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Filed Pursuant to Rule 497(e)
Registration File No.: 333-67701
SUPPLEMENT TO THE PROSPECTUS OF
MORGAN STANLEY DEAN WITTER PRIME INCOME TRUST
DATED DECEMBER 20, 1999
The second paragraph of the section entitled "Determination of Net Asset
Value" in the Prospectus is hereby replaced by the following:
Certain Senior Loans are valued based on quotations received from an
independent pricing service. All other Senior Loans held by the Trust are
valued at their fair value in accordance with procedures established in
good faith by the Board of Trustees of the Trust. Under the procedures
adopted by the Board of Trustees, interests in Senior Loans that are not
valued based on quotations will be priced in accordance with a matrix that
takes into account the relationship between the then current interest rate
and interest rates payable on each Senior Loan, as well as the total number
of days in each interest period and the period remaining until next
interest rate determination or maturity of the Senior Loan. Adjustments in
the matrix-determined price of a Senior Loan are made in the event of a
default on a Senior Loan or a significant change in the creditworthiness of
the Borrower and may also be required in the event of changes in pricing
parameters for newly issued Senior Loans (e.g., interest rates are set at a
higher or lower margin above the base lending rate than were Senior Loans
in the Trust's portfolio). Loans purchased at a discount from par for
reasons other than credit impairment are valued at cost and the discount is
amortized to maturity. In assessing the creditworthiness of a Borrower, the
primary focus is on the ability and intent of the Borrower to continue to
meet its principal and interest payment obligations specified under the
applicable Loan Agreement. Such factors as the Borrower's current and
projected cash flow relative to its debt service requirements and liquidity
are considered in this regard. S&P and Moody's ratings of any outstanding
commercial paper of a Borrower may also be considered. The procedures are
monitored by the Board of Trustees on an ongoing basis to insure that the
values arrived at continue to represent fair value. The Board will continue
to monitor developments in the Senior Loan Market. Should the Board of
Trustees determine that the market for Senior Loans has continued to
develop to the point where market quotations provided by banks, dealers or
pricing services respecting interests in Senior Loans could reliably serve
as a basis for valuing the Trust's portfolio securities that are not
currently valued based on quotations from an independent pricing service,
such quotations would then be used as a basis for valuing interests in such
additional Senior Loans held by the Trust. Other portfolio securities
traded in the over-the-counter market will be valued based upon closing bid
prices; provided, however, that short-term securities with remaining
maturities of less than 60 days will be valued at amortized cost. Other
assets are valued at fair value in accordance with procedures established
in good faith by the Board of Trustees of the Trust.
January 26, 2000
