Securities Act File No.333-61831

                            Pilgrim Prime Rate Trust

                         Supplement dated August 6, 1999
                      to the Prospectus dated June 18, 1999

Acquisition of Pilgrim Capital Corporation by ReliaStar Financial Corp.

     On July 22, 1999,  Pilgrim Capital Corp. (NYSE: PFX), the parent company of
Pilgrim Investments, Inc., which is the adviser to Pilgrim Prime Rate Trust (the
"Trust"), entered into an agreement under which it will be acquired by ReliaStar
Financial Corp. (NYSE: RLR).  ReliaStar  Financial Corp. is a  Minneapolis-based
holding  company whose  subsidiaries  offer  individuals and  institutions  life
insurance and  annuities,  employee  benefits  products and  services,  life and
health  reinsurance,  retirement plans, mutual funds, bank products and personal
finance  education.  Based on revenues,  ReliaStar  Financial  Corp.  is the 8th
largest publicly held life insurance holding company in the United States and at
March 31, 1999, had $23.2 billion in assets under  management and life insurance
in force of $304.7 billion.  Completion of the  acquisition is contingent  upon,
among other things,  approval by the Trustees and the  shareholders of the Trust
and certain regulatory approvals.  The closing of the acquisition is expected to
occur during the fourth quarter of 1999.

     Pilgrim  Investments  as an  organization  will  survive  the  transaction.
Pilgrim Investments does not currently anticipate that there will be any changes
in the personnel  primarily  responsible for management of the Trust as a result
of the acquisition. As a result of the transaction,  Pilgrim Investments may get
access  to the  resources  and  investment  expertise  of  Northstar  Investment
Management Corporation, an investment adviser that is a subsidiary of ReliaStar.

     Under the provisions of the advisory contract between the Trust and Pilgrim
Investments,  the  agreement  will  terminate  automatically  at the time of the
acquisition. As a result, the Board of Trustees on August 2, 1999 approved a new
advisory contract between the Trust and Pilgrim  Investments  which,  subject to
shareholder  approval,  will take effect immediately after the acquisition.  The
contract is  substantially  the same as that currently in effect.  A shareholder
meeting has been scheduled in November to approve the new agreement.