<PAGE> 1
SUPPLEMENT DATED SEPTEMBER 1, 1997
REPLACING THE SUPPLEMENT DATED APRIL 1, 1997
TO PROSPECTUS DATED FEBRUARY 14, 1996
OF
SIERRA PRIME INCOME FUND
P.O. Box 5118
Westboro, Massachusetts 01581-5118
The Prospectus, dated February 14, 1996, as supplemented, for the Sierra Prime
Income Fund (the "Fund") is amended and supplemented as follows:
In the section "MANAGEMENT OF THE FUND -- THE ADVISOR" on page 22, add the
following paragraph after the third paragraph:
On July 1, 1997, Great Western Financial Corporation ("Great
Western"), the indirect parent of Sierra Advisors, the Fund's
investment advisor, and Washington Mutual, Inc. ("Washington Mutual"),
a publicly held financial services company, closed a previously
announced Agreement and Plan of Merger resulting in the merger of
Great Western with and into a wholly-owned subsidiary of Washington
Mutual (the "Merger"). As a result of the Merger, Sierra Advisors is
an indirect subsidiary of Washington Mutual.
In the section "MANAGEMENT OF THE FUND -- THE SUB-ADVISOR" on page 22, add the
following paragraph after the third paragraph:
On May 31, 1997, Morgan Stanley Group Inc. ("Morgan Stanley") and Dean
Witter, Discover & Co. closed a previously announced Agreement and
Plan of Merger to form Morgan Stanley, Dean Witter, Discover & Co.
Prior thereto, Morgan Stanley Group Inc. was the parent of Van Kampen
American Capital Management Inc. ("Van Kampen"), the Fund's investment
sub-advisor. Van Kampen is now a subsidiary of Morgan Stanley, Dean
Witter, Discover & Co.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
