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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 to date, 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 March 6, 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 financial services company, announced that they had entered into an
Agreement and Plan of Merger providing for the merger of Great Western
with and into a wholly-owned subsidiary of Washington Mutual (the
"Merger"). Subject to the satisfaction or waiver of certain conditions,
including the receipt of necessary shareholder and regulatory
approvals, it is anticipated that the Merger would close in the third
quarter of 1997. Following the Merger, Sierra Advisors would be an
indirect subsidiary of Washington Mutual. The Merger was announced
following the announcement by H.F. Ahmanson ("Ahmanson") of an
unsolicited proposal for the merger of Great Western and Ahmanson,
which proposal was subsequently revised and is outstanding.
In the section "MANAGEMENT OF THE FUND -- THE SUB-ADVISOR" on page 22, add the
following two paragraphs after the third paragraph:
On February 5, 1997, Morgan Stanley Group Inc. ("Morgan Stanley") and
Dean Witter, Discover & Co. announced that they had entered into an
Agreement and Plan of Merger to form Morgan Stanley, Dean Witter,
Discover & Co. Dean Witter, Discover & Co. is a financial services
company with three major businesses: full service brokerage, credit
services and asset management. Morgan Stanley is the indirect parent of
Van Kampen American Capital Management Inc. ("Van Kampen"), the Fund's
investment sub-advisor.
Subject to certain conditions being met, it is currently anticipated
that the transaction will close in mid-1997. Thereafter, Van Kampen
will be an indirect subsidiary of Morgan Stanley, Dean Witter, Discover
& Co.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
6740 (4/97)
