SEC File No. 333-29803
                          Filed Pursuant to Rule 497(h)

                              Prospectus Supplement
                       (To Prospectus Dated June 11, 1998)

                        PILGRIM AMERICA PRIME RATE TRUST

                     1,500,000 Shares Of Beneficial Interest
                                -----------------

     On September 25, 1998,  Pilgrim America Prime Rate Trust (the "Trust") sold
1,500,000  shares  of  beneficial   interest  of  the  Trust  through  privately
negotiated  transactions  pursuant  to a  Distribution  Agreement  with  Pilgrim
America Securities, Inc. ("PASI") at a sales price of $9.4914 per share.

Gross Proceeds ..............................      $14,237,100.00
Commission to PASI...........................      $   142,371.00
Net Proceeds to Trust........................      $14,094,729.00

     On September 24, 1998, the last day of the  corresponding  pricing  period,
the last reported sales price of the Shares on the NYSE was 9 15/16.

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.

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

           The Date of this Prospectus Supplement is October 2, 1998.