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SUPPLEMENT DATED SEPTEMBER 23, 1996
TO PROSPECTUS DATED FEBRUARY 14, 1996
OF
SIERRA PRIME INCOME FUND
P.O. BOX 5118
WESTBOROUGH, MASSACHUSETTS 01581-5118
The Prospectus, dated February 14, 1996, as supplemented to date, for the Class
A Common Shares of the Sierra Prime Income Fund (the "Fund") is amended and
supplemented as follows:
In the section "MANAGEMENT OF THE FUND" under the heading "THE SUB-ADVISOR" on
page 22, add the following two paragraphs after the second paragraph:
On June 24, 1996, VK/AC Holding, Inc. announced it had entered into an
Agreement and Plan of Merger among Morgan Stanley Group Inc., MSAM Holdings II,
Inc. and MSAM Acquisition Inc., pursuant to which MSAM Acquisition Inc. will be
merged with and into VK/AC Holding, Inc. and VK/AC Holding, Inc. will be the
surviving corporation. The proposed transaction may be deemed to cause an
assignment, within the meaning of the Investment Company Act of 1940 and the
Investment Advisers Act of 1940, of the investment sub-advisory agreement among
Van Kampen, Sierra Advisors and the Fund. Accordingly, the completion of the
transaction is contingent upon, among other things and subject to certain
exceptions, the approval of both the Board of Trustees of the Fund and the
shareholders of the Fund of a new investment sub-advisory agreement among the
Fund, Sierra Advisors and Van Kampen. The Board of Trustees has approved the
new investment sub-advisory agreement and has called a special meeting of
shareholders to obtain shareholder approval of the agreement. Investment
sub-advisory fees under the new investment sub-advisory agreement to be voted
on at such meeting will be in the same amount as those paid under the current
sub-advisory agreement among the Fund, Sierra Advisors and Van Kampen.
MSAM Acquisition Inc. is a wholly-owned subsidiary of MSAM Holdings II, Inc.
which, in turn, is a wholly-owned subsidiary of Morgan Stanley Group Inc.
Subject to a number of conditions being met, it is currently anticipated that a
closing will occur on or about October 31, 1996. Thereafter, VK/AC Holding,
Inc. and its affiliated entities shall be part of Morgan Stanley Group Inc.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
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SUPPLEMENT DATED SEPTEMBER 23, 1996
TO STATEMENT OF ADDITIONAL INFORMATION DATED FEBRUARY 14, 1996
OF
SIERRA PRIME INCOME FUND
The Statement of Additional Information, dated February 14, 1996 of the Sierra
Prime Income Fund (the "Fund") is hereby amended and supplemented by the
following:
In the section "TRUSTEES AND OFFICERS" under the heading "TRUSTEES" on page
B-12, the following text should be inserted after the biography of John W.
English:
Alfred E. Osborne, Jr. Ph.D.
Professor
The Harold Price Center for Entrepreneurial Studies at UCLA
110 Westwood Plaza, Suite C305
Los Angeles, California 90095-1481
University professor, researcher and administrator at UCLA since
1972. Director, Times Mirror Company, ReadiCare, Inc., United States
Filter Corporation, Nordstrom, Inc., Seda Specialty Packing Corporation
and Greyhound Lines, Inc. Independent general partner, Technology
Funding Venture Partners V. Governor of the National Association of
Securities Dealers, Inc.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
