SEC File No. 333-61831
                          Filed Pursuant to Rule 497(h)

                              PROSPECTUS SUPPLEMENT
                    (To Prospectus Dated September 15, 1998)

                            PILGRIM PRIME RATE TRUST

                    34,442.427 Shares Of Beneficial Interest

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

     During the period of December 16 through  December 17, 1998, Pilgrim  Prime
Rate Trust (the "Trust") sold  34,442.427  shares of beneficial  interest of the
Trust  through  the  Trust's  Shareholder   Investment  Program  pursuant  to  a
Distribution Agreement with Pilgrim Securities, Inc. ("PSI") at a sales price of
$9.24 per share.

Gross Proceeds ..................................  $318,247.90
Commission to PSI ...............................  $         0
Net Proceeds to Trust ...........................  $318,247.90

     On December 15, 1998, the last day of the corresponding pricing period, the
last reported sales price of the Shares on the NYSE was 9 1/4.


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 December 21, 1998.