
<PAGE>
At March 31, 1999 the Company  had  borrowings  of  approximately  $7.0  million
outstanding  under the Credit  Agreement  and had  approximately  $36.3  million
additional borrowings available.

On August 5, 1997, the Company's  Board of Directors  approved  purchasing up to
750,000   shares  of  its  common  stock  from  time  to  time  in  open  market
transactions.  The Company may use cash generated from  operations or borrowings
obtained  under the Credit  Agreement  to purchase  the shares.  As of April 30,
1999, the Company had purchased  659,150 shares pursuant to this  authorization.
In August 1998, the Company's Board of Directors approved the purchase from time
to time of an additional 500,000 shares of common stock.

YEAR 2000

Many  existing  computer  programs only use two digits to identify a year in the
date field. The change from 1999 to 2000 may cause many computer applications to
fail or create erroneous results. The endeavor to correct this year 2000 problem
has commonly become known as Y2K and affects virtually all companies.

The  Company  is  working  to ensure  that its  information  technology  systems
("systems")  will, along with those of its third party service providers ("third
parties" or "third  party"),  continue to function  properly upon the arrival of
the year 2000. The Company has developed and is implementing a comprehensive Y2K
plan (the "plan") to complete all internal system upgrades or conversions by the
fourth quarter of fiscal 1999. A significant part of the plan involves upgrading
hardware  and  software to newer  versions  that have been  certified  to be Y2K
compliant.  To date, most of the Company's current hardware and software systems
have  been  certified,  by the  manufacturers,  as Y2K  compliant.  Based on the
Company's  plan, it is estimated that  incremental  expenses for the Y2K project
will not  have a  material  impact  on the  Company's  operations  or  financial
results. To date, the Company has spent approximately  $817,000 on upgrading its
hardware and software systems to those that are Y2K compliant and to accommodate
the Company's growth.  The Company estimates that the remaining cost to complete
the  implementation  of the plan will be  between  $200,000  and  $500,000.  The
Company will use its own cash or to the extent available borrow from its line of
credit for any Y2K  expenditure.  It is the Company's  policy to capitalize  all
costs for hardware and software  that have a useful life of over  one-year.  The
cost of these assets will be  depreciated  based on the  estimated  useful life.
Costs for remediation and testing are expensed as incurred.

The Company is  measuring  its progress by  following  the three  action  phases
outlined in its plan:  Assessment,  Remediation/Implementation  and Testing. The
Assessment  phase included  completing an inventory of all-internal and external
systems,  office  equipment,  third  party  dependencies,  physical  facilities,
business issues and creating a budget and strategy to address the Y2K issue. The
Remediation/Implementation  phase includes  upgrading or replacing  hardware and
software systems,  issuance of Company  statements of Y2K readiness,  compliance
with regulatory disclosure  requirements,  development of a Y2K contingency plan
and contacting and monitoring third parties.  The Testing phase includes several
levels of testing  some of which rely upon the third  parties.  The Company must
test internal  systems on a stand-alone  basis and also complete  point-to-point
testing with some of its third  parties.  Additionally,  the Company will obtain
the results of certain  third party  testing that will be conducted on behalf of
the  Company and its  affiliates  on an  industry  wide  basis.  The table below
summarizes the status of the Company's Y2K readiness.

--------------------------------------------------------------------------------
                             Status of Y2K Readiness
--------------------------------------------------------------------------------
   Y2k Plan Phase                   % Completed         Completion Target Date
                                As of April 1, 1999
--------------------------------------------------------------------------------
Assessment                             100%                    01/31/99
--------------------------------------------------------------------------------
Remediation/Implementation              95%                    09/30/99
--------------------------------------------------------------------------------
Testing                                 90%                    10/31/99
--------------------------------------------------------------------------------

The Company's core business  activities are highly  dependent upon certain third
parties that are classified as Y2K "mission  critical".  A failure of any single
mission  critical  third party or  combination  of parties  could  likely have a
material  negative  impact to the Company'  ability to conduct its business.  As
part of its plan,  the  Company  has been  monitoring  the Y2K  progress of such
mission critical third parties. To date based upon written disclosures  provided
by such third parties,  the Company has not received any significant  indication
that a mission critical third party will likely experience a Y2K failure.

                                       14
<PAGE>
Below is a  summary  table  that  sets  forth  the most  current  Y2K  status as
disclosed by certain of the Company's mission critical third parties:
<TABLE>
<CAPTION>
                                       Mission Critical Third Party - Y2K Status
                                       -----------------------------------------
--------------------------------------------------------------------------------------------------------------------
Third Party                                             Current Status                                 Last Update
--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------
<S>                          <C>                                                                         <C>
Fund Transfer Agent          The five major systems of the Transfer Agent system                          4/99
                             are Y2K ready. Testing will continue through the second quarter of 1999.
--------------------------------------------------------------------------------------------------------------------
Fund Custodian               The information technology (IT) applications:                                2/99
                             Correction                           99% complete
                             Testing & Implementation             94% complete
                             Level 2 Testing                      86% Complete
                             Level 3 Testing                      67% Complete
--------------------------------------------------------------------------------------------------------------------
                             The Custodian has distributed questionnaires on readiness, testing,          2/99
                             and market evaluation to subcustodians.  We will be obtaining a
                             report of the progress.
--------------------------------------------------------------------------------------------------------------------
Fund Accounting Agent        Achieved   goal   of   Y2K   readiness   production                          4/99
                             environment by 12/98. Testing will continue throughout 1999.
--------------------------------------------------------------------------------------------------------------------
Communication Vendors        Both vendors have remediation and renovation well under way.                 4/99
--------------------------------------------------------------------------------------------------------------------
Electrical Vendor            All IT and non IT systems have been inventoried.  All renovations            4/99
                             are scheduled for completion by mid 1999.
--------------------------------------------------------------------------------------------------------------------
Corporate Banker             Systems are compliant.  Testing continues through mid-1999                   4/99
--------------------------------------------------------------------------------------------------------------------

</TABLE>

The Company is  developing a  contingency  plan with the  objective of providing
reasonable  alternatives  to  systems,  third  party  vendors,   facilities  and
procedures  enabling  the Company to conduct  its core  business  operations  if
confronted  with a Y2K  failure.  The  scope of the  contingency  plan  includes
mission critical systems,  physical  facilities and the Company's  communication
systems. The contingency plan will provide the Company guidance should it or any
of the  Company's  primary third party  providers  fail to meet its goals and be
Year 2000  compliant  and includes an alternate  vendor list for its third party
mission critical providers. The Company has determined that even though it has a
list of alternative  vendors  selected,  it cannot ensure that these  alternates
will be Y2K ready or have the  wherewithal to accept the Company  business.  The
Company has also  determined  that there are some third party  mission  critical
vendors that do not have an alternate source.  The Company relies heavily on its
third  party  mission  critical  systems  to  conduct  its  day to day  business
operations  and to the extent that its  contingency  plan fails,  the  Company's
financial condition may be adversely effected.

The Company's ability to manage the Y2K issue is subject to uncertainties beyond
its  control  and actual  results  could  differ  materially  from what has been
discussed  above.  There are several factors that could effect the Y2K issue for
the Company,  including;  the success of the Company in identifying  systems and
programs  that are affected by Y2K; the amount and nature of testing on internal
and external  systems  that is  required:  the  installation,  programming,  and
systems work related to  upgrading or replacing  each of the affected  programs;
the cost,  magnitude and  availability  of labor and  consulting to complete the
required  Y2K  projects and the success of the  Company's  external  third party
providers and other industry or  governmental  entities in addressing  their Y2K
issues and assessing their risks.


The failure of the Company, the Company's mission critical third party providers
or other  industry or  governmental  entities to resolve Y2K issues could have a
material  adverse affect on the Company's  business,  financial  condition,  and
results of  operations.  The Company  could  become the subject of legal  claims
regarding its inability to operate its business due to Y2K failures by it or any
of its mission  critical third party  vendors.  The Company is also regulated by
several governmental  agencies that may decide to impose fines or sanctions that
could  adversely  effect the  Company's  ability to do business or in some cases
require the Company to cease  operations.  The Company  could also  experience a
decline in assets under  management  if investors in its Funds become  concerned
about the

                                       15
<PAGE>
Y2K problem and withdraw their investments. A decline in assets under management
would have an adverse effect upon the Company's  business,  financial  condition
and results of operations.



FORWARD LOOKING STATEMENT

When  used in this  Form  10-Q and in future  filings  by the  Company  with the
Securities  and  Commission,  in  the  Company's  press  releases  and  in  oral
statements made with the approval of an authorized  executive officer, the words
or phrases,  "will likely  result",  "are expected  to",  "will  continue",  "is
anticipated",  "estimate",  "project",  or similar  expressions  are intended to
identify  "forward  looking"  statements,  within  the  meaning  of the  Private
Securities  Litigation  Reform  Act of  1995.  All  assumptions,  anticipations,
expectations and forecasts  contained herein are forward looking statements that
involve risks and  uncertainties.  Discussions  in  Management's  Discussion and
Analysis  about the  Company's  estimated  completion  dates  for  phases of the
Company's  Year 2000 plan,  related cost  estimates,  statements  about possible
effects of the year 2000 problem and related contingency plans are also "forward
looking"   statements.   Such  statements  are  subject  to  certain  risks  and
uncertainties  that  could  cause  actual  results  to  differ  materially  from
historical  earnings and those presently  anticipated or projected.  The Company
cautions  readers  not to  place  undue  reliance  on any  such  forward-looking
statements,  which  speak  only as of the  date,  made,  and  should  be read in
conjunction with the risk disclosures. The Company wishes to advise readers that
the  factors  in the Year  2000  discussed  above  could  affect  the  Company's
financial  performance  and could cause the Company's  actual results for future
periods to differ  materially  from any opinions or  statements  expressed  with
respect to future periods in any current statements.

The Company will not  undertake  and  specifically  declines any  obligation  to
release  publicly  the  result  of  any  revisions  which  may  be  made  to any
forward-looking  statements to reflect events or circumstances after the date of
such  statements or to reflect the occurrence of  anticipated  or  unanticipated
events.

                                       16
<PAGE>
                           PART II - OTHER INFORMATION



ITEMS 1 THROUGH 3 AND 5 ARE NOT APPLICABLE AND HAVE BEEN OMITTED.


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

The Company's  annual meeting of stockholders was held on February 24, 1999, for
the purpose of electing two directors to the Company's Board of Directors,  each
to serve a  three-year  term and for the  purpose of  approving  a stock  option
program for the board of  directors of the  Company.  At the  meeting,  a quorum
being present, votes cast in the election of the directors were as follows:
<TABLE>
<CAPTION>
      Nominee            Votes For   Votes Against   Votes Withheld   Broker Non Votes
--------------------     ---------   -------------   --------------   ----------------
<S>                      <C>              <C>              <C>             <C>
Robert W.  Stallings     4,784,567         -               2,949            -
John M. Holliman  III    4,782,967         -               4,549            -
</TABLE>

At the meeting,  a quorum being  present,  votes cast in the proposal to approve
the directors' stock option plan were as follows:
<TABLE>
<CAPTION>
          Agenda                Votes For   Votes Against   Votes Withheld     Broker Non Votes
---------------------------     ---------   -------------   --------------     ----------------

<S>                             <C>           <C>              <C>                 <C>
Directors Stock Option Plan     4,149,419     627,314          10,783               -
</TABLE>

Both nominees were elected and the director's stock option plan were approved.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

         10.1 Nicholas-Applegate  Capital  Management  Purchase  Agreement Dated
              January 28, 1999
         10.2 Employment Agreement of Howard Tiffen
         27.0 Financial Data Schedules

(b)      Reports on Form 8-K.

         None

                                       17
<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 10, 1999                   /s/ James R. Reis
                                      ------------------------------------------
                                      James R. Reis
                                      Vice-Chairman and Chief Financial Officer
                                      (Principal Accounting Officer)

                                       18