SEC File No. 333-29805

                          Filed Pursuant to Rule 497(h)

                              Prospectus Supplement
                       (To Prospectus Dated June 19, 1998)

                        PILGRIM AMERICA PRIME RATE TRUST


                      120,000 Shares of Beneficial Interest

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     Pursuant to a Sales Agency  Agreement  dated as of May 22, 1998 (the "Sales
Agency Agreement") among Pilgrim America Prime Rate Trust (the "Trust"), Pilgrim
America  Investments,  Inc., as Investment Manager of the Trust, and PaineWebber
Incorporated  (the  "Sales  Agent")  which has been  filed as an  exhibit to the
Registration  Statement of which this Prospectus  Supplement is a part and which
is  incorporated  by  reference  herein,  the Trust has sold,  through its Sales
Agent, 120,000  shares  of  beneficial  interest  of  the  Trust,   pursuant  to
transactions  effected on the New York Stock Exchange,  during the period August
25, 1998 through August 26, 1998. The highest and lowest executed sales price at
which  shares  were  sold  during  that  period  was   $10.0625  and   $10.0625,
respectively.

Gross Proceeds....................     $1,207,500.00
Commission to Sales Agent.........     $   36,225.00
Net Proceeds to Trust.............     $1,171,275.00

On August 26, 1998 the last  reported  sales price of the Shares on the NYSE was
10 1/16.

Note: S.E.C. fees were not used in arriving at any of the above figures.

THESE  SECURITIES  HAVE NOT BEEN APPROVED OR  DISAPPROVED  BY THE SECURITIES AND
EXCHANGE  COMMISSION OR ANY STATE  SECURITIES  COMMISSION NOR HAS THE SECURITIES
AND  EXCHANGE  COMMISSION  OR ANY STATE  SECURITIES  COMMISSION  PASSED UPON THE
ACCURACY OF THIS PROSPECTUS.  ANY  REPRESENTATION  TO THE CONTRARY IS A CRIMINAL
OFFENSE.


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          The Date of this Prospectus Supplement is September 1, 1998.