<PAGE>
SUPPLEMENT TO THE PROSPECTUS OF
PRIME INCOME TRUST
DATED JANUARY 23, 1998
The sixth paragraph in the section of the Prospectus entitled "THE TRUST AND
ITS ADVISER" is hereby replaced by the following:
The Trust is managed within InterCapital's Taxable Fixed-Income
Group, which manages 23 funds and fund portfolios with approximately
$13.5 billion in assets as of January 31, 1998. Rajesh K. Gupta,
Senior Vice President of InterCapital, Sheila A. Finnerty, Assistant
Vice President of InterCapital, and Peter Gewirtz, a Senior Research
Analyst with InterCapital, have been the portfolio managers primarily
responsible for the management of the Trust's portfolio since
February, 1998.
The biographical description of Rafael Scolari in the section of the
Prospectus entitled "TRUSTEES AND OFFICERS" is hereby replaced by the following:
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH THE TRUST
AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- --------------------------------------------- ---------------------------------------------
<S> <C>
Rajesh K. Gupta (37) ........................ Senior Vice President of InterCapital; Vice
Vice President President of various Dean Witter Funds.
Two World Trade Center
New York, New York
Sheila A. Finnerty (32) ..................... Assistant Vice President of InterCapital
Assistant Vice President (since May, 1995); previously Senior Research
Two World Trade Center Analyst with InterCapital (May, 1993-May,
New York, New York 1995) and prior thereto an investment analyst
with Presidential Life Insurance Company
(April, 1990-May, 1993).
Peter Gewirtz (32) .......................... Senior Research Analyst with InterCapital
Assistant Vice President (since October, 1996); previously Assistant
Two World Trade Center Vice President of Industrial Bank of Japan
New York, New York (February, 1994-October, 1996) and prior
thereto an Associate of Toronto-Dominion Bank
(July, 1991-February, 1994).
</TABLE>
February 26, 1998
